The class action complaint alleges that Pushpin filed in Illinois courts some 1100 small‐claims suits, all fraudulent, but that the class (which consists of the defendants in those suits) seeks “no more than $1,100,000.00 in compensatory damages and $2,000,000.00 in punitive damages,” and “will incur attorneys’ fees of no more than $400,000.00 in prosecuting the class action counts,” and therefore “the total amount of compensatory damages plus punitive damages plus attorney’s fees requested on behalf of all class members is no more than $3,500,000.00.” Of course $3.5 million is well below the $5 million threshold for removal of a state‐court class action to a federal district court under the Class Action Fairness Act. Class counsel wants the stakes to remain below that threshold so that the suit will have to be litigated in state court, class counsel’s preferred forum. Pushpin argues that the potential damages that class counsel could establish if the substantive allegations of the complaint are proved exceed $5 million, and therefore the case should remain in federal court.
One might suppose that whatever potential damages the class might have sought, remand is required because the complaint forswears any claim for more than $3.5 million. The district judge said, however, that “once the proponent [of removal, and hence opponent of remand—Pushpin] has plausibly suggested that the relief exceeds $5 million, then the case remains in federal court unless the plaintiff can show it is legally impossible to recover that much.” The term we’ve italicized appears in many cases, e.g., ABM Security Services, Inc. v. Davis, 646 F.3d 475, 478 (7th Cir. 2011); Blomberg v. Service Corp. Int’l, 639 F.3d 761, 764 (7th Cir. 2011), as does the older formula that to prevent removal the plaintiff must demonstrate to a “legal certainty” that his claim is for less than the jurisdictional amount. E.g., St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289 (1938); Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536, 541 (7th Cir. 2006). Neither “legal impossibility” nor “legal certainty” seems descriptive of what is after all just a party’s commitment not to seek damages above an amount specified by him, whether to avoid removal or for some other reason. See, e.g., BEM I, L.L.C. v. Anthropologie, Inc., 301 F.3d 548, 552 (7th Cir. 2002); Workman v. United Parcel Service, Inc., 234 F.3d 998, 1000 (7th Cir. 2000); Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009). A court can’t force a plaintiff to accept greater damages than he wants; and it might seem that class counsel in this case had made a commitment, in the passages that we quoted from the complaint, not to seek a judgment for more than $3.5 million.
Judge(s): Richard Posner
Jurisdiction: U.S. Court of Appeals, Seventh Circuit
Related Categories: Finance / Banking
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