Gatlin v. Shoe Show, Inc.

• Decision Date: 18 July 2014
• Docket Number: CIVIL ACTION NO. 3:14-CV-00446-TBR
• Parties: TAMMY GATLIN Plaintiff v. SHOE SHOW, INC. Defendant
• Court: U.S. District Court — Western District of Kentucky

TAMMY GATLIN Plaintiff v. SHOE SHOW, INC. Defendant

CIVIL ACTION NO. 3:14-CV-00446-TBR

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION

Date: July 18, 2014

MEMORANDUM OPINION

This case arises out of Plaintiff Tammy Gatlin's employment with Defendant Shoe Show, Inc. (Shoe Show). Gatlin originally filed this action in Jefferson Circuit Court on May 27, 2014, alleging negligent retention of another Shoe Show employee, Savanna Pool, who allegedly assaulted Gatlin at work. (See Docket No. 1-1.) Shoe Show timely removed this action on the basis of diversity. (Docket No. 1.)

Presently pending before the Court are Gatlin's Motion to Remand, (Docket No. 6), and Shoe Show's Motion to Dismiss, (Docket No. 5). Gatlin has not responded to Shoe Show's Motion to Dismiss, and the time to do so now has passed. As such, Shoe Show's Motion now is ripe for adjudication. Shoe Show has yet to respond to Gatlin's Motion to Remand, and the time to do so has not passed; however, the Court need not await Shoe Show's response to address the issues raised by Gatlin's Motion to Remand.

For the reasons that follow, the Court will DENY Gatlin's Motion to Remand and GRANT Shoe Show's Motion to Dismiss.

DISCUSSION

The Court will begin by resolving the issue of subject-matter jurisdiction presented by Gatlin's Motion to Remand before turning to whether this action should be dismissed under Federal Rule of Civil Procedure 12(b)(6).

I. Gatlin's Motion to Remand (Docket No. 6)

There appears to be no dispute that the parties are diverse. Gatlin is a Kentucky resident, and Show Show is a North Carolina corporation with its principal place of business in Concord, North Carolina. (Docket Nos. 1, at 2-3; 1-1, at 3.) However, in her instant Motion to Remand, Gatlin states that her claims do not exceed the $75,000 amount-in-controversy requirement for diversity jurisdiction under 28 U.S.C. § 1332. In support of her Motion, Gatlin attaches her Affidavit in which she states, in pertinent part:

3. I understand that the value of my case, as explained to me by my counsel and as I have made observations, would not exceed $75,000.00 and as such, I am requesting that this matter be remanded back to the Jefferson Circuit Court with the understanding that should I receive a judgment in my favor, my recovery will be limited to $74,999.99;

4. After being advised by my counsel of this, it is my decision to sue the Defendant in this matter for a total amount, including all court costs, attorney fees, and damages, not to exceed the above-mentioned $74,999.99. I'm only hoping to recover what I feel is due and owing to me[.]

(Docket No. 6-1, at 1.)

"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction may be removed by the defendant . . . to the district court . . . embracing the place where such action is pending." 28 U.S.C. §1441(a). A federal district court has original diversity jurisdiction over an action between citizens of different states and where the amount in controversy exceeds $75,000, exclusive of interest and costs. Id. § 1332(a).

A defendant seeking removal bears the burden of proving, by a preponderance of the evidence, that the amount-in-controversy requirement is satisfied. Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 572 (6th Cir. 2001) (citing Gafford v. Gen. Elec. Co., 997 F.2d 150, 158 (6th Cir. 1993)). This standard, however, "does not place upon the defendant the daunting burden of proving, to a legal certainty, that the plaintiff's damages are not less than the amount-in-controversy requirement." Id. (quoting Gafford, 997 F.2d at 158). In determining whether a defendant has met its burden, the Court must look to the damages alleged at the time of removal. Id. at 573. Furthermore, the Sixth Circuit has expressly instructed: "When determining the jurisdictional amount in controversy in diversity cases, punitive damages must be considered . . . unless it is apparent to a legal certainty that such cannot be recovered." Id. at 572 (alteration in original) (quoting Holley Equip. Corp. v. Credit Alliance Corp., 821 F.2d 1531, 1535 (11th Cir. 1987)).

Thus, the Court is faced with two issues: (1) whether the amount in controversy exceeds $75,000, and (2) whether Gatlin's postremoval stipulation destroys the $75,000 amount-in-controversy requirement for § 1332 jurisdiction.

A. Amount in controversy

The Court has addressed this first issue in a varied number of factual circumstances on multiple occasions. See, e.g., Winburn v. Metro. Direct Prop. & Cas. Ins. Co., 2007 WL 891865 (W.D. Ky. March 20, 2007); Shofier v. Mid-AmericaHarborside Healthcare, 2007 WL 433118 (W.D. Ky. Feb. 5, 2007); Sparks v. Wal-Mart Stores, Inc., 2007 WL 101850 (W.D. Ky. Jan. 10, 2007). Despite the Court's familiarity with the issue, Congress recently amended the procedure for removing certain civil actions. See Federal Courts Jurisdiction and Venue Clarification Act of 2011, Pub. L. No. 112-63, § 103(b), 125 Stat 760, 762 (amending 28 U.S.C. § 1446). Of specific importance to the present case is the addition of 28 U.S.C. § 1446(c)(2).

