narrowly construed in favor of the non-removing party to prevent . . . encroachment on the right of state courts to decide cases properly before them." Spectacor, No. 96-1969, slip op. at 12 (3d Cir. Nov. 24, 1997).
Although Defendant contends that the Fenton and Spectacor cases support removal in the case at bar, they actually strengthen the opposite argument. Accordingly, this Court agrees with the line of decisions holding that a case cannot be removed based upon damages pled in a compulsory counterclaim. See Continental Ozark, Inc. v. Fleet Supplies, Inc., 908 F. Supp. 668 (W.D. Ark. 1995) (denying removal); Meridian Aviation Serv. v. Sun Jet Int'l, 886 F. Supp. 613 (S.D. Tex. 1995) (same); Iowa Lamb Corp. v. Kalene Indus., Inc., 871 F. Supp. 1149 (N.D. Iowa 1994) (same); Martin Pet Prod. v. Lawrence, 814 F. Supp. 56 (D. Kan. 1993) (same). This rule is more advantageous because it is consistent with the well-pleaded complaint rule. Under that rule, the presence of federal question jurisdiction is determined solely by the allegations contained in the plaintiff's complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987) (citing Gully v. First Nat'l Bank, 299 U.S. 109, 112-13, 57 S. Ct. 96, 97-98, 81 L. Ed. 70 (1936)); Joyce v. RJR Nabisco Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997); Dukes v. U.S. Healthcare, 57 F.3d 350, 353 (3d Cir.), cert. denied, 516 U.S. 1009, 116 S. Ct. 564, 133 L. Ed. 2d 489 (1995). Additionally, under the well pleaded complaint rule, defenses and counterclaims that implicate federal law are normally insufficient to confer federal jurisdiction.
See Public Serv. Comm'n v. Wycoff Co., 344 U.S. 237, 248, 73 S. Ct. 236, 242, 97 L. Ed. 291 (1952). Accordingly, for the purposes of determining diversity jurisdiction, the amount in controversy should also be ascertained solely from the face of the plaintiff's complaint. See Meridian, 886 F. Supp. at 615.
Moreover, this rule would be consistent with the policy of construing removal statutes narrowly. Battoff, 977 F.2d at 851; Boyer, 913 F.2d at 111; Bishop, 925 F. Supp. at 297. The language and legislative history of the removal statutes demonstrate that Congress's intention was to limit removal jurisdiction. See Shamrock Oil Corp. v. Sheets, 313 U.S. 100, 107-09, 61 S. Ct. 868, 85 L. Ed. 1214 (1941). The Court is Shamrock noted that removal to federal court is a statutory right and not one granted under the Constitution. Id. Therefore, the Court stated, removal jurisdiction must be narrowly construed in favor of the non-removing party. Id. Adopting a rule that allows a removing defendant to allege diversity jurisdiction by using damages pled in a compulsory counterclaim does not narrowly construe removal jurisdiction. Instead, it favors the removing party by allowing them to assert diversity jurisdiction even though the plaintiff's complaint clearly does not support it. This obviously goes against the Supreme Court's reasoning in Shamrock.
Finally, by allowing defendants in state court actions to remove cases to the federal courts by using damages pled in compulsory counterclaims, "federal subject matter jurisdiction would be reliant on state law distinctions between compulsory and permissive counterclaims." Id. This rule would obviously not facilitate the federal courts' purpose in making federal jurisdiction uniform across the nation. Rather, it would allow some cases to be removed in some districts but not in others. Additionally, removal diversity jurisdiction would then revolve around state law and any changes made to it. Clearly this is not the result Congress intended when it instituted removal statutes. Therefore, in the removal context, the amount in controversy should be ascertained solely from the face of the plaintiff's complaint. See Meridian, 886 F. Supp. at 615.
Although the Third Circuit and this district have not previously dealt with the issue before this Court, it is clear that the weight of authority is in favor of adopting the rule that the inclusion of compulsory counterclaims is not permitted in the removal context. Meridian, 886 F. Supp. at 615. This Court, therefore, holds that the amount in controversy for an action removed pursuant to diversity of citizenship jurisdiction is found solely by reference to the plaintiff's complaint. Consequently, this Court lacks the requisite federal subject matter jurisdiction to hear this case. Accordingly, the above captioned action will be remanded.
For the reasons set forth above, this Court will remand the above captioned action to the New Jersey Superior Court, Law Division, Essex County. An appropriate order will issue.
Dated : January 5th, 1998
STANLEY R. CHESLER, U.S.M.J.
CHESLER, MAGISTRATE JUDGE
This matter was opened by the Court sua sponte by an Order to Show Cause why the above captioned action should not be remanded to the New Jersey Superior Court, Law Division, Essex County, for lack of federal subject matter jurisdiction. The Order to Show Cause was filed on November 14, 1997, and was returnable on November 24, 1997. Plaintiff's response was ordered to be by written submission and no oral argument was permitted pursuant to Fed.R.Civ.P. 78; and consistent with this Court's opinion of even date;
IT IS, therefore, on this 5th day of January, 1998, hereby
ORDERED that the above captioned action be and hereby is REMANDED to the New Jersey Superior Court, Law Division, Essex County; and it is further
ORDERED that the Clerk of the Court is not to forward the file in this action to the New Jersey Superior Court until ten (10) days after the entry of this Order.
Stanley R. Chesler