Dart hits bullseye, SCOTUS throws out evidentiary requirement in notice of removal
The United States Supreme Court held on Monday that a defendant seeking removal under CAFA need only allege the jurisdictional amount in its notice of removal. Gone are the days when a defendant must quickly muster an affidavit or other evidence to include in a notice of removal to prove the jurisdictional amount-in-controversy under CAFA.
This case began when the District of Kansas remanded back to state court a class action concerning allegedly deficient royalty payments. See Owens v. Dart Cherokee Basin Operating Co., No. 12-4157, 2013 WL 2237740 (D. Kan. May 21, 2013). (We covered the history of this case here and here). In Dart’s removal papers, it stated that the three requirements of CAFA had been met, and more specifically with regard to the amount-in-controversy, Dart stated the putative class members’ claims totaled more than $8.2 million. Owens moved to remand the case to state court, asserting that Dart’s removal was deficient as a matter of law because it did not include evidence proving the amount-in-controversy exceeded $5 million. In opposing Owens’s motion to remand, Dart submitted a declaration by one of its executive officers, who estimated the amount-in-controversy to be in excess of $11 million dollars. Importantly, Owens did not challenge Dart’s submission. Nonetheless, the district court granted Owens’s motion to remand, finding that under binding Tenth Circuit precedent, evidence outside of the petition and notice of removal is not permitted to determine the amount-in-controversy. The district court also erroneously based its decision, in part, on a purported “presumption” against removal.
The Court vacated the Tenth Circuit’s decision and remanded the case for further proceedings. In so holding, the Court held that a defendant seeking to remove a case to federal court must only file a notice of removal that contains “a short and plain statement of the grounds for removal.” The Court further noted that the party seeking to invoke federal court jurisdiction is responsible for establishing the amount-in-controversy. Relying on the Federal Courts Jurisdiction and Venue Clarification Act of 2011, the Court explained the procedure for when a plaintiff challenges the defendant’s assertion of the amount-in-controversy:
[D]efendants do not need to prove to a legal certainty that the amount in controversy requirement has been met. Rather, defendants may simply allege or assert that the jurisdictional threshold has been met. Discovery may be taken with regard to that question. In case of a dispute, the district court must make findings of jurisdictional fact to which the preponderance standard applies.
Finally, the Court held that there is no anti-removal presumption for cases invoking CAFA, which “Congress enacted to facilitate adjudication of certain class actions in federal court.”
In practice, this decision means that in most cases, a short and sweet allegation that the amount-in-controversy has been met in the notice of removal is sufficient. The evidentiary proofs regarding the amount-in-controversy will come later, once the case is in federal court and the defendant is opposing plaintiff’s motion to remand.