“Would my case be heard in state or federal court?”

Minnesota business lawyers are typically asked why cases are in federal court rather than state court.  Typically, to be in federal court a dispute must be over $75,000 and have plaintiffs and defendants from different states.  If a plaintiff and defendant are from the same state, generally, a dispute cannot be heard in federal court.  Also, if the dispute is not in excess of $75,000, it cannot be heard in federal court.  When calculating the amount in dispute, the amount expended for attorney’s fees are a part of the matter in controversy for subject matter jurisdiction purposes when they are provided for by contract or by state statute or otherwise as a matter of right, since these are part of the liability being enforced.

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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
ARTHUR MUELLER,
Plaintiff,
v.
RADIOSHACK CORPORATION, a
Delaware Corporation doing business as
RadioShack,
Defendant.
Case No. 11-CV-0653 (PJS/JJG)
ORDER

Plaintiff Arthur Mueller leased retail space to defendant RadioShack Corporation
(“RadioShack”) in a shopping complex in Winona, Minnesota. Mueller believes that
RadioShack incorrectly calculated the rent that it owed under the parties’ lease agreement.
Accordingly, Mueller brought this putative class action in Minnesota state court seeking past-due rent, as well as attorney’s fees and declaratory and injunctive relief.1 About two weeks later, RadioShack removed this action to federal court on the basis of diversity jurisdiction. During the
short interval between the time that Mueller sued Radio Shack in state court and the time that
RadioShack removed Mueller’s action to federal court, Mueller sold his interest in the retail
space to Lake Community Bank. At the time of the sale, RadioShack owed no more than
1Mueller seeks to prosecute a class action on behalf of other landlords who entered into
similar leases with RadioShack and who, Mueller believes, were similarly underpaid on the basis
of RadioShack’s allegedly faulty interpretation of the lease agreement.
CASE 0:11-cv-00653-PJS-JJG Document 32 Filed 12/28/11 Page 1 of 9
$57,693.08 in past-due rent to Mueller. The parties agree that Lake Community Bank, and not
Mueller, is entitled to receive any rent that is due after the sale of the property.
This matter is before the Court on Mueller’s motion to remand pursuant to 28 U.S.C.
§ 1447(c) and RadioShack’s motion to join Lake Community Bank under Fed. R. Civ. P. 19(a).
For the reasons stated below, both motions are denied.
A. Mueller’s Motion to Remand
Mueller argues that the amount in controversy does not exceed $75,000, as is required for
the Court to exercise diversity jurisdiction. See 28 U.S.C. § 1332(a). Because he no longer owns
the retail space, Mueller says, the amount in controversy is, at most, $57,693.08.
When a complaint does not mention the amount in controversy — or alleges an amount
that is less than the jurisdictional minimum — the removing party bears the burden of proving,
by a preponderance of the evidence, that the amount in controversy in fact satisfies the
jurisdictional minimum. In re Minn. Mut. Life Ins. Co. Sales Practices Litig., 346 F.3d 830, 834
(8th Cir. 2003). The amount in controversy is measured as of the date of removal. James Neff
Kramper Family Farm P’ship v. IBP, Inc., 393 F.3d 828, 833-34 (8th Cir. 2005).2
2RadioShack argues that, in calculating the amount in controversy, the Court should not
take into account the fact that Mueller sold the property before the case was removed. Although
the Court need not reach this issue, the Court very much doubts that RadioShack is correct. The
“jurisdictional inquiry focuses on the claims made at the time of removal . . . .” James Neff
Kramper, 393 F.3d at 834 (emphasis added). This makes sense, as the federal court’s
jurisdiction is invoked at the time of removal. As always, in determining whether jurisdiction
exists, a court is not limited to the allegations in the complaint, but must instead assess
jurisdiction on the basis of all the facts known to it. Id. at 833-34.
The cases that RadioShack cites are not to the contrary. Although they contain broad
language to the effect that courts are to assess jurisdiction on the basis of the complaint as it was
filed in state court, none of them addresses whether a court should take into account an event that
(continued…)
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RadioShack argues that, taking into consideration Mueller’s claim for attorney’s fees, the
amount in controversy is met.3 The Court agrees.
