The opinion of the court was delivered by: Bumb, United States District Judge
This matter comes before the Court upon its own motion. Relying upon diversity of citizenship to establish federal subject-matter jurisdiction, defendant Wal-Mart Stores, Inc. (the "Defendant") removed this slip-and-fall case upon its allegation that the amount-in-controversy requirement is satisfied by virtue of its adversary's refusal to cap its recovery below $75,000. As the Court has received a number of removal notices alleging diversity of citizenship on similar grounds, it takes this opportunity to opine that allegations similar to that propounded here do not sustain federal subject-matter jurisdiction. Thus, for the reasons below, the Court will remand this action.
On March 8, 2010, plaintiff Jo-Anna Lynn Martin (the "Plaintiff") initiated this action against Defendant by filing a complaint in the Superior Court of New Jersey, Camden County. (Dkt. No. CAM-L-1312-10.) In the three-page complaint, Plaintiff alleges that Defendant's negligence caused her to slip and fall in Defendant's Deptford, New Jersey retail store. The complaint does not specify Plaintiff's injuries beyond boiler-plate generalizations. Plaintiff served the complaint upon Defendant on April 8, 2010, and Defendant timely removed the action to this Court by filing a Notice of Removal two weeks later, on April 23, 2010. [Dkt. Ent. 1.] The Notice of Removal alleges diversity of citizenship as the basis of the Court's original subject-matter jurisdiction over this action. (Ntc. Rmvl. ¶¶ 4-12.) Specifically, the Notice of Removal alleges that the amount in controversy exceeds $75,000, as required by 28 U.S.C. § 1332, because, [O]n April 15, 2010, defense counsel contacted Plaintiff's counsel, via letter, and informed Plaintiff's Counsel of Defendant's intention to Remove this matter to the District Court, if Plaintiff was unwilling to enter into a Stipulation of Damages of less than $75,000 . . . . To date, Plaintiff has refused to enter into the aforementioned Stipulation to limit Damages. Therefore, [Defendant] suspects that Plaintiff may be seeking a recovery in excess of $75,000. (Ntc. Rmvl. ¶ 10-12.) The Court now addresses the sufficiency of this allegation.
1. Analysis of Legal Standard
The Court begins from the premise that it must always be suspicious of its subject-matter jurisdiction. "[T]he federal courts are courts of limited jurisdiction, and there is no presumption that they have subject matter jurisdiction to adjudicate a particular case. Indeed, until the court's jurisdiction is demonstrated, the converse is true." Wright & Miller, 5 Fed. Prac. & Proc. Civ. § 1206 (3d ed. WL 2010) (emphasis added). "A federal court's entertaining a case that is not within its subject matter jurisdiction is no mere technical violation; it is nothing less than an unconstitutional usurpation of state judicial power. Accordingly, there is a presumption that a federal court lacks subject matter jurisdiction, and the party seeking to invoke federal jurisdiction must affirmatively allege the facts supporting it." Id. at 13 Fed. Prac. & Proc. Juris. § 3522.
