Recent Alabama Rulings on Removal

In Freeman’s 66 v. Scottsdale Ins. Co., 2012 WL 1747973 (N.D. Ala. May 15, 2012)(Coogler), after Freeman’s 66’s gasoline station sustained some structural damages in a vehicle accident, its insurer failed to pay a claim.  Freeman’s 66 sued Scottsdale for breach of contract and bad faith, and sought $12,400 to replace a metal awning, $12,600 for replacing three gas pumps and unspecified punitive damages.  After the removal, Freeman’s 66 moved for remand contending a failure to satisfy the amount-in-controversy requirement.  Obviously, Freeman’s 66 specifically demanded just $25,000 in compensatory damages.  Referencing three earlier opinions, Scottsdale unsuccessfully argued that the request for punitive damages was for at least $50,000.  Correctly, Coogler differentiated the three opinions and noted that the range of possible punitive-damages awards was far less than $50,000 to some figure in excess of $50,000.

In Lambeth v. Peterbilt Motors Co., 2012 WL 1712692 (N.D. Ala. May 15, 2012)(Steele), as he was attempting to enter the cab of his Peterbilt truck, a step collapsed, causing Lambeth to fall to the ground and hurt his back.  He brought a products-liability lawsuit in which he alleged that he suffered a “serious injury to his back” and included the typical “boilerplate” language in his complaint. 

In removing the matter, the defendants relied solely on the complaint and, more particularly, on the allegation of a “serious injury” and asked the federal court to find that Lambeth must be seeking more than $75,000.  Judge Steele found that using the word “serious” does not make it “facially apparent” from the complaint that Lambeth was seeking more than $75,000 – “While the back injury is characterized as ‘serious,’ nothing in the Complaint elaborates on the nature or severity of that injury, or otherwise lends substance or meaning to it.  We simply do not know – or have any basis for inferring from the pleadings – anything about how severe, permanent, debilitating or painful the injury might be; how extensive, costly, or traumatic the course of treatment was, is or might be; or whether and to what extent the injury did, does or will constrain Lambeth’s work or life activities.” 

Judge Steele essentially chastised the defendants for relying merely on the complaint and not proffering evidence as to the true nature of Lambeth’s injury, that is, he truly suffered a severe injury that resulted in high medical costs, a lot of pain, significant disability, etc., as opposed to Lambeth’s attorney merely overhyping the injury. 

When the defendants argued that Lambeth’s attorney was “playing a game” by not being more specific in the complaint, Judge Steele wrote:  “These sentiments are an oft-heard refrain voiced by members of the defense bar who feel aggrieved by the manner in which Eleventh Circuit amount-in-controversy jurisprudence has developed in recent years.  Their lament is understandable.  It is true enough that defendants who wish to remove an action to federal court on diversity grounds may face daunting proof obstacles and difficult strategic choices, particularly as to whether to remove the case right away or to develop additional evidence on damages via discovery before pulling the removal trigger.  Contrary to defendants’ insinuation, however, Lambeth neither created this state of affairs nor engaged in impropriety, trickery or skullduggery in proceeding as he has.  For better or worse, the harrowing Scylla-and-Charybdis scenario described by PACCAR is a natural, inevitable consequence of the interaction among liberal pleading rules that do not require a plaintiff to plead injuries and damages with specificity, strict removal statutes that place both the burden of proof and temporal constraints on removing defendants, and appellate evolution of a substantial, subjective gray area in which defense counsel cannot discern for sure whether the “facially apparent” criterion will be deemed to be satisfied in a particular case.  …  A perception of unfairness or hardship is not a valid reason to excuse removing defendants from their strict jurisdictional burden of proving by a preponderance of the evidence that the amount in controversy exceeds $75,000.”

The Freeman’s 66 opinion will be useful in situations where there was just property damage to a business and/or where the insurance claim was for significantly less than $75,000.

The Lambeth opinion is a good counter to those opinions where a federal judge uses the “facial apparent” approach and holds that alleging a “serious injury” equates to seeking more than $75,000.  Chief Judge Steele correctly notes that more should be required when the complaint is so general in his description of the injury and its consequences.

Latest Removal Procedure Ruling in Alabama

Earlier this month, Alabama Chief District Judge Watkins issued an opinion dealing with removal procedure in Stewart v. Bureaus Investment Group #1, 2011 WL 2313213.

In the Circuit Court of Macon County, Alabama, Bureaus brought a debt-collection action against Stewart.  Stewart answered and filed a counterclaim complaint, asserting a claim under the Fair Debt Collection Practices Act (FDCPA) and various state-law-based claims.  Bureaus dismissed its debt-collection complaint, leaving pending only Stewart’s counterclaims. 

Interestingly, Bureaus then moved to realign the parties and the state court granted its motion.  Thereafter, Bureaus filed a notice of removal, asserting federal-question jurisdiction, predicated on the FDCPA claim.  Stewart filed a motion to remand and argued that there was no removal jurisdiction because only defendants may remove and, when the matter was commenced Bureaus was the plaintiff.

As noted by Chief Judge Watkins, no Circuit Court of Appeals has addressed “whether an order of realignment by a state court can allow a former plaintiff, now defendant, to remove a case to federal court based upon a pleading that was originally filed as a counter-complaint.”  Chief Judge Watkins determined that such a former plaintiff/now defendant could and subsequently denied Stewart’s motion to remand.  Because removal jurisdiction is determined based on the situation at the time of removal, for Chief Judge Watkins, at the time of removal, Stewart was the plaintiff prosecuting claims against Bureaus, the defendant.  The prior procedural history was immaterial in the analysis.

Likely, Stewart did not oppose the motion for realignment because she believed that there was no possibility of removal because Bureaus had instituted the litigation as the plaintiff.  The lesson to be drawn is that, if confronted with this scenario, one should oppose a motion to realign because the motion is being filed solely to divest the state court of jurisdiction and unnecessary for any other purpose.  Chief Judge Watkins’s analysis may be correct but it would be interesting to see if the Eleventh Circuit would affirm if there is ever any appellate review. Obviously, this case could turn out significantly different in another venue.

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