In the
United States Court of Appeals
For the Seventh Circuit
No. 11-8003
B ACK D OCTORS L TD., individually and
on behalf of a class,
Plaintiff-Respondent,
v.
M ETROPOLITAN P ROPERTY AND
C ASUALTY INSURANCE C OMPANY,
Defendant-Petitioner.
Petition for Permission to Appeal from
the United States District Court for the
Southern District of Illinois.
No. 10-cv-444-MJR—Michael J. Reagan, Judge.
S UBMITTED M ARCH 4, 2011—D ECIDED A PRIL 1, 2011
Before E ASTERBROOK , Chief Judge, and R OVNER and
E VANS, Circuit Judges.
E ASTERBROOK, Chief Judge. Back Doctors filed a suit in
a state court of Illinois, contending that defendant, an
insurer, uses software that pays medical providers less
than the policies require the insurer to pay. Back Doctors
contended that using this software violates not only
2 No. 11-8003
the contracts between insurer and insured but also
the Illinois Consumer Fraud and Deceptive Business
Practices Act, 815 ILCS 505/2. Back Doctors is a provider
of services, rather than an insured, and the statutory
claim may encounter difficulties under Avery v. State
Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 835
N.E.2d 801 (2005), but the suit’s merits do not concern
us now.
The insurer removed the litigation to federal court
under amendments that the Class Action Fairness Act
of 2005 made to 28 U.S.C. §§ 1332(d) and 1453. These
provisions allow the removal of class actions in which
the stakes exceed $5 million, provided that at least
minimal diversity of citizenship exists. Back Doctors
asked the district court to remand the proceeding, con-
tending that the amount in controversy is less than
$5 million. That the stakes exceed $2.9 million is undis-
puted; the insurer contended that punitive damages
make up the balance. Back Doctors replied that its com-
plaint does not expressly request punitive damages or
allege that the insurer acted wantonly or maliciously.
The state judiciary therefore would not award punitive
damages, Back Doctors insisted, and the amount in con-
troversy required for federal jurisdiction has not been
established.
The district court remanded, stating that removal is
disfavored, that doubts are construed against removal,
and that the insurer has not established a “reasonable
probability” that the amount in controversy exceeds
$5 million. The insurer has asked for our permission to
No. 11-8003 3
appeal, a step authorized by §1453(c). We grant that
request and, because the papers already on file ade-
quately present the parties’ arguments, we resolve the
appeal summarily.
References to a “reasonable probability” of recovering
the amount in controversy entered this circuit’s juris-
prudence in 1993 and, we thought, departed in 2006
with Meridian Security Insurance Co. v. Sadowski, 441 F.3d
536 (7th Cir. 2006). Our 2006 opinion traced the phrase’s
origin and evolution in connection with the amount-in-
controversy requirement and concluded that it had been
misunderstood so frequently that it had to go. The Su-
preme Court held in St. Paul Mercury Indemnity Co. v.
Red Cab Co., 303 U.S. 283, 293 (1938), that allegations
about the amount in controversy must be accepted
unless it is impossible for the plaintiff to recover the
jurisdictional minimum. Jurisdictional facts must be
alleged and proved by a preponderance of the evidence;
the phrase “reasonable probability,” when introduced
by Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir.
1993), was designed to express that point. But many
judges misunderstood the phrase as requiring the propo-
nent of federal jurisdiction to establish that it was likely
that the plaintiff would obtain a judgment exceeding
the amount-in-controversy requirement.
We tried in Brill v. Countrywide Home Loans, Inc., 427 F.3d
446 (7th Cir. 2005), to end the misunderstanding and
confine the phrase to a search for what the plaintiff
actually sought: “part of the removing party’s burden is
to show not only what the stakes of the litigation could
4 No. 11-8003
be, but also what they are given the plaintiff’s actual
demands. That’s the point of statements in our deci-
sions that the removing litigant must show a reasonable
probability that the stakes exceed the minimum. The
demonstration concerns what the plaintiff is claiming
(and thus the amount in controversy between the par-
ties), not whether plaintiff is likely to win or be
awarded everything he seeks.” 427 F.3d at 449 (emphasis
in original; citations omitted). When this clarification
proved to be insufficient, we decided in Sadowski to
ditch the phrase. Sadowski was circulated to all judges
under Circuit Rule 40(e) and has the status of an
en banc decision, but confusion has continued, so we
publish this short opinion to drive the point home.
The legal standard was established by the Supreme
Court in St. Paul Mercury: unless recovery of an
amount exceeding the jurisdictional minimum is
legally impossible, the case belongs in federal court. Only
jurisdictional facts, such as which state issued a party’s
certificate of incorporation, or where a corporation’s
headquarters are located, need be established by a pre-
ponderance of the evidence.
There is no presumption against federal jurisdiction
in general, or removal in particular. The Class Action
Fairness Act must be implemented according to its
terms, rather than in a manner that disfavors removal
of large-stakes, multi-state class actions. When removing
a suit, the defendant as proponent of federal jurisdiction
is entitled to present its own estimate of the stakes; it is
not bound by the plaintiff’s estimate. See, e.g., Oshana v.