Thus, when a case is removed to federal court, the removing defendant bears the burden of establishing subject-matter jurisdiction. Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 447 (7th Cir. 2005). The notice of removal is the defendant's opportunity to persuade the district court of its subject-matter jurisdiction. Id. at 449. The court's ensuing jurisdictional inquiry begins with a review of the removal pleadings; at that juncture, the court must decide whether or not the removing defendant has satisfied its burden of establishing the propriety of federal jurisdiction. See Saffle v. Oil Field Pipe & Supply, Inc., No. 09-0327, 2009 WL 1606519, *3 (N.D. Okla. June 8, 2009) ("When neither the complaint nor the notice of removal establishes that the court has subject matter jurisdiction, a district court may raise this issue sua sponte and remand a case to state court.").*fn1
The case St. Paul Mercury Indemnity Co. v. Red Cab Co. is often cited for the misleadingly simple proposition that, "It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." 303 U.S. 283, 289 (1938); see, e.g., Dardovitch v. Haltzman, 190 F.3d 125, 135 (3d Cir. 1999) (citing Red Cab, 303 U.S. at 289). The Third Circuit clarified Red Cab in the context of a plaintiff's motion to remand in Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d 392, 397-398 (3d Cir. 2004) Samuel-Bassett instructs district courts to grant a remand motion when the moving party --the plaintiff challenging jurisdiction -- has established to a legal certainty that its recovery cannot exceed $75,000. Id. Notably, Samuel-Bassett shifts the burden to the party challenging federal jurisdiction; the rule does not require the proponent of federal jurisdiction to prove anything. See Frederico v. Home Depot, 507 F.3d 188, 195 (3d Cir. 2007) ("[T]he challenger to subject matter jurisdiction ha[s] to prove, to a legal certainty, that the amount in controversy c[an] not exceed the statutory threshold." (emphasis original)); Valley v. State Farm Fire and Cas. Co., 504 F. Supp. 2d 1, 4 (E.D. Pa. 2006).*fn2
When the Court, as opposed to the non-removing party, raises its jurisdiction sua sponte, two questions arise: (1) which party bears the burden of establishing the propriety of federal jurisdiction, and (2) what must that party prove? The first question may be answered easily: the proponent of federal jurisdiction must demonstrate its propriety. Kaufman v. Allstate New Jersey Ins. Co., 561 F.3d 144, 151 (3d Cir. 2009). The second question requires more analysis. Samuel-Bassett's progeny-case Frederico involved a court's sua sponte inquiry. After the Third Circuit questioned subject-matter jurisdiction sua sponte, the plaintiff -- importantly -- responded to the Court's inquiry by contesting federal jurisdiction. In that procedural context, that is, where the parties contested jurisdiction, the Court applied Red Cab's "legal certainty" test. 507 F.3d at 198 ("We will therefore apply Red Cab's legal certainty test to the facts alleged by Frederico in her complaint and incorporated by Home Depot into its Notice of Removal.").
The Third Circuit stated, however, that "[e]ven where allegations are not challenged by the adversary, the Court may still insist that the jurisdictional facts be established . . . [by] the party alleging jurisdiction . . . by a preponderance of the evidence." Id. (internal citation omitted) (emphasis added). In other words, as Frederico held, where there is no jurisdictional contest among the parties, the proponent of federal jurisdiction must still satisfy the Court by a preponderance standard that federal jurisdiction is appropriate.
Frederico offers insight into why the Red Cab "legal certainty" test is ill-suited to govern a court's sua sponte analysis of its subject-matter jurisdiction when there is no jurisdictional contest among the parties. If the legal certainty test were controlling, a removing defendant would establish jurisdiction simply by responding that plaintiff's claims are not legally certain to be worth less than the jurisdictional amount. In practice, this would be no burden at all, since virtually any claim could conceivably be worth more than $75,000. Certainly, a jury could conceivably award more than $75,000 for any simple negligence claim. Even a contract obligation worth tens or hundreds of dollars could, if breached, conceivably produce more than $75,000 in consequential (or "special") damages. Further, a court may always award fees and costs in its discretion, even when such award is not contemplated by the controlling statute. Hall v. Cole, 412 U.S. 1, 5 (1973). In other words, virtually every time a district court were to ask a removing defendant to justify federal jurisdiction, the defendant could merely reply, "Although I do not know the value of the plaintiff's claims, it cannot be said to a legal certainty that the claims do not exceed $75,000." In fact, this "you can't prove otherwise" position is strengthened in cases with vague, boiler-plate averments in the complaint and notice of removal. After all, the less the pleadings say, the harder it becomes to prove that the amount-in-controversy cannot exceed the jurisdictional threshold. This "you can't prove otherwise" burden would be at odds with a court's general presumption against federal jurisdiction.*fn3
The foregoing illustrates precisely why, when a court raises its subject-matter jurisdiction sua sponte and the non-removing party does not assume the burdens of challenging jurisdiction as it did in Frederico, the Red Cab/Samuel-Bassett framework does not control the parties' burdens or the court's inquiry. Although Samuel-Bassett shifts the burden from the proponent of federal jurisdiction to its challenger, as discussed above, Samuel-Bassett does not transfer that burden to the inquiring court. The reason is obvious: a court is ill-equipped to assume this burden. If the burden of establishing that the plaintiff's claims are legally certain to be less than $75,000 were to fall upon the district court, a defendant's glib answer "you can't prove otherwise" would virtually always duck jurisdictional scrutiny -- particularly in simple negligence cases. This consequence is plainly inconsistent with the mandate ...