Supreme Court — Removal — § 1446(a) Requires Only Plausible Allegation of Amount in Controversy — Evidence Required Only If Plaintiff Contests, or Court Questions, Defendant’s Allegation — No Presumption against Removal in CAFA Cases

Dart Cherokee Basin Operating Company, LLC v. Owens, 2014 U.S. LEXIS 8435 (U.S. Dec. 15, 2014):

To remove a case from a state court to a federal court, a defendant must file in the federal forum a notice of removal "containing a short and plain statement of the grounds for removal." 28 U. S. C. §1446(a). When removal is based on diversity of citizenship, an amount-in-controversy requirement must be met. Ordinarily, "the matter in controversy [must] excee[d] the sum or value of $75,000." §1332(a). In class actions for which the requirement of diversity of citizenship is relaxed, §1332(d) (2)(A)-(C), "the matter in controversy [must] excee[d] the sum or value [*6]  of $5,000,000," §1332(d)(2). If the plaintiff's complaint, filed in state court, demands monetary relief of a stated sum, that sum, if asserted in good faith, is "deemed to be the amount in controversy." §1446(c)(2). When the plaintiff's complaint does not state the amount in controversy, the defendant's notice of removal may do so. §1446(c)(2)(A).

To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation? That is the single question argued here and below by the parties and the issue on which we granted review. The answer, we hold, is supplied by the removal statute itself. A statement "short and plain" need not contain evidentiary submissions.

I

Brandon W. Owens, plaintiff below and respondent here, filed a putative class action in Kansas state court alleging that defendants Dart Cherokee Basin Operating Company, LLC, and Cherokee Basin Pipeline, LLC (collectively, Dart), underpaid royalties owed to putative class members under certain oil and gas leases. The complaint sought "a fair and reasonable amount" to compensate putative class members for "damages" [*7]  they sustained due to the alleged underpayments. App. to Pet. for Cert. 34a, 35a.

Invoking federal jurisdiction under the Class Action Fairness Act of 2005 (CAFA), Dart removed the case to the U. S. District Court for the District of Kansas. CAFA gives federal courts jurisdiction over certain class actions, defined in §1332(d)(1), if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million. §1332(d)(2), (5)(B); see Standard Fire Ins. Co. v. Knowles, 568 U. S. ___, ___, 133 S. Ct. 1345, 185 L. Ed. 2d 439, 443 (2013). Dart's notice of removal alleged that all three requirements were satisfied. With respect to the amount in controversy, Dart stated that the purported underpayments to putative class members totaled more than $8.2 million.

Owens moved to remand the case to state court. The notice of removal was "deficient as a matter of law," Owens asserted, because it included "no evidence" proving that the amount in controversy exceeded $5 million. App. to Pet. for Cert. 46a, 53a. In response, Dart submitted a declaration by one of its executive officers. The declaration included a detailed damages calculation indicating that the amount in controversy, sans interest, exceeded $11 million. Without challenging Dart's calculation, Owens urged that Dart's [*8]  amount-in-controversy submission came too late. "[The] legally deficient [notice of removal]," Owens maintained, could not be cured by "post-removal evidence about the amount in controversy." Id., at 100a.

Reading Tenth Circuit precedent to require proof of the amount in controversy in the notice of removal itself, the District Court granted Owens' remand motion. Dart's declaration, the District Court held, could not serve to keep the case in federal court. The Tenth Circuit, as the District Court read Circuit precedent, "has consistently held that reference to factual allegations or evidence out-side of the petition and notice of removal is not permitted to determine the amount in controversy." App. to Pet. for Cert. 26a, and n. 37 (citing Laughlin v. Kmart Corp., 50 F. 3d 871, 873 (1995); Martin v. Franklin Capital Corp., 251 F. 3d 1284, 1291, n. 4 (2001); Oklahoma Farm Bureau Mut. Ins. Co. v. JSSJ Corp., 149 Fed. Appx. 775 (2005)).

Ordinarily, remand orders "[are] not reviewable on appeal or otherwise." §1447(d). There is an exception, however, for cases invoking CAFA. §1453(c)(1). In such cases, "a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand." Ibid. Citing this exception, Dart petitioned the Tenth Circuit for permission to appeal. "Upon careful consideration of the parties' submissions, as well as the applicable law," the Tenth Circuit panel, [*9]  dividing two-to-one, denied review. App. to Pet. for Cert. 13a-14a.

An evenly divided court denied Dart's petition for en banc review. Dissenting from the denial of rehearing en banc, Judge Hartz observed that the Tenth Circuit "[had] let stand a district-court decision that will in effect impose in this circuit requirements for notices of removal that are even more onerous than the code pleading requirements that . . . federal courts abandoned long ago." 730 F. 3d 1234 (2013). The Tenth Circuit was duty-bound to grant Dart's petition for rehearing en banc, Judge Hartz urged, because the opportunity "to correct the law in our circuit" likely would not arise again. Id., at 1235. Henceforth, Judge Hartz explained, "any diligent attorney . . . would submit to the evidentiary burden rather than take a chance on remand to state court." Ibid.

