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Goralski v. Shared Technologies

August 7, 2009

DIANE M. GORALSKI; BEVERLY VASSALLO, PLAINTIFFS,
v.
SHARED TECHNOLOGIES, INC., DEFENDANT.



The opinion of the court was delivered by: Katharine S. Hayden, U.S.D.J.

OPINION

Before the Court is a motion to remand the above-entitled action to state court. Defendant Shared Technologies, Inc. ("STI") removed this employment dispute on diversity grounds, which plaintiffs now challenge. For the reasons that follow, the Court concludes that the case was correctly removed and diversity jurisdiction is proper. The motion is therefore denied.

I.

Plaintiffs Diane Goralski and Beverly Vassallo-former employees of STI-commenced this action on April 10, 2009 in the Superior Court of New Jersey, Law Division, Bergen County. They allege, inter alia, sexual harassment, disability harassment, and wrongful discharge against STI under the New Jersey Law Against Discrimination ("NJLAD"), N.J.S.A. § 10:5-1, et seq., and the New Jersey Conscientious Employee Protection Act ("CEPA"), N.J.S.A. § 34:19-1, et seq. At all times relevant here, plaintiffs were full-time customer-care representatives employed by STI. Compl. ¶¶ 2-3. Plaintiffs‟ asserted causes of action are based on allegations of their colleagues‟ frequent inappropriate touching, viewing of pornographic websites, and sexually suggestive language at the workplace. Compl. ¶¶ 4-6. They claim that STI is liable under the doctrine because its upper management knew of this alleged behavior of its employees and did nothing to prevent it. Compl. ¶¶ 8-15. As stated, STI timely removed the case on May 17, 2009 [D.E. # 1], and this remand motion followed on July 2, 2009 [D.E. # 5]. See 28 U.S.C. §§ 1441, 1447, 1332(a).

II.

A.

To provide a neutral forum for civil litigants, Congress granted federal district courts original jurisdiction in certain civil actions between citizens of different states. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005); 28 U.S.C. § 1332. "To ensure that diversity jurisdiction does not flood the federal courts with minor disputes," § 1332(a) requires the amount in controversy to exceed $75,000. Id. The removal statute, 28 U.S.C. § 1441(a), provides in relevant part that "any 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 of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Defendants may remove an action to federal district court based on diversity of citizenship if there is complete diversity between all named plaintiffs and all named defendants, and where the requisite amount in controversy is met. Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005). The removal statutes should be narrowly construed, and federal jurisdiction strictly limited to those cases that fit the removal framework. La Chemise Lacoste v. Alligator Co., 506 F.2d 339, 344 (3d Cir. 1974). A plaintiff wishing to challenge federal subject matter jurisdiction in a removed case may move for remand at any time after the notice of removal is filed. 28 U.S.C. § 1447(c).

Generally, the allegations on the face of a complaint control the amount-in-controversy calculation, Horton v. Liberty Mutual Ins. Co., 367 U.S. 348, 353 (1961), although a complaint‟s "[i]ndeterminancy of the amount to be recovered is . . . not sufficient to defeat diversity jurisdiction . . . ." Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995). When complaints are "open-ended" and do not allege a specified amount, the Court should perform its "own independent appraisal of the value of the claim," but must reasonably examine the rights being litigated and not focus on "the low end of an open-ended claim." Angus v. Shiley, Inc., 989 F.2d 142, 145-46 (3d Cir. 1993). New Jersey civil practice disallows an exact damages specification in a complaint, instead requiring that "the pleading shall demand damages generally without specifying the amount." N.J. Ct. R. 4:5-2. In determining the amount in controversy, then, this Court may "treat the removal petition as if it had been amended to include the relevant information contained in later-filed affidavits." Willingham v. Morgan, 395 U.S. 402, 408 n.3 (1969); see also Reiff v. Convergent Techs., No. 95-3575, 1995 U.S. Dist. LEXIS 15535, at *10-13 (D.N.J. Oct. 20, 1995) (Irenas, J.).

The removing party-here, STI-bears the burden of demonstrating that the case properly belongs in federal court. Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citing Samuel-Bassett v. Kia Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004)). "[I]f, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed, or if, from the proofs, the [C]court is satisfied to a [legal] certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). This is known as the "legal certainty test."

Until recently, issues concerning the legal frameworks and burdens of proof to be applied in amount-in-controversy disputes had long provoked confusion among the district courts. Discussing the issue in Samuel-Bassett, supra, the Third Circuit examined two earlier Supreme Court cases: Red Cab, supra,and McNutt v. General Motors Acceptance Corporation of Indiana, 298 U.S. 178 (1936). In McNutt, the complaint and record lacked "findings [and] evidence" supporting the requisite amount in controversy, and only generally alleged that it had been met. McNutt, 298 U.S. at 181. The Supreme Court framed the issue as follows: "In the absence of any showing in the record to support that general allegation, the question is upon which party lay the burden of proof." Id. It then held that the party asserting federal jurisdiction must "justify his allegations by a preponderance of [the] evidence." Id. at 189. Two years later, in Red Cab, plaintiff reduced its request for damages below the jurisdictional minimum after defendant filed a notice of removal. The Supreme Court held that because the complaint‟s amended request for damages was not made in good faith, the legal certainty test would apply to determine whether or not plaintiff could indeed recover the jurisdictional minimum, satisfying the amount-in-controversy requirement. Red Cab, 303 U.S. at 288-89. In Samuel-Bassett, the Third Circuit reconciled these two holdings on the basis of whether or not "relevant [jurisdictional] facts are . . . in dispute or findings have [previously] been made [by] the District Court . . . ." 357 F.3d at 398. If such findings had been made, the legal certainty test would apply; if not, the preponderance of the evidence standard would apply to resolve such disputes.

Id. Under the facts presented there, the Third Circuit held that the legal certainty test applied. Id.

When this discussion caused further confusion, the Third Circuit again clarified the Red Cab/McNutt dichotomy in Morgan v. Gay, 471 F.3d 469 (3d Cir. 2006) and Frederico, supra. In Morgan, a putative class action, the Third Circuit held that where a complaint expressly limits damages to a sum certain below the jurisdictional threshold, the removing defendant must prove to a legal certainty that the amount in controversy actually concerns the statutory minimum amount. Id. at 474. Conversely, in Frederico (another putative class action), the complaint did not state an exact sum of damages, but instead claimed "damages and compensation to all class members from the Defendants, interest, punitive damages, costs of suit, treble damages and attorneys‟ fees . . . ." 507 F.3d at 197. Reconciling its holding with Morgan, the Third Circuit applied the legal certainty test against the plaintiff challenging federal jurisdiction. It held as follows, once and for all:

The distinction between a case governed by Morgan and a case governed by Red Cab and Samuel-Bassett is crystal clear. Morgan applies where the complaint specifically avers that the amount sought is less than the jurisdictional minimum. There, a defendant seeking removal must prove to a legal certainty that plaintiff can recover the jurisdictional amount. By contrast, Samuel-Bassett applies where the plaintiff has not specifically averred in the complaint that the amount in controversy is less than the jurisdictional ...


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