Class Action Fairness Act

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In December, we wrote about the recent Supreme Court decision in Owens v. Dart Cherokee Basin Operating Co. In Owens, the Court held that class action defendants need not provide evidentiary submissions in support of their notice of removal of a case from state to federal court. Rather, they need only include in their notices a “plausible allegation” that the amount in controversy exceeds the $5 million jurisdictional threshold set forth in the Class Action Fairness Act (“CAFA”).

In so holding, the majority relied on the wording of the removal statute itself, which merely requires a “short and plain statement” setting forth a good-faith basis supporting removal. The Court’s decision thus set forth for corporate class action defendants the minimum requirements their notices of removal must contain. The Court, however, neither held nor addressed whether a “plausible allegation” will sustain the removing defendants’ evidentiary burden of proof where the class action plaintiffs contest whether the amount in controversy exceeds $5 million.

The US Supreme Court ruled on Monday that class action defendants need not provide evidentiary submissions in support of their attempts to remove a case from state to federal court.  Rather, they need only include in their notice of removal a “plausible allegation” that the amount in controversy exceeds the jurisdictional threshold.

In Owens v. Dart Cherokee Basin Operating Co., the plaintiff filed a putative class action in Kansas state court, alleging that the energy-company defendants underpaid royalties due on oil and gas leases.  The defendants removed the action to the U.S. District Court for the District of Kansas pursuant to the Class Action Fairness Act (“CAFA”), which gives federal jurisdiction over class actions only if the amount in controversy exceeds $5 million.  The defendants made the short and plain statement in their notice of removal that the alleged underpayments to putative class members totaled more than $8.2 million.  In response, the plaintiff moved to remand the case to state court on the ground that the removal notice included no evidence demonstrating that the amount in controversy exceeded $5 million.  The district court agreed with the plaintiff, finding that Tenth Circuit precedent required proof of the amount in controversy in the notice of removal under CAFA.  The Tenth Circuit refused to review the district court’s ruling.