Authored by Julie G. Yap

On Monday morning, the Supreme Court yet again rejected a would-be class action plaintiff’s attempts to avoid federal court.  The Court’s order again affirmed that defendants need not overcome significant barriers to plead their cases in federal court—a position contrary to that often advanced by plaintiffs and their counsel in opposing the removal of putative class actions alleging violations of state wage and hour laws.  Instead of imposing an evidentiary burden on a removing defendant, the Supreme Court clarified that a petition for removal from state court to a federal district court “need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.”  As such, removing defendants need only satisfy the same liberal pleading standards applicable to a plaintiff’s complaint.

In Dart Cherokee Basin Operating Co. v. Owens, the named plaintiff attacked the defendant’s petition to remove the case from state court to a federal district court under the Class Action Fairness Act (“CAFA”), arguing that the notice of removal was “deficient as a matter of law” because it included “no evidence” proving that the amount in controversy exceeded the required $5 million threshold for federal jurisdiction under CAFA .  In response, the defendant submitted a declaration, including a detailed damages calculation indicating that the amount in controversy well exceeded the  jurisdictional minimum by more than $6 million.  The district court, however, refused to consider the declaration, holding that the notice of removal must contain evidence of the amount in controversy.  When the defendant appealed the district court’s remand order, the Tenth Circuit denied review.

The Supreme Court overturned the trial court’s holding and concluded that a removing defendant need only set forth “a short and plain statement of the grounds for removal” and need not submit supporting evidence.  The Court noted that, “by design,” the removal statute tracks the general pleading requirements for plaintiffs, citing legislative history that corroborated Congress’ intent to “simplify the ‘pleading’ requirements for removal.”  As such, like a complaint, “when a defendant seeks federal-court adjudication, the defendant’s amount in controversy allegation should be accepted when not contested by the plaintiff or questioned by the court.”  Moreover, the Court emphasized that there is no presumption against removal in cases removed under CAFA, noting that CAFA was enacted to facilitate the removal of certain types of cases to federal court.

While the Court’s decision addressed a decision invoking removal under CAFA, the Court’s holding interpreted a section of the removal statute, 28 U.S.C. § 1446(a), which applies not only to removals under CAFA, but also to removals under the court’s traditional bases for jurisdiction, including diversity of citizenship.

This ruling has significant implications for wage and hour litigation because both CAFA jurisdiction as well as traditional diversity jurisdiction are often at issue when plaintiffs bring claims under state wage laws to avoid the federal courts or to seek enhanced damages.  The Supreme Court’s ruling demonstrates that a removing defendant cannot be held to a higher burden in pleading the right to litigate its claims in federal court.