Ahead of the Class

The United States Supreme Court has agreed to consider whether a defendant seeking removal to federal court under the Class Action Fairness Act (“CAFA”) must include evidence supporting federal jurisdiction rather than only a “short and plain statement of the grounds for removal.” Dart Cherokee Basin Operating Co., LLC v. Owens, cert. granted, 82 U.S.L.W. 3376 (U.S. Apr. 7, 2014) (No. 13-719).

The appeal arises out of the Tenth Circuit’s decision to deny review of a Kansas district court order holding that a defendant must prove in his Notice of Removal that CAFA’s jurisdictional requirements are met. Owens v. Dart Cherokee Basin Operating Co., LLC, 2013 WL 2237740 (D. Kan. May 21, 2013).

In Owens, a gas royalty owner brought a class action against Dart Cherokee Basin Operating Co., LLC (“Dart”) in Oklahoma state court seeking to represent a class of royalty owners who were underpaid royalties. Under CAFA, a class action is removable to federal court if there is minimal diversity, at least 100 putative class members, and at least $5 million in controversy. See 28 U.S.C. § 1332(d). Although Plaintiff did not specifically allege at least $5 million in controversy, Dart removed the case to federal court, alleging that based on the nature of the claims asserted, the size of the putative class, and the length of the proposed class period, the amount in controversy exceeded $8.2 million.

Owens moved to remand the case to state court, arguing that Dart’s Notice of Removal contained no admissible evidence supporting its jurisdictional allegations. In opposing remand, Dart offered a declaration from its Vice President of Legal Affairs and General Counsel stating facts demonstrating that CAFA’s jurisdictional requirements were met. Owens did not dispute Dart’s evidence but argued that the Notice of Removal could not be cured by attaching evidence in response to a motion to remand.

The district court remanded the case to state court because it believed Dart was required to prove CAFA’s jurisdictional requirements: “the general and conclusory allegations of the Petition and Notice of Removal do not establish by a preponderance of the evidence that the amount in controversy exceeds $5 million.” Owens, 2013 WL 2237740, at *4. The court refused to consider Dart’s supporting declaration because it had not attached it to its Notice of Removal.

Dart sought review in the Tenth Circuit pursuant to 28 U.S.C. § 1453(c), but the Tenth Circuit denied its petition and a subsequent application for rehearing en banc.

The Supreme Court’s anticipated disposition of Dart’s appeal should provide clarity on whether a defendant seeking removal under CAFA is required to include evidence supporting federal jurisdiction. The Fourth, Seventh, Eighth, Ninth, and Eleventh Circuits require only that a notice of removal contain allegations of the jurisdictional facts supporting removal;¹ those courts do not require that evidence supporting federal jurisdiction be submitted with the removal notice. District courts in those Circuits may consider evidence supporting removal even if it comes later in response to a motion to remand.

Until the Supreme Court renders a decision, defendants in the Tenth Circuit should provide evidence in support of their removal petitions. If, for example, it is not clear from the face of a complaint that the amount in controversy exceeds $5 million, defendants should provide evidence—usually in the form of supporting declarations and admissible documents—to establish the amount in controversy along with the Notice of Removal.

Even though not required elsewhere, attaching a supporting declaration is a good idea because it forces the witness who ultimately may be called upon to prove jurisdiction to scrutinize and vouch for the evidence within the 30-day removal period. Doing so reduces the likelihood of an error in the Notice of Removal that could forfeit jurisdiction if it comes to light after 30 days have passed.

¹ See 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. App’x 533, 534-35 (9th Cir. 2012); Lowery v. Ala. Power Co., 483 F.3d 1184, 1217 n.73 (11th Cir. 2007).