Bergstrom v. Burlington Northern R. Co.

• Decision Date: 31 July 1995
• Docket Number: Civ. No. A2-94-98.
• Citation: 895 F. Supp. 257
• Parties: Anne-Marit BERGSTROM, Charles Studness and Clarine Moe, and the State of North Dakota, Plaintiffs, v. BURLINGTON NORTHERN RAILROAD COMPANY, a foreign corporation, Defendant.
• Court: U.S. District Court — District of South Dakota

895 F. Supp. 257

Anne-Marit BERGSTROM, Charles Studness and Clarine Moe, and the State of North Dakota, Plaintiffs, v. BURLINGTON NORTHERN RAILROAD COMPANY, a foreign corporation, Defendant.

Civ. No. A2-94-98.

United States District Court, D. North Dakota, Northeastern Division.

July 31, 1995.

Peter K. Halbach, Devils Lake, ND, for plaintiffs.

Daniel John Crothers, Nilles, Hansen, Davies, Ltd., Fargo, ND, for defendant.

ORDER ON PLAINTIFFS' MOTION TO REMAND

BENSON, Senior District Judge.

Plaintiffs filed a complaint in North Dakota state court on August 8, 1994, for monetary damages "in excess of $29,000" and equitable relief against the defendant railroad. Plaintiffs' complaint alleges Defendant's railroad acts as a dam and blocks the flow of water off Plaintiffs' land. They seek a judgment requiring Defendant to construct a culvert under the railroad bed to provide drainage.

On an allegation of diversity of citizenship and an amount in controversy exceeding $50,000, Defendant has removed the case to federal court. Diversity clearly exists, the parties disagree as to the amount in controversy. The question before the court is the method by which the "amount in controversy" should be calculated for removal jurisdiction when equitable relief is involved.

It is well settled that the party invoking federal jurisdiction bears the burden of proving the jurisdictional requirements. Hatridge v. Aetna Casualty & Surety Co., 415 F.2d 809, 814 (8th Cir.1969). The fact that it can be difficult to place a value on equitable relief will not defeat jurisdiction. Hedberg v. State Farm Mutual Automobile Insurance Co., 350 F.2d 924, 929 (8th Cir. 1965). Where a plaintiff's complaint does not request more than the jurisdictional minimum on its face, the defendant has the burden to produce evidence establishing beyond a preponderance that the claim is for more than the jurisdictional minimum. De Aguilar v. Boeing Co., 47 F.3d 1404, 1411-12 (5th Cir.1995); Gafford v. General Electric Co., 997 F.2d 150, 158 (6th Cir.1993). This same burden is placed on a plaintiff who alleges damages in excess of the jurisdictional minimum and has the allegation challenged by the defendant. State of Missouri v. Western Surety Co., 51 F.3d 170 (8th Cir.1995). The plaintiff in such a case must prove by a preponderance of the evidence that it is not legally certain that the claim is worth less than the jurisdictional minimum. Id.

Plaintiffs have sued for $29,000 in money damages. On removal, Defendant's burden is to show that an amount in excess of $21,000 in other relief is also in controversy, so that the total amount in controversy is more than $50,000. Defendant has offered the affidavit of William Porter, Assistant Manager of Engineering for Burlington Northern Railroad Company, as proof of the costs involved in building the culvert. William Porter estimates the direct costs of building total $34,566.¹ When added to the $29,000 in money damages, the $50,000 jurisdictional amount would be met. The plaintiffs rely on an affidavit of Glenn J. Olson, the City Engineer for the City of Devils Lake, who estimates the cost of building the culvert "to be no greater than $10,000.00 and possibly less." If the court accepts the plaintiffs' estimate of $10,000 in addition to the $29,000 cash request, jurisdiction would fail. A hearing was held on June 13, 1995, at which both Porter and Olson testified. Their testimony was consistent with their earlier affidavits, although Olson revised his estimate downward to $30,000. The court received in evidence the Railroad's most recent estimate of its costs. The estimate is $30,000 for materials and labor.

When the burden rests upon the plaintiff to prove jurisdiction, plaintiff is allowed to proceed if it appears the amount claimed is made in good faith. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938). The same should be true for the defendant's allegations of its costs to satisfy a requested equitable relief. If it is not legally certain that the estimate of the costs are exaggerated, they should be accepted for the purpose of determining amount in controversy. Cf. Nickel v. Jackson, 380 F.Supp. 1389 (W.D.Okla.1974) (applying St. Paul Mercury in a removal context). Plaintiff has not shown to a legal certainty that the railroad's estimates are exaggerated, and there are no other indications of a lack of good faith on the part of the defendant. Therefore, on the jurisdiction issue, the court accepts the railroad's contention that the culvert construction would cost at least $30,000.

