damage to property, diminution in property values, loss of use and
enjoyment of property, personal injury, and other damages.
Akzo subsequently moved for partial summary judgment dismissing, inter
alia, all the plaintiffs' claims for "stigma" damages, i.e., damages for
diminution in the value of plaintiffs' property (mostly due to public
fear of the consequences of the mine collapse). On September 28, 1999, I
granted Akzo's motion in part and denied it in part. Specifically, I
dismissed plaintiffs' claims for damages for diminution in the value of
their property, not associated with any actual physical damage to the
property. 71 F. Supp.2d at 193. I declined, however, to grant summary
judgment as to the plaintiffs who sought to recover both for physical
damage and for diminution in the market value of their property. I also
denied summary judgment as to certain other claims, including claims for
ultrahazardous activity and nuisance. Id. at 191-92.
Plaintiffs then moved for an order pursuant to Rule 54(b) of the
Federal Rules of Civil Procedure entering a final judgment, so that they
could immediately appeal the dismissal of the stigma claims. I granted
that motion, based on my finding that allowing all of plaintiffs' claims
to be tried together would further the interests of judicial economy, in
the event that the Court of Appeals were to reinstate the stigma damage
The plaintiffs whose claims for stigma damages were dismissed then
appealed to the Second Circuit, arguing that New York law does allow them
to recover such damages. The Court of Appeals did not address the
merits, but sua sponte raised the issue of whether the case had been
properly removed from state court to the federal district court in the
first place, and in particular whether the requirements establishing
diversity jurisdiction had been met.
Ultimately, the Second Circuit was unable to determine, on the record
before it, whether jurisdiction existed under § 1332(a). The court
did hold that if the individual plaintiffs each sought less than $50,000
in damages, plaintiffs' damage claims could not be aggregated to satisfy
the statutory figure. 216 F.3d at 296 (citing Snyder v. Harris,
394 U.S. 332, 336 (1969)). The court added, though, that the question
became "more complicated" if at least one, but not all, of the named
plaintiffs met the jurisdictional threshold of $50,000. 216 F.3d at 297.
The issue in that situation would be whether the district court could, or
should, exercise supplemental jurisdiction over the rest of the
plaintiffs under 28 U.S.C. § 1367, which grants district courts that
have original jurisdiction over an action the power to exercise
supplemental jurisdiction over all claims that are part of the same case
Because this issue had not been briefed or argued by the parties, and
because the relevant facts had not been established, the Second Circuit
elected to remand the entire case to the district court to give Akzo (the
party bearing the burden of showing that removal was proper) an
opportunity to show whether any or all of the plaintiffs met the required
$50,000 amount in controversy. The court also gave the following guidance
to the district court, based on three possible sets of facts:
If, on remand, Akzo can show to a reasonable
probability that each of the plaintiffs' claims
— including those of absent class members
— met or exceeded $50,000 when the case was
brought, then diversity jurisdiction was proper.
Conversely, if, on remand, Akzo can show that one or
more, but not all, of the plaintiffs have claims that
exceeded $50,000, then the district court should
consider whether the exercise of supplemental
jurisdiction over the remaining plaintiffs' claims
would be proper, or whether, instead, the claims of
these remaining plaintiffs should be dismissed.
Finally, if Akzo is unable to show to a reasonable
probability that the claims of any of the plaintiffs
met the statutory requirement, then the district court
must send the lawsuit back to state court.
Id. at 298-99 (footnotes omitted).
Following remand, defendant submitted a declaration (Docket #44) of its
attorney, Kenneth A. Payment, Esq., setting forth Akzo's reasons for
believing that each of the individual plaintiffs' claims exceeded $50,000
when the case was brought. Plaintiffs have not opposed that showing and
they too urge the Court to retain jurisdiction. Plaintiffs have submitted
copies of their responses to defendant's interrogatories, as well as an
affidavit (Docket #45) and an affirmation (Docket #48) of their
attorney, Theodore J. Burns, Esq., purportedly showing that each of their
claims exceeds $50,000. Plaintiffs also contend that even if only some of
the individual claims exceed the jurisdictional amount, the Court should
exercise supplemental jurisdiction over the remaining claims under
28 U.S.C. § 1367.
First of all, it is axiomatic that the parties cannot agree between
themselves and stipulate to jurisdiction in federal court. Regardless of
the preferences of the litigants, the Court must be satisfied that the
requirements for establishing federal jurisdiction have been met. In this
case, the parties rely on diversity jurisdiction under § 1332(a).
