Neky v. Costco Wholesale Corporation

Background

Michael Neky sued Costco Wholesale Corporation in the Superior Court of California, County of San Mateo. He alleged negligence and premises liability arising from a January 19, 2017 fall on a wet area of the delivery docks at a Costco-owned property in Foster City, California. Neky alleged that Costco’s negligence and failure to maintain the property caused his fall and resulting injuries.

Neky filed the state-court complaint on January 17, 2019. The complaint requested general damages, special damages, lost earnings, and other costs in an unspecified amount. On March 1, 2019, Costco’s registered agent was served with the complaint and Neky’s Statement of Damages, which listed $1,525,000 in general and specific damages.

Costco removed the case to federal court on June 28, 2019, relying on diversity jurisdiction. Neky moved to remand, arguing that the parties were not completely diverse and that Costco’s removal notice was untimely. Because the court resolved the motion based on untimeliness, it did not decide whether diversity jurisdiction existed.

Analysis

Federal law generally gives a defendant 30 days to file a notice of removal after receiving the initial pleading. If the initial pleading does not show that the case is removable, the 30-day period may begin when the defendant receives another document from which removability can first be determined.

The court held that the Statement of Damages served on March 1 triggered the 30-day removal period. Under the court’s analysis, that statement functioned like an amendment to the complaint because it specifically identified the damages Neky sought. The statement therefore gave Costco notice that the amount in controversy exceeded the $75,000 threshold for diversity jurisdiction.

Costco argued that its counsel did not recognize the amount in controversy until receiving Heartland Express, Inc.’s Application for Lien on May 30, 2019. The court rejected that argument because Costco did not dispute receiving the Statement of Damages with the complaint on March 1. The court also considered the complaint, Statement of Damages, and Proof of Service because those documents were included with Costco’s removal papers and were part of the case record.

Disposition

The court concluded that Costco filed its notice of removal more than 30 days after receiving the Statement of Damages. The court therefore granted the Motion to Remand and remanded the case to the Superior Court of California, County of San Mateo. Judge William H. Orrick expressly stated that he did not need to reach the question whether diversity jurisdiction existed.