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In considering a motion to compel arbitration, federal subject-matter jurisdiction based on diversity of citizenship can only be found if "it appears to a legal certainty," looking only at the petition, that the parties could recover an amount equal or greater to the jurisdictional threshold, according to a Wisconsin federal court.
In Woehrer v. Bernard, No. 06C1194, 2007 WL 1795592 (E.D. Wis. June 20, 2007), Woehrer brought a motion to compel arbitration with Bernard over disputed legal fees. Bernard opposed the motion, claiming the federal court lacked the subject-matter and personal jurisdiction necessary to hear the controversy and order arbitration.
The Court concluded that it did not have subject-matter jurisdiction over the matter, because the claim brought by Woehrer did not satisfy the amount in controversy requirement at federal court. The Court agreed that the parties were diverse in citizenship, but noted that Woehrer failed to establish that her claim exceeded the jurisdictional minimum of $75,000.
"To determine whether the jurisdictional minimum has been met," the Court looked "only at the petition, and ask[ed] how much is at stake in the arbitration dispute, i.e., what is the maximum the arbitrator could award petitioner." Here, the Court found Woehrer did not "ask for a specific amount and [did] not state anything that indicates that her claim is worth more than $75,000."
Furthermore, the Court was not swayed by the possibility that Woehrer's claim could exceed $75,000 if granted punitive damages, noting that "under Wisconsin law,…punitive damages may not be awarded in a breach of contract claim," and "even if the arbitrator could award punitive damages, it is extremely unlikely that it would award an amount which together with compensatory damages would exceed the jurisdictional minimum."
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