Legal Definitions - amount in controversy

The term amount in controversy refers to the total monetary value of what a plaintiff (the person or entity bringing a lawsuit) is seeking from a defendant (the person or entity being sued). This value can include not only a specific sum of money for damages but also the estimated monetary worth of non-monetary remedies, such as an order from the court to do or stop doing something (an injunction).

This concept is crucial because it often determines which court has the authority, or "jurisdiction," to hear a particular case. Different court systems and even different levels within the same court system have specific "amount in controversy" requirements.

• Federal Court Diversity Jurisdiction: For a case to be heard in a federal district court based on diversity jurisdiction (meaning the parties are from different states), the amount in controversy claimed by the plaintiff must exceed $75,000. This threshold ensures that federal courts focus on more substantial disputes between citizens of different states.

  Example 1: A business owner from Florida sues a construction company from Georgia for breach of contract, claiming that the company's failure to complete a project on time resulted in $120,000 in lost profits and additional expenses. Because the claimed amount of $120,000 exceeds the $75,000 federal threshold, and assuming the parties are truly diverse (from different states), this case could potentially be heard in a federal court.

• Federal Court Class Action Lawsuits: For certain large-scale class action lawsuits to be heard in federal court under the Class Action Fairness Act (CAFA), the total amount in controversy for all claims combined must exceed $5,000,000. This allows federal courts to handle significant disputes affecting many people across state lines.

  Example 2: Thousands of consumers across the country file a class action lawsuit against a major appliance manufacturer, alleging that a widespread defect in a popular refrigerator model caused an average of $600 in damages per customer. If the total damages for all affected customers are estimated to be $15 million, this collective amount exceeds the $5 million threshold for federal class action jurisdiction, making it eligible for a federal court.

• State Court Tiers: Many state court systems have different tiers of courts (e.g., small claims court, district court, superior court), each with its own "amount in controversy" limits. These limits help streamline the judicial process by directing smaller disputes to less formal and often faster courts.

  Example 3: A tenant in California wants to sue their landlord for the return of a $3,000 security deposit that was wrongfully withheld. California's small claims court handles cases where the amount in controversy is $12,500 or less for individuals. Since the tenant's claim of $3,000 falls within this limit, they can file their lawsuit in the simpler and more accessible small claims court rather than a higher-level state court.