As amended, § 1446 permits a defendant to assert the amount in controversy in its notice of removal if removing from a jurisdiction where "State practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded." § 1446(c)(2)(A)(ii). Removal from such a jurisdiction is proper upon the defendant's assertion of the amount in controversy "if the district court finds, by a preponderance of the evidence, that the amount in controversy exceeds the amount specified in [28 U.S.C. § 1332(a)]." Id. § 1446(c)(2)(B). These recently enacted congressional amendments are applicable in the present case because Kentucky both prohibits the demand for a specific sum and allows recovery beyond that demanded in the pleadings. See Ky. R. Civ. P. 8.01(2), 54.03(2).

In her Complaint, Gatlin seeks damages for "economic and other losses," including "emotion damages, pain and suffering, financial loss, and security of a job that she enjoyed working at." (Docket No. 1-1, at 6-7.) She also appears to seek damages for physical injuries from "facial wounds" resulting from her alleged assault by Pool. (See Docket No. 1-1, at 6.) Gatlin additionally seeks punitive damages. (Docket No. 1-1, at 7.)

As for her financial-loss damages, Gatlin's last date of employment was June 25, 2013. (Docket No. 1-2, at 1.) According to the Declaration of J.W. Manning, a senior executive at Shoe Show, Gatlin earned, on average, $12.67 per hour in gross wages and worked approximately 15 hours per week. (Docket No. 1-2, at 2.) Had Gatlin remained employed from June 25, 2013, through the date of trial, which Shoe Show estimates as occurring roughly 18 months from the filing of its Notice of Removal, Gatlin would have earned between $13,000 and $15,000. The amount of Gatlin's emotional damages for pain and suffering and physical damages resulting from the alleged assault are less certain at this point.

However, considering that Gatlin seeks punitive damages, it becomes clear that the amount in controversy more likely than not is beyond $75,000. The Supreme Court has embraced a punitive-to-compensatory damages ratio near 4:1. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 424-26 (2003). Using a conservative estimate that Gatlin seeks $15,000 in compensatory damages, that 4:1 ratio would result in Gatlin being awarded $60,000 in punitive damages. That amount combined with the compensatory damages she seeks clearly meets the statutory threshold.

B. Gatlin's affidavit and stipulation

In regard to the second issue—whether Gatlin's postremoval stipulation destroys the $75,000 amount-in-controversy requirement for § 1332 jurisdiction—this Court has noted on several recent occasions that postremoval stipulations reducing the amount in controversy below the jurisdictional threshold "are generally disfavored because '[i]f the plaintiff were able to defeat jurisdiction by way of a post-removal stipulation, they could unfairly manipulate proceedings merely because their federal case begins to lookunfavorable.'" Proctor v. Swifty Oil Co., 2012 WL 4593409, at *3 (W.D. Ky. Oct. 1, 2012) (quoting Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 872 (6th Cir. 2000)); see also Agri-Power, Inc. v. Majestic JC, LLC, 2013 WL 3280244, at *3 (W.D. Ky. June 27, 2013). Thus, as the Sixth Circuit advises, "a post-removal stipulation reducing the amount in controversy to below the jurisdictional limit does not require remand to state court." Rogers, 230 F.3d at 872. However, where a state prevents a plaintiff from pleading a specific amount of damages—as is the case in Kentucky—and the plaintiff provides specific information about the amount in controversy for the first time in a stipulation, this district views such stipulations as a clarification of the amount in controversy rather than a reduction of such. See, e.g., Proctor, 2012 WL 4593409, at *3. Accordingly, this Court has recognized that a plaintiff may stipulate that it neither seeks, nor will accept, damages in an amount greater than $75,000, and that such a stipulation will destroy the amount-in-controversy requirement for § 1332 jurisdiction. See, e.g., Agri-Power, 2013 WL 3280244, at *3-4; Spence v. Centerplate, 931 F. Supp. 2d 779, 781-82(W.D. Ky. 2013). Still, "only where that clarifying stipulation is unequivocal will it limit the amount of recoverable damages and warrant remand." Proctor, 2012 WL 4593409, at *3 (citing Egan v. Premier Scales & Sys., 237 F. Supp. 2d 774, 778 (W.D. Ky. 2002)).

Several recent decisions by this Court are helpful in determining whether Gatlin's stipulation here is sufficient to destroy jurisdiction. First, in Egan v. Premier Scales & Systems, the plaintiff executed an affidavit stating that she "will accept a sum of $74,990 exclusive of interest and costs as a judgment...