Kyla Asbury Dec. 16, 2014, 12:37pm

WASHINGTON (Legal Newsline) - The U.S. Supreme Court has held that a defendant removing a class action lawsuit to federal court under the Class Action Fairness Act of 2005 does not need to include actual evidence in establishing the required amount in controversy.

The Supreme Court ruled that a lower court’s decision to remand the case to state court was based in part on its erroneous application of a presumption against removal — a rule that federal courts must "narrowly construe" removal statutes and resolve all doubts in favor of remand, according to the decision issued Dec. 15.

By a 5-4 vote, the court held that no such presumption exists when removal is sought pursuant to the Class Action Fairness Act of 2005.

Justices Ruth Bader Ginsburg, John Roberts, Stephen Breyer, Samuel Alito and Sonia Sotomayor voted in the majority, with Ginsburg authoring the opinion.

Justices Antonin Scalia, Anthony Kennedy and Elena Kagan voted in the minority, with Scalia authoring a dissenting opinion.

Justice Clarence Thomas also voted in the minority and authored his own dissenting opinion.

To remove a case from a state court to a federal court, a defendant must file in a notice of removal "containing a short and plain statement of the grounds for removal," the majority opinion states. "When removal is based on diversity of citizenship, an amount-in-controversy requirement must be met."

Ordinarily, the matter in controversy must exceed the sum or value of $75,000, and, in class actions for which the requirement of diversity of citizenship is relaxed, the matter in controversy must exceed the sum or value of $5 million.

If the plaintiff’s complaint, filed in state court, demands monetary relief of a stated sum, that sum, if asserted in good faith, is deemed to be the amount in controversy, according to the majority opinion. When the plaintiff ’s complaint does not state the amount in controversy, the defendant’s notice of removal may do so.

"To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation? That is the single question argued here and below by the parties and the issue on which we granted review," Ginsburg's opinion states. "The answer, we hold, is supplied by the removal statute itself. A statement 'short and plain' need not contain evidentiary submissions."

Brandon W. Owens, the plaintiff in the class action lawsuit, filed his lawsuit in Kansas state court, claiming Dark Cherokee Basin Operating Company LLC and Cherokee Basin Pipeline LLC underpaid royalties owed to class members under certain oil and gas leases.

The complaint sought a fair and reasonable amount to compensate class members for damages they allegedly sustained due to the underpayments.

Dart removed the class action to the U.S. District Court for the District of Kansas by invoking federal jurisdiction under the Class Action Fairness Act of 2005.

Dart’s notice of removal alleged that all three requirements if CAFA were satisfied. Dart claimed the purported underpayments to putative class members totaled more than $8.2 million.

Owens moved to have the class action remanded back to state court, which was granted. The district court held that Dart's declaration could not serve to keep the case in federal court.

"Ordinarily, remand orders '[are] not reviewable on appeal or otherwise,'" Ginburg's order states. "There is an exception, however, for cases invoking CAFA."

In such cases, "a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand."

"Citing this exception, Dart petitioned the Tenth Circuit for permission to appeal," the opinion states. "'Upon careful consideration of the parties’ submissions, as well as the applicable law,' the Tenth Circuit panel, dividing two-to-one, denied review."

Although the court indicated that "[w]e need not here decide whether such a presumption is proper in mine-run diversity cases," by disavowing that presumption in the CAFA context, the court has facilitated future efforts by out-of-state defendants to remove class actions from state courts, particularly given that 10 of the 11 regional circuit courts of appeal had endorsed this supposed presumption.

In the dissenting opinion, Scalia stated that because the court is reviewing the Tenth Circuit’s judgment, the only question before the judges is whether the Tenth Circuit abused its discretion in denying Dart permission to appeal the District Court’s remand order.

"Instead of correcting an erroneous district court opinion at the expense of an erroneous Supreme Court opinion, I would have dismissed the case as improvidently granted," Scalia's opinion states. "Failing that, my vote is to affirm the Court of Appeals since we have absolutely no basis for concluding that it abused its discretion."

In his dissenting opinion, Thomas stated that while he agreed with Scalia and the rest of the minority, he writes his own dissenting opinion to point out another, more fundamental defect in the court's disposition.

"We lack jurisdiction to review even the Court of Appeals’ denial of permission to appeal," Thomas states. "Congress has granted this court jurisdiction to review '[c][/c]ases in the courts of appeals” by writ of certiorari. Purporting to act pursuant to this grant of jurisdiction, the majority today reviews the decision of the Court of Appeals to deny an application for permission to appeal a remand order."

As Scalia explains, the decision whether to permit such an appeal requires no assessment of the merits of a remand order, according to Thomas' opinion.

"The application here is nothing more than a request for discretionary permission to seek review," the opinion states. "The Tenth Circuit having denied that permission, no 'case' ever arrived 'in the court of appeals.' I would dismiss for lack of jurisdiction."

Richard Samp, Chief Counsel for the Washington Legal Foundation, which filed a brief in conjunction with the International Association of Defense Counsel and the Federation of Defense & Corporate Counsel, said the decision sends a clear signal.

"Today’s decision sends a clear signal: the U.S. Supreme Court will not permit the plaintiffs' bar—or lower federal courts—to frustrate the will of Congress that large class actions be removable to federal court to ensure that out-of-state defendants can have their cases heard in an impartial forum," Samp said in a press release. "By rejecting the 'presumption against removal,' the Supreme Court made clear that the federal courts are fully open to class action defendants."

Owens is represented by Rex A. Sharp of Gunderson Sharp in Prairie Village, Kan.

Dart is represented by Nowell D. Berreth of Alston & Bird in Atlanta; and Matthew Joseph Salzman of Stonson Leonard in Kansas City, Mo.

U.S. Supreme Court case number: 13-719

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