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What is the "Amount in Controversy" Threshold In Federal Court?

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Understanding the "Amount in Controversy": Key Thresholds for Legal Cases

The "amount in controversy" is a critical factor in determining whether a court has jurisdiction to hear a case. However, the specific rules for calculating this amount vary depending on the court and the type of case. Here's a breakdown of the key principles:

Federal Court (Diversity Jurisdiction):

  • $75,000 Threshold: For federal courts to have diversity jurisdiction (cases between citizens of different states), the amount in controversy must exceed $75,000, excluding interest and costs (28 U.S.C.A. § 1332).
  • Plaintiff's Good Faith Allegation: The plaintiff's stated amount is generally accepted if made in good faith. To dismiss the case, it must be "legally certain" that the claim is for less than $75,000 (Horton v. Liberty Mut. Ins. Co., 367 U.S. 348 (1961); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938)).
  • Defendant's Challenge: If the defendant challenges the amount, both parties present evidence, and the court decides whether the $75,000 threshold is met by a "preponderance of the evidence" (Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81 (2014)).

Removal to Federal Court:

  • When a defendant moves a case from state to federal court, the removal notice needs only a "plausible allegation" that the amount exceeds $75,000 (Dart Cherokee Basin Operating Co., LLC v. Owens, 574.S. 81 (2014)).
  • If the initial state court filing doesn't state an amount, the defendant can assert it, and the court decides by a preponderance of the evidence (28 U.S.C.A. § 1446).

Medicare Appeals:

  • ALJ Hearings: $100 (adjusted for inflation) (42 C.F.R. § 405.1006).
  • Judicial Review: $1,000 (adjusted for inflation) (42 C.F.R. § 405.1006).
  • The amount is based on the actual charge, minus Medicare payments, deductibles, and coinsurance.

California State Court (Limited Civil Cases):

  • $35,000 or less (West's Ann.Cal.C.C.P. § 85).
  • Determined by the plaintiff's demand, excluding attorney's fees, interest, and costs.
  • The plaintiff's demand is accepted unless it's clear it's not made in good faith (Giorgianni v. Crowley, 197 Cal.App.4th 1462 (2011)).

Class Action Fairness Act (CAFA):

  • $5,000,000 threshold for federal jurisdiction (28 U.S.C.A. § 1332).
  • Individual class member claims are aggregated to reach this amount.

Key Takeaway:

The "amount in controversy" is a jurisdictional requirement that varies significantly across different courts and case types. Always consult the specific rules applicable to your situation.