Rising-Moore, John R v. Red Roof Inns Inc ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-1976
JOHN R. RISING-MOORE,
Plaintiff-Appellant,
v.
RED ROOF INNS, INC.,
Defendant-Appellee.
____________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. IP 1:03-CV-00707-SEB-JPG—Sarah Evans Barker, Judge.
____________
ARGUED JANUARY 6, 2006—DECIDED JANUARY 31, 2006
____________
Before EASTERBROOK, MANION, and WOOD, Circuit
Judges.
EASTERBROOK, Circuit Judge. John Rising-Moore pre-
fers to litigate this slip-and-fall case in state court. But
after his lawyer said that the claim was worth between
$180,000 and $200,000, and demanded $160,000 in settle-
ment, the suit was removed to federal court, where sum-
mary judgment was granted in defendant’s favor. 368 F.
Supp. 2d 867 (S.D. Ind. 2005). Rising-Moore asks us to
return the proceedings to Indiana, where he can have
a second chance on the merits. Diversity of citizenship
is established, but the amount in controversy is disputed.
Rising-Moore slipped just outside the lobby door of a Red
Roof Inn during a sleet storm. He had been driving late
2 No. 05-1976
at night from Indianapolis to his home in Bloomfield
when bad weather led him to stop at the motel rather
than complete the journey. It is unclear whether Rising-
Moore had experienced icing conditions on the road or just
expected to encounter them before reaching home. He says
that the ramp between the lobby door and the parking
lot was ice-free when he arrived but had become slick by the
time he left the office. Rising-Moore maintains that the fall
cost him about $10,000 in direct medical outlays, caused
him to miss work for about 10 weeks, and left him with
permanent injuries (including ongoing pain and suffering).
He makes about $175,000 annually from his business, so
Red Roof Inns counts his lost income as about $35,000,
which when added to the $10,000 in out-of-pocket costs falls
only $30,000 short of the jurisdictional minimum. A modest
allowance for pain, suffering, and future losses (either
income foregone or medical expenses incurred) brings the
total over the threshold. Counsel’s estimate that the stakes
are more than double the jurisdictional minimum shows,
Red Roof Inns maintains, that pain, suffering, and future
loss cannot be dismissed as negligible. The district court
agreed and denied Rising-Moore’s motion to remand. 2004
U.S. Dist. LEXIS 11748 (S.D. Ind. Mar. 30, 2004).
The complaint filed in state court does not reveal how
much Rising-Moore wants as damages. Indiana no longer
allows pleadings to do so. Ind. Trial R. 8(A)(2). All too many
litigants had made whopping demands in order to generate
publicity; Indiana concluded that the best way to curtail
this practice is to forbid any statement about how much
money the plaintiff seeks. In a system of courts having
general jurisdiction, that makes a great deal of sense; it
does not mesh well, however, with federal jurisdiction,
because removal in diversity suits under 28 U.S.C. §1332depends on the amount in controversy. When the complaint
includes a number, it controls unless recovering that
amount would be legally impossible. St. Paul Mercury
No. 05-1976 3
Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938). When
the complaint omits a number, however, the size of the
claim must be evaluated in some other way.
A defendant who removes a suit in which the com-
plaint lacks an ad damnum must establish a “reasonable
probability” that the amount in controversy exceeds
$75,000. See, e.g., Smith v. American General Life &
Accident Insurance Co., 337 F.3d 888, 892 (7th Cir. 2003);
Chase v. Shop ‘N Save Warehouse Foods, Inc., 110 F.3d 424,
427-28 (7th Cir. 1997). The burden of persuasion rests on
the removing party, see Brill v. Countrywide Home Loans,
Inc., 427 F.3d 446 (7th Cir. 2005), but once this demonstra-
tion has been made the rule of St. Paul Mercury kicks in. A
removing party need not show that the plaintiff will prevail
or collect more than $75,000 if he does. The burden, rather,
is to show what the plaintiff hopes to get out of the litiga-
tion; if this exceeds the jurisdictional amount, then the case
proceeds in federal court unless a rule of law will keep the
award under the threshold. See Brill, 427 F.3d at 449; Pratt
Central Park Limited Partnership v. Dames & Moore, Inc.,
60 F.3d 350 (7th Cir. 1995).
Rising-Moore’s lawyer has revealed what he thinks his
loss amounts to: between $180,000 and $200,000. This is
the amount “in controversy.” In this court, Rising-Moore
dismisses this figure as one offered early in the negotia-
tions; the settlement demand of $160,000 receives similar
treatment, coupled with a plea that it be ignored given Fed.