Mueller does not dispute that a claim for contractual attorney’s fees counts toward the
amount in controversy for purposes of diversity jurisdiction. See Springstead v. Crawfordsville
State Bank, 231 U.S. 541, 541-42 (1913); see also 14AA Charles Alan Wright et al., Federal
Practice and Procedure § 3712, at 806-08 (4th ed. 2011) (“the law is now quite settled . . . that
the amount expended for attorney’s fees are a part of the matter in controversy for subject matter
jurisdiction purposes when they are provided for by contract or by state statute or otherwise as a
matter of right, since these are part of the liability being enforced” (footnotes omitted)).4 But
2(…continued)
occurred after the state-court action began but before the action was removed to federal court.
Instead, these cases mostly concern whether events occurring after removal — that is, after the
jurisdiction of the federal court has been invoked — can deprive a federal court of jurisdiction.
See, e.g., St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292 (1938) (post-removal
reduction in amount of claim does not destroy jurisdiction). Because cases almost never change
much between the time that they are filed in state court and the time that they are removed to
federal court, the references in these cases to the complaint filed in state court are best
understood as (imprecise) references to the case as it existed at the time of removal.
3Although the lease agreement provides for the recovery of attorney’s fees, see Compl.
Ex. A Art. XIX § 2, Mueller does not cite this provision in his complaint. Instead, he seeks
attorney’s fees under Minn. Stat. §§ 555.08 and 555.10. Compl. ¶ 54. Nevertheless, both parties
have treated the complaint as raising a claim for attorney’s fees pursuant to the lease agreement
and have not addressed whether Mueller could recover fees under §§ 555.08 and 555.10. The
Court follows suit.
4The Eighth Circuit has said in dicta that “only statutory attorney fees count toward the
jurisdictional minimum calculation.” Rasmussen v. State Farm Mut. Auto. Ins. Co., 410 F.3d
1029, 1031 (8th Cir. 2005) (emphasis added); see also Hartis v. Chicago Title Ins. Co., 656 F.3d
778, 781-82 (8th Cir. 2009) (per curiam) (quoting Rasmussen). Although this language implies
that contractual attorney’s fees do not count toward the jurisdictional minimum, it is not entirely
clear that the Eighth Circuit had contractual fees in mind. Neither Rasmussen nor Hartis
discussed contractual fees or suggested why they should be treated differently than statutory fees
(continued…)
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CASE 0:11-cv-00653-PJS-JJG Document 32 Filed 12/28/11 Page 3 of 9
Mueller argues that the Court can take into account only the amount of fees that were incurred as
of the date that the state-court case commenced. Mueller relies primarily on a Seventh Circuit
case — Gardynski-Leschuck v. Ford Motor Company — that held that the value of future legal
services are not “in controversy” between the parties and may not be considered for purposes of
determining the jurisdictional amount. 142 F.3d 955, 958-59 (7th Cir. 1998); see also
GreatAmerica Leasing Corp. v. Rohr-Tippe Motors, Inc., 387 F. Supp. 2d 992, 995-96 (N.D.
Iowa 2005) (following Gardynski-Leschuck).
The Court disagrees with the reasoning of Gardynski-Leschuck (which is, of course, not
binding on this Court). Courts routinely take into account future damages when determining the
amount in controversy. See, e.g., Mass. Cas. Ins. Co. v. Harmon, 88 F.3d 415, 416 (6th Cir.
1996) (when the validity of a disability insurance policy is at issue, future potential benefits may
be taken into account in determining the amount in controversy); Burns v. Mass. Mut. Life Ins.
Co., 820 F.2d 246, 249 (8th Cir. 1987) (“Where the heart of a cause of action is a claim for future
benefits, the amount in controversy is the present value of the claimed future benefit.”); Broglie
v. MacKay-Smith, 541 F.2d 453, 455 (4th Cir. 1976) (“Damages which the plaintiff claims will
accrue in the future are properly counted against the jurisdictional amount if a right to future
payments . . . will be adjudged in the present suit.” (citation and quotations omitted)).
4(…continued)
for jurisdictional purposes. Hartis relied only on Rasmussen. Rasmussen simply held that the
plaintiff had not established a statutory basis for fees and cited Crawford v. F. Hoffman-La
Roche, Ltd., 267 F.3d 760 (8th Cir. 2001). Crawford had nothing to do with contractual fees.
