On June 5, 2014, the US Court of Appeals for the Eleventh Circuit held in McDaniel v. Fifth Third Bank that a court must consider the value of all claims put forth by the plaintiff when ascertaining whether the amount of damages satisfies the requirements for federal jurisdiction, even if the court believes that some of those claims lack merit (No. 14-11615, (11th Cir. June 5, 2014)).

Plaintiff Brian McDaniel brought a putative class action in Florida state court, alleging that defendant Fifth Third Bank's policy of charging a $4 check cashing fee to patrons who did not have an account at the bank violated the Florida Consumer Collection Practices Act (FCCPA) and Florida fraud laws. McDaniel sought compensatory damages for his FCCPA claims and punitive damages for his fraud claims. Fifth Third removed to federal court under CAFA, which requires the amount in controversy for any case to exceed $5 million. The plaintiff moved to remand. In considering the motion, the district court held that it lacked subject matter jurisdiction, finding that the plaintiff's fraud claims were "deficient on their face" and therefore not at issue, and the amount of damages flowing from the fraud claims could not count toward the CAFA threshold. Without these claims, the amount in controversy did not reach $5 million, so the district court remanded.

The Eleventh Circuit reversed. The circuit held that when determining whether the amount in controversy has been met for the purposes of federal jurisdiction, the district court should only consider the amount that the plaintiff placed in controversy and not the amount the plaintiff is likely to recover. To find otherwise would require courts to decide the merits of a plaintiff's case before deciding whether jurisdiction exists. A court may only ignore the amount of damages claimed by a plaintiff where the underlying cause of action is brought in bad faith. Therefore the district court's inquiry into whether the plaintiff would actually recover the damages was inappropriate for the purposes of establishing federal jurisdiction.

Practitioners should remember that, for the purposes of establishing federal jurisdiction, a party must only show that the plaintiff could recover an amount in excess of the threshold and that it is inappropriate for a court to consider the probability that the party will recover that amount.