R. Evid. 408, which provides that offers in compromise
generally are inadmissible. If the court is to look at the
parties’ negotiations, Rising-Moore insists, it should give
principal weight to his offer to settle for $60,000 while the
motion for summary judgment was pending. Although post-
removal events—even an irrevocable promise not to accept
more than the jurisdictional minimum—do not authorize
remand of a suit that was within federal jurisdiction when
removed, see St. Paul Mercury, 303 U.S. at 293, Rising-
4 No. 05-1976
Moore contends that the $60,000 offer shows his real aims
and demonstrates that the dispute between the parties
never exceeded $75,000.
Rule 408 says that a settlement offer is not admissible “to
prove liability for or invalidity of the claim or its amount.”
Red Roof Inns did not use the offers to show either its own
liability or the “invalidity” of Rising-Moore’s claim. Instead
it used them to show the stakes, a question independent of
the claim’s merit. The district court thus was entitled to
take account of the offers, and perforce of counsel’s pre-offer
estimate that a jury would value Rising-Moore’s injury at
$180,000 or up. The $180,000 to $200,000 estimate is close
in spirit to the ad damnum in a complaint; it makes sense
to give it the same legal status. That the complaint is
“early” in the case, and precedes discovery, does not dimin-
ish the jurisdictional effect of the demands it contains; no
more does the timing of counsel’s estimate rob it of conse-
quence. Rising-Moore does not contend that it would be
impossible for a jury properly charged under Indiana law to
find damages exceeding $75,000 and did not seek an
evidentiary hearing under Fed. R. Civ. P. 12(b)(1) at which
the parties could present evidence about what he “really”
wants. For a high-income plaintiff such as Rising-Moore, an
award over the threshold cannot be ruled out. Thus the case
belongs in federal court.
To the extent that any event after the date of removal can
shed light on the jurisdictional question, the willingness to
accept $60,000 supports a conclusion that the “controversy”
exceeds $75,000. Rising-Moore did not offer to take $60,000
if a jury should decide in his favor and nothing otherwise;
he wanted $60,000 with certainty, which implies that the
stakes at trial comfortably exceed the minimum. Plaintiffs
win about half of all tort suits that go to trial. See Seth A.
Seabury, Nicholas M. Pace & Robert T. Reville, Forty Years
of Civil Jury Verdicts, 1 J. Empirical Legal Studies 1, 9-10
(2004); Thomas H. Cohen, Tort Trials and Verdicts in Large
No. 05-1976 5
Counties, 2001 (Bureau of Justice Statistics Nov. 2004); see
also George L. Priest & Benjamin Klein, The Selection of
Disputes for Litigation, 13 J. Legal Studies 1 (1984) (provid-
ing a theoretical explanation why this should be so). If
Rising-Moore had a 50% likelihood of a $120,000 verdict at
trial, he would offer to accept $60,000 with certainty, which
has the same expected value; both sides then could save
legal expenses. If he is risk averse, he would be willing to
accept less than half of the anticipated award: then an
offer to take $60,000 might imply that the stakes were
$150,000. If his lawyer had private knowledge suggest-
ing that the chance of prevailing was less than 50%, then
the anticipated verdict implied by the offer (if a jury found
in plaintiff’s favor) would be even higher. So, for example,
a risk-averse plaintiff who thought that he had a one-in-
three chance of winning $200,000 at trial would take a sure
$60,000 happily. Only if Rising-Moore were risk-neutral
and had more than an 80% chance of winning a favorable
verdict would the $60,000 offer imply that the full contro-
versy is under $75,000. Given the district judge’s belief that
Rising-Moore has no chance of prevailing before a reason-
able jury, that hardly seems likely.
Only brief mention of the merits is required; the dis-
trict judge has said everything that needs saying on this
score. Indiana does not make land owners absolutely liable
for falls on their property. See Hammond v. Allegretti, 262
Ind. 82, 88, 311 N.E.2d 821, 826 (1974). With respect to
winter storms, in particular, Indiana does not require
immediate removal of snow or ice. Hammond, 262 Ind. at
88. Although Rossow v. Jones, 404 N.E.2d 12 (Ind. App.
1980), held that a week is too long to wait, action within
shorter times (such as at daybreak during a storm, or soon
after a storm ends) has been treated as reasonable dili-
gence. See Orth v. Smedley, 378 N.E.2d 20, 23 (Ind. App.
1978) (dictum). Red Roof Inns did not wait a week, or even
overnight. As Rising-Moore tells the tale, the path was clear
6 No. 05-1976
and dry when he entered and slippery (because of
an ongoing ice storm) when he left the motel’s office
about 15 minutes later. Only a duty of continuous monitor-
ing and clearing during a winter storm would make an
owner liable under these circumstances, and there is no
such duty in Indiana.
AFFIRMED
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-31-06