With Ironies Abounding, the United States Supreme Court Rules on Removal Under CAFA

Dart Cherokee Basin Operating Co., LLC v. Owens, ___ U.S. ___ (2014).  This case reached a fairly simple conclusion: a notice of removal that removes to federal court a putative class action need not contain evidence to support a claim that the amount in controversy exceeds $5 million, a required basis for removal.  The removing defendant can supply that detail in its opposition to a motion to remand that the plaintiff may file.  The fundamental basis for this decision was the language of the removal statute, 28 U.S.C. §1446(a), which states that a notice of removal need only “contain[  ] a short and plain statement of the grounds for removal.”

The issue arose out of the so-called Class Action Fairness Act, 28 U.S.C. §1332(d)(2).  That provision allows a class action to be removed from state court to federal court if the amount in controversy, aggregated as to all members of the putative class, exceeds $5 million.  Defendant’s notice of removal alleged that this amount in controversy requirement was met, but supplied no evidence to support that assertion.  Plaintiff moved to remand the case on the grounds that defendant had therefore not demonstrated the right to remove the case.  The District Court agreed and granted remand.  Defendant asked the Tenth Circuit Court of Appeals to grant discretionary review of that ruling under 28 U.S.C. §1453(c)(1), a provision that creates an exception to the normal rule that remand decisions are not reviewable on appeal, but that court declined to do so.  A three-judge panel of the Tenth Circuit split 2-1 on the issue, and the Tenth Circuit en banc split right down the middle.

The Supreme Court granted review because the issue of whether the required amount in controversy must be affirmatively established by evidence presented in the removal papers had created a conflict among Circuit Courts of Appeal.   The Court concluded that there was no such requirement.  The Court observed that the standard of “a short and plain statement” was similar to the language of Federal Rule of Civil Procedure 8(a), and that pleading the amount in controversy under that rule is not a demanding undertaking for plaintiffs.  So it should not be demanding for defendants either.

The actual vote was 5-4.  The dissenters did not appear to disagree that removal papers need not contain evidence to prove the amount in controversy.  Instead, the dissenters objected to the fact that the Court had taken up the appeal at all.  In their view, since the Tenth Circuit had exercised its discretion not to review the District Court’s decision, there was simply nothing for the Supreme Court to review and the grant of certiorari should have been vacated as improvidently granted.  The majority, however, concluded that the appeal was “in” the Tenth Circuit even though that court did not accept the appeal for review.  Thus, the Supreme Court had the power to review that decision under 28 U.S.C. §1254(1), which authorizes the Supreme Court to grant certiorari as to “[c]ases in the Courts of Appeals.”  Moreover, the ruling of the District Court was effectively unreviewable later, and that ruling would have altered, for the worse, practice in all removals of putative class actions within the Tenth Circuit.  Accordingly, the majority believed that the Supreme Court had the ability to take the case up and attacked the Tenth Circuit for refusing to grant review of defendant’s appeal.

The lineup of the Justices was unusual, deviating from the often-predictable grouping of the most conservative Justices, appointed by Republican Presidents, against the less conservative Justices, appointed by Democratic Presidents.  Justice Ginsburg wrote the majority opinion, in which Chief Justice Roberts and Justices Breyer, Alito, and Sotomayor joined.  Justice Scalia authored the dissent, to which Justices Thomas, Kennedy, and Kagan signed on.  The position of Justice Scalia, usually an implacable foe of class action plaintiffs, as evidenced (for example) here and here, in favor of vacating certiorari, for once favored plaintiff, who would have ended up back in state court as plaintiff had sought to do.  But that is only one of a series of ironies in this ruling.

The majority’s citation of Rule 8(a) as requiring very little to plead successfully is ironic, coming from the same Court that created from whole cloth the enhanced pleading standard, under that same Rule 8(a), of Bell Atlantic v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009).  In another irony, the majority of a Supreme Court that lately has exercised its discretion to grant review of fewer cases than at any time in recent memory criticized a Court of Appeals for failing to accept this particular appeal for review. 

Finally, the issue that so divided the Court was not raised by either party or by either of the courts below.  Rather, an amicus curiae, Public Citizen, was the one who provoked that issue.  In Turner v. Rogers, 131 S.Ct. 2507 (2011), a dissent by four Justices, including Chief Justice Roberts and Justice Alito, condemned the majority for considering an issue raised only by an amicus.  That dissent cited cases in which the Court had declined to consider an issue raised only by an amicus, and labeled that posture “a wise and settled general practice.”  The Chief Justice and Justice Alito evidently saw that issue differently here.