Facts Outside Of The Complaint And Notice Of Removal Are Irrelevant For Deciding CAFA Jurisdiction

Owens v. Dart Cherokee Basin Operating Co., LLC, 2013 WL 2237740 (D. Kan. May 21, 2013).

The U.S. District Court of Kansas has held that reference to factual allegations or evidence outside of the complaint and notice of removal is not permitted to determine the amount in controversy.

The plaintiff brought an action in state court, representing a class of royalty owners who were underpaid royalties from the defendants working interest Kansas wells. The plaintiff alleged breach of contract and unjust enrichment claims and sought compensatory damages, costs, and further relief as the court deemed just and proper. The petition did not state a specific amount of damages.

The defendant removed the action to the District Court, asserting CAFA jurisdiction and contending that the amount in controversy was in excess of $8.2 million. Thereafter, the plaintiff moved to remand, and the District Court granted the motion.

The District Court stated that, in determining the amount in controversy for an action removed pursuant to CAFA, the question is not how much the plaintiff will recover but rather is an estimate of the amount that will be put at issue in the course of the litigation. The District Court further noted that the amount in controversy is ordinarily determined by either the allegations of the complaint or by the allegations in the notice of removal where the allegations of the complaint are not dispositive. If the jurisdictional amount is not shown by the allegations of the complaint, then the burden is on the removing party to set forth in the notice of removal the underlying facts supporting the assertion that the amount in controversy exceeds the threshold limit.

The District Court observed that, in McPhail v. Deere & Co., 529 F.3d 947, 956 (10th Cir. 2008), the Tenth Circuit held that a plaintiff cannot avoid removal merely by declining to allege the jurisdictional amount; however, in the absence of an explicit demand for more than the jurisdictional amount, the defendant must show how much is in controversy through other means such as interrogatories obtained in state court prior to the removal, affidavits, or other evidence submitted to the federal court.

In support of their calculation that the amount in controversy exceeded $8.2 million, the Owens defendants presented the declaration of Charles E. Henderson, Vice President of Legal Affairs and General Counsel. Henderson stated that these calculations showed that the plaintiff's...