UNITED STATES — On December 15, 2014, the Supreme Court of the United States issued a decision in Dart Cherokee Basin Operating Co., LLC v. Owens, 2014 U.S. Lexis 8435, 37 (U.S. Dec. 15, 2014) that will be helpful to putative class action defendants seeking to remove their cases from state court to federal court pursuant to 28 U.S.C. § 1446(a). The court held that § 1446(a) means exactly what is says – that is, defendants seeking to remove cases to federal court are only required to file a “short and plain statement” setting forth their grounds for removal, and need not file accompanying evidentiary submissions.
Under § 1446(a), “[a] defendant or defendants desiring to remove any civil action from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal . . .” A circuit split emerged as to whether defendants seeking removal in class actions brought pursuant to the Class Action Fairness Act (“CAFA”) must affirmatively establish the jurisdictional threshold amount in controversy, by submitting evidence, in their notices of removal. The Fourth and Seventh Circuit Courts of Appeals found that the pleading standard for defendants seeking removal was the same standard imposed on plaintiffs in drafting an initial complaint. The Tenth Circuit, however, imposed a heightened burden on defendants and required them to include evidence establishing the amount in controversy in their notices of removal. The Supreme Court, drawing on the legislative history of § 1446 and the inequities in imposing a more stringent pleading burden on defendants than the “plausibility” standard that plaintiffs must satisfy, held, “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.” 2014 U.S. Lexis 8435 at *14.
The Court’s decision, however, does not prevent plaintiffs from challenging the district court’s jurisdiction based on the amount in controversy – it merely delays the challenge process. Under § 1446(c)(2)(B), “[R]emoval . . . is proper on the basis of an amount in controversy asserted . . . if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds” the jurisdictional threshold. Under that provision, plaintiffs (or the district court) can challenge the amount in controversy asserted by defendants in their notices of removal. Dart Cherokee, 2014 U.S. Lexis 8435 at *12. “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.” Id. Thus, while class action defendants are only required to make a “plausible allegation” in a notice of removal that the amount in controversy threshold is satisfied, they must still be prepared to defend an immediate challenge to their amount in controversy allegation.
Notably, a group of Justices led by Justice Scalia, dissented from the Court’s opinion. They did not take issue with the merits of the Court’s opinion, though. Rather, they submitted that the Court did not have jurisdiction over the question presented because, in the case at issue, the Tenth Circuit refused to hear the petitioner’s appeal from the district court’s order remanding the class action back to state court. The majority argued that jurisdiction was proper because the Tenth Circuit “relied on the legally erroneous premise that the District Court’s decision was correct.” Id. at *16.