Can Paper Co. Employee Keep Retaliation Claim out of Federal Court?

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Henderson, KY (WorkersCompensation.com) -- Companies and employees involved in workers’ compensation claims sometimes fight over whether diversity jurisdiction exists such that the case can be heard in federal court rather than a state court.

One case illustrates what it might take for an employer to establish that the amount in controversy meets the minimum requirement for diversity jurisdiction – $75,000.

A paper company’s employee worked full time making about $33 per hours. She injured herself at work and obtained workers’ compensation benefits. After she returned from medical leave, she claimed, the company retaliated against her in various ways, including, ultimately, by firing her in February 2023.

She filed a complaint with the EEOC alleging retaliation and seeking a $150,000 settlement.

Next, she sued the company in April 2024 in county court for workers’ compensation retaliation. The company had the case removed to federal court.

The employee asked the court to send the case back to county court. Specifically, she alleged that the company didn’t establish that $75,000 was at stake. To support that contention, she pointed out that she provided an affidavit promising not to seek more than $66,000.

The court explained that federal diversity jurisdiction exists when there is complete diversity between the parties and "the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332 (a). The amount in controversy is the amount required to satisfy the plaintiff's demands in full on the day the suit was removed. Oshana v. Coca-Cola Co., 472 F.3d 506, 510-11 (7th Cir. 2006). 

The party asserting that there is federal jurisdiction bears the burden of showing that the amount in controversy exceeds $75,000.

Did the federal court have to send case back to the county?

A. No. Her salary, as well as potential future pay and punitive damages, exceeded the threshold amount.

B. Yes. She promised to seek no more than $66,000. Thus, the threshold amount was not met.

If you selected A, you agreed with the court in Thomas v. Pratt Paper, No. 2:24-CV-186-PPS-AZ (N.D. Ind. 09/16/24), which held that the employer established that the employee, on the day the case was removed to federal court, was seeking over $75,000.

First, the court pointed out that the settlement indicated she was seeking far more than $75,000 in a claim where the factual allegations mirrored those of her lawsuit.

“Given her wage of $33 per hour, that makes her back wage claim alone worth more than $90,000,” the court wrote. And that was not including her potential recovery of future pay and punitive damages, both of which she was entitled to seek.

“Pratt has readily demonstrated by a preponderance of the evidence that, at the time of removal, the amount in controversy exceeded the jurisdictional floor,” the court wrote.

Finally, the court noted that the affidavit in which the employed pledged to not ask for more than one year of lost wages totaling approximately $66,000, could not defeat the federal court’s authority to hear the case. It was the amount at stake on the day in controversy that mattered. Her subsequent affidavit, even if it was convincing evidence, did not divest the court of jurisdiction.

Because, on the day of removal, it was possible for the employee to obtain more than the threshold amount of $75,000, it was proper for the federal court to hear the case, the court held.

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