"Even where the parties are satisfied to present their disputes to the
federal courts, the parties cannot confer subject matter jurisdiction
where the Constitution and Congress have not. The absence of such
jurisdiction is non-waivable; before deciding any case we are required to
assure ourselves that the case is properly within our subject matter
jurisdiction." Wynn v. AC Rochester, 273 F.3d 153, 157 (2d Cir. 2001)
(per curiam) (citing Bender v. Williamsport Area Sch. Dist., 475 U.S. 534,
541 (1986)). See also Drake v. Minn. Mining & Mfg. Co., 134 F.3d 878, 883
(7th Cir. 1998) ("parties cannot stipulate to the subject-matter
jurisdiction of the federal courts . . ."); In re Carbon Dioxide Industry
Antitrust Litig., 229 F.3d 1321, 1325 (11th Cir. 2000) ("To be sure,
parties may not stipulate subject matter jurisdiction").
"The Supreme Court has held that the party asserting diversity
jurisdiction in federal court has the burden of establishing the
existence of the jurisdictional amount in controversy." Lupo v. Human
Affairs Int'l, Inc., 28 F.3d 269, 273 (2d Cir. 1994) (citing McNutt v.
General Motors Acceptance Corp., 298 U.S. 178, 189 (1936). In the case at
bar, the Court of Appeals stated that "Akzo has the burden of proving
that it appears to a `reasonable probability' that the claim is in excess
of the statutory jurisdictional amount." Mehlenbacher, 216 F.3d at 296
(quoting United Food & Commercial Workers Union Local 919 v. CenterMark
Properties Meriden Square, Inc., 30 F.3d 298, 305 (2d Cir. 1994)).*fn3
"Where . . . jurisdictional facts are challenged, the party asserting
jurisdiction must support those facts with `competent proof' and `justify
[its] allegations by a preponderance of evidence.'" United Food, 30 F.3d
at 305 (quoting McNutt, 298 U.S. at 189). "Satisfaction of the §
1332(a) diversity requirements, i.e. the amount in controversy and the
citizenship of the parties, is determined as of the date that suit is
filed." Wolde-Meskel v. Vocational Instr. Project Cmty. Services, Inc.,
166 F.3d 59, 62 (2d Cir. 1999). Under this "time of filing" rule,
"[e]vents occurring subsequent to the institution of suit which reduce
the amount recoverable below the statutory limit do not oust
jurisdiction." Id. (quoting St. Paul, 303 U.S. at 289-90). See Chase
Manhattan Bank, N.A. v. American Nat'l Bank & Trust Co. of Chicago,
93 F.3d 1064, 1070 (2d Cir. 1996) ("The amount in controversy is
determined at the time the action is commenced") (quoting Tongkook, 14
F.3d at 784).
Although "[f]ederal diversity jurisdiction is not lost by post-filing
events that change or disturb the state of affairs on which diversity was
properly laid at the outset," Wolde-Meskel, 166 F.3d at 62,
that does not
mean that the court cannot take evidence to determine if jurisdiction was
"properly laid at the outset." That is in fact what the Court of Appeals
envisioned in this case; see Mehlenbacher, 216 F.3d at 298 ("It is only
fair . . . that the issue be remanded to the district court to allow the
parties to submit evidence on the amount in controversy and to give
defendants an opportunity to meet their burden as to this requirement of
diversity jurisdiction as well") (quoting United Food, 30 F.3d at 306).
See also Williams v. Best Buy Co., 269 F.3d 1316, 1321 (11th Cir. 2001)
("where the notice of removal asserts the jurisdictional amount and the
plaintiff does not challenge that assertion in the district court, we will
remand the case to the district court for factual findings on the amount
in controversy if the amount in controversy cannot be clearly determined
by a review of the record") (citing Mehlenbacher); Tongkook, 14 F.3d at
785 (plaintiff's subjective belief, at the time it instituted suit, that
amount in controversy exceeded jurisdictional amount, does not control
where pretrial discovery uncovers facts showing, to a legal certainty,
that plaintiff could not recover jurisdictional amount).
