Legal Certainty Test
The standard for dismissing a complaint for lack of meeting the amount in controversy is a rather high one in federal court. In 1938, Justice Owen Roberts set forth the "legal-certainty test", which is still used today:
It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But 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.
The validity of the amount of damages claimed is considered a threshold issue of law for a judge to decide at the commencement of the case.
The legal certainty test is often heavily litigated in personal injury or wrongful death cases, in the situation where they are removed by a defendant to federal court on the basis of diversity jurisdiction, and then the plaintiff moves to remand to state court. Since the 1970s, many states have prohibited plaintiffs in such cases from demanding a specific amount of money in the ad damnum section of their complaints, because of serious problems with unscrupulous attorneys gaining undue publicity by simply demanding outrageous and unrealistic damage amounts like $1 trillion. Therefore, many such complaints cannot and do not state an amount in controversy on their face, which puts defendants in the awkward position of having to submit evidence to the federal court that plaintiffs could theoretically recover $75,000, while simultaneously maintaining that plaintiffs are not entitled to anything at all.
Read more about this topic: Amount In Controversy
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