(1) To Remove or Not to Remove, and the “Other Paper” rule
“Is this case removable?” This is one of the first questions that defense counsel ask themselves on receipt of a new complaint, especially in Philadelphia. But how to determine whether the “amount in controversy” actually exceeds the $75,000 minimum federal diversity jurisdiction threshold under 28 U.S.C. § 1332(a) when the pleading does not list a specific dollar amount? And how to make that decision in the limited 30-day removal period under 28 U.S.C. § 1446(b)?
Sometimes the answers are obvious, like when a plaintiff pleads a specific dollar amount; other times, these can be gray areas. As underscored by Judge Barclay Surrick in Ricketts v. Wal-Mart Stores East, LP, the “matter in controversy” needs to not be expressly “stated in the initial pleading to trigger the running of the 30-day period for removal.” 2014 WL 2514615, at *2 (E.D. Pa. June 3, 2014). Rather, the 30-day removal period runs only when the defendant can “reasonably and intelligently conclude that the amount in controversy exceeds the jurisdiction minimum.” The risk in waiting is obvious: if a vague initial pleading is deemed sufficient to have put the defendant on notice that the amount in controversy exceeds $75,000, any subsequent removal attempt will be untimely. On the other hand, premature removal risks a remand (though the Third Circuit does not per se bar successive removal attempts, “all doubts should be resolved in favor of remand,” Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992)), and a possible obligation to repay attorney’s fees.
This is where the “other paper” rule comes in handy. The “other paper” rule is set forth in Section 1446(b)(3). Under it, the 30-day deadline for removal is only triggered when the defendant receives “a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” For patient practitioners, the “other paper” rule provides the ability to invoke federal jurisdiction down the road, once the right to removal is clearer.
However, as noted by Judge Gerald Pappert in Young v. Wal-Mart Stores East, LP, any number of documents can potentially qualify as an “other paper,” as long as they are “in the record of the state court proceeding.” 2015 WL 1137089, at *1 (E.D. Pa. Mar. 12, 2015). A firm understanding of what documents may constitute an “other paper” sufficient to trigger removal is thus crucial.
(2) Recent Eastern District of Pennsylvania Guidance
Two recent EDPA decisions provide further guidance about what qualifies as an “other paper.” In Hensler v. Wal-Mart Stores, Inc., Judge Joel Slomsky ruled that, in Philadelphia County, where actions with an amount in controversy of $50,000 or less are automatically submitted to compulsory arbitration, a plaintiff’s boilerplate “allegation of damages in excess of $50,000” (typically in the complaint’s wherefore clauses and/or in the accompanying civil cover sheet), constitutes nothing more than “a mechanism by which plaintiffs avoid submitting the case to compulsory arbitration.” 2019 WL 653073 (E.D. Pa. Feb. 14, 2019). By such allegations, the court explained, plaintiffs are “simply complying with the state law obligation to either invoke or avoid arbitration in state court.” Such allegations, therefore, are “not sufficient notice that the amount in controversy threshold for federal jurisdiction has been met,” and do not trigger the time for removal. The “other paper” triggering the removal timeframe in Hensler, rather, was the plaintiff’s Reply to the defendant’s New Matter, in which she expressly denied the defendant’s allegation that her damages were “limited to an amount not in excess of $75,000.”
More recently, Judge Surrick affirmed removal under the “other paper” rule in Sharawi v. WWR Premier Holdings, LLC, 2020 WL 93942 (E.D. Pa. Jan. 7, 2020). The personal injury/trip-and-fall suit asserted a single count for damages “in an amount not in excess of Fifty Thousand ($50,000.00) Dollars,” which obviously did not exceed the compulsory arbitration limit. At arbitration, the arbitration panel rendered a defense finding, and the plaintiff filed a notice of appeal on October 3, 2019. On November 1, 2019—within 30 days of the plaintiff’s appeal—the defendant removed the case. On plaintiff’s motion to remand, Judge Surrick found the defendant had “possession of all of the material” showing the amount in controversy exceeded $75,000 (e.g., the amended complaint, plaintiff’s medical records, and plaintiff’s deposition) “by mid-September 2019—more than 30 days before the Notice of Removal was filed.” Nonetheless, the court concluded that the 30-day removal clock did not begin to run at that time because, as a matter of law, “cases subject to compulsory arbitration under Pennsylvania law may not be removed for lack of federal jurisdiction”; had the defendant tried to remove before arbitration was concluded and appealed, the court would have been required to remand. As such, while the defendant may have previously been aware that the amount in controversy exceeded $75,000, the “other paper” triggering the 30-day removal period was the plaintiff’s notice of appeal of the arbitration award.
(3) Bright-Line Takeaways
For a savvy practitioner seeking a chance to remove a case filed in the Philadelphia County Court of Common Pleas, these decisions provide three bright-line take-away rules: (1) Boilerplate wherefore clause damages allegations seeking “an amount in excess of $50,000,” though sufficient to avoid compulsory arbitration, do not trigger removal. (2) A pleading containing an express denial of a defense allegation that damages do not exceed $75,000 constitutes an “other paper” triggering removal. (3) A case subject to the $50,000 compulsory arbitration limit is not removable before arbitration proceedings are concluded, and a plaintiff’s filing of a notice of appeal of a defense decision can constitute the “other paper” triggering removal.