Court Opinion

ID: 4670155
Source: CourtListenerOpinion
Date Created: 2021-03-22 17:00:36.723144+00
Date Added: 2024-06-11T08:01:34.192795
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ACADEMY OF COUNTRY MUSIC, a                No. 20-55589
California nonprofit corporation,
                   Plaintiff-Appellee,      D.C. No.
                                         2:20-cv-03046-
                  v.                        RGK-JC

CONTINENTAL CASUALTY COMPANY,
an Illinois corporation,                    OPINION
                 Defendant-Appellant,

                 and

DOES, 1 through 10,
                         Defendants.

      Appeal from the United States District Court
         for the Central District of California
      R. Gary Klausner, District Judge, Presiding

        Argued and Submitted February 8, 2021
                 Pasadena, California

                  Filed March 22, 2021

  Before: Richard C. Tallman, Consuelo M. Callahan,
          and Kenneth K. Lee, Circuit Judges.

               Opinion by Judge Callahan
2   ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

                          SUMMARY *

                     Jurisdiction / Remand

    The panel vacated the district court’s order sua sponte
remanding this civil action to state court, based on the
panel’s determination that the transmittal of the remand
order did not deprive federal courts of jurisdiction and that
review was not barred by 28 U.S.C. § 1447(d).

    The panel held that 28 U.S.C. § 1447(d) barred review
only of a remand order that was based on a colorable
§ 1447(c) ground. The panel held further that it could look
behind the district court’s characterization of its order to
determine whether its assertion of § 1447(c) was colorable.

    The panel held that the district court’s remand order was
not based on a colorable § 1447(c) ground. Specifically, the
panel held that the district court erred as a matter of law in
requiring that the notice of removal “prove” subject matter
jurisdiction. By acting sua sponte, and thereby refusing to
allow the appellant to offer proof to substantiate its
allegations in the notice of removal that the amount in
controversy exceeded $75,000, the district court denied the
appellant a fair opportunity to submit proof. The panel
further held that because the district court erred as a matter
of law in requiring that the notice of removal “prove” the
amount in controversy and then failed to follow Supreme
Court and Ninth Circuit precedent by refusing to allow the
appellant to supplement its notice of removal, the district

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.          3

court’s order was not “colorable” or “arguable,” and could
be reviewed.

    The panel concluded that the transmittal of the remand
order to the state court did not deprive this court of
jurisdiction. The panel further held that the district court’s
assertion that a notice of removal must prove subject matter
jurisdiction was contrary to Dart Cherokee Basin Operating
Co., LLC v. Owens, 574 U.S. 81, 89 (2014), and Arias v.
Residence Inn by Marriott, 936 F.3d 920 (9th Cir. 2019), and
thus was not a “colorable” basis for remand.

    The panel directed the district court to enter an order
recalling the remand, and to notify the state court that the
district court had resumed jurisdiction over the action.

                        COUNSEL

Richard A. Simpson (argued), Wiley Rein LLP,
Washington, D.C.; Robert C. Christensen, CAN Coverage
Litigation Group, Oakland, California; for Defendant-
Appellant.

Kayla Robinson (argued) and Kirk Pasich, Pasich LLP, Los
Angeles, California, for Plaintiff-Appellee.
4   ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

                                OPINION

CALLAHAN, Circuit Judge:

    We confront two jurisdictional issues. First, we consider
whether the district court’s transmittal of its sua sponte order
remanding this civil action to a state court based solely on
the notice of removal deprives federal courts of jurisdiction.
Second, we consider whether review of the remand order is
barred by 28 U.S.C. § 1447(d). We determine that the
transmittal of the remand order does not deprive federal
courts of jurisdiction and that review in this case is not
barred by § 1447(d). The district court’s requirement that a
notice of removal prove subject matter jurisdiction is
contrary to Dart Cherokee Basin Operating Co., LLC v.
Owens, 574 U.S. 81, 89 (2014), 1 and accordingly, is not a
“colorable” ground under 28 U.SC. § 1447(c). See Powerex
Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 234
(2007). Therefore, we vacate the district court’s remand
order.

                                      I

    On February 24, 2020, the Academy of Country Music
(Academy) filed a lawsuit in a California Superior Court
alleging that Continental Casualty Company (Continental)
breached an insurance policy by denying coverage for a
claim asserted against it by a former executive. On April 1,
2020, Continental removed the case to the U.S. District
Court for the Central District of California. The Notice of
Removal stated that the parties were diverse; the amount in
controversy exceeded $75,000, exclusive of interest and
costs; and that prior to the commencement of the action,

    1
        Parallel citations are omitted throughout this opinion.
   ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.          5

Academy had made a demand on Continental for an amount
in excess of $75,000.

