Allen v. R & H Oil & Gas Co.

70 F.3d 26, 1995 WL 680425
Court of Appeals for the Fifth Circuit·Decided August 29, 1995·No. 94-60444·Published·Cited by 13 cases

Opinion

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 94-60444

BARBARA ALLEN, et al.,

Plaintiffs-Appellants,

versus

R & H OIL & GAS COMPANY, FARRAR OILFIELD SERVICE AND EQUIPMENT CO., and TRI-STATE OIL SERVICES, INC.,

Defendants,

TRI-STATE OIL SERVICES, INC., Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Mississippi

(August 29, 1995)

Before JOLLY, SMITH, and DeMOSS, Circuit Judges. JERRY E. SMITH, Circuit Judge:

The 512 plaintiffs of a joint, state-law tort action (the "Allen plaintiffs" or "plaintiffs") appeal the removal of their claims to federal court. They contend that the district court erred in finding federal subject-matter jurisdiction under 28 U.S.C. § 1332 (diversity of citizenship), because it improperly "aggregated" their claim for punitive damages as a "whole" in reaching the $50,000.01 amount-in-controversy mark for each plaintiff. They also claim the district court misapplied the standard for assessing the amount in controversy when plaintiffs

challenge defendants' assertion of removal jurisdiction. Because we find that each plaintiff has an undivided claim for the full amount of the alleged punitive damages, which on the face of the complaint more likely than not exceeds the jurisdictional amount, we affirm.

I.

On May 20, 1990, an oil and gas well exploded near the town of Heidelberg, Mississippi, causing evacuation of the area. According to the plaintiffs, who are local residents, they suffered property damage and wide-ranging, physical and mental injuries from the explosion and release of toxic fumes.

Subsequently, the 512 Allen plaintiffs jointly filed suit in Mississippi state court against R & H Oil & Gas Company, Farrar Oilfield Service and Equipment Company, and Tri-State Oil Services, Inc. (collectively, the "defendants"), which operated the well. The Allen plaintiffs' individual claims))the suit is not a class action))are based upon theories of negligence and strict liability, and they seek compensatory and punitive damages. No specific amount of damages was pled.

The defendants, which are Louisiana corporations, petitioned for removal to federal court, asserting that there was complete diversity of citizenship between the set of plaintiffs and the set of defendants. See 28 U.S.C. §§ 1441, 1446. They also contended, in conclusory terms, that the $50,000.01 amount-in-controversy requirement was met. Removal was granted.

The plaintiffs, in the discovery phase of the case before a magistrate judge, then moved to remand on the ground that the amount-in-controversy requirement was not met. The gravamen of their motion was that the defendants had failed to present any evidence that showed that each plaintiff's claim exceeded § 1332's $50,000 requirement.

The defendants, in response, made two arguments. First, they contended that the alleged punitive damage award could be assessed against each individual plaintiff. In the alternative, they argued that an exception to the amount-in-controversy's non-aggregation principle applied, so that each individual plaintiff's potential punitive damage award could be aggregated and applied to the $50,000 requirement.

After considering the parties' memoranda, the magistrate judge, in a "bare bones" order, recommended denying remand. In upholding the order, the district court reasoned that the aggrega- tion of the potential punitive damages award was proper, as each plaintiff shared in a common and undivided interest in the claim.1 The court also considered the plaintiffs' motion to "clarify"

their complaint by amendment to seek explicitly less than the requisite amount in compensatory and punitive damages. This motion

1 The court's full reasoning is as follows:

The 512 plaintiffs elected to file this case as a single action against defendants and, while their claims for compensatory damages are separate and divisible, the court, giving due consideration to the nature and purpose of punitive damages, concludes that the same cannot be said as to plaintiffs' punitive damage claim. Punitive damages are sought for a single wrong to the plaintiffs who thus have a common and undivided interest in any punitive damages award.

likewise was denied on the ground that such post-petition amend- ments were mooted by the finding that the punitive damages alone met the requisite amount. Finally, the district court, recognizing the split among district courts in this circuit on the issue of aggregation of punitive damages, certified this case for immediate appeal via 28 U.S.C. § 1292(b).

II.

Removal is controlled by 28 U.S.C. § 1441, which provides, in relevant part, that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States . . . ." Such original jurisdiction exists, for example, if there is "diversity of citizenship," such as where the suit is between citizens of different states and the amount-in-controversy exceeds $50,000. 28 U.S.C. § 1332. Here, plaintiffs do not dispute diversity but question the application of the amount-in-controversy standard.2

2 The dissent notes that on its face, the complaint alleges that one of the defendants, Farrar Oilfield Service and Equipment Co. (Farrar"), has its principal place of business in Mississippi. If that were so, there would be no diversity of citizenship. See 28 U.S.C. § 1332(c)(1)(deeming "citizenship " for corporations to be either state of incorporation or state where defendant has its principal place of business). The defendants, however, argued in the district court that Farrar's principal place of business is not Mississippi. And, while making no explicit findings of fact, the district court implicitly agreed by finding subject-matter jurisdiction. No party continues to press this issue. Accordingly, while we recognize our duty to determine jurisdiction sua sponte, if necessary, see Mosley v. Cozby, 813 F.2d 659 (5th Cir. 1987) (per curiam), we see no reason to question this implicit finding.

A.

The Supreme Court has long interpreted § 1332's phrase "matter in controversy" not to allow multiple plaintiffs to add together "separate and distinct demands, unite[d] for convenience and economy in a single suit," to meet the requisite jurisdictional level. See Snyder v. Harris, 394 U.S. 332, 336 (1969) (quoting Troy Bank v. A.G. Whitehead & Co., 222 U.S. 39, 40 (1911)); Zahn v. International Paper Co., 414 U.S. 291, 301 (1973) ("[O]ne plaintiff may not ride in on another's coattails.") (citation omitted).3 The general rule is that each plaintiff who invokes diversity of citizenship jurisdiction must allege damages that meet the dollar requirement of § 1332.

"Aggregation" of damages allegedly owed to separate plain-

tiffs, however, may be permitted in the limited situation where "two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest." Snyder, 394 U.S. at 335.4 Unfortunately, the "common and undivided" test retains an amorphous quality. In applying this standard, many courts have

3 But see Free v. Abbott Labs. (In re Abbott Labs.), 51 F.3d 524 (5th Cir. 1995) (holding that under a plain meaning analysis, the Judicial Improvements Act of 1990, as codified in part at 28 U.S.C. § 1367, overrules Zahn in the class action context), suggestion for rehearing en banc filed.

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