Excessive Punitive Damages Claim Does Not Confer Diversity Jurisdiction

In Smith v. American General Life and Accident Ins. Co., 337 F.3d 888 (7th Cir. July 24, 2003), plaintiff alleged bad faith against an insurance company, and claimed actual damages well below $75,000. Defendant argued that plaintiff’s additional claim for $1 million in punitive damages conferred diversity jurisdiction. However, in part relying on State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408 (Apr. 7, 2003) [see my post here], the Seventh Circuit disagreed, finding that a federal court must take a "realistic look" at punitive damages when considering whether the jurisdictional amount is satisfied for removal.