District Court of New Jersey Finds Plaintiff's $65,000 Settlement Demand and "John Doe" Claims Insufficient to Defeat Diversity Jurisdiction

01.19.18

In Scott v. Dollar Tree, the plaintiff filed a personal injury matter in State Court against the defendant retail store, for a fall down accident. Soon after the plaintiff commenced this action, the defendant advised that it would remove this matter to Federal Court based upon Diversity Jurisdiction if she did not stipulate to cap damages at $75,000 (i.e., the jurisdictional minimum). The plaintiff refused to stipulate to damages and instead made a conditional $65,000 settlement demand if accepted within 30 days. The defendant subsequently removed the matter to the District of New Jersey.

Upon removal, the plaintiff filed a motion to remand. The plaintiff first argued that the John Doe defendants could potentially destroy diversity if those unknown defendants are citizens of New Jersey. That argument was summarily dismissed by the Court, stating that in determining whether a civil action is removable, the citizenship of defendants sued under fictitious names are to be disregarded. The plaintiff further argued that the amount in controversy did not meet the jurisdictional minimum because the plaintiff made a $65,000 demand and the severity of her injuries did not meet the jurisdictional threshold. The Court rejected that argument as well, holding that a plaintiff's settlement demand is not the proper amount for the Court to consider when determining the amount in controversy for jurisdictional purposes because it had no bearing on whether a reasonable jury could award damages in excess of that amount. The Court further reasoned that the defendant was justified in relying upon the plaintiff's general allegations in her Complaint that she sought to recover damages for "severe, painful, and permanent injuries" in order to meet the amount in controversy requirement, particularly in conjunction with the plaintiff's refusal to stipulate to limit her damages to $75,000.

Comment: Where removal to Federal Court based on Diversity Jurisdiction is an option, the utilization of a stipulation to cap damages at the jurisdictional minimum can be a useful tool to limit potential exposure for the defendant. As exemplified by this case, the implementation of such a stipulation will force a plaintiff to decide at the outset of the lawsuit to either place a ceiling on any recovery or litigate the matter in Federal Court.

For more information, please contact Anthony T. Ling at aling@wglaw.com or 973.854.1073.

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