Per the removal statute, removal requires a defendant to file a notice of removal "containing a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). Under the Class Action Fairness Act of 2005 (CAFA), certain class actions fall under federal jurisdiction, if among things, the total amount at issue is more than $5,000,000. 28 U.S.C. § 1332(d)(2). Rejecting arguments that specific proof of the amount in controversy is required at the time of removal, the United States Supreme Court held in Dart Cherokee Basin Operating Co. v. Owens, that a notice of removal must only assert a “plausible allegation” that the $5,000,000 threshold has been reached, "evidentiary submissions" are not required.
If the plaintiff contests, or the court questions, the defendant’s allegation, then evidence supporting the alleged amount in controversy must be presented. Dart Cherokee pertained to a Kansas state class action seeking oil and gas royalties without asserting the total damages sought. The defendants removed under CAFA arguing that the royalties at issue exceeded $8.2 million. When plaintiff sought remand, defendants filed a supporting declaration.
The district court granted remand and refused to consider the evidence presented per its view of Tenth Circuit precedent. “Upon careful consideration of the parties’ submissions, as well as the applicable law,” a divided panel of the Tenth Circuit denied leave to appeal and en banc review concurred. However, by a 5-4 vote, the Supreme Court vacated the judgment of the Tenth Circuit and remanded for further proceedings.
Justice Ginsburg, in the majority, explained that the “short and plain statement” requirement, incorporated into CAFA, tracked the general pleading requirements stated of the Federal Rules of Civil Procedure. And, under such liberal rules, the majority opined that Courts should accept a defendant’s plausible allegations threshold requirements. If contested or formally questioned, both sides should submit proof of the amount in controversy and the court will determine, by a preponderance of the evidence, which side prevails.
In addition, analyzing the CAFA requirements, the Court made clear that “no anti-removal presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.” This guts the common plaintiff argument that any “presumption against removal” applies to CAFA.
It should be noted that the final 5-4 result is not a reflection of disagreement on the merits, but whether the case belonged before the Court in the first place. As the Tenth Circuit did not grant permission to appeal, per Justice Scalia's dissent (joined by Justices Kennedy and Kagan, and, in part, Justice Thomas) the case was only about whether the Tenth Circuit abused its discretion in denying permission to appeal without explanation, making it all but impossible to determine whether any abuse of discretion has occurred.
As others have noted, this holding is significant: if the courts of appeals could insulate controversial and important questions under CAFA from Supreme Court review by simply refusing to grant permission to appeal, the Supreme Court’s ability to shape uniform nationwide rules governing federal jurisdiction over class actions could be impeded significantly; by reaching the merits, the Court has signaled that it is prepared to review such questions when appropriate.