Published on:

New Maryland Amount in Controversy Federal Diversity Opinion

The U.S District Court for Maryland made a noteworthy ruling in Jackson v. Johnson, a Maryland auto tort case that is interesting case that involves federal diversity law and interesting plaintiffs’ lawyers tactics in finding their preferred venue for the case.

Plaintiffs' Venue Tactics on Full Display

Plaintiffs’ Venue Tactics on Full Display

The Battleground

Venue is key. It is this way everywhere. But it is particularly so in Maryland.  In this state, plaintiffs want to be in Baltimore City or Prince George’s County.  Some people kid themselves that “in the right case” another venue can be better.  But this is mostly delusional.  

Conversely, you really do not want be in some of these ultra conservative counties on the Eastern Shore.  Can plaintiffs win tough case there?  Absolutely. We have.  But you really want to choose the path of least resistance and you don’t get that in those counties.

But, for some lawyers in some cases, the worst case scenario for an auto tort case is federal court.  Why?  I mean, the federal courthouses make most county courthouse look downright pedestrian.  But, alas, this is not a beauty contest.

The first problem many auto tort lawyers have is that it is not in their wheelhouse.  Very few garden variety accident claims find their way into federal court. The federal courts make you jump though a lot of hoops with respect to Rule 26 disclosures and other obligations.  Some of these obligations are evidentiary.  As a breed, plaintiffs’ lawyers think the federal rules of evidence are are more exactly both in letter and in application.  Another basis for the reluctancy of Plaintiffs’ attorneys  is if you are a lawyer on the Eastern Shore, you really don’t want to track all the way to Baltimore.  (Insurance companies don’t care.  They will just hire a lawyer in Baltimore or Greenbelt.  Or not.  Either way.)

The Big Issue in Jackson

Plaintiff filed suit in Washington County.  This is not a place where plaintiffs’ lawyers crawl past other jurisdictions to sue there.  Still, Plaintiff sued for $75,000 because it wanted to fly just shy of the jurisdictional amount that would invoke federal jurisdiction if there was diversity of citizenship which there was in this case.  To satisfy diversity jurisdiction, there must be (1) diversity of citizenship and (2) the matter in controversy must exceed the sum or value of $75,000.  Citing the plain language of 28 U.S.C. 1332(a), the court held that alleging exactly $75,000 in damages should be considered a claim not in excess of $75,000, precluding subject matter jurisdiction.

That should  be fatal to removal in any case where the amount plead in the ad damnum clause is not more than $75,000.   Defendants still thought the case should be removed to federal court.  Why?   Defendants are bugged, with some reason, that after a verdict above $75,000 the plaintiff could technically just amend their Complaint even after the verdict.  So, at a minimum, the defendant wanted the court to put a $75,000 cap on the case.

Court’s Ruling

The court ruled in an opinion by Judge Ellen Lipton Hollander that defendant had to prove that it was a “legal certainty” that the plaintiff would actually recover more than $75,000 if she prevailed.  Proving the value of damages to a legal certainty in a tort case is an impossible task.   Alternatively, the defendant argued that if the case is kept in state court, the award should be limited to $75,000 and not a penny more.  Again, the court disagreed and cited Maryland’s long standing policy of allowing post-verdict amendments to pleadings.

The court stressed that while a plaintiff in Maryland is permitted to amend the complaint post-verdict to accurately reflect the value of the damages, there is no rule that says a court must allow a plaintiff to amend the complaint post-verdict.  For the court, the fact that a post-verdict amendment request may be denied was sufficient to guard against plaintiff’s lawyers who deliberately request damages at or below $75,000 to avoid removal to federal court.  Since a plaintiff, the court argued, may or may not be permitted to amend the complaint post-verdict, he “under-claims” his damages to avoid federal court “at his own peril.”

Is this new law?  Not really.  Niles Barton & Wilmer, who defended the case, decided to fight this issue for reasons that escape me.  But I’m writing about the case because I think it raises issues of tactics and law that are interesting and important for every plaintiffs’ lawyer to consider.

Posted in: Maryland Courts
Published on:
Updated: