Jurisdictional Burden of Proof Explained…at least for the Ninth Circuit.

Green v. Staples Contract and Commercial, Inc., CV08-7138-SVW (C.D. Cal. December 10, 2008).

In this case, the Central District of California was kind enough to explain AGAIN the Ninth Circuit’s three different burdens of proof for establishing removal jurisdiction under CAFA. Thanks again, Judge Wilson!

This matter was filed on April 25, 2008 by plaintiff, Shannon Green, as a putative wage an hour class action in California state court. The complaint alleged that “the aggregate claim is under the five million dollar threshold of the Class Action Fairness Act of 2005.”

The defendant, Staples, removed the case to federal court on October 29, 2008 alleging that the class included 550 current and former workers and that the amount in controversy exceeded five million dollars.

Ms. Green filed her motion to remand on November 17, 2008. She challenged the removal based solely on the issue of the amount in controversy. She argued that the defendant had not met its burden of establishing that there were more than five million dollars in controversy. Ms. Green argued that the defendant must prove by a legal certainty that the amount in controversy was satisfied. The defendant, on the other hand, argued that the amount sought in the plaintiffs’ complaint was not entirely clear and that the defendant should only have to prove that the amount in controversy exceeds the five million dollar threshold by a preponderance of the evidence.

United States District Judge Steven V. Wilson writing for the Central District of California, began his opinion by stating that under CAFA the burden of establishing removal jurisdiction remains on the proponent of federal jurisdiction (Editor’s Note: See the CAFA Law Blog analysis of Abrego posted on May 25, 2006, the Ninth Circuit burden case).

Judge Wilson explained the Ninth Circuit’s three different scenarios and three different burdens of proof for establishing removal jurisdiction. First, when the plaintiff fails to plead a specific amount of damages, the defendant seeking removal must prove by a preponderance of the evidence that the amount in controversy requirement has been met. Second, if the complaint alleges damages in excess of the federal amount in controversy requirement, then the amount in controversy requirement is presumptively satisfied unless it appears to a legal certainty that the claim is actually for less than a jurisdictional minimum. Finally, when the plaintiff has plead a specific amount in damages less than the jurisdictional minimum, the defendant will be able to remove to Federal Court by showing to a legal certainty that the amount in controversy exceeds the statutory minimum (Editor’s Note: See the CAFA Law Blog analysis of Lowdermilk posted on July 30, 2007, another Ninth Circuit burdens case.)

Judge Wilson explained that the court’s initial inquiry is whether the plaintiff has plead a specific amount in damages less than the jurisdictional minimum or whether the amount pled is uncertain. If it is “facially apparent” from the complaint that the jurisdictional amount is in controversy, then the court need not look beyond “the four corners of the complaint” to determine whether the jurisdictional amount is satisfied. (Editor’s Note: See the CAFA Law Blog analysis of the Lowdermilk case, another Ninth Circuit burdens case.) In such cases, the court applies the legal certainty. If, on the other hand, the plaintiff seeks no specific amount in damages, or the amount sought is unclear, then the court will look beyond the face of the complaint and apply the preponderance of the evidence standard. (Editor’s Note: See the CAFA Law Blog Analysis of Guglielmino posted on November 6, 2007, yet another Ninth Circuit burdens case.)

With these standards in mind, the court stated that because the plaintiff had chosen to limit its “aggregate claim” to less than five million dollars, which includes all possible forms of relief, the court found that the plaintiff had pled a specific amount in controversy that was less than the jurisdictional minimum. Thus, Lowdermilk controlled and the legal certainty standard applied. The court stated that the legal certainty standard sets a high bar for the party seeking removal, but it is not insurmountable. With that standard, the court may consider facts in the notice of removal as well as any summary judgment type evidence relevant to the amount in controversy at the time of removal.

The court viewed each of the defendants arguments and discounted them in turn. The court stated that until the parties are able to more definitively ascertain the extent of damages, the court can not base it jurisdiction on defendants “speculation and conjecture.” The court did note in Footnote 4 that CAFA eliminates the one year removal limitation. The court’s footnote states that if, at a later date, it becomes apparent by a legal certainty that the amount in controversy exceeds five million dollars, the defendants should still have the ability to remove this case to federal court.

So, we may see this case again.