Negligence – Foreign Corporation – Removal – Amount in Controversy

Where the plaintiff, who sued a foreign corporation for negligence after he allegedly received bone tissue that had been improperly harvested, requested damages “all in an amount that does not exceed $75,000,” the District Court grants the plaintiff’s motion to remand to state court since: (1) the ad damnum in the complaint in this case specifically limits the plaintiff’s prayer for damage “in an amount that does not exceed $75,000;” and (2) although the defendant attempts to make much of the different types of damages alleged in the complaint, the Supreme Court established long ago that the ad damnum or demand for judgment takes precedence over conflicting damage allegations in the body of the complaint.

So ordered.

Background

The plaintiff, Mr. Smith, a South Carolina citizen, sued Medtronic, a foreign corporation which does business in South Carolina. Smith alleges in the complaint that he underwent spine surgery in 2003 and during such surgery he received bone tissue that had been improperly harvested and which is subject to recall. The complaint alleges causes of action for negligence, breach of warranty, strict liability and violations of the South Carolina Unfair Trade Practices Act, S.C. Code Ann. Sect. 39-5-10, et seq.

The prayer for relief, or ad damnum clause, requests actual damages, punitive damages, and treble damages for the unfair trade practices, “all in an amount that does not exceed $75,000.” The defendant removed this case from state court on July 11, 2006 based on diversity jurisdiction. The plaintiff filed a motion to remand.

Discussion

The key issue before this court is whether the amount in controversy in this case exceeds $75,000. The plaintiff claims that this court lacks subject -matter jurisdiction over the present case because the complaint specifically stipulated that the plaintiff will not seek damages greater than $75,000. On the other hand, the defendant states it “reasonably believes and therefore avers that the amount in controversy exceeds $75,000 exclusive of interests and costs.”

However, in the case at bar, the plaintiff has specifically pled in the complaint that he is seeking damages “in an amount that does not exceed $75,000,” which notably falls below the jurisdictional threshold. Upon review of various authorities, this court tends to lean toward the belief that when presented with the issues in the case at bar, a case where the complaint specifically limits recoverable damages to below the jurisdictional minimum, the appropriate procedure would be to conclude that the action was removed improvidently and the court is without jurisdiction since, on the basis of the plaintiff’s claims as originally pleaded, the requisite jurisdictional amount was lacking.

However, this court also understands the concerns raised by the line of decisions which have found that the inquiry does not necessarily end merely because the plaintiff alleges damages below the threshold amount required for federal jurisdiction. Those opinions have ultimately found that the face of the plaintiff’s pleading will not control if made in bad faith.

The defendant in this case has failed to show, by any standard, that the plaintiff’s limitation on damages was made in bad faith or that the plaintiff would recover a judgment in excess of $75,000 if this case should go to trial and he prevailed. In fact, the only “evidence” proffered by the defendant that the amount in controversy exceeds $75,000 is the mere fact that actual, punitive, and treble damages are requested in the complaint. Obviously, such scant statements are woefully inadequate.

Although the defendant attempts to make much of the different types of damages alleged in the complaint, the Supreme Court established long ago in Iowa Central Railway Co. v. Bacon, 236 U.S. 305 (1915), that the ad damnum or demand for judgment takes precedence over conflicting damage allegations in the body of the complaint. We conclude this case was removed improvidently and we are without jurisdiction. The plaintiff’s motion to remand is granted.

Smith v. Medtronic Sofamor Danek, USA, Inc. (Lawyers Weekly No. 002-017-06) (8 pages) (Harwell, J.) (U.S. District Court for the District of South Carolina at Beaufort) (No. 9:06-cv-01992-RBH) (July 31, 2006).