Supreme Court To Decide Evidentiary Requirements for Removal Notices in Class Actions

by Ballard Spahr LLP
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The U.S. Supreme Court has agreed to review the issue of what, if any, evidence a defendant must present in a notice of removal to remove a case to federal court based on the Class Action Fairness Act (CAFA). In granting the petition for a writ of certiorari in Dart Cherokee Basin Operating Co. v. Owens, the Supreme Court is poised to resolve a newly created split among the federal circuit courts of appeal on this issue. The Court’s decision next term could have a broad impact on the ability of class action and mass action defendants to remove class actions to federal court.

Under CAFA, a case is removable to federal court if there are more than 100 class members, any class member is diverse from any defendant, and the total amount in dispute is more than $5 million. Seven of the federal circuits have held that a notice of removal need only satisfy the notice-pleading standard for asserting CAFA jurisdictional requirements. These circuit courts do not require the defendant to attach evidence to the notice of removal supporting federal jurisdiction, and instead allow such evidence to be submitted after plaintiff moves to remand the case to state court.

In Dart Cherokee, the plaintiff filed a putative class action in Kansas state court seeking gas and oil royalties. After the defendants removed the case to federal court, the district court granted the plaintiff’s motion to remand because the defendants had not presented evidence establishing federal jurisdiction in their notice of removal. The district court also declined to consider jurisdictional evidence subsequently submitted by the defendants in response to plaintiff's motion to remand. The U.S. Court of Appeals for the 10th Circuit denied the defendants' request for appellate review, allowing the remand order to stand.

This will be the third occasion in as many years that the Supreme Court has addressed removal under CAFA. Previously, the Court considered the issue in Standard Fire Insurance Co. v. Knowles and Mississippi ex rel. Hood v. AU Optronics Corp. The current case in particular gives the Court an opportunity to examine the current barriers to CAFA removal jurisdiction and how such barriers comport with the purposes of CAFA.

Although the decision by the 10th Circuit is troublesome for class action defendants, who may find it difficult to gather all necessary evidence to present in a timely notice of removal, the Supreme Court’s grant of certiorari in the Dart Cherokee case signals that the Court is likely to reverse the 10th Circuit’s holding and side with the majority of circuits. A decision upholding the majority view would certainly promote the policy underlying CAFA of increasing class action defendants’ access to federal courts.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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