In order to determine whether Akzo has met its burden of showing that
the requirements for diversity jurisdiction have been met, I must "look
first to the plaintiffs' complaint and then to Akzo's petition for
removal." Id. at 296. The Court is not limited to those documents,
however, for the Second Circuit expressly noted that Akzo would be given
the opportunity on remand "to introduce evidence" to show that the
individual plaintiffs' claims each exceed $50,000. Id. at 299 n. 11. See
also United Food, 30 F.3d at 305 ("Where the pleadings themselves are
inconclusive as to the amount in controversy, . . . federal courts may
look outside those pleadings to other evidence in the record").
Although the Court of Appeals clearly left it to the district court to
resolve this issue in the first instance, I note that the Court of
Appeals also expressed some doubt about whether defendant would be able to
establish that each plaintiff's claim is for more than $50,000. The court
stated that "while the record as to the amount of loss sustained by each
plaintiff is sparse, what evidence there is suggests that Akzo may not be
able to meet that burden" of showing that each claim meets the
amount-in-controversy requirement. Id. at 298 n. 11. The court noted, for
[o]ne of the arguments put forward by plaintiffs'
counsel for certifying this suit as a class action was
that the individual losses sustained by the plaintiffs
were likely to be less than $50,000. At oral argument
before the district court, plaintiffs' counsel
maintained that "for most of these people the cost of
trying their cases would be more than their damages.
It would not be economically feasible for them to go
forward on a case by case basis, because they might
claim ten or fifteen or twenty thousand dollars in
subsidence damage per person, or maybe even a little
more, maybe twenty-five or thirty thousand dollars.
Tr. of Hearing on Class Certification, Aug. 21, 1998,
Id. The court nevertheless remanded in order to give Akzo an opportunity
to present evidence on this issue, stating that "it is not impossible"
that Akzo might carry its burden in this regard. Id.
Defendant itself has also implicitly indicated that the individual
claims in this case might not each satisfy the $50,000 minimum. At page
two of its notice of removal, Akzo asserted that the amount in
controversy was sufficient, "given the multiplicity of plaintiffs and
their claim for
punitive damages." (Emphasis added.) As the Second
Circuit explained, Akzo apparently assumed — erroneously —
that the damages sought by plaintiffs could be aggregated to meet the
statutory figure. Akzo's statement at least suggests that without such an
aggregation, the individual claims might fall below the minimum.
Having reviewed the complaint, defendant's removal petition, and the
additional evidence submitted by the parties following remand from the
Court of Appeals, I find that only some of the plaintiffs' claims exceed
$50,000. I also conclude that under Zahn v. International Paper Co.,
414 U.S. 291 (1973), this Court cannot exercise supplemental jurisdiction
over the claims of the plaintiffs that do not meet the statutory
minimum. Finally, I conclude that the proper course of action is for the
court to remand the entire action to state court.
First, although most of the plaintiffs allege some physical damage to
their property as a result of the mine collapse, not all of them do.
Plaintiff Kirk Richenberg, for example, states in his answers to
defendant's interrogatories that he owns two pieces of property in the
area, but that neither has suffered any damage, "structural or
otherwise. . . ." Affidavit of Theodore J. Burns, Esq. (Docket #45), Ex.
23, at 3, 4. He also states that he "has suffered no physical injuries as
a result of the incidents to date." Id. at 8. It appears that virtually
the entire basis for his claim for damages is his allegation that the
value of his property was diminished "due to the stigma of potential
future damage." Id. at 3-5.*fn4
In the case of plaintiff Richenberg, then, I do not believe that his
claim, regardless of the amount of damages alleged, can be said to exceed
$50,000 for purposes of determining whether there is a basis for
diversity jurisdiction.*fn5 In my prior decision on Akzo's motion for
partial summary judgment, I ruled that "[t]o the extent that plaintiffs
seek only stigma damages, . . . they cannot recover." 71 F. Supp.2d at
190. Because that decision concerned only a question of law — the
recoverability of "stigma" damages under New York law — and did not
involve the resolution of any disputed issues of fact, I believe that it
is proper to take the unavailability of such damages into account in
determining whether the amount-in-controversy requirement has been met.
There was no intervening event between the filing of the complaint and
the issuance of my Decision and Order that rendered unavailable damages
that previously had been available. Such damages never were available
under New York law; my prior Decision and Order simply explained why.
