Schiller v. David’s Bridal, Inc., No. 10-616 (E.D. Cal. July 14, 2010)

Surprise, surprise. When there’s a dispute between a removing defendant and a potential CAFA plaintiff over the amount in controversy, you (defendant) can’t use the plaintiff’s refusal to stipulate that the amount in controversy is less than $5,000,000 as evidence that the amount in controversy will exceed $5,000,000, says the court in Schiller v. David’s Bridal, Inc.

The defendant offered the plaintiff a sweetheart deal: we can keep this in state court if you stipulate that your damages will be less than $5,000,000. How generous.

When the plaintiff turned the defendant down, the defendant then attempted to use the plaintiff’s refusal to stipulate against her. The defendant argued that because the plaintiff wouldn’t stipulate that her damages were less than $5,000,000, that clearly demonstrated that her damages in fact exceeded $5,000,000.

The court’s response: nice try. 

Three reasons were provided by the court. First, the amount in controversy cannot be established by a plaintiff’s refusal to stipulate to the amount in controversy even though two courts (the Western District of Missouri and the Western District of Kentucky) have found that it may be a factor in determining whether the amount in controversy has been met. Second, the Court has an independent duty to consider its own subject matter jurisdiction – an affirmative stipulation cannot establish or deprive the court of subject matter jurisdiction; therefore, a refusal to stipulate provides even less foundation. Third, the burden is on the defendant, not the plaintiff, to establish by a preponderance of evidence that the amount in controversy has been met.

The court found that the plaintiff in this context has no obligation to assist the defendant in establishing the amount in controversy. To find otherwise, the court said, would enable the defendant to force the plaintiff to choose between stipulating in a manner prejudicial to her interests or litigating in a forum that she did not choose.

Sorry, defendant, but you have to get to $5,000,000 on your own (evidence).

(It should be noted that although the failure to stipulate could not be used as evidence, the defendant did, however, meet his burden of showing that it was more likely than not that the amount in controversy exceeded $5,000,000 using other evidence.  As a result, the motion to remand was denied).