The question in Allstate Fire & Casualty Co. v. Love was whether “the amount of an insurancy policy or the underlying claim determines the amount in controversy to establish diversity jurisdiction ….” The Court addressed, and clarified, earlier Circuit precedent on that generaly topic, and went on to hold that in this case: “where the claim under the policy exceeds the value of the policy limit, courts … should ask whether there is a legal possibility that the insurer could be subject to liability in excess of the policy limit” (a Stowers claim having been made in this dispute). No. 22-20405 (June 22, 2023).

A Louisiana statute lets private citizens sue to enforce certain state environmental laws, provided that “any injunction the citizen might obtain must be entered in favor of the Commissioner of Louisiana’s Office of Conservation.” Straightforward substantively, this statute raises federal-jurisdiction questions “that would make for a tough Federal Courts exam.” Grace Ranch LLC v. BP Am. Prod. Co., No. 20-30224 (Feb. 26, 2021). Specifically:

• Is Louisiana a party to the suit? If so, diversity jurisdiction does not apply. The Fifth Circuit concluded that it was not a party, notwithstanding the potential for relief issued in its name, “because [Louisiana] has not authorized landowners to sue in its name” in the relevant statute. Similarly, Louisiana is not a real party in interest because the potential for an injunction in its favor is a “contingency,” which would make it “highly inefficient to remand the case to state court only at the end stage of the lawsuit when the injunction might issue.”
• Does the 5th Circuit have jurisdiction? The matter was removed to federal court and the district court decided to abstain. Reviewing the not-always-clear history of 28 USC § 1447(c) and the cases applying it, the Court concluded that “a discretionary remand such as one on abstention grounds does not involve a removal ‘defect’ within the meaning of section 1447(c).”
• Was Burford abstention appropriate? Grace Ranch involved the remediation of environmental damage caused by a now-outlawed way of storing waste from oil and gas production. The Court reversed the district court’s decision to abstain, agreeing that the case presented “the potential need to decide an unsettled question of state law, in an area of general importance to the State”–but also finding that the case does not involve “an integrated state regulatory scheme in which a federal court’s tapping on one block in the Jenga tower might cause the whole thing to crumble.”

“Respect for the state system and the strictly circumscribed nature of federal jurisdiction requires our unflagging attention to these limits. We expect the same unflagging attention from litigants who invoke our jurisdiction.” Accordingly, the Fifth Circuit remanded the case of Midcap Media Finance LLC v. Pathway Data, Inc. for  further review of diversity jurisdiction. “The parties in this case failed to properly allege diversity of ciizenship. First, the alleged only that Coulter was a California resident, not that he was a California citizen. Second, because MidCap is an LLC, the pleadings needed to identify MidCap’s members and allege their citizenship.” No. 18-50650 (July 9, 2019) (citations omitted).

The district court found improper joinder and thus denied a motion to remand; the Fifth Circuit reversed in Cumpian v. Alcoa World Alumina LLC. The Court dissected the sometimes-confusing standard for determining whether a party’s joinder should be disregarded in determining the basis for a removal based on diversity jurisdiction, specifically concluding: “On a question of improper joinder at the early stage of a case, it is error to use the no-evidence summary judgment standard because the determination is being made before discovery has been allowed. . . . the evidence that is dispositive . . . are the facts that could be easily disproved if not true.” No. 17-40825 (Dec. 6, 2018)

In Porter v. Times Group, the plaintiff sued People Magazine and two journalists for defamation. The case was removed, and then remanded – one of the individual defendants died and the district court allowed joinder of the Louisiana citizen appointed as that defendant’s “succession representative” under Louisiana law, which destroyed diversity. The Fifth Circuit would not ordinarily have jurisdiction over a remand order because of 28 USC § 1447(d) (“An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . .”) People Magazine argued that the joinder decision was reviewable as a collateral order, and the Fifth Circuit disagreed, finding that it did not establish the third and fourth requirements for appeal of such an order (that the order be “effectively unreviewable on an appeal from final judgment” and “too important to be denied review”).

