CAFA Removal Jurisdiction: Using a Plaintiff’s Complaint Against It

by Cozen O'Connor
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Most cases involving the existence of removal jurisdiction under CAFA involve the $5 million amount in controversy.  In a recent Third Circuit opinion, determining whether or not the putative class had the requisite 100 members proved equally complex.  The case is instructive with respect to the extent to which class action defendants can use the allegations in a complaint to support a claim of jurisdiction.

In Judon v. Travelers Property Casualty Company of America, the plaintiff sought to represent a class of individuals who were injured while riding in common carriers insured by Travelers that were capable of transporting fewer than 16 passengers, and for whom Travelers limited the availability of first-party medical benefits to $5,000.  The plaintiff alleged that under Pennsylvania law, Travelers was required to offer up to $25,000 in first-party benefits.  Critically, the plaintiff alleged that “hundreds of members of the class” were wrongfully denied payment up to $25,000.

Travelers removed, based solely on the allegations in the complaint.  Travelers contended the reference to “hundreds of members” must mean at least 200, so that the numerosity requirement was met.  Travelers also argued that the amount in controversy exceeded $5 million, since (i) each class member could be entitled to $20,000 (the difference between the $25,000 which they were entitled and the $5,000 they were paid); (ii) $20,000 per class member times 200 class members would yield $4 million in compensatory damages; and (iii) the complaint demanded treble damages.

The plaintiff’s motion for remand argued that Travelers, as the removing party, bore the burden of establishing jurisdiction under CAFA, and that Travelers had failed to show to a legal certainty either that the class had at least 100 members or that the amount in controversy exceeded $5 million.  The district court granted the motion to remand, holding that because the plaintiff “vigorously contested” the jurisdictional facts, Travelers was required to produce extrinsic evidence establishing jurisdiction by a preponderance of the evidence.

With respect to the numerosity of the class, however, the Third Circuit reversed.  The court held that numerosity was not “vigorously contested,” because the plaintiff never claimed that there were fewer than 100 class members—only that Travelers had failed to meet its burden.  Travelers was entitled to rely on the “hundreds of members” language in the complaint as an admission in favor of jurisdiction, and the district court should have required the plaintiff to prove to a legal certainty that there could not be 100 members in the class.

The court did not make a similar determination as to the amount in controversy, however, notwithstanding Travelers’ argument that its calculation, like its “200 members” inference, came directly from the allegations in the complaint.  While Travelers was entitled to assume a 200-member class in calculating the amount in controversy, the court held, Travelers’ assumption of $20,000 in damages per class member was faulty because it relied on the maximum exposure per plaintiff—when, in fact, many class members’ claims might well be smaller (indeed, the named plaintiff’s claim was less than $3,000).  Because Travelers’ calculation of the amount in controversy was based on questionable inferences from the complaint, and because Travelers had not submitted any extrinsic evidence to support its calculations or assumptions, the case was remanded.

The takeaways?  First, if a poorly crafted complaint explicitly concedes a jurisdictional fact, defense counsel is permitted to take it and rely on it.  Second, if the jurisdictional fact is not conceded in the complaint, but requires factual assumptions outside the complaint, a removing defendant probably will need to present extrinsic evidence.  And finally, even if the jurisdictional fact seems plain from the face of the complaint, it can’t hurt to bolster the inference with extrinsic facts.

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Cozen O'Connor
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