Through a pair of opinions issued the same day, the Ninth Circuit attempted to clarify the evidence required for a defendant to meet its burden of showing that the amount in controversy exceeds CAFA’s $5 million threshold when a plaintiff moves to remand. In the first opinion, Ibarra v. Manheim Investments, Inc., the plaintiff filed suit in state court seeking to represent a class of employees allegedly injured by the defendant’s “pattern and practice of failing to pay their Non-Exempt employees for working off-the-clock.” The defendant removed the case and submitted a declaration calculating damages based on the assumption that the alleged “pattern and practice” of violations meant that each putative class member was denied one meal break and one rest break per relevant shift. The district court remanded for failure to establish the amount in controversy, finding that there was no basis in the complaint or the evidence to support such an assumption. The defendant appealed the remand order.
The Ninth Circuit vacated the district court’s order and remanded to the district court for further proceedings, explaining that “neither side has submitted proof regarding the violation rate,” and that, based on the Supreme Court’s decision in Dart Cherokee Basin Operating Co. v. Owens, “‘both sides’ should have an opportunity to submit evidence and argument[.]” As we reported earlier, Dart held that a removing party need only include a “plausible allegation that the amount in controversy has been met” but where, as in Ibarra, a defendant’s assertion regarding the amount in controversy is challenged, both sides should have the opportunity to submit proof, and the district court will decide, by a preponderance of the evidence, whether the amount-in-controversy has been met.
The court in Ibarra noted that the complaint’s allegation of a “pattern and practice” of violations did not mean that the defendant “universally” violated the law. The court reasoned that a removing defendant’s “damage assessment may require a chain of reasoning that includes assumptions”; however, “those assumptions cannot be pulled from thin air but need some reasonable grounds underlying them.” The court also noted the parties’ disagreement over whether the plaintiff was required to submit proof rebutting the defendant’s amount-in-controversy evidence, but stated that Dart had not addressed the issue and left it for the district court to decide on remand.
In the second opinion, LaCross v. Knight Transportation, Inc., the Ninth Circuit applied the principles set forth in Ibarra to reverse a district court’s remand order under CAFA. The plaintiffs in LaCross alleged that the defendant had improperly classified truck drivers as independent contractors rather than employees, and, as a result, failed to reimburse drivers for certain expenses, including fuel costs. The defendant calculated the amount in controversy by adding invoices for fuel costs incurred during a certain quarter and multiplying that total by the class period. The court noted that, unlike the “pattern and practice” of violations alleged in Ibarra, the plaintiffs in LaCross alleged a universal policy of violations and that, if the plaintiffs were found to be employees, all fuel costs would have to be reimbursed. The court held that the chain of reasoning applied in calculating the amount in controversy was not based on unreasonable assumptions and reversed the district court’s order remanding the case.