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 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. 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.
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. In many consumer class actions, it is a challenge to assemble sufficient evidence of the size of the putative class and the potential value of their claims by the 30-day deadline for a notice of removal. The Dark Cherokee case will determine whether defendants will continue to have the option, now available in most circuits, of pleading jurisdictional facts in the notice and establishing them with evidence some weeks later in the opposition to any motion to remand.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; 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.
© Copyright 2014. The Mayer Brown Practices. All rights reserved.
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.