## Facts

- McKee Foods Corporation used distributors to purchase, deliver, stock, display, and service McKee baked goods at retail locations.
- Two distributors filed a putative class action in California state court alleging they were misclassified as independent contractors rather than employees.
- The complaint asserted claims including unpaid overtime under California law, fraud and negligent misrepresentation, breach of agreements, unfair competition, and declaratory and injunctive relief.
- In a jurisdictional allegation, the complaint stated each plaintiff’s damages were “less than $75,000,” but the prayer sought compensatory damages, punitive damages, attorney’s fees, back taxes and benefits, an accounting, and injunctive/declaratory relief without stating a total sum.
- McKee removed to federal court on diversity jurisdiction, contending the amount in controversy exceeded $75,000 for each named plaintiff when all requested relief was considered.
- Plaintiffs moved to remand, disputing that the amount in controversy requirement was met.

## Issues

1. What burden of proof applies to a removing defendant on the amount in controversy when the complaint states each plaintiff’s damages are less than $75,000 but otherwise seeks open-ended monetary and equitable relief without a total cap?
2. Under the proper burden, did McKee show that the amount in controversy for each named plaintiff exceeded $75,000 at the time of removal?

## Decision

- The Ninth Circuit held the complaint was “unclear or ambiguous” as to the amount in controversy because the “less than $75,000” allegation was not reconciled with an open-ended request for punitive damages, attorney’s fees, and other relief.
- In that posture, the removing defendant must establish the amount in controversy by a preponderance of the evidence, not to a legal certainty.
- McKee satisfied the preponderance standard by showing that the combined potential value of wage-related damages, punitive damages exposure on fraud-based claims, and recoverable attorney’s fees more likely than not exceeded $75,000 for each named plaintiff.
- The denial of the motion to remand was affirmed.

## Legal Principles

- When a complaint does not demand a sum certain and is unclear or ambiguous as to the total amount in controversy, the removing defendant must prove the jurisdictional amount by a preponderance of the evidence.
- A plaintiff’s statement that damages are below the jurisdictional threshold does not control if the complaint’s causes of action and prayer for relief leave recovery uncapped and reasonably place more than $75,000 at stake.
- Amount in controversy focuses on the value of the claims and relief put in dispute at removal, including punitive damages and statutorily authorized attorney’s fees when recoverable as a matter of law.

## Conclusion

The Ninth Circuit affirmed federal diversity jurisdiction, holding that an uncapped request for damages and fee- and punitive-based remedies rendered the complaint ambiguous on amount in controversy, and that the removing defendant met its preponderance-of-the-evidence burden to show more than $75,000 was at stake for each named plaintiff.


Guglielmino v. McKee Foods Corp., 506 F.3d 696 (9th Cir. 2007)