   On April 10, 2020, the district court issued a sua sponte
order remanding the case to state court. The order’s critical
paragraphs read:

       The Court is not satisfied that Defendant has
       satisfied its burden to show that the amount
       in controversy meets the jurisdictional
       requirement. Defendant makes no attempt to
       calculate damages, nor does it offer
       evidentiary support as to the existence and
       amount of punitive damages. The Court is
       unable to find a plausible allegation that the
       amount in controversy has been met. That
       Plaintiff’s Complaint alleges damages “in an
       amount exceeding the Court’s jurisdictional
       limit” is not persuasive, given that this likely
       refers to the jurisdictional limit of $25,000
       for unlimited civil cases in California state
       court. There is nothing from which the Court
       could conclude that this reference to the
       “jurisdictional limit” refers to the
       jurisdictional limit for diversity jurisdiction.

       The fact that Plaintiff, at one time, made a
       settlement demand in excess of $75,000 does
       not alter the result that the amount in
       controversy has not been established. A
       settlement demand is “relevant evidence of
       the amount in controversy if it appears to
       reflect a reasonable estimate of the plaintiff's
       claim,” but it is not dispositive. Cohn v.
       Petsmart, Inc., 281 F.3d 837, 840 (9th Cir.
6   ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

       2002). Here, Defendant offers no evidence to
       suggest that Plaintiff’s demand reasonably
       estimates the value of its claims. “The
       removal statute is strictly construed against
       removal jurisdiction, and the burden of
       establishing federal jurisdiction falls to the
       party invoking the statute.” California ex rel.
       Lockyer v. Dynegy, Inc., 375 F.3d 831, 838
       (9th Cir. 2004) (citing Ethridge v. Harbor
       House Rest., 861 F.2d 1389, 1393 (9th Cir.
       1988)).      “Federal jurisdiction must be
       rejected if there is any doubt as to the right of
       removal in the first instance.”            Gaus,
       980 F.2d at 566. Thus, the Court concludes
       that it lacks subject matter jurisdiction over
       this case.

The same day that the district court issued its sua sponte
remand order it transmitted a certified copy of that order to
the Los Angeles County Superior Court.

    On April 27, 2020, Continental filed a motion to alter or
amend the April 10 order pursuant to Federal Rule of Civil
Procedure 59(a). The motion was supported by a declaration
of one of Continental’s claims professionals affirming the
underlying policy’s $2 million limit. It was also supported
by a stipulation that the litigation concerned “(i) damages in
the amount of $621,824.65; (ii) prejudgment interest of
$85,681.17; and (iii) attorneys’ fees and costs of
$562,893.95, for a total amount of $1,270,399.77.”

    On June 1, 2020, the district court denied the motion.
The district court stated that its sua sponte order was a
determination that it lacked subject matter jurisdiction and
that review of its decision was precluded by 28 U.S.C.
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.             7

§ 1447(d). On June 8, 2020, Continental filed a timely
notice of appeal.

                               II

   There are two challenges to our jurisdiction in this
appeal. First, did the district court’s transmittal of its remand
order to the state court deprive us, as well as the district
court, of jurisdiction? See Seedman v. U.S.D.C., 837 F.2d
413 (9th Cir. 1988). Second, if the transmittal of the remand
order does not deprive the courts of jurisdiction, is review
prohibited by 28 U.S.C. § 1447(d)? These are questions of
law which we review de novo. See Lively v. Wild Oats
Markets, Inc., 456 F.3d 933, 938 (9th Cir. 2006).

    We have not always recognized the distinct natures of
these two questions. However, we conclude that controlling
case law holds that the district court’s transmittal of its
remand order does not immunize that order from review.
We further conclude that despite the district court’s
characterization of its order, § 1447(d) does not bar our
review because jurisdiction could not be determined when
the district court issued its sua sponte order.

