Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 125 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.627 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.628 After the Eighth Circuit declined the insurer’s interlocutory appeal, the United States Supreme Court granted certiorari.629 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 represent.630 These individuals thus might seek more damages if, for example, Knowles was replaced as the named plaintiff or another class member intervened in the case. Because the named plaintiffs’ stipulation was thus not effective, the district court’s original finding that the total potential damages in the case exceeded $5,000,000 was controlling and the requirements for CAFA jurisdiction were met.631 Although Standard Fire is incompatible with Lowdermilk, it did not expressly overrule it. Because of this, some courts in California clung to the notion that removing defendants must prove to a “legal certainty“ that the CAFA amount in controversy has been met. The Ninth Circuit corrected this situation in Rodriguez v. AT&T Mobility Servs. LLC.,632 holding that the Supreme Court’s ruling in Standard Fire effectively overturned Lowdermilk. In Rodriguez, the Ninth Circuit found that the lead plaintiff’s asserted waiver of any claim in excess of the $5 million amount-in-controversy requirement was ineffective in light of Standard Fire.633 Accordingly, the Ninth Circuit held that the proper burden of proof imposed upon a defendant to establish the jurisdictional amount is the “preponderance of the evidence“ standard, and not the “legal certainty” standard set forth in Lowdermilk.634 Under the “preponderance of the evidence standard,” evidence related to the contested amount in controversy may be “direct or circumstantial,” and “a damages assessment may require a chain of 627 Id. at 1347. 628 Id. at 1348. 629 Id. 630 Id. at 1348-49. 631 Id. at 1350. 632 728 F.3d 975 (9th Cir. 2013). 633 Id. at 982. 634 Id. at 981; see also Dart Cherokee Basin Operating Co., LLC, 135 S. Ct. at 554 (2014) (“when a defendant’s assertion of the amount in controversy is challenged … both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied”); Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (“Whether damages are unstated in a complaint, or, in the defendant’s view are understated, the defendant seeking removal bears the burden to show by a preponderance of the evidence that the aggregate amount in controversy exceeds $5 million when federal jurisdiction is challenged.”).
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