Opinion ID: 1038530
Heading Depth: 4
Heading Rank: 2

Heading: The Reasoning of Lowdermilk and Standard Fire

Text: Lowdermilk involved a class complaint filed in Oregon state court on behalf of a class of employees. 479 F.3d at 996. Defendant removed the case to federal court, and plaintiff opposed removal, arguing that the aggregate amount in controversy did not exceed $5 million. Id. Plaintiff’s RODRIGUEZ V. AT&T MOBILITY SERVICES 11 complaint alleged damages “in total, less than five million dollars.” Id. at 996. The district court remanded the case to state court. Id. We affirmed the order of remand. Because plaintiff had alleged that the amount in controversy was less than $5 million, we held that “we need not look beyond the four corners of the complaint to determine whether the CAFA jurisdictional amount is met.” Id. at 998. We further held that “a plaintiff may sue for less than the amount she may be entitled to if she wishes to avoid federal jurisdiction and remain in state court.” Id. at 999. Plaintiff, being the “master of her complaint,” could elect to remain in state court by merely forgoing any damages above the jurisdictional minimum. Id. at 998–99. Accordingly, we held that “the familiar ‘legal certainty’ standard best capture[d] the proof the defendant must produce,” noting, at 999, that the Third Circuit had reached a similar conclusion in Morgan v. Gay, 471 F.3d 469 (3d Cir. 2006).1 Lowdermilk rested on two principles. 479 F.3d at 998 (“There are two principles that inform our judgment here.”). First, federal courts are courts of limited jurisdiction, which is to be strictly construed. Id. Second, “plaintiff is the ‘master 1 No other circuit has adopted this heightened standard, and most circuits have adopted a preponderance standard. See Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242, 1246 (10th Cir. 2012) (rejecting the legal certainty test and reviewing cases); Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 752 (11th Cir. 2010); Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009); Amoche v. Guarantee Trust Life Ins. Co., 556 F.3d 41, 50 (1st Cir. 2009); Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 404 (6th Cir. 2007); Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 540–41 (7th Cir. 2006). The Third Circuit has not spoken on the legal certainty standard after Standard Fire. 12 RODRIGUEZ V. AT&T MOBILITY SERVICES of her complaint’ and can plead to avoid federal jurisdiction.” Id. at 998–99. Lowdermilk adopted the “legal certainty” test, in part, to “preserve the plaintiff’s prerogative . . . to forgo a potentially larger recovery to remain in state court.” Id. at 999. It was the second principle that primarily explained our decision in Lowdermilk. That federal courts are courts of limited jurisdiction is inherently true for all cases in which federal jurisdiction is at issue, but we do not routinely impose a heightened “to a legal certainty” burden of proof in determining whether there is federal jurisdiction in other contexts. See McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936) (discussing a party’s burden to show that federal jurisdiction is appropriate and that he “justify his allegations by a preponderance of the evidence”); Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004) (holding that a defendant must carry its burden to establish by a preponderance of the evidence that the amount in controversy exceeded $75,000 because plaintiff’s complaint “[fell] short of even seeking the threshold amount”). That second principle is, however, directly contradicted by Standard Fire. The Court held that a plaintiff seeking to represent a putative class could not evade federal jurisdiction by stipulating that the amount in controversy fell below the jurisdictional minimum. Standard Fire, 133 S. Ct. at 1350. As a consequence, we cannot now say that a plaintiff, in the class action context, has the “prerogative . . . to forgo a potentially larger recovery to remain in state court.” See Lowdermilk, 479 F.3d at 999 (adopting the legal certainty standard to “preserve” that choice). Plaintiff may not “sue for less than RODRIGUEZ V. AT&T MOBILITY SERVICES 13 the amount she may be entitled to if she wishes to avoid federal jurisdiction and remain in state court.” Id. In addition, Lowdermilk held that district courts “need not look beyond the four corners of the complaint to determine whether the CAFA jurisdictional amount is met” so long as a plaintiff avers damages below $5 million. Id. at 998. Under Standard Fire, the district court’s inquiry is not so narrow. Standard Fire instructed district courts to look to the potential claims of the absent class members, rather than plaintiff’s complaint, holding that section 1332(d) so requires: “[t]he statute tells the District Court to determine whether it has jurisdiction by adding up the value of the claim of each person who falls within the definition of [the] proposed class.” 133 S. Ct. at 1348. Put another way, Lowdermilk reasoned that the initial jurisdictional determination derives from the complaint, while Standard Fire mandates that courts determine their jurisdiction by aggregating all potential class members’ individual claims. See id. at 1350 (“[T]o ignore a nonbinding stipulation does no more than require the federal judge to do what she must do in cases without a stipulation and what the statute requires, namely ‘aggregate’ the ‘claims of the individual class members.’” (quoting 28 U.S.C. § 1332(d)(6)). To do so, district courts must necessarily “look beyond the four corners of the complaint” when the complaint alleges damages below the jurisdictional minimum, contrary to Lowdermilk’s instruction. Lowdermilk, 479 F.3d at 998. Lowdermilk adopted the legal certainty standard to reinforce plaintiff’s prerogative, as master of the complaint, to avoid federal jurisdiction by forgoing a portion of the 14 RODRIGUEZ V. AT&T MOBILITY SERVICES recovery on behalf of the putative class. That choice has been taken away by Standard Fire. Further, Standard Fire instructs courts to look beyond the complaint to determine whether the putative class action meets the jurisdictional requirements. Standard Fire, 133 S. Ct. at 1350. The theory supporting our adoption of the legal certainty standard no longer holds true. Lowdermilk’s legal certainty standard is a consequence of a plaintiff’s ability to plead to avoid federal jurisdiction. That principle is not viable in actions involving absent class members. The reasoning behind Lowdermilk’s imposition of the legal certainty standard is clearly irreconcilable with Standard Fire. We hold that Standard Fire has so undermined the reasoning of our decision in Lowdermilk that the latter has been effectively overruled. A defendant seeking removal of a putative class action must demonstrate, by a preponderance of evidence, that the aggregate amount in controversy exceeds the jurisdictional minimum. This standard conforms with a defendant’s burden of proof when the plaintiff does not plead a specific amount in controversy. See Guglielmino v. McKee Foods, 506 F.3d 696, 701 (9th Cir. 2007).2 This is the burden AT&T must satisfy on remand.