DARTCHEROKEEARTICLE
004
DART CHEROKEE:
SHIFTING THE BURDEN
TO PLAINTIFF IN FEDERAL
DIVERSITY CASES
AUTHOR: Bill Caravetta
EMAIL: [email protected]
BIO: jshfirm.com/williamgcaravettaIII
We’ve all seen this before: You’ve been assigned to
defend a carrier in a bad faith lawsuit filed in State Court.
One of your immediate concerns is removing the case to
Federal District Court. You’re satisfied that the diversity of
citizenship requirement is met, however, you don’t know if the
jurisdictional amount of $75,000.00 is met. The complaint is
silent on the amount of damages. You do know Plaintiff has
certified the case as not subject to compulsory arbitration, i.e.,
the case is worth $50,000.00 or more.
It’s the $25,000.00 plus gap which causes all the angst.
Until now, arguably, the entire burden has rested on the
Defendant carrier to establish that the amount in controversy
exceeds $75,000.00. The recent U.S. Supreme Court
Decision in Dart Cherokee Basin Operating Co., LLC v. Owens,
574 U.S., 135 S.Ct. 547 (Dec. 2014), may have changed all that.
Indeed, under Dart, it is arguably incumbent upon Plaintiff,
having decided to contest removal, to come forward with
evidence that the jurisdictional amount in controversy has not
been met.
Typically, in a Motion to Remand to State Court, Plaintiff
will contend that the Defendant carrier has not proven the
jurisdictional amount in controversy has been met by a
“preponderance of the evidence,” and therefore, the case
should be remanded. As a result of Dart Cherokee, a defendant
seeking to remove a case from State court based upon
diversity jurisdiction need only submit “a plausible allegation
that the amount in controversy exceeds the jurisdictional
threshold.” Dart, Slip Op. at 7. The “‘short and plain’ statement
need not contain evidentiary admissions.” Id. at 2.
As explained in Dart, the analysis of the sufficiency of a
defendant’s removal notice starts with the removal statute,
28 U.S.C. § 1446. That statute, as amended in 2011, provides
that the removal notice need only contain a “short and plain”
statement of the grounds for removal:
“(a) Generally - - a defendant or defendants desiring to remove
any civil action from a state court shall file in the District Court
for the United States for the District and Division within which
such action is pending a Notice of Removal signed pursuant
to Rule 11 of the Federal Rules of Civil Procedure and containing
a short and plain statement of the grounds for removal, together
with a copy of all process, pleadings, and orders served upon
such defendant or defendants in such action.” 28 U.S.C. §1446(a)
(emphasis added).
In Dart, the Plaintiff filed a class action suit seeking “a fair
and reasonable amount.” No specific monetary amount
was alleged. In its removal notice, Defendant alleged that
purported underpayments to the putative class were $8.2
million dollars, exceeding the $5,000,000.00 jurisdictional
threshold under the Class Action Fairness Act (the diversity
jurisdiction statute for class actions). The Plaintiff moved to
remand to State court arguing that the removal notice was
deficient, because Defendant had offered “no evidence”
proving the amount in controversy exceeded the jurisdictional
threshold. Dart, Slip Op., at 2. Defendant responded to the
motion by providing a declaration that included a damages
calculation exceeding the jurisdictional amount. Plaintiff
objected to the attempt to introduce post-removal evidence.
The District Court remanded the matter.
Although remand orders are generally not subject to review,
a special provision of the CAFA allowed the Defendant to
petition for review. The Tenth Circuit denied review, but the
Supreme Court granted Certiorari. As framed by the majority,
the question presented was:
Whether a defendant seeking removal to Federal Court is required
to include evidence supporting Federal jurisdiction in the notice
of removal, or is alleging the required “short and plain statement of
the grounds for removal” enough?
In answering this question, the Court looked to the language
and legislative history of the removal statute, particularly
the 2011 amendment. The Court concluded that Congress’
use of the “short and plain” language in the statute was an
effort to simplify the “pleading” requirements for removal, so
that removal notices were governed by the same liberal rules
that apply to other pleadings. Dart, Slip. Op., at 5. The Court
observed that when the plaintiff alleges an amount
in controversy in its complaint, it is accepted if made in good
faith. The Court then observed that it would be anomalous
if the same standard were not applied to a defendant’s notice
of removal. Id. The Court then quoted the House Judiciary
Committee Report discussing amendments to the removal
statute in 2011:
[D]efedants do not need to prove to a legal certainty that the
amount in controversy requirement has been met. Rather,
Defendants may simply allege or assert that the jurisdictional
amount has been met. . .