Dart Cherokee Basin Operating Co. v. Owens

2014-12-15

Headline: Federal courts can accept removal notices that plausibly allege the monetary threshold; Court held defendants need not include evidence unless the plaintiff contests it, easing removal of class actions to federal court.

Holding: A defendant removing a case to federal court need only include a plausible allegation of the required amount in the removal notice; evidentiary proof is necessary only if the plaintiff contests the allegation or the court questions it.

Real World Impact:

Eases removal of qualifying class actions to federal court without immediate proof.
Lets plaintiffs force evidentiary proof by contesting the defendant's amount claim.
Requires courts to decide contested amounts by a preponderance of the evidence.

Topics: class actions, moving cases to federal court, amount in controversy, removal procedure

Summary

Background

Brandon W. Owens filed a proposed class action in Kansas state court accusing Dart Cherokee Basin Operating Company and a related pipeline company of underpaying royalties. The complaint sought a vague "fair and reasonable amount" in damages. Dart removed the case to federal court under a law that lets some large class actions go to federal court if the amount in controversy exceeds $5 million. Dart's notice alleged about $8.2 million; later it filed an executive declaration calculating over $11 million. Owens asked the district court to send the case back to state court, arguing the removal notice had no evidence proving the $5 million threshold.

Reasoning

The central question was whether a removal notice must include evidence proving the amount in controversy or whether a short, plain, plausible statement suffices. The Court said the statute borrows the familiar "short and plain" standard and does not require evidentiary materials in the notice. Instead, if the plaintiff disputes the defendant's allegation (or the court questions it), the statute requires evidence and the court then decides the amount by a preponderance of the evidence.

Real world impact

The ruling makes it easier for defendants to move qualifying class actions into federal court by allowing reasonable allegations about the dollar amount in the initial notice. Plaintiffs still can force proof by timely contesting the allegation; if they do, the defendant must present evidence and the court will weigh it. The Supreme Court vacated the lower appellate judgment and sent the case back for proceedings consistent with this rule.

Dissents or concurrances

Two dissenting opinions warned about jurisdiction and procedure. One dissent argued the Court lacked the proper basis to decide the merits and would have dismissed or affirmed; another argued the Court lacks jurisdiction to review the appeals-court refusal to permit appeal.