Burden of Removing Class Actions Reduced by U.S. Supreme Court

Posted on December 19th, 2014 by Matthew C. O’Connell

With its opinion in Dart Cherokee Basin Operating Co., LLC v. Owens, No. 13-719, decided December 15, 2014, the Supreme Court of the United States resolved a conflict in the Circuit Courts concerning the amount of proof necessary to show the amount in controversy when a defendant removes a class action to Federal court.  The Court’s holding is good news for defendants who remove such cases pursuant to the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. Sec. 1332.

In Dart Cherokee, Owens filed a class action in a Kansas state court, alleging that Dart had underpaid royalties due under gas and oil leases held by the putative class members.   Dart removed the case to Federal District Court pursuant to 28 U.S.C. Sec. 1446.  Pursuant to CAFA, Federal courts have jurisdiction over class actions if the amount in controversy exceeds $5 million. Owens sought remand, claiming that Dart’s petition for removal lacked evidence supporting its assertion that the jurisdictional minimum amount in controversy satisfied CAFA.  The District Court granted Owens’ motion for remand, holding that Tenth Circuit precedent required proof of the amount in controversy in the notice of removal itself.  The Tenth Circuit denied review and rehearing and certiorari was granted.

In a 5-4 decision authored by Justice Ruth Bader Ginsburg, the Court held that the “short and plain statement of the grounds for removal” required by 28 U.S.C. Sec. 1446(a) does not require the submission of evidence supporting the assertion that the minimum amount in controversy exists in class actions where the plaintiff’s complaint does not state such an amount. The Court also held that the Tenth Circuit’s denial of a review of the remand order constituted an abuse of discretion.  The Court additionally reasserted that the “purported presumption against removal” does not exist in cases removed pursuant to CAFA, which, the Court noted, was enacted by Congress to “facilitate adjudication of certain class actions in federal court.” Dart Cherokee, at 7.