Supreme Court to Address Evidentiary Requirements for Determining Removal Jurisdiction in Class Actions

The Supreme Court of the United States granted certiorari in Dart Cherokee Basin Operating Company, LLC v. Owens, to resolve a circuit split over the evidentiary standard for determining removal jurisdiction pursuant to the Class Action Fairness Act (“CAFA”). Specifically, the Court will consider “[w]hether 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?”

In Dart Cherokee, the district court concluded that the defendant failed to satisfy its burden of establishing removal jurisdiction under CAFA because, although the Notice of Removal alleged that CAFA’s $5 million jurisdictional threshold was satisfied, the defendant did not submit any attendant evidence in its Notice of Removal. Rather, the defendant only provided the evidence in opposition to the plaintiff’s motion for remand, which the court concluded could not be properly considered. The Tenth Circuit refused to hear the appeal and, in an opinion dissenting from the Circuit Court’s refusal to hold a rehearing en banc, three Circuit Judges concluded the district court’s decision to remand the case was “contrary to fundamental principles regarding the purpose and function of pleadings in federal court,” and that the burden imposed as a result of the decision was “excessive and unprecedented.”

Currently, the Circuit Courts of Appeal apply varying standards in deciding whether a defendant has sufficiently pled the required amount in controversy in a CAFA removal case. Those standards range from the more easily satisfied “reasonable probability,” “preponderance of the evidence,” and “legal impossibility” tests to the more stringent “legal certainty” standard. Courts disagree on what evidence may be considered in reaching a decision that the amount in controversy under CAFA has been satisfied and, moreover, some Circuits have yet to even reach a decision as to the standard a court must apply to find the amount in controversy has been sufficiently pled.

Appropriately, it seems the Supreme Court will use this case to resolve the Circuit split and supply a uniform standard for lower courts to evaluate the amount in controversy in a case removed under CAFA. Such a decision will likely provide welcome insight to courts and counsel alike, while reinforcing the principles underlying CAFA. Stay tuned to this blog for news of the Supreme Court’s decision.

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