Supreme Court Clarifies The Standard Governing Removal Of Class Action Cases To Federal Court

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.

The Supreme Court granted certiorari to resolve a division among the Circuits. For example, the Fourth, Seventh, Eighth, Ninth, and Eleventh Circuits have held that alleging a short and plain statement of the grounds for removal under CAFA is sufficient. See e.g., Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 199-200 (4th Cir. 2008); Spivey v. Vertrue, Inc., 528 F.3d 982, 986 (7th Cir. 2008); Hartis v. Chicago Title Ins. Co., 694 F.3d 935, 944-45 (8th Cir. 2012); Janis v. Health Net, Inc., 472 F.Appx. 533, 534-35 (9th Cir. 2012); Lowery v. Al. Power Co., 483 F.3d 1184, 1217 n.73 (11th Cir. 2007).

In a 5-4 decision, the majority of the Supreme Court held that a defendant's notice of removal under CAFA need only include a plausible allegation that the amount in controversy...