Thus, it is not clear whether the Eighth Circuit meant to suggest that contractual fees are not
counted toward the amount in controversy — and, if so, what authority the Eighth Circuit was
relying on for that proposition. In any event, to the extent that Rasmussen and Hartis stand for
the proposition that contractual attorney’s fees do not count toward the jurisdictional minimum,
they are inconsistent with the Supreme Court’s decision in Springstead.
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Gardynski-Leschuck distinguishes such cases on the ground that attorney’s fees, unlike
other types of future damages, are avoidable. The Court is not convinced that this is a real
distinction; many types of future damages might be avoidable — in whole or in part — but courts
nevertheless take them into account in determining the amount in controversy. Gardynski-
Leschuck also points out that counting future fees could lead to the absurd result that bitterly
feuding parties could manufacture federal jurisdiction over a de minimis claim by their
determination to litigate to the death. The answer to this argument is that, to count toward the
jurisdictional amount, the attorney’s fees must be reasonable. See Charvat v. GVN Mich., Inc.,
561 F.3d 623, 630 n.5 (6th Cir. 2009) (noting that reasonable attorney’s fees, when mandated or
allowed by statute, may be included in the amount in controversy for purposes of diversity
jurisdiction). The Court will therefore take into account Mueller’s likely future attorney’s fees
for purposes of determining the amount in controversy.
Mueller next argues that, even if it is proper to take into account the amount of attorney’s
fees he may incur in the future, RadioShack has offered no evidence about the likely amount of
those fees. In fee-shifting cases, however, judges may and regularly do bring their own expertise
to bear in determining a reasonable fee. See Warnock v. Archer, 397 F.3d 1024, 1027 (8th Cir.
2005) (district courts may draw on their own experience and knowledge of prevailing market
rates).
A fee of just over $17,300 in this case would put the amount in controversy over the
jurisdictional threshold. In this Court’s experience, it is a rare case that can be litigated in federal
court through even the summary-judgment stage for less than $17,300. This Court has regularly
awarded far more than $17,300 in fees in cases that were resolved at or before the summary-
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CASE 0:11-cv-00653-PJS-JJG Document 32 Filed 12/28/11 Page 5 of 9
judgment stage. See, e.g., Coleman v. Crossroads Lending Grp., Inc., No. 09-0221, 2010 WL
4676984, at *15 (D. Minn. Nov. 9, 2010) (awarding attorney’s fees of over $90,000 after a
motion for partial summary judgment and a paper “trial” on stipulated facts); Thompson v.
Speedway SuperAmerica, LLC, No. 08-1107, 2009 WL 2998163, at *1, *3 (D. Minn. Sept. 15,
2009) (awarding attorney’s fees of over $50,000 where compensable time included “little more
than drafting a complaint, exchanging written discovery, defending two relatively brief
depositions, and engaging in settlement negotiations”); Winthrop Resources Corp. v. Sabert
Corp., No. 07-1735, Docket No. 69 (D. Minn. July 21, 2008) (granting plaintiff’s unopposed
motion for over $100,000 in fees after plaintiff won summary judgment in its favor); Olson v.
Messerli & Kramer, P.A., No. 07-0439, 2008 WL 1699605, at *5 (D. Minn. Apr. 9, 2008)
(awarding $36,795.79 in fees and costs after plaintiff successfully opposed summary judgment
and the parties settled).
At oral argument, Mueller’s attorney estimated that her firm had already spent 30 hours
on this case. Multiplying by counsel’s hourly rate of $350 yields a fee of $10,500 — well over
half of the amount necessary to meet the jurisdictional minimum. Notably, Mueller incurred this
amount before the parties took any discovery or engaged in any motion practice on the merits of
the case. Mueller’s attorney pointed out that some of the hours were billed by her associate at a
lower rate. Nevertheless, this rough estimate demonstrates the near certainty that Mueller will
incur more than enough in attorney’s fees to put this case over the jurisdictional threshold. The
Court therefore denies Mueller’s motion to remand.
