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: CAFA Law Blog - Information, cases and insights regarding the Class Action Fairness Act of 2005

Pleadings At The Time Of Removal And Not Subsequent To Are Relevant To Determine CAFA Jurisdiction

Rhoades v. Progressive Cas. Ins. Co., Inc., No. 2:10-CV00763GEBKJM, 2010 WL 2402847 (E.D. Cal. Jun 10, 2010).

A District Court in California remanded the action to the state court holding that the amount in controversy must be determined according to the plaintiffs' pleading at the time of the petition for removal and not at the time of a subsequent amendment to the pleadings

The plaintiffs, claims adjusters, and claims generalist associates working for the defendant, brought a class action in state court, for unpaid waiting period, inaccurate wage statements, and for penalties under the California Labor Code.

The defendant removed the action to federal court under CAFA, and the plaintiffs moved to remand. 

The District Court remanded the action to state court holding that the defendant had not satisfied its burden of showing that the amount in controversy exceeded the sum of $5 million.

After removal, the plaintiffs filed their first amended complaint averring that because the individual members of the classes had sustained damages under the $75,000 jurisdictional threshold and that the aggregate claim was under the $5 million threshold, removal under CAFA would be improper. 

The District Court, however, refused to consider the first amended complaint in determining whether the amount in controversy was satisfied holding that whether the suit was removable must be determined according to the plaintiffs' pleading at the time of the removal.

The District Court stated that as the plaintiffs' original complaint did not specify the amount of damages sought, the removing defendant must prove by a preponderance of the evidence that it was ‘more likely than not' that the amount in controversy satisfied the jurisdictional amount requirement. The defendant's opposition to the plaintiffs' motion to remand showed the total compensation of the California class would be $4,311,916.50.  The defendant also sought to enlarge this amount by using the allegation in the plaintiffs' first amended complaint that each class member averaged two to five hours of overtime per week.  The Court remarked that the plaintiffs' amended complaint might not be considered in determining whether the case was removable.  

Because the defendant had no other evidence satisfying the jurisdictional amount requirement, the Court granted the plaintiffs motion to remand.

Full post as published by CAFA Law Blog - Information, cases and insights regarding the Class Action Fairness Act of 2005 on August 31, 2010 (boomark / email).