Youtsey v. Avibank Mfg., Inc., No. CIV.A. 10-30100-KPN, 2010 WL 3452367 (D. Mass. Sep 02, 2010).

A District Court in Massachusetts remanded the case to the state court finding that the exact amount in controversy, and  not the amount that the plaintiff is ultimately likely to recover, determines CAFA jurisdiction.

The plaintiff, Norman L. Youtsey, a resident of Massachusetts, brought this action in the Massachusetts state district court for failure to pay wages in violation of Mass. Gen. L. ch. 149; breach of implied covenant of good faith and fair dealing; breach of contract; and unjust enrichment. The undisputed facts in this case are that the plaintiff worked as a sales engineer for the defendant, a Delaware corporation with its principal place of business in California. The plaintiff was terminated on July 17, 2009, and at that time, the defendant owed approximately $20,000 in commissions to the plaintiff. The defendant only paid $6,027.19 to the plaintiff, and it refused to pay him the remaining amount.

The statute under which the plaintiff’s wage claim arose, i.e. Mass. Gen. L. ch. 149, provides that a prevailing party is automatically entitled to treble damages and reasonable attorneys’ fees. Referring in part to such treble damages, the defendant asserted the amount in controversy was actually more than $75,000, and noted that the parties were diverse and removed the action to the federal court.

The plaintiff filed a motion to remand.

In his motion, the plaintiff argued that the burden on the defendant was high to show that the amount in controversy was indeed high. The plaintiff contended that the defendant was required to prove with a legal certainty that the plaintiff’s claims exceeded $75,000, to invoke the jurisdictional threshold of the federal jurisdiction. The Court disagreed finding that the removing defendant was only required to demonstrate that there was a reasonable probability that the amount in controversy exceeded $75,000.

While holding so, the Court noted that there were several standards set by the First Circuit or the by the Supreme Court to determine the removability of a case. One of the standards set by the First Circuit is that once the damages allegation is challenged, the party seeking to invoke jurisdiction has the burden of alleging with sufficient particularity facts indicating that it is not a legal certainty that the claim involves less than the jurisdictional amount. Here, the defendant argued that it should be required to show simply that it is not to a legal certainty that the claim involved less than the jurisdictional amount.

In a CAFA scenario, the Court noted that in Amoche v. Guar. Trust Life Ins. Co., 556 F.3d 41 (1st Cir. 2009), which was interestingly not cited by either party, the First Circuit held that it would adopt a more stringent reasonable probability standard in a removal case. (Editors’ Note: See the CAFA Law Blog analysis of Amoche posted on July 15, 2009).

Amoche utilized four guideposts which led this Court to conclude that the reasonable probability standard should apply here as well. Amoche, dispelled the previous standard set by the First circuit as an archetypical rule to be followed by courts in general. The most significant guidepost among the four guideposts that Amoche reiterated–which applied to the CAFA situation as well–was that the plaintiff’s likelihood of success on the merits is largely irrelevant to the court’s jurisdiction because the pertinent question is what is in controversy in the case, not how much the plaintiff is ultimately likely to recover.

The Court noted that all of these Amoche guideposts applied easily to the non-CAFA situation, i.e., where a defendant removes a state case on the basis of diversity. Applying the Amoche principles,the Court found that the defendant had not demonstrated a reasonable probability that the amount in controversy exceeds $75,000. The Court explained that with the plaintiff’s acknowledged best-case scenario, if he were to be fully successful on his claims, he would obtain $20,000, those damages will be trebled, see Mass. Gen. L. ch. 149, § 50, and his recovery will be offset by $6,027.19–which the defendant paid the plaintiff before he brought this suit. Therefore, even under a rosy narrative, the plaintiff’s award of $53,972.81 ($60,000 minus $6,027.19) would be more than $21,000 shy of the $75,000 jurisdictional threshold. The Court also concluded that the defendant’s argument that the attorney fees demanded by the plaintiff when added to the amount claimed would raise the recovery amount to over $ 75,000 was nothing more than a naked speculation.

Accordingly, the Court remanded the case to the Massachusetts state district court.