Keywords: CAFA, jurisdictional allegations, removal notice, civil action

Yesterday, the Supreme Court granted certiorari in one case of interest to the business community:

Federal Jurisdiction—Class Action Fairness Act—Sufficiency of Jurisdictional Allegations in Removal Notice

To remove a civil action from state court to federal court, the defendant must "file ... a notice of removal ... containing a short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a). Today, the Supreme Court granted certiorari in Dart Cherokee Basin Operating Co. v. Owens, No. 13-719, to decide whether a notice of removal must also include evidence supporting jurisdiction if the facts establishing jurisdiction do not appear on the face of the state-court complaint. The Court's resolution of this issue will be important to all businesses seeking to remove state-court lawsuits—and especially state-court class actions—to the federal courts.

Owens, the plaintiff in Dart Cherokee, filed a class action in Kansas state court seeking to recover oil and gas royalties, but did not specify the amount sought. The defendants responded by filing a notice of removal that invoked the Class Action Fairness Act of 2005. The notice alleged that the royalties at issue exceeded $8.2 million, and thus satisfied the CAFA's $5 million jurisdictional minimum. See 28 U.S.C. § 1332(d)(2). When Owens moved to remand the suit to state court, the defendants filed a declaration supporting the jurisdictional facts alleged in their notice of removal. Relying on Tenth Circuit precedent, the district court remanded the case on the ground that the defendants had not "establish[ed] by a preponderance of the evidence that the amount in controversy exceeds $5 million" because they had "fail[ed] to incorporate any evidence supporting [their] calculation in the notice of removal, such as an economic analysis of the amount in controversy or settlement estimates." The district court refused to consider the evidence filed with the opposition to the motion to remand, holding that the defendants "were obligated to allege all necessary jurisdictional facts in the notice of removal." A divided panel of the Tenth Circuit denied leave to appeal; and rehearing en banc was denied by an equally divided court, over a published dissent.

According to the petition for certiorari, the Fourth, Seventh, Eighth, Ninth, and Eleventh Circuits apply a notice-pleading standard, requiring that notices of removal include allegations but not evidence.See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 199-200 (4th Cir. 2008); Spivey v. Vertrue, Inc., 528 F.3d 982, 986 (7th Cir. 2008); Hartis v. Chicago Title Ins. Co., 694 F.3d 935, 944-45 (8th Cir. 2012); Janis v. Health Net, Inc., 472 F. App'x 533, 534-35 (9th Cir. 2012); Lowery v. Al. Power Co., 483 F.3d 1184, 1217 n.73 (11th Cir. 2007). Furthermore, the petition contends, the First, Fourth, Fifth, Seventh, Ninth, and Eleventh Circuits have either allowed or required district courts to consider post-notice removal evidence when deciding whether to remand. See Amoche v. Guarantee Trust Life Ins. Co., 556 F.3d 41, 46, 51-53 (1st Cir. 2009); Bartnikowski v. NVR, Inc., 307 F. App'x 730, 732-33, 735-37, 739 (4th Cir. 2009); Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000); Harmon v. Oki Sys., 115 F.3d 477, 479-80 (7th Cir. 1997); Janis, 472 F. App'x at 534-35; Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 772-774 (11th Cir. 2010).

The correct articulation of the procedures and evidentiary burdens for seeking removal, especially under the CAFA, will be of substantial interest to any business that may prefer a federal forum to state court. Absent extensions, amicus briefs in support of the petitioners will be due on May 29, 2014, and amicus briefs in support of the respondent will be due on June 30, 2014.

Originally published April 7, 2014

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