PHILADELPHIA (Legal Newsline) - A federal appeals court has ruled that Travelers Property Casualty Company of America did not establish the Class Action Fairness Act amount-in-controversy in a class action lawsuit against the company.
The district court erred in concluding that the CAFA numerosity requirement was not satisfied, but correctly concluded that Travelers did not establish the CAFA $5 million amount-in-controversy requirement, according to an opinion filed Dec. 12 in the U.S. District Court for the Third Circuit.
Circuit judges D. Brooks Smith, Thomas M. Hardiman and Cheryl Ann Krause voted in the majority, with Smith authoring the opinion. The appeal was argued on Nov. 5.
The panel affirmed in part, vacated in part and remanded the case to the U.S. District Court for the Eastern District of Pennsylvania. The district court is to remand the case to state court unless the district court, through further proceedings, determines that Travelers has established jurisdiction under CAFA.
Francine Judon filed her class action lawsuit against Travelers in the Court of Common Pleas in Philadelphia County on Jan. 24 and it was removed to the U.S. District Court for the Eastern District of Pennsylvania on Feb. 28.
Judon claimed Travelers refused to pay first-party medical benefits beyond $5,000, which was a breach of contract, and that its denial of her claims was done in bad faith and violated Pennsylvania code. She claimed Travelers breached its contract with other class members as well.
On March 24, Judon filed a motion to remand. On June 30, the district court granted the motion to remand. Travelers petitioned for a review of the remand and on Oct. 3, the appellate court granted Travelers' petition.
"At the core of this jurisdictional challenge is the nature of the burden of proof and evidentiary standards applicable in a case removed under CAFA," the opinion states.
In order to determine whether the CAFA jurisdictional requirements are satisfied, a court evaluates allegations in the complaint and a defendant’s notice of removal, according to the opinion.
"As Judon’s complaint unambiguously pleaded that the numerosity requirement was satisfied, the district court should have placed the burden of proof on Judon to show, to a legal certainty, that the numerosity requirement was not satisfied," the opinion states. "But the District Court correctly applied the preponderance of the evidence standard to the amount-in-controversy requirement. Accordingly, we will affirm in part, vacate in part, and remand to the District Court for further proceedings."
Judon was represented by James C. Haggerty and Suzanne T. Tighe of Haggerty, Goldberg, Schleifer & Kupersmith in Philadelphia.
Travelers was represented by Matthew A. Goldberg, Joseph Kernen of Brian M. Robinson of DLA Piper in Philadelphia
U.S. Court of Appeals for the Third Circuit case number: 14-3406, 14-4099
From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.