Background
Defendants appealed the district court’s denial of mandatory attorneys’ fees under RCW four point eight four point two five zero. The district court had ruled that because it exercised diversity jurisdiction, the amount in controversy was necessarily over seventy five thousand dollars, rendering the statute inapplicable. The plaintiffs initially sought over two hundred fifty thousand dollars, but after union plaintiffs were dismissed, the remaining plaintiff indicated in a settlement letter that her individual damages were ten thousand dollars or less.
The court’s reasoning
The court determined that courts assess the amount in controversy for diversity jurisdiction at the time of removal, but subsequent partial dismissals may validly decrease the amount below the threshold. Under Washington law, the amount pleaded refers to notice to the opposing party that the moving party seeks under ten thousand dollars. This notice does not need to occur at the original pleading stage and may be provided in a settlement offer or other communication before trial. The plaintiff’s letter stating damages were ten thousand dollars or less satisfied this requirement.
What it means going forward
Defendants may now seek mandatory attorneys’ fees on remand if they are deemed the prevailing party. The ruling clarifies that federal courts exercising diversity jurisdiction must apply state fee-shifting statutes when the amount in controversy drops below the statutory limit due to case developments.