Wang v. Pacific Cycle, Inc.

• Decision Date: 14 January 2008
• Docket Number: No. 4:07-cv-00545.,4:07-cv-00545.
• Citation: 530 F.Supp.2d 1048
• Parties: Tony Wenyu WANG, Plaintiff, v. PACIFIC CYCLE, INC., and Toys "R" US-Delaware, Inc., Defendants.
• Court: U.S. District Court — Southern District of Iowa

Page 1048

530 F.Supp.2d 1048

Tony Wenyu WANG, Plaintiff, v. PACIFIC CYCLE, INC., and Toys "R" US-Delaware, Inc., Defendants.

No. 4:07-cv-00545.

United States District Court, S.D. Iowa, Central Division.

January 14, 2008.

Kimberly K. Hardeman, Gregory M. Lederer, Lederer Weston Craig PLC, Cedar Rapids, IA, for Defendants.

Mark S. Pennington, Kutmus & Pennington, Des Moines, IA, for Plaintiff.

ORDER ON MOTION FOR REMAND

ROBERT W. PRATT, Chief District Judge.

Before the Court is Plaintiff, Tony Wenyu Wang's ("Wang") Motion for Remand to State Court, filed December 12, 2007. Clerk's No. 3. Wang filed a Petition in the Iowa District Court for Polk County on or about November 6, 2007. In the Petition Wang alleges that Defendants, Pacific Cycle, Inc. ("Pacific Cycle") and Toys "R" Us-Delaware, Inc. ("Toys `R' Us") (collectively "Defendants"), were negligent in their failure to inspect a bicycle and in their failure to properly install a quick release skewer to prevent the front wheel of the bicycle from coming off the "fork." Pacific Cycle filed a Notice of Removal on December 3, 2007, to which Toys "R" Us consented, claiming that jurisdiction is proper in the Southern District of Iowa pursuant to diversity of citizenship jurisdiction, 28 U.S.C. § 1332(a). See Clerk's No. 1. Specifically, Pacific Cycle claims that federal jurisdiction is proper because the parties are diverse citizens and the amount in controversy exceeds $75,000, exclusive of interest and costs. On December 12, 2007, Wang filed a motion to remand the action to state court, arguing that Pacific Cycle failed to establish the requisite minimum amount in controversy. Clerk's No. 3. Pacific Cycle filed a resistance on December 20, 2007. Clerk's No. 4. Wang filed a reply on December 28, 2007. Clerk's No. 5. A hearing on this matter was held on January 3, 2008. Clerk's No. 7. The matter is fully submitted.

I. THE PETITION AND REMOVAL NOTICE

Wang alleges that on or about February 26, 2000, he and his family purchased a bicycle from Toys "R" Us, located at 8801 University Avenue, Clive, Iowa. Pet. Div. II, ¶ 7. The bicycle Wang purchased was manufactured and assembled by Pacific Cycle. Id. Div. I, ¶ 5. On or about October 9, 2000, when Wang was eleven-years-old,¹ he was riding the bicycle in a normal manner when the front wheel of the bicycle came off, causing him serious injury. See id. ¶ 6. Wang contends that Pacific Cycle was negligent in failing to inspect the bicycle before it was distributed to retailers for sale to the public, and in failing to properly install a quick release skewer to prevent the front wheel from coming off the "fork." Id. ¶ 8. As for Toys "R" Us, Wang alleges that Toys "R" Us was negligent in failing to inspect the Pacific Cycle bicycle prior to delivery to Wang, and in failing to properly install a quick release skewer to prevent the front wheel from coming off the "fork." Id. Div. II, ¶ 9. Wang claims that Pacific Cycle's and Toys "R" Us' negligence proximately caused him injuries. As a result, Wang has incurred past and future: (1) medical expenses, (2) loss of use of the body, (3) physical pain and suffering, (4) mental pain and suffering, and (5) permanent damage.

Pacific Cycle's Removal Notice claims that federal diversity jurisdiction supports removal of this matter because the parties are completely diverse, and because, based on the contents of the Petition, Pacific Cycle believes in good faith that the amount in controversy exceeds $75,000, exclusive of interest and costs. Specifically, Wang is a citizen of the State of Iowa, Pacific Cycle is a citizen of the State of Delaware (place of incorporation) and the State of Wisconsin (principal place of business), and Toys "R" Us is a citizen of the State of Delaware (place of incorporation), with its principal place of business in a State other than the State of Iowa. Wang does not dispute that diversity of citizenship exists. Wang, however, claims that Pacific Cycle has failed to establish that the amount in controversy exceeds the jurisdictional amount. Indeed, Wang states that he is "willing to clarify his damages by stating that the total damages are less than $75,000, the jurisdictional amount for federal court." Pl.'s Br. at 3. Thus, the sole matter before the Court is whether Wang's claimed damages exceeded the $75,000 jurisdictional requirement at the time of removal.