                              III

    The distinction between federal court jurisdiction and
jurisdiction to review a remand order was suggested in City
of Waco, Texas v. United States Fidelity & Guaranty Co.,
293 U.S. 140 (1934). In an action that had been removed
from a Texas court, the district court issued a single order
that overruled the motion to remand, granted the motion to
dismiss the cross-complaint, and remanded the balance of
the action to state court. Id. at 142.
8   ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

    The City appealed alleging that the dismissal of its action
was contrary to the law of Texas. Id. The Fifth Circuit held
“that, as no appeal lies from an order of remand, the cause
was irrevocably out of the District Court, the action of that
court in dismissing the city’s cross-action was moot, and its
propriety could not be reviewed.” Id. at 142–43. The Fifth
Circuit further stated that “all matters concerning the entire
controversy, both those presented by the cross bill, and those
presented by the main suit are now, because of the remand,
pending in the State court and for its action, unaffected by
the attempt of the Federal court to dismiss the City’s cross
action.” Id. at 143.

    The Supreme Court did not agree. It reasoned that “[i]f
the District Court’s order stands the cross-action will be no
part of the case which is remanded to the state court.” Id.
Critically, the Court stated: “True, no appeal lies from the
order of remand; but in logic and in fact the decree of
dismissal preceded that of remand and was made by the
District Court while it had control of the cause. Indisputably
this order is the subject of an appeal; and, if not reversed or
set aside, is conclusive upon the petitioner.” Id. In other
words, even accepting that the remand order was not
reviewable, its issuance and the pendency of the underlying
suit in state court did not deprive the Court of jurisdiction. 2

    2
        The Supreme Court further stated:

          We are of opinion that the petitioner was entitled to
          have the Circuit Court of Appeals determine whether
          the dismissal of its cross-action against the Fidelity
          Company was proper. If the District Court erred on
          this point, which we do not decide, its action should be
          reversed. A reversal cannot affect the order of remand,
          but it will at least, if the dismissal of the petitioner’s
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.                    9

    The distinction between federal court jurisdiction and
review jurisdiction pursuant to § 1447(d) and its
predecessors appears to have remained dormant until the
Supreme Court decided Thermtron Products, Inc. v.
Hermansdorfer, 423 U.S. 336 (1976). In Thermtron, the
district court remanded an action to the state court because
of its crowded docket. Id. at 340. Thermtron filed an
alternate petition for writ of mandamus or prohibition with
the Sixth Circuit, which held that it had no jurisdiction to
review the removal order because of the prohibition against
review in § 1447(d). Id. at 341–42.

    The Supreme Court held that the district court had
“exceeded its authority in remanding on grounds not
permitted by the controlling statute,” and that § 1447(d) was
“not dispositive of the reviewability of remand orders in and
of itself.” Id. at 345. The Court ruled that “only remand
orders issued under § 1447(c) and invoking the grounds
specified therein that removal was improvident and without
jurisdiction are immune from review under § 1447(d).” 3 Id.

           complaint was erroneous, remit the entire controversy,
           with the Fidelity Company still a party, to the state
           court for such further proceedings as may be in
           accordance with law.

293 U.S. at 143–44.
    3
        Sections 1447(c) and (d) state:

           (c) A motion to remand the case on the basis of any
           defect other than lack of subject matter jurisdiction
           must be made within 30 days after the filing of the
           notice of removal under section 1446(a). If at any time
           before final judgment it appears that the district court
           lacks subject matter jurisdiction, the case shall be
           remanded. An order remanding the case may require
10 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

at 346. Reviewing the history of § 1447, the Court found
that “[t]here is no indication whatsoever that Congress
intended to extend the prohibition against review to reach
remand orders entered on grounds not provided by the
statute.” Id. at 350. The Court held that “[b]ecause the
District Judge remanded a properly removed case on
grounds that he had no authority to consider, he exceeded his
statutorily defined power; and issuance of the writ of
mandamus was not barred by § 1447(d).” Id. at 351.

     There is no mention in Thermtron of whether the district
court transmitted its remand order to the state court. But the
Court’s strong statement that a district court’s actions
beyond that “recognized by the controlling statute” were
reviewable certainly suggests that it would not countenance
a district court evading review by immediately transmitting
its remand order to the state court.

    In Flam v. Flam, 788 F.3d 1043 (9th Cir. 2015), we
addressed the merits of a remand order that had been
transmitted to the state court. In Flam, a magistrate judge
issued an order remanding the case to state court. Dr. Flam
timely filed a motion for reconsideration of the removal
order. The district court refused to entertain the motion,

       payment of just costs and any actual expenses,
       including attorney fees, incurred as a result of the
       removal. A certified copy of the order of remand shall
       be mailed by the clerk to the clerk of the State court.
       The State court may thereupon proceed with such case.

