Ninth Circuit Adopts New Standard For Establishing CAFA Jurisdiction Following Standard Fire

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Crow Doesn’t Taste Too Bad…. If You Season It Right.

AT&T Mobility appears determined to make it onto the Christmas card list of every employer in the United States.

In yet another big win for AT&T, the Ninth Circuit recently overturned its own case law and held that a defendant must establish CAFA’s $5 million jurisdictional amount simply by a preponderance of the evidence, regardless of whether the plaintiff alleges that the amount in controversy is below that threshold. Rodriguez v. AT&T Mobility Svcs., 2013 U.S. App. LEXIS 17851 (9th Cir. Aug. 27, 2013). The plaintiff in Rodriguez filed a proposed class action against AT&T Mobility in California state court alleging multiple wage and hour violations. AT&T removed the case to federal court under CAFA based on several declarations from AT&T representatives establishing that the amount in controversy could not be lower than $5.5 million. The plaintiff subsequently filed a motion to remand the case to state court, pointing out that he had promised in his complaint to be a good boy and not seek or accept more than $5 million.

The district court began its analysis with Lowdermilk v. U.S. Bank Nat'l Ass’n, 479 F.3d 994 (9th Cir. 2007), in which the Ninth Circuit held that a defendant must prove CAFA jurisdiction by a “legal certainty” in cases where the plaintiff alleges that the threshold will not be met. But, the district court then put Lowdermilk on an A-Rod style drug regimen, finding that no amount of evidence could establish CAFA jurisdiction to a legal certainty because the plaintiff’s waiver “effectively foreclosed the jurisdictional issue.” In essence, the district court found that the actual amount in controversy was irrelevant, and granted the motion to remand.

“Whoa, Nellie!” exclaimed the Ninth Circuit in its best Keith Jackson voice. The court held that Lowdermilk was effectively overruled by Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013), in which the Supreme Court ruled that a named plaintiff’s stipulation concerning the amount in controversy cannot be binding upon class members if it is made prior to class certification. While Standard Fire arguably did not describe a particular standard to be applied in determining whether the amount in controversy has been established, the Ninth Circuit agreed with AT&T that Lowdermilk’s imposition of a heightened standard of proof could not be reconciled with Standard Fire’s reasoning. Thus, while acknowledging that the district court’s decision was consistent with Lowdermilk, the Ninth Circuit nonetheless overturned its decision and remanded the case to the district court for a determination on whether AT&T had established CAFA jurisdiction by a preponderance of the evidence.

The Bottom Line: If the Ninth Circuit’s view is any indication, it does not appear that federal courts will attempt to restrict Standard Fire with a narrow reading.