United States: Eleventh Circuit Clarifies That Defendants May Introduce Evidence to Satisfy CAFA’s Removal Requirements

Originally published June 28, 2010

Keywords: Pretka v. Kolter City Plaza II, evidence, Class Action Fairness Act 2005, removal requirements,

In Pretka v. Kolter City Plaza II, Inc., the US Court of Appeals for the Eleventh Circuit clarified that defendants may introduce their own evidence to meet the jurisdictional requirements for removing a case under the Class Action Fairness Act of 2005 (CAFA), such as the often-contested requirement that at least $5 million is at stake. 2010 WL 2278358 (11th Cir. June 8, 2010). Many observers had read a prior Eleventh Circuit decision—Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. 2007)—to prohibit defendants from doing so, creating a split in authority and making many class actions effectively impossible to remove to federal court. In Pretka, the Eleventh Circuit made clear that, perhaps due to its overly broad "dicta," Lowery had been misunderstood. 

Specifically, in Lowery, the Eleventh Circuit had stated that defendants may rely only on "document[s] received by the defendant from the plaintiff" in demonstrating that the jurisdictional amount has been satisfied. The court had also criticized the defendant for relying upon "speculation" about the stakes of the class action. Some district courts—and many practitioners—had interpreted this language in Lowery to prohibit defendants from introducing any evidence to support removal under CAFA—which effectively made non-removable those cases in which the complaint did not allege the amount in controversy.

In Pretka, the Eleventh Circuit took great pains to narrow Lowery. The Pretka court made clear that Lowery does not hold "that the use of deduction, inference, or other extrapolation of the amount in controversy is impermissible." Rather, the rule is that mere "speculation" about the amount in controversy is impermissible when the record contains absolutely no evidence to indicate that the amount has been met. Moreover, Pretka held that Lowery's bar on a defendant's introduction of evidence to support removal applies only to class actions being removed under the second paragraph of 28 U.S.C. § 1446(b)—that is, class actions being removed after an "an amended pleading, motion, order, or other paper" indicates for the first time that jurisdiction exists. By contrast, if the defendant is removing under the first paragraph of § 1446(b)—i.e., at the outset of the action, as is usually the case—the defendant may use any type of evidence to support a removal petition, including its "own affidavits, declarations, or other documentation ...." This result puts the Eleventh Circuit back in line with other federal courts, which generally permit defendants to submit evidence to support removal.

Pretka is of interest to any business that may be the target of putative class action lawsuits and that is amenable to suit in the Eleventh Circuit. In particular, Pretka will dramatically improve the likelihood that a defendant may remove a class action under CAFA by permitting the defendant to introduce evidence that the amount in controversy exceeds $5 million. 

Learn more about our Consumer Litigation & Class Actions practice.

Visit us at www.mayerbrown.com.

Copyright 2010. Mayer Brown LLP, Mayer Brown International LLP, Mayer Brown JSM and/or Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.