In St. Paul Mercury, 303 U.S. at 288-89, the Supreme Court stated that
if, 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 court
is satisfied to a like 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.
(Footnote omitted) (quoted in Tongkook, 14 F.3d at 784). Thus, based on
my prior ruling on defendant's motion for partial summary judgment, it is
clear that plaintiffs never were entitled to recover stigma damages, so
the claims for such damages should not be included in determining whether
the amount-in-controversy requirement has been met. See Saglioccolo v.
Eagle Ins. Co., 112 F.3d 226, 233 (6th Cir. 1997) ("Although we are
mindful that once jurisdiction has properly attached, it cannot be ousted
by subsequent events, appellant's intentional infliction of emotional
distress claim was defective from the start. In other words, it was clear
`from the face of the pleadings, . . . to a legal certainty, that the
plaintiff cannot recover the amount claimed'") (quoting St. Paul Mercury,
303 U.S. at 289) (other quotation omitted); Wiggins v. North American
Equitable Life, 644 F.2d 1014, 1017-18 (4th Cir. 1981) (where part of the
amount in controversy was a prayer for punitive damages that was clearly
precluded under applicable state law, court concluded "to a legal
certainty" that it lacked subject matter jurisdiction because of the
insufficiency of the amount in controversy). See also FLF, Inc. v. World
Publications, Inc., 999 F. Supp. 640, 643-44 (D.Md. 1998) ("While the
Court agrees that a plaintiff should be given the benefit of the doubt
with respect to a questionable legal theory at this juncture, the Court
need not close its eyes to legal theories that are plainly without merit"
in determining whether amount in controversy is sufficiently great to
meet jurisdictional requirements).
I also am aware that plaintiffs have requested an award of punitive
damages, in an unspecified amount, and that "[w]hen punitive damages are
permitted under the controlling law, the demand for such damages may be
included in determining whether the jurisdictional amount is satisfied."
A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d 82, 87 (2d Cir. 1991). Even
taking that request into account, however, I do not believe that every
plaintiff here can be said to have met the amount-in-controversy
requirement. For one thing, the Second Circuit has held that "punitive
damages asserted on behalf of a class may not be aggregated for
jurisdictional purposes where . . . the underlying cause of action
asserted on behalf of the class is not based upon a title or right in
which the plaintiffs share, and as to which they claim, a common
interest." Gilman v. BHC Securities, Inc., 104 F.3d 1418, 1431 (2d Cir.
1997); see, e.g., Davies v. Belden & Blake Corp., No. 00-CV-0245, 2001 WL
210471, *5 (W.D.N.Y. Feb. 20, 2001) (dividing total punitive damages
requested by number of plaintiffs to determine if individual plaintiffs
in class action met jurisdictional amount, since aggregation was not
appropriate); see also Martin v. Franklin Capital Corp., 251 F.3d 1284,
1292 (10th Cir. 2001) ("all of the circuits considering the issue now
hold that punitive damages cannot be aggregated and attributed in total
to each member of a putative class for purposes of satisfying the
amount-in-controversy requirement of diversity jurisdiction").
The instant case also does not fall within the "common fund" exception
set forth by the court of appeals in Gilman, because each plaintiff's
claim is based on that particular plaintiff's ownership or use of a
discrete piece of property, and not upon a "single title or right" in
which the plaintiffs claim a common interest. Gilman, 104 F.3d at 1430.
The fact that all the plaintiffs' claims arise out of the same conduct on
the part of defendant is immaterial,
since "[a]n action arising out of a
common course of conduct does not give rise to the common fund
exception." Fein v. Chrysler Corp., No. CV-98-4113, 1998 U.S. Dist. LEXIS
15644, *7 (E.D.N.Y. Sept. 28, 1998) (noting that "[t]he `paradigm cases
[in which the common fund exception applies] . . . are those which
involve a single indivisible res, such as an estate, a piece of property
. . . or an insurance policy'") (quoting Bishop v. General Motors Corp.,
925 F. Supp. 294, 298 (D.N.J. 1996)); see also Meritcare Inc. v. St. Paul
Mercury Ins. Co., 166 F.3d 214, 218 (3d Cir. 1999) (plaintiffs' claims
could not be aggregated to satisfy jurisdictional amount, because
"[a]lthough their claims stem[med] from the same cause . . . they [we]re
separate and distinct").
