A recent Ninth Circuit decision highlights the importance of the defendant clearly pleading the basis for alleging the amount in controversy in a notice of removal under the Class Action Fairness Act (CAFA). In this case, after the defendant prevailed on a summary judgment motion and the plaintiff appealed, the Ninth Circuit vacated and remanded for the district court to determine the amount in controversy.
In Moe v. GEICO Indemnity Co., — F.4th –, 2023 WL 4483690 (9th Cir. July 12, 2023), the plaintiff filed a putative statewide class action in Montana against GEICO. He alleged that GEICO improperly failed to pay him, and other third-party claimants injured in accidents for which GEICO drivers were determined to be responsible, collection fees and interest on medical bills, and lost wages. In removing to federal court, GEICO’s notice of removal relied on a declaration from an employee stating “that he ‘generated data and can state that the claims paid by GEICO Indemnity Co., and the damage exposure, not liability, to the potential members of the putative class proposed by Plaintiff exceeds the sum or value of $5 million in the aggregate.’” No further explanation of the data and no calculations were provided. At the district court level, neither the plaintiff nor the district court challenged the propriety of removal. The district court granted summary judgment on the named plaintiff’s claim, and he appealed.
On appeal, the Ninth Circuit questioned sua sponte whether the $5 million threshold for the amount in controversy was satisfied. While the Supreme Court has held in Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014), that evidence supporting the amount in controversy is not required to accompany a notice of removal, a “plausible assertion of the amount at issue” is required. Here, the Ninth Circuit found GEICO’s notice of removal and accompanying declaration to be lacking. It explained that the plaintiff’s “claimed damages in his individual claim are under $1,000,” “there is little indication what the average amount of damages the purported class members may have suffered,” and “it is unclear how large the purported class may be.” 2023 WL 4483690, at *3. The Ninth Circuit therefore vacated the summary judgment ruling (without addressing its merits), and remanded for the district court to determine whether the amount in controversy requirement was satisfied.
As I see it, a key practice pointer here for defense counsel is to include enough allegations in the notice of removal (and if desired, although not required, an accompanying declaration) to demonstrate how the amount in controversy is being estimated. Here, a conclusory assertion that data existed to support it was not enough. Some specifics as to the nature of the data and what it reflected might have been enough to avoid a remand, and then presumably another appeal. Sometimes it can be helpful to offer the court more than one method of calculation.