Coca-Cola Co., 472 F.3d 506, 510-11 (7th Cir. 2006); Rubel v.
No. 11-8003 5
Pfizer, Inc., 361 F.3d 1016, 1020 (7th Cir. 2004). Once this
has been done, and supported by proof of any contested
jurisdictional facts, the presumption is the one stated in
St. Paul Mercury: the estimate of the dispute’s stakes
advanced by the proponent of federal jurisdiction
controls unless a recovery that large is legally impossible.
So the question here is not whether the class is more
likely than not to recover punitive damages, but whether
Illinois law disallows such a recovery. (If the class
should be awarded punitive damages, even a one-to-one
ratio of punitive to actual damages would result in a total
award exceeding $5 million, if the class’s position
about actual damages is right.)
Is recovery of more than $5 million impossible?
Litigants sometimes make it so, and prevent removal, by
forswearing any effort to collect more than the jurisdic-
tional threshold. See St. Paul Mercury, 303 U.S. at 291 (“the
status of the case as disclosed by the plaintiff’s com-
plaint is controlling in the case of a removal”); Oshana,
472 F.3d at 511-12 (adding that disclaimers in the
complaint block removal only if state law makes them
effective as caps on damages, which Illinois law does not).
Back Doctors did not file in state court a complaint that
disclaimed punitive damages or otherwise make a dis-
avowal that is conclusive as a matter of state law. Instead
it declared in the district court that it does not “now” want
punitive damages, and the district judge relied on this
when remanding the suit. But there are two problems.
First, events after the date of removal do not affect
federal jurisdiction, and this means in particular that a
6 No. 11-8003
declaration by the plaintiff following removal does not
permit remand. St. Paul Mercury, 303 U.S. at 292 (“though,
as here, the plaintiff after removal, by stipulation, by
affidavit, or by amendment of his pleadings, reduces
the claim below the requisite amount, this does not
deprive the district court of jurisdiction”); see also In re
Shell Oil Co., 970 F.2d 355, 356 (7th Cir. 1992). Cf.
Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805
(7th Cir. 2010) (decertification of class after removal does
not allow remand). Second, Back Doctors has a fiduciary
duty to its fellow class members. A representative can’t
throw away what could be a major component of the
class’s recovery. Either a state or a federal judge might
insist that some other person, more willing to seek
punitive damages, take over as representative. What
Back Doctors is willing to accept thus does not bind
the class and therefore does not ensure that the stakes
fall under $5 million. (Our point is not that a federal
judge should take steps to keep suits in federal court,
but that class representatives’ fiduciary duty might
ensure that the amount in controversy exceeds $5 million
no matter where the litigation occurs.)
What remains is the possibility that the complaint
itself scuttles any award of punitive damages. Back
Doctors did not expressly ask for a punitive award and
did not include in the complaint allegations of wanton
or egregious conduct. Yet Back Doctors does not cite
any decision by an Illinois court holding that such an
omission from a complaint makes a punitive award
impossible. Plaintiffs can amend their complaints as the
litigation progresses. The Illinois statute is about fraud,
No. 11-8003 7
after all, and the complaint alleges that the insurer con-
cealed from its clients the means it used to avoid paying
what the insurance contracts promise. Fraud is a
common ground of punitive damages in Illinois. See
Black v. Iovino, 219 Ill. App. 3d 378, 580 N.E.2d 139 (1991)
(holding this about claims under 815 ILCS 505/2 in par-
ticular); Crowder v. Bob Oberling Enterprises, Inc., 148 Ill.
App. 3d 313, 499 N.E.2d 115 (1986) (same). And juries
can award damages not requested by the complaint. In
federal courts, “[e]very . . . final judgment should grant
the relief to which each party is entitled, even if the
party has not demanded that relief in its pleadings”. Fed.
R. Civ. P. 54(c). Illinois follows the same approach. 735
ILCS 5/2-604 (“the [complaint’s] prayer for relief does
not limit the relief obtainable”).
If the Supreme Court of Illinois had established that
punitive damages are a special situation, and that
omission of a request from the initial pleading forbids
a punitive award, then remand would be appropriate.
But the state judiciary had not come to this conclusion.
A plaintiff in Illinois can limit the relief to an amount less
than the jurisdictional minimum, and thus prevent re-
moval, by filing a binding stipulation or affidavit with
the complaint. So we held in Oshana and Shell. There
may be other ways that Illinois law treats as effective;
we need not decide, because Back Doctors did not file
any kind of limiting document with its complaint—
indeed, has not filed one to this day. (A statement that
it does not “now” want punitive damages would not
prevent a change of mind.) When a plaintiff does not
tie its own hands, the defendant is entitled to present
8 No. 11-8003
a good-faith estimate of the stakes. If that estimate
exceeds the jurisdictional minimum, it controls and
allows removal unless recovery exceeding the jurisdic-
tional minimum would be legally impossible.
A punitive award exceeding $2.1 million is possible in
this litigation, so the amount in controversy exceeds
$5 million under the approach of St. Paul Mercury. The
order returning this suit to state court is vacated, and
the case is remanded to the district court for decision
on the merits.
4-1-11