Earlier this week, the Supreme Court addressed the evidentiary burden of the amount in controversy for federal diversity removal pursuant to CAFA (28 U.S.C. 1332(d)(2)). A “short and plain statement” suffices, with proof by a preponderance required only if the plaintiff contests the amount alleged. In Dart Cherokee Basin Operating Co, LLC v. Owens (574 US __ ) , Owens filed a putative class action in Kansas state court for underpaid oil and gas lease royalties by Dart. Dart sought to federally remove the case under CAFA. Dart alleged an amount in controversy of $8.2 million, exceeding the $5 million requirement. No evidence of the amount was included. Owens moved to remand the case to state court, claiming the lack of evidence made the petition legally deficient. Dart filed a declaration in support, but the district court granted Owen’s remand motion. Dart petitioned the Tenth Circuit for permission to appeal, was denied, and then petitioned for certiorari.
The Court stated that the standard for removal under28 USC §1446(a) mirrors that of the general pleading requirement of Fed. R. Civ. P. 8(a). When a plaintiff invokes federal jurisdiction, the amount in controversy is accepted if made in good faith. It would be anomalous to treat pleading plaintiffs and removing defendants differently under the same standard. If the alleged amount in controversy is contested, both sides will submit proof, and the court decides by a preponderance of evidence if the amount has been satisfied. By relying on a presumption against removal, the district court erred.
The Court then addressed jurisdictional issues with the case. Although neither party contested jurisdiction, amicus submitted on behalf of Owens argued no issue existed for the Court to review - the denial of review by the Tenth Circuit was discretionary. The Court held review appropriate because the denial relied upon the erroneous premise of the District Court. Additionally, when CAFA-related questions presented in remand denial appeals are “important, unsettled, and recurrent,” the court of appeals should inquire whether the question will likely escape review. The Court inferred that Tenth Circuit denied review based upon the wrongful application of law and erred in doing so.
The Court vacated the Tenth Circuit decision and remanded for further proceedings.
Justice Scalia, with whom Kennedy, Kagan, and Thomas joined, dissented and expanded on the argument against jurisdiction.