In the district court, Bank of America won and Fulcrum lost.  Fulcrum appealed.  The Fifth Circuit noticed that the pleadings identified Fulcrum as “a limited liability company organized and existing under the laws of the State of Nevada.”  As that allegation does not in fact establish Fulcrum’s citizenship, the Court asked for amendment pursuant to 28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.”)  In response, Fulcrum alleged that is members were from Georgia, Nevada, New York, and North Carolina.  Because Bank of America is also a citizen of North Carolina, and because “we find no evidence in the record, and Fulcrum has cited none, supporting Fulcrum’s recent assertions that it is a citizen of North Carolina,” the court remanded for the purpose of discovery and findings on the citizenship question.  Bank of America v. Fulcrum Enterprises LLC, No. 14-20532 (March 18, 2016, unpublished).

In yet another opinion showing that the seemingly simple language of CAFA is anything but, in Robertson v. Exxon Mobil the Fifth Circuit reversed the remand of a mass action, concluding that the district court erred in finding that no plaintiff satisfied the $75,000 amount-in-controversy requirement.  No. 15-30920 (Dec. 31, 2015).  In a footnote, the Court declined to engage the broader issue of whether at least 100 plaintiffs had to satisfy that requirement, and the Court declined to rule on potentially applicable exceptions to jurisdiction (such as “local controversy”) until the district court addressed them on remand.  On the proof point, the Court noted: “(1) [Plaintiff] Eddie Ashley claims that she has suffered, among other harms, emphysema and the wrongful death of her husband from lung cancer; and (2) [Plaintiff] Tommie Jones avers that he developed prostate cancer and a host of other ailments. We hold that it is more likely than not that these plaintiffs seek to recover more than $75,000. Indeed, Plaintiffs’ counsel acknowledged at oral argument that for the plaintiffs who contracted cancer, he would be ‘asking [the] jury, come trial, for a whole lot more than $75,000.'”

A prospective plaintiff in a medical malpractice case in Louisiana must submit the claim to a medical review panel before filing suit.  When suit is filed before the panel is done, district courts have divided on whether an in-state defendant is “improperly joined” for purposes of a diversity analysis in a removal.  In Flagg v. Stryker Corp., the Court concluded that such a defendant is not improperly joined, finding that the panel did not actually adjudicate the claim, and that the panel process could be waived by the parties. A dissent reasoned that the Louisiana statute was analogous to federal statutes where thee court had found improper joinder in similar situations.  No. 14-31169 (Sept. 4, 2015).

Defendants removed, averring: “The real property at issue has a current fair market value of $87,500.”  The district court denied remand.  Plaintiffs appealed, and the Fifth Circuit entertained her argument because it went to the existence of subject matter jurisdiction. Taking judicial notice of county appraisal records that valued the property at $62,392, the Court remanded for the gathering of more evidence about the amount in controversy. Statin v. Deutsche Bank, No. 14-20200 (Dec. 19, 2014, unpublished).  The Court noted the recent Supreme Court case of Dart Cherokee Basin Operating Co. v. Williams, No. 13-719 (U.S. Dec. 15, 2014), which confirmed that while “defendants to not need to attach evidence supporting the alleged amount in controversy to the notice of removal,” “once the notice of removal’s asserted amount is ‘challenged,’ the parties ‘must submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.'”

The borrowers’ complaint in a wrongful foreclosure case sought: “‘an order canceling the Mortgage’ on property that is worth more than $200,000 while also stipulating that they will not recover more than $75,000.”  Accordingly: “Given our established rule that the amount in controversy in cases like this is determined by the value of the property, it is irrelevant whether the stipulation is binding. A party cannot sue over a mountain but stipulate that it is a molehill.”  Solis v. HSBC Bank USA, No. 14-40489 (Nov. 17, 2014, unpublished).