       (d) An order remanding a case to the State court from
       which it was removed is not reviewable on appeal or
       otherwise, except that an order remanding a case to the
       State court from which it was removed pursuant to
       section 1442 or 1443 of this title shall be reviewable
       by appeal or otherwise.
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 11

explaining that 28 U.S.C. § 1447(d) barred review because
“the Magistrate Judge’s remand order was issued, … the
case was closed, … [and] certification was sent to the Fresno
County Superior Court.” Id. at 1045. Nonetheless, we
vacated the magistrate judge’s order, holding that because
the remand order was dispositive of all federal proceedings,
it was properly characterized as a dispositive motion under
28 U.S.C. § 636(b)(1)(A), and could not be issued by a
magistrate judge. Id. at 1047. We could not have considered
the merits of the magistrate judge’s order if the transmittal
of the remand order to the state court had deprived us of
jurisdiction.

    Our opinion in Flam recognized that in Seedman,
837 F.2d at 414, we had read § 1447(d) broadly to “preclude
not only appellate review but also reconsideration by the
district court,” but we further recognized that “the rule is not
without exceptions.” Flam, 788 F.3d at 1047. Although
Seedman contains language that seems to suggest that
transmittal of a remand order deprives federal courts of
jurisdiction, a closer reading of Seedman reconciles it with
Flam.

    In July 1986, Seedman filed an action in state court
against multiple defendants alleging eight causes of action
based primarily on an alleged breach of an agreement to buy
certain assets. 837 F.3d at 413. We explained the underlying
proceedings as follows:

       On November 6, 1986, the district court sua
       sponte remanded the case to state court on the
       ground that the removal petition was
       untimely. One month later, respondents filed
       a second removal petition claiming the earlier
       remand order was erroneous. The remand
       order had already been certified to the state
12 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

       court. Petitioner filed a motion for remand,
       but the court denied that motion, vacated its
       earlier remand order, and granted the second
       removal petition. The court concluded its
       initial order was based on a clerical error, and
       removal was proper.

Id. at 413–14. Seedman filed a petition for a writ of
mandamus, asserting that the district court lacked
jurisdiction to vacate its earlier remand order. Id. at 414.

     In holding that the district court’s initial order was not
reviewable, we clearly stated that we were construing
§ 1447(c). We held that the language of § 1447(d) “has been
universally construed to preclude not only appellate review
but also reconsideration by the district court,” and that
“[o]nce a district court certifies a remand order to state court
it is divested of jurisdiction and can take no further action on
the case.” Id. We held that “a second removal petition based
on the same grounds does not ‘reinvest’ the court’s
jurisdiction” because “[a]s the statute makes clear, if the
remand order is based on section 1447(c), a district court
has no power to correct or vacate it.” Id. (emphasis added).
We agree with this statement: if a remand order is based on
§ 1447(c), then § 1447(d) precludes review by any federal
court.

    But nothing in Seedman precludes review of remand
orders that are not based on § 1447(c). The next paragraph
in Seedman reads:

       Respondent argues that our decision in Bucy
       v. Nevada Const. Co., 125 F.2d 213 (9th Cir.
       1942) allows a district court to correct
       erroneous remand orders. Bucy held only
       that a court may correct an error before the
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 13

       order is certified to the state court. We stated
       in Bucy that it was doubtful a court could
       vacate a remand order after certification. Id.
       at 217–18.        We now so hold: after
       certification to the state court a federal court
       cannot vacate a remand order issued under
       section 1447(c).

Id. The final phrase—“cannot vacate a remand order issued
under section 1447(c)”—clarifies that we were not
commenting on general federal jurisdiction. We further held
in the following paragraph that Thermtron was of no
assistance to respondent because “[h]ere the court’s order
was based on § 1447(c) since the court determined that the
removal had been improvidently granted because the
petition was untimely.” Id. Thus, Seedman is not contrary
to our implicit ruling in Flam, which is consistent with the
relevant Supreme Court cases, that the transmittal of a
remand order to the state court does not deprive a court of
jurisdiction to review that order if review is not barred by
§ 1447(d).

