May 26, 2014 Articles

Navigating CAFA Removal and Remand Strategies

Decisions concerning removal and remand under CAFA have exhibited an interesting dichotomy.

By Jennifer L. Gray – May 26, 2014

In the wake of the U.S. Supreme Court’s decision last year in Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345 (2013), federal-circuit and district-court decisions concerning removal and remand under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), have exhibited an interesting dichotomy. Some courts have adhered to the legislative-intent-focused underpinning of Knowles, while othershave embraced a strict, textual approach. Generally, decisions involving how the amount in controversy is calculated for class-action removal have expanded the scope of CAFA jurisdiction, while decisions involving the requirements for mass-action removal have narrowed the scope of CAFA jurisdiction. In the mass-action cases, courts have exhibited a reluctance to permit removal where doing so appears inconsistent with a strict textual reading of CAFA provisions, even when the result is inconsistent with CAFA’s goals of ensuring federal-court consideration of nationwide litigation.

Knowles held that a class-action plaintiff could not avoid CAFA removal by stipulating that the amount in controversy was below the CAFA threshold of $5 million. Prior to Knowles, courts were split as to whether such stipulations were effective to defeat CAFA removal. The Supreme Court held that because a putative class member has no power to bind absent class members prior to the certification of a class, a stipulation is not effective in establishing the amount in controversy and therefore could not provide a basis to avoid CAFA jurisdiction. The Court explained that its decision was grounded in the legislative intent behind CAFA—to expand federal jurisdiction over class actions. The Court cautioned against “treat [ing] a nonbinding stipulation as if it were binding, exalt[ing] form over substance, and run[ning] directly counter to CAFA’s primary objective: ensuring federal court consideration of interstate cases of national importance.” Knowles, 133 S. Ct. at 1350 (internal quotation marks omitted).

In the wake of Knowles, courts have generally moved away from strict requirements regarding proof of the amount in controversy, favoring more lenient standards consistent with Knowles’s focus on CAFA’s legislative intent. For example, the several courts that have had the occasion to consider the burden-of-proof standard for establishing the amount in controversy have acknowledged that a rigid requirement of proving damages to “a legal certainty” is inconsistent with Knowles.

Premium Content For:
  • Litigation Section
Join - Now