Where punitive damages are required to satisfy the jurisdictional amount in a diversity case, a two-art inquiry is necessary. The first question is whether punitive damages are recoverable as a matter of state law. If the answer is yes, the court has subject matter jurisdiction unless it is clear beyond a legal certainty that the plaintiff would under no circumstances be entitled to recover the jurisdictional amount.
Plaintiff appealed from the district court which granted defendants' motion for summary judgment on the basis that the statutes of limitations for plaintiff's various claims had run. Plaintiff insured believed that defendant insurer had made misrepresentations at the time plaintiff made a switch in life insurance policies and filed a class-action lawsuit in federal court. His complaint included six counts, all based on state law, including, among others, breach of contract, fraudulent misrepresentation, and breach of fiduciary duty.
Did the district court lack subject matter jurisdiction over plaintiff's complaint?
The court held that it lacked subject matter jurisdiction over plaintiff's complaint. While the amount in controversy was over $75,000 for the entire class combined, the amount in controversy was less than $75,000 for plaintiff alone. Also, plaintiff's case did not meet the narrow exceptions to aggregate, such as there be one res. Plaintiff argued that each plaintiff could meet amount in controversy if the court considered punitive damages. However, the punitive damages necessary to meet the amount in controversy would have exceeded compensatory damages.
The court vacated the order dismissing the action on the merits and remanded the case with orders to dismiss it for want of federal subject matter jurisdiction. Federal courts did not have subject matter jurisdiction over the case.