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Harmon v. Oki Systems

June 2, 1997




Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 93 C 1102 David F. Hamilton, Judge.

Before FLAUM, EASTERBROOK, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

Argued April 14, 1997

Decided June 2, 1997

This is a products liability case stemming from injuries Joe Harmon suffered when his foot was pinned between a wall and a forklift he had been driving. After Harmon and his wife sued the manufacturer and the company that serviced the forklift in Indiana state court, the manufacturer removed the case to the United States District Court for the Southern District of Indiana. After nearly 2 years of discovery the Harmons filed a motion to remand. Judge David Hamilton denied the motion and granted summary judgment for the defendants. This appeal followed.

Harmon had driven forklifts at the Cummins Engine Plant in Indianapolis, Indiana, for over 19 years. On the morning of July 29, 1991, he was operating a "Rider," an electric-powered "stand-up" forklift manufactured by Crown Equipment. Harmon used the Rider for 6 hours before lunch, took a break, and resumed operations in the afternoon. Throughout the day, the brakes on the Rider, which operate just the opposite as do brakes on a car (i.e., you have to press down on the pedal to disengage the brakes), worked properly. Shortly after resuming work, Harmon jumped off of the Rider to retrieve a box. As he was about to pick up the box, he saw the Rider coming toward him. Harmon tried to jump back onto the forklift, but his foot became pinned between the Rider and a concrete wall. He was unable to free himself and called for help. Although a number of co-workers came to his aid, they were unable to move the Rider until Harmon stepped on the brake pedal with his other foot and drove away from the wall.

In July 1993 the Harmons sued Crown and OKI Systems, the company that sold and serviced the Rider, in Indiana state court. Mr. Harmon's suit alleged Crown negligently designed the Rider and was strictly liable for selling a product that was defective due to inadequate warnings. Mr. Harmon also asserted that OKI negligently maintained the forklift. Mrs. Harmon tacked on a loss of consortium claim, and both Harmons sought punitive damages.

On August 20, 1993, Crown filed a notice of removal and civil cover sheet in district court, alleging diversity jurisdiction existed under 28 U.S.C. sec.1332. The notice stated Crown and OKI were Ohio corporations and the Harmons were Indiana residents. However, the notice, which was no model to emulate, did not mention (1) the defendants' principal places of business; (2) the Harmons' Indiana citizenship (as opposed to their residence); or (3) that over $50,000 was at stake.

The Harmons did not immediately point out the omissions. Instead they engaged in discovery for almost two years. On August 9, 1995, however, after the district court dropped the case from the trial calendar and scheduled arguments on the defendants' motions for summary judgment -- a subtle hint that the case might end in defeat without a trial -- the Harmons suddenly "discovered" the omissions in the removal notice and sought remand back to state court.

Judge Hamilton denied the remand request and allowed Crown to amend its removal papers pursuant to 28 U.S.C. sec.1653. He pointed out that the Harmons did not claim that diversity did not exist or that the amount in controversy was less than $50,000. Rather, the Harmons merely asserted that Crown failed to demonstrate those facts to a reasonable probability. Judge Hamilton then found that the omissions at issue were "procedural defects" and explained that under 28 U.S.C. sec.1447(c), a motion to remand based on defects of this sort must be made within 30 days of removal. Finally, Judge Hamilton concluded that the record amply demonstrated that federal jurisdiction was proper at the time of removal. He noted that the Harmons' answers to interrogatories made clear that they had incurred over $55,000 in medical expenses alone and that $80,000 in lost wages were suffered by the time the case was removed.

On the same day he denied remand, Judge Hamilton resolved a number of evidentiary issues and granted summary judgment for Crown. He concluded the Harmons had not shown that any act or omission by Crown proximately caused the accident. Approximately 10 months later and based on a slightly different record, Judge Hamilton granted summary judgment for OKI. He again reasoned that the Harmons could not show proximate cause. We review the district court's conclusion that it had jurisdiction and its decisions to grant summary judgment, de novo.

The Harmons first argue that Judge Hamilton erred by declining to remand the case and allowing Crown to amend its removal papers. The plaintiffs raise a bunch of arguments, all of which can be boiled down to two main themes. First, they contend the district court erred in finding that the omissions in Crown's notice were subject to sec.1447's 30-day limit for challenging procedural defects. Second, they contend the district court erred by using postremoval evidence (i.e., answers to interrogatories) to determine whether jurisdiction was proper at the time of removal. Throughout both arguments the Harmons remind us that Crown admitted (at a hearing on the issue) it did not know the exact amount in controversy when the case started because Indiana rules bar plaintiffs from alleging a specific damage figure in their complaints.

Our first task is to pin down whether Crown's errors were procedural defects covered by sec.1447(c) or instead omissions which reveal the absence of subject matter jurisdiction. See In re Continental Cas. Co., 29 F.3d 292, 293 (7th Cir. 1994). The only circuit to consider this issue has found that sec.1447(c) covers any defects which do not go to the "question of whether the case could have been brought in federal district court." In re Allstate Ins. Co., 8 F.3d 219, 221 (5th Cir. 1993). Applying that definition, the Fifth Circuit held that a defendant's failure to allege citizenship as opposed to residency (one of Crown's errors) constituted a procedural defect. As the court put it, although the party failed "to demonstrate diversity, the record discloses no dispute that it in fact existed." Id. (emphasis in original). That seems logical, and Crown's omissions -- like those in Allstate -- did not undermine jurisdiction (as would have been the case, for example, if the Harmons were really Ohio citizens living in Indiana).

The question is, then, what evidence may the district court use to figure out whether jurisdiction actually existed at the time of removal. The Harmons say district courts are limited to the evidence in the record when removal is sought. In support, they cite In re Shell Oil Co., 970 F.2d 355 (7th Cir. 1992) (per curiam), which held that plaintiffs cannot defeat federal jurisdiction simply by filing postremoval affidavits stating they are seeking less than the jurisdictional amount. In addition, our recent opinion in Chase v. Shop 'N Save Warehouse Foods, Inc., No. 96-2037, 1997 WL 149536 (7th Cir. Mar. 27, 1997), seems to lend some support to the Harmons' view. It states, the "court, however, is limited to examining only that evidence of the amount in controversy that was available at the moment the petition for removal was filed." Id. at *3 (citing Shell). Finally, the plaintiffs refer us to Laughlin v. Kmart Corp., 50 F.3d 871 (10th Cir.), cert. denied, 116 S. Ct. 174 (1995). In that case the defendant removed a suit based on diversity jurisdiction, but did not mention ...

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