    The Third Circuit reached the same conclusion in
Carlyle Investment Management, LLC v. Moonmouth Co.,
779 F.3d 214, 218 (3d Cir. 2015). It held that it had
jurisdiction “because the District Court remanded due to the
forum selection clause and not due to a § 1447(c) reason.”
Id. Plaintiffs had argued that the act of mailing the remand
order had divested the federal courts of jurisdiction. The
Third Circuit held that the cases cited by the plaintiffs were
“easily distinguishable because they involve remands under
§ 1447(c)” and that the court “retains jurisdiction over
appeals of remand orders that are not made pursuant to
§ 1447(c).” Id.
14 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

    Any other jurisdictional holding would be troubling.
The Supreme Court has not wavered from its position in
Thermtron that § 1447(d) bars review only of remand orders
made pursuant to § 1447(c). It would be contrary to the
intent of Thermtron to hold that the limited avenue of review
carefully crafted by the Supreme Court could be closed by
the district court transmitting its remand order to a state court
without notice to the parties. Nonetheless, we would so hold
if our precedent or Supreme Court precedent so required, but
as explained, they do not.

                              IV

A. 28 U.S.C. § 1447(d) bars review only of a remand
   order that is based on a colorable § 1447(c) ground.

    In Thermtron the Supreme Court explained its limitation
of the bar to review in § 1447(d) as follows:

        There is no doubt that in order to prevent
        delay in the trial of remanded cases by
        protracted litigation of jurisdictional issues,
        United States v. Rice, 327 U.S. 742, 751
        [(1946)], Congress immunized from all
        forms of appellate review any remand order
        issued on the grounds specified in § 1447(c),
        whether or not that order might be deemed
        erroneous by an appellate court. But we are
        not convinced that Congress ever intended to
        extend carte blanche authority to the district
        courts to revise the federal statutes governing
        removal by remanding cases on grounds that
        seem justifiable to them but which are not
        recognized by the controlling statute.

423 U.S. at 351.
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 15

     Twenty years later in Quackenbush v. Allstate Insurance
Co., 517 U.S. 706 (1996), the Supreme Court reiterated that
a district court’s “abstention-based remand order does not
fall into either category of remand order described in
§ 1447(c), as it is not based on lack of subject matter
jurisdiction or defects in removal procedure.” Id. at 712.
The Court held that “the abstention-based stay order was
appealable as a final decision under § 1291 because it put the
litigants effectively out of court.” Id. at 713 (internal
quotation marks and citations omitted). 4

     In Powerex, 551 U.S. 224, the Supreme Court further
expounded on its holding in Thermtron. It explained that in
Thermtron it “held that § 1447(d) should be read in pari
materia with § 1447(c), so that only remands based on the
grounds specified in the latter are shielded by the bar on
review mandated by the former.” Id. at 229. The Court
reviewed the evolution of the statute and accepted that
“§ 1447(d) permits appellate courts to look behind the
district court’s characterization.” Id. at 233 (citing Kircher
v. Putnam Funds Tr., 547 U.S. 633, 641 n.9 (2006)). The
Court concluded that “review of the District Court’s
characterization of its remand as resting upon lack of
subject-matter jurisdiction, to the extent it is permissible at
all, should be limited to confirming that that characterization
was colorable.” Id. at 234.

    We anticipated, and have subsequently applied,
Powerex. In Lively, 456 F.3d 933, Wild Oats removed a
personal injury action to the district court, alleging that,

    4
     The Supreme Court determined that in light of its opinion in Moses
H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1
(1983), contrary to its perspective in Thermtron, the remand order was
appealable. Quackenbush, 517 U.S. at 715.
16 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

because the parties were completely diverse and the amount
in controversy exceeded $75,000, diversity jurisdiction
existed. Id. at 936. The district court remanded the case to
state court for lack of subject matter jurisdiction, holding that
removal was improper because Wild Oats, a California
citizen and local defendant, violated the forum defendant
rule contained in 28 U.S.C. § 1441(b), and that this
constituted a jurisdictional defect. Id. at 936–37. On appeal,
we reaffirmed that we had “jurisdiction to decide whether a
district court has the power to do what it did [in issuing a
remand order], although we cannot examine whether a
particular exercise of power was proper.” Id. at 938 (quoting
N. Cal. Dist. Council of Laborers v. Pittsburg-Des Moines
Steel Co., 69 F.3d 1034,1038 (9th Cir. 1995)).

