{"id":2202,"date":"2025-05-20T18:50:41","date_gmt":"2025-05-20T22:50:41","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=2202"},"modified":"2025-05-20T18:50:42","modified_gmt":"2025-05-20T22:50:42","slug":"when-removing-diversity-cases-defendants-cannot-embiggen-the-amount-in-controversy-through-attorneys-fee-estimates","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2025\/05\/20\/when-removing-diversity-cases-defendants-cannot-embiggen-the-amount-in-controversy-through-attorneys-fee-estimates\/","title":{"rendered":"When Removing Diversity Cases Defendants Cannot \u201cEmbiggen\u201d The Amount-In-Controversy Through Attorneys\u2019 Fee Estimates"},"content":{"rendered":"
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By Gerald L. Maatman, Jr., Shannon Noelle, and Anna Sheridan<\/strong><\/p>\n\n\n\n

Duane Morris Takeaways<\/em>: \u00a0<\/strong>In an order issued on May 13, 2025, Judge Joshua Wolson of the U.S. District Court for the Eastern District of Pennsylvania ruled <\/a>that a case removed to federal court on the basis of diversity jurisdiction had to be remanded back to state court given that the amount-in-controversy (AIC) alleged was based on an attorneys\u2019 fee award that exceeded the plaintiff\u2019s damages award by \u201cat least seven times.\u201d<\/em><\/p>\n\n\n\n

Case Background<\/strong><\/p>\n\n\n\n

On January 9, 2025, Plaintiff Frank Wise sued his former employer Kimberly-Clark, a manufacturer of paper-based consumer products, in the Philadelphia Court of Common Pleas on behalf of himself and a putative class, accusing his former employer of violating the Pennsylvania Minimum Wage Act (\u201cPMWA\u201d) by failing to pay overtime for the time spent walking to and from job assignments in the Defendant\u2019s manufacturing facility.  As part of its remedial regime, the PMWA permits a prevailing party to recover \u201creasonable\u201d attorneys\u2019 fees.  Plaintiff Wise estimated that his damages totaled $9,350.30, but on his cover sheet he indicated that the amount in controversy totaled \u201c[m]ore than $50,000.00\u201d for the amalgamated claims of the class.  (ECF No. 1-3, p. 2). <\/p>\n\n\n\n

On February 26, 2025, Defendant Kimberly-Clark removed the action to federal court, asserting that the amount in controversy was over $75,000 because Plaintiff Wise \u201cmay try to recover at least $78,375.00 in attorney\u2019s fees.\u201d  (ECF No. 1 \u00b6\u00b6 24, 29). Plaintiff Wise moved to remand by including with that motion a declaration from his attorneys that if the lawsuit proceeded on an individual, rather than a class wide basis, the Plaintiff and his attorneys would waive the right to recover attorneys\u2019 fees that would cause the amount in controversy to cross $75,000.<\/p>\n\n\n\n

The Court\u2019s Order<\/strong><\/p>\n\n\n\n

Judge Wolson found that Defendant Kimberly-Clark did not carry its burden to demonstrate that the amount in controversy exceeded $75,000, which the Defendant primarily based on its attorneys\u2019 fees estimate.  Although attorneys\u2019 fees can be factored into the amount in controversy threshold, the attorneys\u2019 fees sought must be reasonable<\/em>.  To pinpoint the legal standard under Pennsylvania law for determining when an award of attorneys\u2019 fees is reasonable, Judge Wolson surveyed case law interpreting statutes similar to the PMWA, such as the Pennsylvania Unfair Trade Practices and Consumer Protection Law, where Pennsylvania courts determined that the \u201cterm reasonable\u201d incorporates the concept of proportionality between the damages award and attorneys\u2019 fees award.  Though Pennsylvania law contains no \u201chard-and-fast rule for the acceptable ratio,\u201d courts consider \u201cthe time and labor required, the novelty and difficulty of the questions involved, and the skill requisite properly to conduct the case, the customary charges of the members of the bar for similar services, the amount involved in the controversy and benefits resulting to the clients from the services, and the contingency or certainty of the compensation.\u201d  (internal citations and quotations omitted).  Applying this framework, Judge Wolson found that a 7:1 ratio for attorneys\u2019 fees as compared to damages was unreasonable and could not be used to reach the jurisdictional threshold. <\/p>\n\n\n\n

Judge Wolson further opined that this conclusion also was consistent with protecting the judicial economy of federal courts as litigants and attorneys should not be able to use exorbitant attorneys\u2019 fees estimates to circumvent the amount in controversy requirement to invoke diversity jurisdiction.  In the case at hand, the parties agreed for purposes of the motion that Plaintiff Wise could recover $9,350.30 in monetary damages and that the legal issues at hand involved straight-forward unpaid overtime claims.  Notably, Judge Wolson also found the Plaintiff\u2019s attorneys\u2019 declaration, waiving the right to collect attorneys\u2019 fees, to be unavailing as it arguably amended the complaint.<\/p>\n\n\n\n

Implications For Employers<\/strong><\/p>\n\n\n\n

The Court\u2019s holding in Wise<\/em> emphasizes the importance of providing concrete evidence regarding damages sought and reasonable attorneys\u2019 fee estimates when seeking to remove based on diversity jurisdiction.  Ultimately, the damages and attorneys\u2019 fees alleged in the complaint take precedence, but proportionality must be considered even in the context of fee shifting statutes.  If a party\u2019s jurisdictional math does not add up, they may be sent back to where the matter started:  state court.  <\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Shannon Noelle, and Anna Sheridan Duane Morris Takeaways: \u00a0In an order issued on May 13, 2025, Judge Joshua Wolson of the U.S. District Court for the Eastern District of Pennsylvania ruled that a case removed to federal court on the basis of diversity jurisdiction had to be remanded back to … <\/p>\n

Continue reading “When Removing Diversity Cases Defendants Cannot \u201cEmbiggen\u201d The Amount-In-Controversy Through Attorneys\u2019 Fee Estimates”<\/span><\/a><\/p>\n","protected":false},"author":575,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43],"tags":[],"ppma_author":[7,134,133],"class_list":["post-2202","post","type-post","status-publish","format-standard","hentry","category-procedural-issues"],"authors":[{"term_id":7,"user_id":575,"is_guest":0,"slug":"gmaatman","display_name":"Gerald L. Maatman, Jr.","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2022\/09\/maatmangerald-100x100.jpg","author_category":"","last_name":"Maatman Jr.","first_name":"Gerald L.","job_title":"","user_url":"https:\/\/www.duanemorris.com\/attorneys\/geraldmaatman.html","description":"Read Gerald's bio.<\/a>"},{"term_id":134,"user_id":717,"is_guest":0,"slug":"snoelle","display_name":"Shannon Noelle","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2025\/07\/noelleshannon-100x100.jpg","author_category":"","last_name":"Noelle","first_name":"Shannon","job_title":"","user_url":"","description":"Read Shannon's Bio<\/a>"},{"term_id":133,"user_id":711,"is_guest":0,"slug":"asheridan","display_name":"Anna Sheridan","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2025\/04\/sheridananna-100x100.jpg","author_category":"","last_name":"Sheridan","first_name":"Anna","job_title":"","user_url":"","description":"Read Anna's bio.<\/a>"}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/2202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/575"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=2202"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/2202\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=2202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=2202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=2202"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=2202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}