II. LAW AND ANALYSIS

As a general matter, a civil case brought in state court may be removed by a defendant to federal court if it could have been brought there originally. See 28 U.S.C. § 1441(a); Motion Control Corp. v. SICK Inc., 354 F.3d 702, 705 (8th Cir. 2003). Federal courts are courts of limited jurisdiction and "the requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception." Godfrey v. Pulitzer Publ'g Co., 161 F.3d 1137, 1141 (8th Cir.1998) (internal citation and quotations omitted). "The district court has subject matter jurisdiction in a diversity case when a fact finder could legally conclude, from the pleadings and proof adduced to the court before trial, that the damages that the plaintiff suffered are greater than $75,000." Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir.2002).² Whether a case has been properly removed is "determined based on the plaintiffs pleadings at the time of removal." Adams v. Bank of Am., N.A., 317 F.Supp.2d 935, 940 (S.D.Iowa 2004). A defendant who seeks to remove a case to federal court bears the burden of proving that the requirements for diversity jurisdiction have been met. See, e.g., McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Yeldell v. Tutt, 913 F.2d 533, 537 (8th Cir.1990).

When a case is filed in state court, and subsequently removed, "[t]here is a strong presumption that the plaintiff has not claimed a large amount in order to confer jurisdiction on a federal court or that the parties have colluded to that end," because, "if such were the purpose suit would not have been instituted in the first instance in the state but in the federal court." St. Paul Mercury Indem. Co. v. Red.Cab Co., 303 U.S. 283, 290-91, 58 S.Ct. 586, 82 L.Ed. 845 (1938). Thus, where a plaintiff specifically claims less than the federal requirement in a state court action, removal should generally be precluded. See id. at 294, 58 S.Ct. 586 ("If [the plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove."); see also Terra Int'l, Inc. v. Miss: Chem. Corp., 119 F.3d 688, 695 (8th Cir. 1997) (stating that, "[i]n general, federal courts give considerable deference to" a plaintiffs choice of forum"). The standards are made less clear in a case such as this one, where state court rules prohibit plaintiffs from asserting a specific amount in controversy.³ See McCorkindale v. Am Home Assurance Co./A.I.C., 909 F.Supp. 646, 655 (N.D.Iowa 1995) (explaining that in Iowa "the allegations of the actual damages on the face of the complaint provide the court with no basis for determining the amount of actual damages in question").

The procedure in determining whether an action is removable is to, first, "determine whether the complaint is removable on its face." Wiemers v. Good Samaritan Soc'y, 212 F.Supp.2d 1042, 1045 (N.D.Iowa 2002) (citing McCorkindale 909 F.Supp. at 653-55). Second, if the complaint is not removable on its face, then the court must "provide the parties with the opportunity to"satisfy the court as to the amount in controversy." Id. (citing McCorkindale 909 F.Supp. at 653-55). Where, as here, the amount in controversy is sufficiently unclear as to permit disagreement over whether the complaint is removable on its face, the court must turn to the second prong of the analysis. See id. To prove the amount in controversy, the proponent of federal jurisdiction is required to show by a preponderance of the evidence that "a fact finder could legally conclude, from the pleadings and proof adduced to the court before trial, that the damages that the plaintiff suffered are greater than $75,000." Kopp, 280 F.3d at 885.

Here, Pacific Cycle offers two settlement demand letters from Wang to support its contention that the amount in controversy exceeded the jurisdictional minimum at the time of removal. In the first demand letter, dated May 1, 2007, Wang made a demand of $95,000, reiterating⁴ that he incurred $6,430.27 in past medical expenses, with future medical expenses estimated to be $13,280. See Def.'s Br. in Resistance, Ex. A. The letter notes that "[t]his has been a long and painful process [for Wang and he must] still undergo significant oral surgery in which there is also no guarantee of success." Id. At some point, it appears that Pacific Cycle made a counter-offer of $5,000. See id., Ex. B. On August 30, 2007, Wang made a counter-settlement demand of $90,000. Id. Thereafter, on November 6, 2007, Wang filed the instant lawsuit in state court. These pre-litigation demand letters, Pacific Cycle argues, demonstrate by a preponderance of the evidence that the jurisdictional amount was satisfied at the time the case was removed to federal court. The Court disagrees.

As a general matter, settlement demands are "relevant evidence of the amount in controversy if it appears to reflect a reasonable estimate of the plaintiffs claim." Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir.2002) (emphasis added), cited with approval in, LaPree v. Prudential Fin., 385 F.Supp.2d 839, 849 (S.D.Iowa 2005). In the present case, there is no independent support that the $95,000 and $90,000 settlement demands reflect a reasonable estimate of the damages suffered by Wang. The only recoverable dollar amount Wang provided prior to initiating the lawsuit...