On December 15, 2014, the Supreme Court of the United States decided Dart Cherokee Basin Operating Co., LLC v. Owens, No. 13-719, holding that a notice of removal to federal court under 28 U.S.C. § 1446(a) and the Class Action Fairness Act's "minimal-diversity" requirements need only include a plausible allegation that the amount in controversy exceeds the jurisdictional threshold, and need not include actual evidence establishing that amount.
Owens filed a putative class action in Kansas state court against Dart, alleging that Dart underpaid royalties owed under certain oil and gas leases. The complaint sought a "fair and reasonable amount" to compensate class members as damages. Dart removed the case to federal court under the Class Action Fairness Act of 2005 (CAFA), and stated in its notice of removal that alleged underpayments totaled more than $8.2 million, which exceeded the $5 million jurisdictional threshold in CAFA. Dart did not attach any evidence supporting the $8.2 million figure in its notice of removal.
Owens moved to remand the case to state court, alleging that because there was "no evidence" proving that the amount-in-controversy exceeded $5 million, the removal notice was deficient as a matter of law. In opposition, Dart submitted as evidence a declaration with a detailed damages calculation showing the amount in controversy exceeded $11 million. The district court granted Owens' remand motion, reading § 1446(a) to preclude consideration of Dart's evidence submitted outside of the notice of removal. Dart appealed the remand order to the United States Court of Appeals for the Tenth Circuit, but that court twice denied review. The Supreme Court granted certiorari to resolve a split among the circuits on the question of whether a removing defendant must include "evidence" supporting federal jurisdiction in the notice of removal, or instead whether a "short and plain statement" of the grounds for removal was sufficient.
The Supreme Court held that the removal statute itself provided the answer: a "short and plain" statement plausibly alleging the amount in controversy is all that is required; a notice of removal need not contain evidentiary submissions. This conclusion was particularly sensible because the removal statute tracks the general pleading requirement in Federal Rule of Civil Procedure 8, and was intended to impose the same standard applicable to plaintiffs who file in federal court in the first instance. Because a plaintiff's amount-in-controversy allegation is accepted if made in good faith, a defendant's amount-in-controversy allegation upon removal likewise is acceptable "when not contested by the plaintiff or questioned by the court."
The Court further held that if a plaintiff or the court does question the amount in controversy, then removal is proper if the defendant proves, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold. Quoting a House report, the Court also explained that discovery can also be taken to determine if the amount-in-controversy allegation is satisfied.
In a separate section of its opinion, the Court addressed a jurisdictional issue that neither party raised, but which was highlighted by an amicus brief — whether the Supreme Court had jurisdiction to review the discretionary decision of the Tenth Circuit not to review the district court's remand order. The Court majority held that it had jurisdiction, because the Tenth Circuit's denial of the request to review the remand order was "infected with legal error" and because both orders presented essentially the same question: "What must the removal notice contain?" Because the Court concluded that the removal notice need only contain a plausible allegation that the amount-in-controversy exceeds the jurisdictional threshold, it vacated the Tenth Circuit's judgment and remanded the case for further proceedings.
Justice Ginsburg delivered the opinion for the Court, in which Chief Justice Roberts and Justices Breyer, Alito and Sotomayor joined. Justice Scalia filed a dissenting opinion, in which Justices Kennedy, Kagan and Thomas (all but the last sentence) joined. Justice Thomas filed a separate dissenting opinion.