Ninth Circuit Moves to Preponderance Standard for CAFA Jurisdiction

Published On August 30, 2013 | By Michele Floyd | Litigation
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ATTThe Ninth Circuit wrote the next chapter in the continuing CAFA amount in controversy saga yesterday, holding that a defendant must establish the amount in controversy for removal jurisdiction by only a preponderance of the evidence.   The previous Ninth Circuit authority on the subject was Lowdermilk v. U.S. Bank National Association, 479 F. 3d 994 (9th Cir. 2001) where the Ninth Circuit required defendants to establish the amount in controversy to a “legal certainty.”   Rodriguez v. AT&T Mobility Services LLC overruled Lowdermilk, finding that the “legal certainty” standard was incompatible with the United States Supreme Court’s recent decision in Standard Fire v. Knowles.  Standard Fire held that a putative class plaintiff could not stipulate to an amount in controversy below the $5,000,000 CAFA threshold in order to keep a class action suit in state court.

Rodriguez’ suit was a wage and hour class action originally filed in Los Angeles Superior Court.  Defendant removed under CAFA.  Rodriguez sought remand, arguing that his allegation that “the aggregate amount in controversy is less than five million dollars” coupled with his agreement to waive any amount in excess of $5,000,000, was sufficient to defeat federal jurisdiction.  Standard Fire, of course, eliminated any significance of the allegation and attempted waiver.  But, the issue here was whether AT&T met its burden of establishing the amount in controversy absent the stipulation. Resolving this issue required the court to re-visit the appropriate burden of proof.

AT&T submitted declarations containing evidence of class size and the value of each putative class member’s claim. Simple math indicated an amount in controversy in excess of the jurisdictional amount. But, was it enough?  The court didn’t decide, but remanded the case to let the district court weigh the evidence against the correct preponderance of the evidence standard.

After Standard Fire, the class action plaintiff is no longer the master of her complaint.  The Ninth Circuit found that Standard Fire’s prohibition against stipulating to a lower recovery undermined Lowdermilk  and its progeny establishing that a plaintiff could “sue for less than the amount she may be entitled to if she wishes to avoid federal jurisdiction and remain in state court:”

Lowdermilk adopted the legal certainty standard to reinforce plaintiff’s prerogative, as master of the complaint, to avoid federal jurisdiction by forgoing a portion of the recovery on behalf of the putative class.  That choice has been taken away by Standard Fire.  Further, Standard Fire instructs courts to look beyond the complaint to determine whether the putative class action meets the jurisdictional requirements.

Standard Fire precludes a court from assigning any significant weight to a plaintiff’s amount in controversy allegation. Accordingly, the preponderance standard, which is the standard applicable when a plaintiff does not plead a specific amount in controversy, is the standard applicable to the amount in controversy requirement under CAFA.

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About The Author

Michele Floyd’s practice focuses on complex business litigation, primarily representing Internet companies in federal and state litigation involving antitrust claims, state unfair competition claims, disclosure of subscriber information and other privacy-related claims and false advertising. Michele specializes in handling complex cases that involve difficult procedural issues and has extensive experience defending companies in consumer class action litigation under the unfair competition and related laws of several states, including California, Florida, Georgia, Illinois, Nevada, New York, Texas, and Washington. She has served as national counsel for clients and coordinated the defense of nationwide state litigation as well as multi-district federal litigation. Michele also assists clients, particularly internet and e-commerce clients, through often unique business and legal challenges, counseling them on regulatory compliance, multi-state advertising campaigns, promotions, distribution methods, pricing programs and general best practices aimed at minimizing the risk of litigation. She has defended and counseled clients in several industries, including the telecommunications, pharmaceutical, retail apparel, automotive, medical, and Internet industries. Her practice extends into regulatory fields, having represented clients in matters before the Federal Communications Commission, matters involving the Department of Justice and various states’ Attorney General Offices as well as state and federal agencies, such as the United States Department of Transportation and the California Department of Transportation. Previously, Michele served as Senior Legal Director, Commercial Litigation, at Yahoo! Inc., where she was responsible for managing and defending the company’s commercial litigation and counseling on general business matters such as contract disputes (including those involving Terms of Service and privacy policies), advertising and disclosures, privacy, antitrust, and audits. Before joining Yahoo!, she was a partner in the regulatory litigation practice group at a prominent national law firm where her practice focused on class action defense and spanned many industries. Michele’s services are offered to clients through ZwillGen Law LLP, an affiliate of ZwillGen PLLC.

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