It does appear that there is a reasonable probability that some of the
named plaintiffs' claims do exceed $50,000. This is based on plaintiffs'
answers to interrogatories and the summary of those answers contained in
the affidavit of plaintiffs' attorney, Theodore J. Burns, Esq. (Dkt.
#45). But, it is also quite clear that most of them do not, and there is
virtually no proof that absent class members have individually sustained
losses in excess of $50,000. Therefore, I believe that it can be said, to
a legal certainty, that not every plaintiff in this action has a claim
for over $50,000, even when punitive damage claims are included.
Certainly the claims of plaintiffs Richenberg and Glazier do not meet the
statutory minimum. Even setting aside the unavailability of stigma
damages, a jury could not reasonably award over $50,000 in punitive
damages to those plaintiffs, whose property is not even alleged to have
suffered any physical damage. See Morrison v. Allstate Indem. Co.,
228 F.3d 1255, 1272 (11th Cir. 2000) ("Although we recognize that a court
owes some deference to a diversity plaintiff's amount in controversy
allegations, . . . that deference does not eviscerate the court's
obligation to scrupulously enforce its jurisdictional limitations," and
"a court would be remiss in its obligations if it accepted every claim of
damages at face value, no matter how trivial the underlying injury")
(quoting Diefenthal v. Civil Aeronautics Bd., 681 F.2d 1039, 1052 (5th
Likewise, although plaintiff John Hendrickson has alleged actual
physical damage to his property, his answers to defendant's
interrogatories indicate that he has suffered no physical injury
himself, and that the amount of his property damages is well below
$10,000. See Burns Aff. Exs. 15, 16. Again, I do not believe that a jury
could reasonably award Hendrickson damages, even including punitive
damages, in excess of $50,000, given the relatively small extent of his
actual damages and the fact that the conduct alleged here does not appear
to have been "intentional, malicious, outrageous, or otherwise aggravated
beyond mere negligence," Graham v. Columbia-Presbyterian Med. Ctr.,
185 A.D.2d 753, 754 (1st Dep't 1992), or "so flagrant as to transcend
mere carelessness," Frenya v. Champlain Valley Physicians' Hosp. Med.
Ctr., 133 A.D.2d 1000, 1000-1001 (3d Dep't 1987), as to support an award
of punitive damages. "Although punitive damages are included in the
amount of controversy, the existence of the required amount must be
supported by competent proof." Larkin v. Brown, 41 F.3d 387, 388 (8th
Cir. 1994) (internal citation and quote omitted). "Indeed, when
determining the amount in controversy, `a claim for punitive damages is
to be given closer scrutiny, and the trial judge accorded greater
discretion, than a claim for actual damages.'" Id. (quoting Zahn v.
International Paper Co., 469 F.2d 1033, 1034 n. 1 (2d Cir. 1972),
aff'd, 414 U.S. 291 (1973)).
Furthermore, the Second Circuit directed this Court to consider whether
"each of the plaintiffs' claims — including those of absent class
members — met or exceeded $50,000 when the case was brought. . . ."
216 F.3d at 298 (emphasis added). That class, as defined by plaintiffs,
includes all individuals and businesses who reside, work, or own property
within a thirteen-mile radius of the mine and who suffered damages due to
the mine collapse. That class, in turn, is composed of four subclasses:
(1) residential homeowners whose property values were
adversely affected, who incurred physical damage to
their property, or who lost the use and enjoyment of
their property; (2) commercial property owners who
suffered economic losses, including diminution in the
value of their property or lost profits; (3) persons
who live or work within the thirteen-mile radius who
suffered economic losses, including "the expense of
securing alternative water supplies," the cost of
remediating damage to their property, and lost wages;
and (4) persons who suffered personal injuries or
emotional distress due to the mine collapse or
resulting water contamination.
Mehlenbacher, 216 F.3d at 294. Given the broad scope of this proposed
class, and the various types of damages sought (at least one of which
— diminution in property value attributable to the "stigma"
associated with the mine collapse — I have ruled is unavailable), I
find it very unlikely that all, or even most, of the unnamed class
members (who are estimated by plaintiffs to number "at least in the
thousands," see Amended Class Action Complaint ¶ 5) have individual
claims exceeding $50,000.