The U.S. Supreme Court recently issued an important opinion clarifying the requirements for removal of class actions to federal court under the Class Action Fairness Act of 2005 (“CAFA”). Under 28 U.S.C. § 1446(a), 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.” CAFA gives federal courts jurisdiction over class actions if the amount in controversy exceeds $5 million. Until recently, however, federal courts were split on whether actual evidence of the amount in controversy must be contained in the notice of removal.
In Dart Cherokee Basin Operating Co., LLL v. Owens, No. 13-719, Slip Op (Dec. 15, 2014), Plaintiff Owens filed a putative class action in Kansas state court against Dart and others alleging that defendants underpaid royalties due under certain oil and gas leases. Dart removed the case to federal district court under CAFA. In connection with satisfying the amount in controversy requirement for CAFA jurisdiction, Dart alleged in its Notice of Removal that the purported underpayments totaled $8.2 million. In response, Owens moved to remand the case to state court, arguing that Dart’s removal notice was “deficient as a matter of law” because it did not include evidence proving that the amount in controversy exceeded $5 million. The district court agreed with Owens and remanded the case. Dart appealed the district court’s ruling to the Tenth Circuit, but the Tenth Circuit denied review and rehearing en banc.
On Monday, in a 5-4 opinion authored by Justice Ginsburg, the U.S. Supreme Court reversed, holding that:
- a defendant need not present evidence when removing a case, but instead need only file a notice of removal containing a short and plain statement of the grounds for removal, including a plausible allegation that the amount in controversy exceeds the jurisdictional threshold;
- evidence establishing the amount in controversy is required only when the plaintiff contests, or the court questions, the defendant’s allegation; and
- there is no anti-removal presumption for cases removed under CAFA.
The opinion is available here (last visited Dec. 16. 2014). For more information about how this ruling may affect your business and/or current or pending litigation, please contact the authors.
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