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From Products Liability Law Daily, April 8, 2014

Justices to determine whether notice of removal under CAFA requires evidence supporting federal jurisdiction

By Pamela Wolf, J.D.

The Supreme Court on Monday, April 7, granted a request for review of a case that could impact potentially every defendant who seeks to remove a case to the federal courts. The Justices will be asked to determine what exactly is required in a notice of removal filed by a defendant seeking to move a case from a state to a federal court — allegations establishing the jurisdictional facts supporting removal, or those allegations plus evidence (Dart Cherokee Basin Operating Company, LLC v. OwensDkt No 13-719).

Defendants allege jurisdictional facts. The defendants sought to remove to federal court class litigation initiated by a complaint for an unspecifiedamount of damages, seeking royalty payments under certain Kansas oil and gas leases, according to the petition for certiorari. The defendants, in their notice of removal, alleged that the putative class included about 400 members who own royalty rights in approximately 700 oil and gas wells, and that the dispute concerned the production of those wells from January 1, 2002 until present. The defendants also calculated that the approximate amount in controversy was $8.2 million. These allegations exceeded the 100-class-member and $5-million-amount-in-controversy thresholds for removal to federal court under the Class Action Fairness Act (CAFA).

Evidence showing jurisdiction deemed too late. The plaintiff, who purportedly did not dispute the jurisdictional allegations in the removal notice, moved the court to remand the case to state court, arguing that the defendants’ removal petition was deficient because it did not include any admissible evidencesupporting removal. Although the defendants provided such evidence in response to the motion to remand, the plaintiff argued that this later-provided evidence could not cure the deficient removal notice. The plaintiff purportedly had assessed the case as worth over $20 million in a mediation brief.

The district court, believing that the defendants were required in their notice of removal to prove that CAFA’s jurisdictional requirements were met, remanded the case to state court. The district court had refused to consider evidence establishing removal jurisdiction because it was not filed with the removal notice, but rather was offered in response to the plaintiff’s remand motion. In so deciding, according to the cert petition, the district court relied on its understanding that the “Tenth Circuit has consistently held that reference to factual allegations or evidence outside of the petition and notice of removal is not permitted to determine the amount in controversy.”

The defendants sought review in the Tenth Circuit of the lower court’s ruling, but a divided panel denied review. The defendants’ request for an en banchearing fared no better; it was denied by a 4-4 split.

According to the defendants, who then turned to the Supreme Court for review, the Tenth Circuit is at odds with at least seven other circuit courts of appeals in imposing “a requirement that a defendant initiating removal must not only come forward with allegations of the requisite jurisdictional facts, but also present evidence of such facts in the notice of removal.” In this case, the Tenth Circuit’s requirement served to deny a class action defendant access to the federal court, despite the undisputed fact that the case satisfies each of the substantive requirements for federal court jurisdiction established in the CAFA, according to the defendants.

Question before the Court. Specifically, the question the Justices will consider is: “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?”

Attorneys: Nowell D. Berreth (Alston & Baird LLP) for Dart Cherokee Basin Operating Company, LLC.

Companies: Dart Cherokee Basin Operating Company, LLC.

MainStory: TopStory ClassActLitigationNews

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