However, this does not end the inquiry. There is a split of authority as to whether the cost to the defendant is a relevant consideration for jurisdictional "amount in controversy."² Three lines of cases have developed. The first looks only to the plaintiff and ignores the defendant altogether.³ This line of decisions follows that which is appropriately called the "plaintiff's viewpoint" rule. Under that rule, an equitable remedy will still have a value to the plaintiff, but it may differ from the cost to the defendant. The court would attempt to place a dollar value on the plaintiff's benefit resulting from the defendant's burden.

A second line of cases considers the amount in controversy to be the value as seen from the standpoint of the party seeking jurisdiction.⁴ In the case of a complaint filed in federal court, the court considers jurisdiction from the plaintiff's viewpoint, and in the case of a removal, the court considers jurisdiction from the defendant's viewpoint. This test has the advantage of looking at the amount in controversy from the viewpoint of the party that has the burden of proof on jurisdiction. The party with the burden is more likely to have access to the proof necessary to prove the court has jurisdiction to consider the party's claim.

There is also a growing number of courts that follow a rule that looks at "either viewpoint."⁵ Regardless of which party is seeking to have the case in federal court, the court in evaluating the amount in controversy can look to the cost or benefit to either party. Perhaps the strongest argument for this rule is it best serves the purpose of an amount in controversy requirement: It keeps small diversity cases out of federal court, but allows larger cases to proceed.⁶

Plaintiff has cited cases in the Eighth Circuit that at first reading seem to support the "plaintiff's viewpoint" rule exclusively, but there is language in the cases that would support a more balanced standard. Furthermore, those cases have not directly addressed the question of evaluating equitable relief in the removal context. See Hedberg v. State Farm Mutual Automobile Insurance Co., 350 F.2d 924 (8th Cir.1965); Hatridge v. Aetna Casualty & Surety Co., 415 F.2d 809 (8th Cir.1969); Massachusetts State Pharmaceutical Ass'n v. Federal Prescription Service, Inc., 431 F.2d 130 (8th Cir.1970); and Burns v. Massachusetts Mutual Life Ins. Co., 820 F.2d 246 (8th Cir.1987). It appears the Western District of Missouri and the Eastern District of Arkansas are the only courts in the Eighth Circuit to have addressed the problem now before the court in this case. See Solna, Inc. v. American Printing Equipment, Inc., No. 89-0715-CV-W-5 (W.D.Mo.1989) (unpublished in F.Supp., available at 1989 WL 325976) and Inman v. Milwhite Co., 261 F.Supp. 703 (E.D.Ark. 1966). These courts followed the "party asserting jurisdiction" rule.

In Hedberg v. State Farm Mutual Automobile Ins. Co., 350 F.2d 924 (8th Cir.1965), the plaintiffs were related insurance companies that were attempting to enforce a "no compete" clause in their employment contracts with an agent. The contracts limited the agent's right to sell other insurance after the employment relationship was terminated. Id. at 927-928. The companies brought the case originally in federal court and therefore carried the burden of proof. Id. at 929. The companies sought money damages for breach of contract as well as an injunction prohibiting violations of the restrictive covenant and replevin of business property. The court held that the agent's prior sales supported a conclusion that the suit to prohibit the agent from selling insurance was worth more than $10,000 to the plaintiff. Id. at 930. The court did not reach the question of whether the value to the defendant was relevant, but there is language in Judge Blackmun's opinion suggesting the defendant's value could also be used. Id. at 928. The case is not directly on point, because there is no real question that a plaintiff's allegation of an amount in controversy will be accepted if it is made in good faith and not incorrect to a legal certainty. St. Paul Mercury, supra. The case did not provide a specific standard that a defendant would have to meet in an attempt to remove a case to federal court.

Judge Blackmun's language in Hatridge v. Aetna Casualty & Surety Co., 415 F.2d 809 (8th Cir.1969), in support of considering defendant's costs in a removal context, clarifies the issue:

The defendant viewpoint rule, we feel, is particularly appropriate where the values to the parties are not the same and where the defendant has removed the action. In that context Judge Phillips has said that `the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce.' Ronzio v. Denver and R.G.W.R.R., 116 F.2d 604, 606 (10 Cir. 1940).

Although this court often has spoken routinely in terms of the plaintiff's viewpoint, or of the value of the right which the plaintiff seeks to protect, see, for example, Federated Mut. Implement & Hardware Ins. Co. v. Steinheider, 268 F.2d 734, 767-738 (8 Cir.1959), and Bishop Clarkson Memorial Hosp. v. Reserve Life Ins. Co., 350 F.2d 1006, 1008 (8 Cir.1965), we, too, have recognized the possibility of utilizing the defendant's risk as a measure of federal jurisdiction.

"It is the

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