    We explained:

        Lively is correct that if the district court
        remanded under its § 1447(c) authority, we
        would lack jurisdiction to review the
        order. . . . Rather than assuming the existence
        of this authority, as Lively would have us do,
        we must determine its veracity—we must
        determine whether the district court had the
        authority under § 1447(c) to remand. Stated
        differently, the question raised on appeal is
        not whether the district court’s remand order
        was correct, but whether the district court
        exceeded the scope of its § 1447(c) authority
        by issuing the remand order in the first place.
        Such an inquiry is well within our
        jurisdictional bounds—because it “takes aim
        at the district court’s authority to issue the
        remand order, we have jurisdiction.” In re
        Ford Motor Co./Citibank, 264 F.3d 952, 965
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 17

       (9th Cir. 2001); see also N. Cal. Dist. Council
       of Laborers v. Pittsburg-Des Moines Steel
       Co., 69 F.3d 1034, 1038 (9th Cir. 1995).

456 F.3d at 937–38.

    In Atlantic National Trust LLC v. Mt. Hawley Insurance
Co., 621 F.3d 931 (9th Cir. 2010), we again considered our
limited jurisdiction to review remand orders under
§ 1447(d). Citing Thermtron, 423 U.S. at 351, we stated that
§ 1447(d) did not bar the court from reviewing a remand
order when the trial court exceeds its statutorily defined
power by remanding a properly removed case on a ground
that it had no authority to consider. Atlantic, 621 F.3d
at 934. We further stated that “we may review remand
orders where the district court exceeded the procedural
limitations in § 1447(c), even where a district court
purported to remand on a ground enumerated in that statute.”
Id. at 935. We concluded that “in light of Powerex, when a
district court remands a case purporting to rely on a ground
enumerated in § 1447(c), we have appellate jurisdiction to
look behind the district court’s characterization of its basis
for remand only to determine whether the ground was
‘colorable.”’ Id. at 938.

    More recently, we reiterated this scope of review in
County of San Mateo v. Chevron Corp., 960 F.3d 586, 594–
95 (9th Cir. 2020). We explained:

       When a district court bases its remand order
       on one of the grounds in § 1447(c)—i.e., the
       district court “remands based on subject
       matter jurisdiction [or] nonjurisdictional
       defects”—as opposed to, for example, based
       on a merits determination or concerns about
       a heavy docket, [Atl. Nat’l Tr., 621 F.3d] at
18 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

       934–35, “review is unavailable no matter
       how plain the legal error in ordering the
       remand,” Briscoe v. Bell, 432 U.S. 404, 413
       n.13 (1977). “[R]eview of the District
       Court’s characterization of its remand as
       resting upon lack of subject-matter
       jurisdiction, to the extent it is permissible at
       all, should be limited to confirming that that
       characterization was colorable.” Powerex
       Corp. v. Reliant Energy Servs., Inc., 551 U.S.
       224, 234, (2007).

    We are not alone in our reading of § 1447(d). In
Ellenburg v. Spartan Motor Chassis, Inc., 519 F.3d 192 (4th
Cir. 2008), the Fourth Circuit addressed a situation similar
to our case. There “the district court sua sponte entered an
order remanding the case to state court, concluding that the
Notice of Removal’s allegation that the value of the matter
in controversy exceeded the sum of $75,000 was ‘inadequate
to establish’ the jurisdictional amount, because it failed to
‘allege facts adequate to establish’ the amount.” Id. at 194.
The Fourth Circuit cited the Supreme Court’s statement that
courts should not “extinguish the power of an appellate court
to correct a district court that has not merely erred in
applying the requisite provision for remand but has
remanded a case on grounds not specified in the statute and
not touching the propriety of the removal.” Id. at 196
(quoting Thermtron, 423 U.S. at 352). The Fourth Circuit
reasoned that the district court “ruled not that it lacked
subject matter jurisdiction, but rather that the defendants’
allegations of diversity jurisdiction were ‘inadequate’ and
that their Notice of Removal failed ‘to establish that the
amount in controversy exceeds the jurisdictional amount.’”
Id. at 197. The Fourth Circuit further explained:
      ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 19

         In its opinion evaluating the Notice of
         Removal, the district court applied a
         particular standard for assessing the
         sufficiency of such filing; it did not consider
         whether subject matter jurisdiction in fact
         existed. Rather than permitting allegations in
         the Notice of Removal to serve the same role
         that allegations in a complaint serve, the
         district court demanded that the Notice of
         Removal actually demonstrate the factual
         basis for the allegations in the notice. The
         district court’s selection and application of a
         legal standard for pleading in a notice of
         removal thus remains reviewable as a
         “conceptual antecedent” to the remand order.
         See Blackwater, 460 F.3d at 586–87 (citing
         Shives v. CSX Transp., Inc., 151 F.3d 164,
         168 (4th Cir.1998)).

