When a plaintiff seeks injunctive relief, federal courts calculate the amount in controvery based on the value of the object of the lawsuit
Diversity Jurisdiction Review
Federal courts, as courts of limited jurisdiction, only have the power to hear certain types of cases. As a general rule, federal courts can assert diversity subject matter jurisdiction under 28 usc § 1332 when no plaintiff is a citizen of the same state as any defendant and the amount in controversy exceeds $75,000.
For example, if plaintiff alleges that defendant defrauded her out of $100,000 and the parties are citizens of different states, a federal court should be able to assert diversity subject matter jurisdiction. That case can properly be heard in federal court. Below is a video on diversity jurisdiction if you’d like a quick review or introduction.
But what happens when the plaintiff seeks injunctive or declaratory relief?
When a plaintiff seeks injunctive relief he asks the court to compel the defendant to do something or to refrain from doing something. For example, if a plaintiff wants to compel a defendant to disclose financial documents or stop playing music late at night, the plaintiff is not asking the court to make the defendant pay him money. He just wants the defendant to do something or not do something.
Likewise, if a plaintiff asked the court to declare her the rightful owner of a necklace in a declaratory judgment action, the plaintiff is not seeking money from the defendant. She just wants the court to declare her rights with respect to a certain object.
Where plaintiff seeks injunctive relief or a declaratory judgment, the court will examine how much the objective of the case is worth. Courts will typically look at the monetary value of the case for the plaintiff if plaintiff prevails, or alternatively look at the monetary loss for the defendant if plaintiff prevails.
Keep in mind that in removal actions, the removing party must prove by a preponderance of the evidence that the amount in controversy requirement is satisfied. If the amount in controversy cannot be determined then a federal court cannot assert diversity jurisdiction.
Let’s say a plaintiff asks a court to enjoin foreclosure on his property indefinitely, and grant him title to the property. Here, the amount in controversy requirement should be satisfied if the property is worth greater than $75,000. This case could be heard in federal court if the parties are diverse.
In contrast, let’s say the parties are arguing over who has rights to a financial instrument that has little value. In that instance, the amount in controversy requirement is probably not satisfied. This case would not belong in federal court because the federal court could not assert diversity subject matter jurisdiction.