On September 3, the Ninth Circuit reversed a district court’s remand of a putative class action, holding that when a notice of removal plausibly alleges a basis for federal court jurisdiction, the district court must provide the defendant an opportunity to show by a preponderance of the evidence that the jurisdictional requirements of the Class Action Fairness Act (“CAFA”) are satisfied.

• Arias v. Marriott is a putative class action brought on behalf of employees of the hotel chain. According to the named plaintiff, Marriott failed to compensate its employees for overtime and missed meal breaks and failed to issue accurate, itemized pay stubs.
• The lawsuit was originally filed in California state court. Marriott removed the case, asserting federal jurisdiction under CAFA because (1) at least one member of the class was diverse from at least one defendant, (2) the class size was at least 100, and (3) the amount in controversy exceeded $5 million.
  • Marriott based its amount-in-controversy estimate on employee data, including the number of hourly employees who fit the proposed class definition as well as estimates for how often the alleged violations occurred.
• The district court remanded the case to state court sua sponte, discrediting Marriott’s amount-in-controversy calculations as speculative. Importantly, the district court did not conclude that Marriott’s allegations were implausible, instead finding that “Marriott failed to meet its burden of proving the amount in controversy.”
• The Ninth Circuit reversed, holding that “[w]hen a notice of removal plausibly alleges a basis for federal court jurisdiction, a district court . . . [must] giv[e] the defendant an opportunity to show by a preponderance of the evidence that the jurisdictional requirements are satisfied.” Thus, when the district court remanded sua sponte, it “deprived Marriott of a fair opportunity to submit proof.”
• The court also stated that Marriott could support its estimate of the amount in controversy by making “reasonable assumptions” about the frequency with which alleged pay violations occurred, rejecting the district court’s finding that Marriott’s assumed violation rates were “speculation and conjecture.” Lastly, the Ninth Circuit held that the district court erred by excluding prospective attorneys’ fees from the amount in controversy.
• Arias thus reaffirms Ninth Circuit precedent holding that “Congress intended CAFA to be interpreted expansively” and that the amount in controversy reflects the maximum recovery the plaintiff could reasonably recover—a jurisdictional threshold that cannot be defeated merely because it is “equally possible” that damages might be less than the requisite amount.

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