Throwing a DART at CAFA Removal – When To Prove Amount In Controversy?
In the notice of removal, apparently, because it may be too late if you simply plead satisfaction of the amount in controversy and wait until the amount is challenged to prove the underlying calculations. In Dart Cherokee Basin Operating Co., LLC v. Owens, 730 F.3d 1234 (10th Cir,. September 17, 2013), Judge Hartz, joined by Judges Kelly, Tymkovich and Phillips, dissented from the Court’s denial of en banc review of this issue by an equally divided vote. In this case, the Petitioner/Defendant had removed the case pursuant to CAFA, and pleaded facts supporting satisfaction of the $5 million amount in controversy, but had waited until the Respondent/Plaintiff challenged the notice of removal to submit a declaration setting forth a calculation of potential liability. The District Court remanded the case, holding that the declaration was untimely.
Judge Hartz would have granted review, and argued that the Tenth Circuit owed a duty to the bench and bar to clarify the standard of removal in CAFA cases, and should reject the standard imposed by the District Court as imposing an “excessive” and “unprecedented” burden beyond that contemplated by federal pleading standards under Fed. R. Civ. P. 8(a)(1). And while the District Court had relied on the Tenth Circuit’s decision in McPhail v. Deere & Co., 529 F.3d 947 (10th Cir. 2008) for the proposition that the party seeking removal has the burden of establishing the amount in controversy by a preponderance of the evidence, Judge Hartz was quick to observe that that case says nothing about what supporting information need be included in the notice of removal, and under what circumstances a removing party may rely on supporting evidence not submitted with the notice of removal.
In closing, Judge Hartz lamented a lost opportunity to provide much-needed clarity on an unclear issue:
In short, I think it is important that this court inform the district courts and the bar of this circuit that a defendant seeking removal under CAFA need only allege the jurisdictional amount in its notice of removal and must prove that amount only if the plaintiff challenges the allegation.
So until further notice, counsel would be well-advised to include proof of the amount in controversy in their notice of removal. Just to be safe.