96 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com this situation in Lowdermilk v. United States Bank, holding that the removing defendant must prove to a “legal certainty“ that the CAFA amount in controversy has been met.576 Lowdermilk noted that federal courts are courts of “limited jurisdiction” and therefore should strictly construe subject matter jurisdiction.577 Second, Lowdermilk noted that the plaintiff is “master of her complaint” and can plead to avoid federal jurisdiction.578 Moreover, Lowdermilk raised the bar in cases where there is no evidence of bad faith, requiring the defendant to not only contradict the plaintiff’s own assessment of damages, but also overcome the presumption against federal jurisdiction.579 The Lowdermilk rule threatened to eviscerate CAFA by making it easy for plaintiffs to avoid removal by disingenuously stating that the amount in controversy was less than $5 million. Plaintiffs could then later amend their complaints or otherwise contend that they had discovered additional evidence supporting greater damages than they had initially alleged, and there was no way to bind class members to the initial amount-in-controversy estimate. Lowdermilk was dealt an initial blow in 2013 when the United States Supreme Court restored CAFA’s integrity in Standard Fire Insurance Co. v. Knowles.580 There, the named plaintiff, Knowles, claimed that his homeowners insurer had shorted him and “hundreds [or] possibly thousands” of other policyholders in the putative class that he sought to represent by failing to include certain benefits when paying out claims. Knowles sued in Arkansas state court and attempted to avoid removal to federal court by stating in his complaint that he was seeking less than $5 million in damages on behalf of the class.581 The defendant nonetheless removed the case to federal court, invoking CAFA. In analyzing jurisdiction, the district court concluded that the total potential damages put in controversy by the class action claim exceeded the threshold amount. But the court concluded that the plaintiff’s statements that he would not seek more than $5,000,000 on behalf of the class served to limit the amount in controversy to less than the jurisdictional minimum, making CAFA inapplicable.582 After the Eighth Circuit declined the insurer’s interlocutory appeal, the United States Supreme Court granted certiorari.583 The Supreme Court overturned the trial court's holding and found that the plaintiff’s supposed “stipulation” did not limit the amount in controversy in the case. Writing for a unanimous Court, Justice Breyer noted that while the plaintiff could agree to limit his own request for damages, he could not do so on behalf of absent members of a class that no court had yet empowered him to 576 Lowdermilk v. United States Bank, 479 F.3d 994, 1000 (9th Cir. 2007); see also Cifuentes v. Red Robin Int’l, Inc., No. C11-5635-EMC, 2012 WL 693930 (N.D. Cal. 2012) (holding that defendants failed to provide “concrete evidence” to estimate the amount in controversy to a “legal certainty” as required under Lowdermilk —”a very high, although not insurmountable, threshold for defendants”). 577 Id. at 998. 578 Id. at 999. 579 Id. 580 133 S. Ct. 1345 (2013). 581 Id. at 1347. 582 Id. at 1348. 583 Id.
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