We love federal court. Hence, we love removing actions to federal court. But the road to removal is paved with opportunities for remand. One primary issue is how to demonstrate that the amount in controversy requirement has been met. Typically, the plaintiff’s complaint will not pray for any specific amount of money. So, defense counsel must rely on other evidence for its valuation analysis.
But in trying to show that the plaintiff’s case is theoretically worth at least $75,000, attorneys sometimes overlook a crucial bit of evidence: the pre-litigation settlement demand. In assessing the amount in controversy, a plaintiff’s settlement demand is relevant. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). Indeed, in the Ninth Circuit, such evidence may by itself be sufficient to establish the jurisdictional minimum. Id. Moreover, settlement demands (including those otherwise inadmissible in California court) are admissible:
[Federal] Rule [of Evidence] 408 disallows use of settlement letters to prove "liability for or invalidity of the claim or its amount." We agree with the district court that Rule 408 is inapplicable because this evidence was not offered to establish the amount of [defendant’s] liability, but merely to indicate [plaintiff’s] assessment of the value of the [claim].
Cohn, 281 F.3d at 840; see also also Simmons v. PCR Tech., 209 F. Supp. 2d 1029, 1033 (N.D. Cal. 2002) (admitting evidence of a settlement demand that was otherwise inadmissible under California Evidence Code § 1152).