Class Representative’s Motion To Remand For Insufficient Amount In Controversy Doesn’t Add Up

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A Kentucky federal court recently ruled that a class plaintiff may not defeat removal by understating the aggregate amount in controversy alleged in her complaint.

The defendants had assisted plaintiff in connection with her claim for Social Security Disability benefits after she was referred to them by her long-term disability insurance carrier.  According to plaintiff, the nature of the fee arrangement between the defendants and the referring insurance carriers created a conflict of interest, which the defendants unlawfully failed to disclose, causing her to suffer between $5,000 and $75,000 in damages.  On behalf of purportedly “hundreds” of similarly situated Kentucky residents, she commenced a class action lawsuit in Kentucky state court.  After the defendants removed the case to federal court, plaintiff filed a motion to remand.  As the basis for her motion, plaintiff argued that defendants failed to establish by a preponderance of the evidence that the aggregate amount in controversy exceeded $5 million, as required under CAFA.

The court found facts suggesting otherwise.  Plaintiff alleged that she, as the class representative, suffered at least $5,000 in damages.  Defendants further provided evidence with their notice of removal that they were hired to assist more than 1300 Social Security Disability claimants in Kentucky.  Thus the court found, by even the most conservative estimate, the aggregate amount in controversy equalled at least $6.5 million.

Plaintiff unsuccessfully argued that, for purposes of calculating the aggregate amount in controversy, it was inappropriate for the court to include as members of the putative class all 1300 claimants supposedly assisted by defendants because the claims of many potential class members would be time-barred by a 1-year statute of limitations.  The court held that this additional “fact” strayed beyond the scope of what the court was permitted to consider as part of its jurisdictional inquiry and, in any event, was inconsistent with plaintiff’s actually alleged class definition, which was not restricted to SSD claimants represented by defendants within the last year.  Accordingly, the court denied plaintiff’s motion to remand.

Black v. Crowe, Paradis, & Albren, LLC, et al., No. 5:14-cv-00187-KKC (E.D. Ky Aug. 13, 2014).

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Carlton Fields Jorden Burt on:

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