Dart filed a petition for certiorari in this Court requesting resolution of the following question: "Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required 'short and plain statement of the grounds for removal' enough?" Pet. for Cert. i. Owens' brief in opposition raised [*10]  no impediment to this Court's review. (Nor, later, did Owens' merits brief suggest any barrier to our consideration of Dart's petition.) We granted certiorari to resolve a division among the Circuits on the question presented. 572 U. S. ___, 134 S. Ct. 1744, 188 L. Ed. 2d 829 (2014). Compare Ellenburg v. Spartan Motors Chassis, Inc., 519 F. 3d 192, 200 (CA4 2008) (a removing party's notice of removal need not "meet a higher pleading standard than the one imposed on a plaintiff in drafting an initial complaint"), and Spivey v. Vertrue, Inc., 528 F. 3d 982, 986 (CA7 2008) (similar), with Laughlin, 50 F. 3d, at 873 ("the requisite amount in controversy . . . must be affirmatively established on the face of either the petition or the removal notice").

II

As noted above, a defendant seeking to remove a case to a federal court must file in the federal forum a notice of removal "containing a short and plain statement of the grounds for removal." §1446(a). By design, §1446(a) tracks the general pleading requirement stated in Rule 8(a) of the Federal Rules of Civil Procedure. See 14C C. Wright, A. Miller, E. Cooper, & J. Steinman, Federal Practice and Procedure §3733, pp. 639-641 (4th ed. 2009) ("Section 1446(a) requires only that the grounds for removal be stated in 'a short and plain statement'--terms borrowed from the pleading requirement set forth in Federal Rule of Civil Procedure 8(a)."). The legislative history of §1446(a) is corroborative. Congress, by borrowing the familiar "short and plain statement" standard from [*11]  Rule 8(a), intended to "simplify the 'pleading' requirements for removal" and to clarify that courts should "apply the same liberal rules [to removal allegations] that are applied to other matters of pleading." H. R. Rep. No. 100-889, p. 71 (1988). See also ibid. (disapproving decisions requiring "detailed pleading").

When a plaintiff invokes federal-court jurisdiction, the plaintiff's amount-in-controversy allegation is accepted if made in good faith. See, e.g., Mt. Healthy City Bd. of Ed. v. Doyle, 429 U. S. 274, 276, 97 S. Ct. 568, 50 L. Ed. 2d 471 (1977) ("'[T]he sum claimed by the plaintiff controls if the claim is apparently made in good faith.'") (quoting St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U. S. 283, 288, 58 S. Ct. 586, 82 L. Ed. 845 (1938); alteration in original). Similarly, when a defendant seeks federal-court adjudication, the defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court. Indeed, the Tenth Circuit, although not disturbing prior decisions demanding proof together with the removal notice, recognized that it was anomalous to treat commencing plaintiffs and removing defendants differently with regard to the amount in controversy. See McPhail v. Deere & Co., 529 F. 3d 947, 953 (2008) (requiring proof by defendant but not by plaintiff "bears no evident logical relationship either to the purpose of diversity jurisdiction, or to the principle [*12]  that those who seek to invoke federal jurisdiction must establish its prerequisites").

If the plaintiff contests the defendant's allegation, §1446(c)(2)(B) instructs: "[R]emoval . . . is proper on the basis of an amount in controversy asserted" by the defendant "if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds" the jurisdictional threshold. 1 This provision, added to §1446 as part of the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (JVCA), clarifies the procedure in order when a defendant's assertion of the amount in controversy is challenged. In such a case, both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied. As the House Judiciary Committee Report on the JVCA observed:

   "[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." [*13]  H. R. Rep. No. 112-10, p. 16 (2011).

Of course, a dispute about a defendant's jurisdictional allegations cannot arise until after the defendant files a notice of removal containing those allegations. Brief for Dart 14.

1   Section 1446(c)(2) applies to removals "sought on the basis of the jurisdiction conferred by section 1332(a)," and §1446(c)(2)(B) provides that "removal of the action is proper . . . [if] the amount in controversy exceeds the [in excess of $75,000] amount specified in section 1332(a)" (emphasis added). We assume, without deciding, a point the parties do not dispute: Sections 1446(c)(2), and 1446(c)(2)(B) apply to cases removed under §1332(d)(2), and removal is proper is the amount in controversy exceeds $5 million, the amount specified in §1332(d)(2). See Frederick v. Hartford Underwriters Ins. Co., 683 F. 3d 1242, 1247 (CA10 2012) ("[T]here is no logical reason why we should demand more from a CAFA defendant than other parties invoking federal jurisdiction." (internal quotation marks omitted)).

In remanding the case to state court, the District Court relied, in part, on a purported "presumption" against removal. App. to Pet. for Cert. 28a. See, e.g., Laughlin, 50 F. 3d, at 873 ("[T]here is a presumption against removal jurisdiction."). We need not here decide whether such a presumption is proper in mine-run diversity cases. It suffices to point out that no antiremoval presumption attends cases invoking [*14]  CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court. See Standard Fire Ins. Co., 568 U. S., at ___, 133 S. Ct. 1345, 185 L. Ed. 2d 439, 442 ("CAFA's primary objective" is to "ensur[e] 'Federal court consideration of interstate cases of national importance.'" (quoting §2(b)(2), 119 Stat. 5)); S. Rep. No. 109-14, p. 43 (2005) (CAFA's "provisions should be read broadly, with a strong preference that interstate class actions should be heard in a federal court if properly removed by any defendant.").

In sum, as specified in §1446(a), a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Evidence establishing the amount is required by §1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant's allegation.

Share this article:

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email

Recent Posts

Archives