         We may review a conceptual antecedent
         ruling even if it was an essential precursor to
         a remand order that is itself unreviewable
         under § 1447(d).

Id.

   We read Supreme Court precedent and our precedent as
holding that § 1447(d) precludes review only of a remand
order based on one of the grounds in § 1447(c)—subject
matter jurisdiction or nonjurisdictional defects—and that we
may look behind the district court’s characterization of its
order to determine whether its assertion of a § 1447(c)
ground is colorable.
20 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

B. The district court’s remand order is not based on a
   colorable § 1447(c) ground.

    Despite the district court’s contrary assertions, it could
not make a ruling on subject matter jurisdiction. The district
court acted sua sponte based on only the notice of removal.
However, a shortcoming in a notice of removal concerning
the amount in controversy is not jurisdictional, at least not
until the movant has an opportunity to correct any perceived
deficiency in the notice. In Dart Cherokee, 574 U.S. at 89,
the Supreme Court held that “a defendant’s notice of
removal need include only a plausible allegation that the
amount in controversy exceeds the jurisdictional threshold.”
In Arias v. Residence Inn by Marriott, 936 F.3d 920 (9th Cir.
2019), we reiterated that a “notice of removal ‘need not
contain evidentiary submissions’ but only plausible
allegations of the jurisdictional elements.” Id. at 922
(quoting Ibarra v. Manheim Inv., Inc., 775 F.3d 1193, 1197
(9th Cir. 2015)).

    Other than for cases under the Class Action Fairness Act
of 2005 (CAFA), we strictly construe the removal statute
against removal jurisdiction. 5 Hansen v. Grp. Health Coop.,
902 F.3d 1051, 1056–57 (9th Cir. 2018) (citing Geographic
Expeditions, Inc. v. Est. of Lhotka ex rel. Lhotka, 599 F.3d
1102, 1107 (9th Cir. 2010)). Nonetheless, the fact that the
party removing a case to a federal district court has the
burden of proving that the district court has jurisdiction does
not mean that the notice of removal must in and of itself meet
this burden.

    5
      In Arias, we noted that “no antiremoval presumption attends cases
invoking CAFA.” Id. at 922 (quoting Dart Cherokee, 574 U.S. at 89).
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 21

     This point was made clear in Dart Cherokee. Invoking
federal jurisdiction under CAFA, Dart removed the case
from a Kansas state court to a federal district court. 574 U.S.
at 84. The defendant filed a motion to remand and the
district court, “[r]eading Tenth Circuit precedent to require
proof of the amount in controversy in the notice of removal
itself,” granted the motion. Id. at 84. Dart petitioned the
Tenth Circuit for permission to appeal, the Tenth Circuit
denied review, and Dart petitioned for certiorari. Dart
requested resolution of the following question: “Whether a
defendant seeking removal to federal court is required to
include evidence supporting federal jurisdiction in the notice
of removal, or is alleging the required ‘short and plain
statement of the grounds for removal’ enough?” Id. at 86.
The Court held that “a defendant’s notice of removal need
include only a plausible allegation that the amount in
controversy exceeds the jurisdictional threshold.” Id. at 89.
It further explained that where a defendant’s assertion of the
amount in controversy is challenged, then “both sides submit
proof and the court decides, by a preponderance of the
evidence, whether the amount-in-controversy requirement
has been satisfied.” Id. at 88.

    Following Dart Cherokee, in Arias we held that “a
district court may not remand the case back to state court
without first giving the defendant an opportunity to show by
a preponderance of the evidence that the jurisdictional
requirements are satisfied.” Arias, 936 F.3d at 924. We
explained:

       The district court did not conclude that
       Marriott’s allegations were implausible.
       Instead, the district court stated that Marriott
       failed to meet its burden of proving the
       amount in controversy.            In rejecting
22 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

       Marriott’s assumed violation rates, the
       district court cited a lack of “evidence
       supporting [Marriott’s] assumptions.” But a
       notice of removal “need not contain
       evidentiary submissions.” Dart Cherokee,
       135 S. Ct. at 551. Instead, evidence showing
       the amount in controversy is required “only
       when the plaintiff contests, or the court
       questions, the defendant’s allegation.” Id. at
       554. . . . The district court clearly questioned
       Marriott’s allegation, but by remanding the
       case to state court sua sponte, the district
       court deprived Marriott of “a fair opportunity
       to submit proof.” Ibarra, 775 F.3d at 1200.
       This error warrants vacatur of the remand
       order.

