Opinion ID: 203670
Heading Depth: 2
Heading Rank: 1

Heading: The Removing Defendant's Burden Regarding the Amount in Controversy Under CAFA

Text: We agree with those circuits that have used the terminology of a reasonable probability as the standard a removing defendant must meet under CAFA. [2] See Blockbuster, Inc. v. Galeno, 472 F.3d 53, 58 (2d Cir.2006) ([The removing defendant] must show that it appears to a `reasonable probability' that the aggregate claims of the plaintiff class are in excess of $5 million.); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 449 (7th Cir. 2005) ([T]he removing litigant must show a reasonable probability that the stakes exceed the [jurisdictional] minimum.). GTL contends that a reasonable probability burden is too rigorous and that it should only be required to show, as if it were an initial plaintiff filing, that it is not a legal certainty that the amount in controversy is less than the jurisdictional minimum. This lesser burden, GTL argues, mirrors the burden on a plaintiff who initially files in federal court. [3] The removing defendant's effort to liken its situation to cases in which the plaintiff has chosen to be in federal court and it is the defendant who seeks to defeat federal jurisdiction does not work. In CAFA, Congress expressly expanded federal jurisdiction largely for the benefit of defendants against a background of what it considered to be abusive class action practices in state courts. See CAFA § 2, 119 Stat. at 4-5. That did not mean, however, that Congress intended to place defendants in the same position as plaintiffs who originally choose a federal forum. Congress certainly did not use any statutory language adopting the analogy, and the policy considerations are very different in the two situations. Furthermore, placing a removing defendant in the same posture as a plaintiff who originally files in federal court would conflict with the general rule of deference to the plaintiff's chosen forum. See 14C Wright, Miller & Cooper, Federal Practice and Procedure § 3725, at 95 (3d ed.1998) (recognizing that a greater burden [is imposed] on defendants in the removal situation than is imposed on plaintiffs who wish to litigate in federal court by invoking its original jurisdiction to demonstrate the amount in controversy but that [t]his discrepancy in treatment of plaintiffs and defendants may be justified by the historical tradition that the plaintiff is the master of the forum and is empowered to choose the court system and venue in which litigation will proceed). We reject GTL's analogy. Instead, GTL, as the proponent of federal jurisdiction, must sufficiently demonstrate that the amount in controversy exceeds CAFA's jurisdictional minimum. To do so, it must show a reasonable probability that more than $5million is at stake in this case. See Blockbuster, 472 F.3d at 58; Brill, 427 F.3d at 449; cf. McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936) ([T]he court may demand that the party alleging jurisdiction justify his allegations by a preponderance of evidence.). Several brief notes on this approach are in order before we apply this standard to the facts here. First, the reasonable probability standard is, to our minds, for all practical purposes identical to the preponderance standard adopted by several circuits. [4] See Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir.2006) (equating the proper application of the reasonable probability test with the preponderance standard). There was no error in the district court's discussion of GTL's burden in terms of the preponderance of the evidence. Yet because questions of removal are typically decided at the pleadings stage where little or no evidence has yet been produced, the removing defendant's burden is better framed in terms of a reasonable probability, not a preponderance of the evidence. See Brill, 427 F.3d at 449. The reasonable probability language better captures the preliminary nature of this inquiry, reserving the preponderance of the evidence terminology for other conclusions. Second, we do not wish to encourage or create a step-by-step burden shifting system, which would result in extensive and time consuming litigation over the question of the amount in controversy in CAFA removal cases. See Spielman, 251 F.3d at 4 ([D]etermining whether a case belongs in federal court should be done quickly, without an extensive fact-finding inquiry.); Coventry Sewage Assocs. v. Dworkin Realty Co., 71 F.3d 1, 4 (1st Cir.1995) ([P]reliminary jurisdictional determinations should neither unduly delay, nor unfairly deprive a party from, determination of the controversy on the merits.); see also 14B Wright, Miller & Cooper, supra, § 3702, at 16-17 (The federal courts, as well as the parties, naturally are concerned about the efficient use of their own limited resources and attempt to avoid time-consuming threshold issues that do not go to the merits.). Consideration of this preliminary issue should not devolve into a mini-trial regarding the amount in controversy. Third, with that caution in mind, deciding whether a defendant has shown a reasonable probability that the amount in controversy exceeds $5 million may well require analysis of what both parties have shown. Merely labeling the defendant's showing as speculative without discrediting the facts upon which it rests is insufficient. See Strawn, 530 F.3d at 299 (finding the defendant's showing sufficient to establish the amount in controversy under CAFA where the plaintiffs had offered nothing to challenge the accuracy of the defendant's affidavit). In the course of that evaluation, a federal court may consider which party has better access to the relevant information. See Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 n. 3 (11th Cir.2006) (Defendants have better access to information about conduct by the defendants, but plaintiffs have better access to information about which plaintiffs are injured and their relationship to various defendants.). Fourth, a court's analysis of the amount in controversy focuses on whether a removing defendant has shown a reasonable probability that more than $5 million is in controversy at the time of removal. Events subsequent to removal that reduce the amount in controversy below the jurisdictional minimum do not divest a federal court of jurisdiction. Coventry Sewage Assocs., 71 F.3d at 6. Finally, the plaintiffs' likelihood of success on the merits is largely irrelevant to the court's jurisdiction because the pertinent question is what is in controversy in the case, not how much the plaintiffs are ultimately likely to recover. See Brill, 427 F.3d at 448 (The question is not what damages the plaintiff will recover, but what amount is `in controversy' between the parties. That the plaintiff may fail in its proof, and the judgment be less than the threshold (indeed, a good chance that the plaintiff will fail and the judgment will be zero) does not prevent removal.).