The Fifth Circuit withdrew its original opinion in Scarlott v. Nissan North America to issue a revised opinion on rehearing.  No. 13-20528 (Nov.10, 2014).  The Court did not materially change its earlier holding that the amount-in-controversy requirement for diversity jurisdiction was not satisfied, or its disposition by a remand to the district court for purposes of remand to state court.  The Court added discussion — and a dissent — about how the district court should handle a sanctions award on remand.  The plurality simply said: “In light of our holding that the district court did not have jurisdiction over this case, the district court should reconsider whether to award attorneys’ fees and costs to the defendants; and if the court decides that attorneys’ fees and costs are still appropriate, the court should reconsider the amount of the award.”  The dissent would vacate the award; among other points, it made this basic one: “By its very nature, section 1927 involves assessing the merits of the claim, which establishes the inappropriateness of the district court’s order in light of the lack of jurisdiction.”

While resolved on other grounds, a part of the diversity-of citizenship question in Tewari De-Ox Systems, Inc. v. Mountain States-Rosen, LLC was whether a business entity — charted as a corporation in Wyoming — should nevertheless be treated as an unincorporated association because it called itself a “cooperative.”  No. 13-50956 (July 9, 2014).  On that point, the Court noted: “Other circuits have rejected similar arguents: ‘For purposes of diversity jurisdiction, the Cooperative is to be treated as a corporation simply because it has been incorporated under [state] law, regardless of the Cooperative’s individual structure, purpose, operations, or name.”  (quoting Kuntz v. Lamar Corp., 385 F.3d 1177, 1183 (9th Cir. 2004), and also citing Pastor v. State Farm Mut. Auto Ins. Co., 487 F.3d 1042, 1048 (7th Cir. 2007)).

1. Thompson sued Defendants in Arkansas in 2011, alleging he was a citizen of Arkansas.  That lawsuit was dismissed for improper venue.
2. Thompson sued Defendants again in Florida in 2012, and voluntarily dismissed that action after the magistrate concluded that diversity was lacking.
3. Thompson sued Defendants again in Alabama in 2012, alleging that he was a citizen of Arkansas.  That action was transferred to Mississippi.   It was then dismissed for lack of jurisdiction because Thompson and one of the citizens were both Florida citizens at the time of filing in 2012.

Thompson argued that the relevant facts related to the original 2011 filing, not the 2012 re-filing.  HELD: “[T]he [Alabama] complaint does not relate back to the [Arkansas] complaint because the second complaint was not an amendment, but rather the commencement of a separate action.”  Dismissal affirmed.

Su, a citizen of Taiwan, served on the board of Vantage, an offshore drilling contractor. Vantage is incorporated in the Cayman Islands with its principal place of business in Texas.  Vantage sued Su in Texas state court for breach of fiduciary duty and related claims.   Su removed, remand was denied, and the district court certified the jurisdictional issue for interlocutory appeal.  Vantage Drilling Co. v. Su, No. 13-20379 (Jan. 7, 2014). The Fifth Circuit reversed and ordered remand, relying primarily upon  Chick Kam Choo v. Exxon Corp., 764 F.2d 1148 (5th Cir. 1985).  Section 1332(a)(2) requires complete diversity, and section 1332(c)(1) deems a corporation a citizen of “every State and foreign state” in which it is incorporated — thus, “there are aliens on both sides of the litigation, complete diversity is lacking, and there can be no diversity jurisdiction.”  Su argued that Choo could be read to allow federal jurisdiction to protect against local bias, but the Court rejected that argument as inconsistent with the statute.

The district court dismissed a case about the misappropriation of trust assets under the “probate exception” to federal diversity jurisdiction.  Curtis v. Brunsting, No. 12-20164 (Jan. 9, 2013) (applying Marshall v. Marshall, 547 U.S. 293 (2006)).  The Fifth Circuit stated that “Marshall requires a two-step inquiry into (1) whether the property in dispute is estate property within the custody of the probate court and (2) whether the plaintiff’s claims would require the federal court to assume in rem jurisdiction over that property.”  Id. at 5.  Finding no evidence that this inter vivos trust was, or even could be, subject to Teas probate administration, the Court reversed and remanded.