Id. at 925. In Arias we further stated that, “when a
defendant’s allegations of removal jurisdiction are
challenged, the defendant’s showing on the amount in
controversy may rely on reasonable assumptions.” Id.
at 922.

    Here, the district court erred as a matter of law in
requiring that the notice of removal “prove” subject matter
jurisdiction. Furthermore, by acting sua sponte, and thereby
refusing to allow Continental to offer proof to substantiate
its allegations in the notice of removal that the amount in
controversy exceeded $75,000, the district court denied
Continental “a fair opportunity to submit proof,” which led
us to vacate the remand orders in Ibarra and Arias. What
the court should have done was to issue an order to show
cause requiring the removing party to prove more than
$75,000 was in controversy. Both sides agreed at argument
    ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 23

that ample proof existed to establish that key jurisdictional
element.

    There is no question that Academy’s complaint made the
requisite plausible allegations concerning the amount in
controversy. Indeed, the Notice of Removal stated that the
“matter in controversy exceeds $75,000.” 6 It also stated that
a settlement demand had been made in excess of $75,000.
We have stated that a “settlement letter is relevant evidence
of the amount in controversy if it appears to reflect a
reasonable estimate of the plaintiff’s claim.” Cohn v.
Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). Moreover,
in support of its Rule 59 motion, Continental provided
supporting documents stipulating that the amount in
controversy exceeds $75,000.

    The import of this is not that the district court’s
determination of subject matter jurisdiction was wrong
(although it clearly was), but that the court could not at that
stage of the litigation determine subject matter jurisdiction.
The district court erred as a matter of law in requiring that
the notice of removal “prove” subject matter jurisdiction
instead of containing plausible allegations of the
jurisdictional elements. Arias, 936 F.3d at 922. Thus, as in
Lively, the district court “exceeded the scope of its § 1447(c)
authority by issuing the remand order in the first place.”
Lively, 456 F.3d at 938. In sum, because the district court
erred as a matter of law in requiring that the notice of
removal “prove” the amount in controversy and then failed
to follow Supreme Court and Ninth Circuit precedent by

    6
      This specific assertion refutes the district court’s unreasonable
suggestion that Continental’s allegation that the amount in controversy
exceeded the court’s jurisdictional limit referred to the state court’s
$25,000 jurisdictional limit.
24 ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO.

refusing to allow Continental to supplement its notice of
removal, the district court’s order is not “colorable” or
“arguable” and may be reviewed. See Powerex, 551 U.S. at
234; County of San Mateo, 960 F.3d at 595. And because
the subject matter jurisdictional question could not be
determined at the time the district court issued its sua sponte
order and the order deprived Continental of “a fair
opportunity to submit proof,” see Arias, 936 F.3d at 925, the
district court’s orders are vacated. 7

                                  V

    A district court’s order remanding a civil action to state
court deprives the removing party of access to a federal
court. Accordingly, the Supreme Court has recognized that
such orders, if otherwise reviewable, may be appealed.
Quakenbush, 517 U.S. at 715. We conclude based on
precedent that the transmittal of the remand order to the state
court did not deprive us of jurisdiction. See City of Waco,
293 U.S. 140; Flam, 788 F.3d 1043. We further hold that
the district court’s assertion that a notice of removal must
prove subject matter jurisdiction is contrary to Dart
Cherokee, 574 U.S. 81, and Arias, 936 F.3d 920, and thus is
not a “colorable” basis for remand. Accordingly, we vacate
the district court’s orders. The district court shall enter an
order recalling the remand and shall notify the Los Angeles

    7
      The district court’s denial of Continental’s Rule 59 motion was
based on its determination that it lacked jurisdiction to consider the
motion. As we hold that the district court did have jurisdiction to
consider the motion, we vacate the court’s denial of the Rule 59 motion
as well as its remand order.
   ACAD. OF COUNTRY MUSIC V. CONTINENTAL CAS. CO. 25

County Superior Court that the district court has resumed
jurisdiction over the action.

   VACATED AND REMANDED.