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CASE 0:11-cv-00653-PJS-JJG Document 32 Filed 12/28/11 Page 6 of 9
B. RadioShack’s Motion for Joinder
RadioShack moves under Fed. R. Civ. P. 19(a) to join its new landlord, Lake Community
Bank (“the Bank”), as a plaintiff in this lawsuit. Rule 19(a) requires joinder of a party if:
(A) in that person’s absence, the court cannot accord complete
relief among existing parties; or
(B) that person claims an interest relating to the subject of the
action and is so situated that disposing of the action in the person’s
absence may:
(i) as a practical matter impair or impede the
person’s ability to protect the interest; or
(ii) leave an existing party subject to a substantial
risk of incurring double, multiple, or otherwise
inconsistent obligations because of the interest.
None of these circumstances require the Bank’s joinder.
First, the Bank’s absence does not deprive the Court of the ability to afford complete
relief to Mueller and RadioShack. Mueller is seeking past-due rent through February 2011. If
the Bank were to be joined as a plaintiff, it would be seeking rent from March 2011 onward.
Mueller’s claim is thus separate and distinct from the Bank’s. The Court is fully capable of
awarding Mueller rent through February 2011 — or finding that RadioShack does not owe pastdue
rent to Mueller — without any reference to the Bank’s interest in obtaining past-due rent
beginning in March 2011.
Second, adjudicating this case in the Bank’s absence will not, as a practical matter, impair
the Bank’s interest. No matter the outcome of this litigation, the Bank will not be precluded
from bringing its own lawsuit for past-due rent against RadioShack — and, if the Bank does so,
the Bank will not be bound by anything decided in this action. See Pirrotta v. Indep. Sch. Dist.
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CASE 0:11-cv-00653-PJS-JJG Document 32 Filed 12/28/11 Page 7 of 9
No. 347, Willmar, 396 N.W.2d 20, 21-22 (Minn. 1986). It is conceivable that if a number of
things were to happen — specifically, (1) if the parties were to litigate this action to a conclusion;
(2) if Mueller were to lose; (3) if the Bank were then to sue RadioShack; (4) if RadioShack were
then to defend on grounds of res judicata or collateral estoppel; and (5) if the Bank were then to
be held to have been in privity with Mueller — the Bank’s ability to protect its interests could be
impaired by the outcome of this litigation. But the chances of all of these contingencies being
fulfilled are small — and, based on the evidence before it, the Court cannot conclude that the
Bank is likely to be found to be in privity with Mueller. Moreover, the Bank seems unconcerned
about such a possibility; there is no dispute that the Bank is aware of this action and has not, to
date, shown any interest in joining it. Under these circumstances, the Court sees no reason to
force the Bank to bring claims against RadioShack. Cf. Gwartz v. Jefferson Mem’l Hosp. Ass’n,
23 F.3d 1426, 1429-30 (8th Cir. 1994) (plaintiff’s corporation was not a necessary party because
plaintiff had the same interest in establishing the facts that the corporation had).
Finally, RadioShack is not at risk of incurring double, multiple, or inconsistent
obligations in the Bank’s absence. As noted, the interests of Mueller and the Bank do not
overlap. Everyone agrees that, if RadioShack owes rent, it owes rent to Mueller through
February 2011, and it owes rent to the Bank from March 2011 onward. Under no circumstances
will RadioShack be ordered to make the same rent payments more than once. Likewise, under no
circumstances will RadioShack be ordered by one court to do something, and then be ordered by
another court not to do the same thing, leaving RadioShack with inconsistent obligations. See
Field v. Volkswagenwerk AG, 626 F.2d 293, 301-02 (3d Cir. 1980) (“the possibility of a
subsequent adjudication that may result in a judgment that is inconsistent as a matter of logic . . .
-8-
CASE 0:11-cv-00653-PJS-JJG Document 32 Filed 12/28/11 Page 8 of 9
[does not] trigger the application of Rule 19”), disagreed with on other grounds by Newman-
Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989). The Court therefore denies RadioShack’s
Rule 19 motion for joinder.
ORDER
Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS
HEREBY ORDERED THAT:
1. Plaintiff’s motion to remand [Docket No. 8] is DENIED; and
2. Defendant’s motion for joinder [Docket No. 20] is DENIED.
Dated: December 28 , 2011 s/Patrick J. Schiltz
Patrick J. Schiltz
United States District Judge
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