Advisories September 5, 2013

Class Action Litigation Advisory: In Rodriguez, the Ninth Circuit Made It Easier to Remove Under CAFA

Last week, in Rodriguez v. AT&T Mobility Services LLC, No. 13-56149 (9th Cir. Aug. 27, 2013), the Ninth Circuit made it a little easier for defendants to remove cases under the Class Action Fairness Act (CAFA). Taking its cues from the Supreme Court’s recent decision in Standard Fire, the Ninth Circuit held that a defendant seeking to remove a case under CAFA needs to prove the amount in controversy only by a preponderance of the evidence, not by a legal certainty.

Rodriguez is good news for defendants.

The Ninth Circuit: Standard Fire calls for a relaxed standard to proving the amount in controversy under CAFA.

Robert Rodriguez brought a putative class action against AT&T on behalf of retail sales managers in AT&T wireless stores in the Los Angeles area. After AT&T removed the case to federal court, Rodriguez moved to remand the case based on his allegations that the “aggregate amount in controversy is less than” $5 million. In response, AT&T submitted declarations showing that the amount in controversy “could not be less than roughly $5.5 million and was likely double that amount.” The district court rejected AT&T’s evidence and remanded the case to state court, concluding that AT&T had not demonstrated with a “legal certainty” that the case met CAFA’s amount in controversy.

That was before Standard Fire. In Standard Fire, the Supreme Court held that a named plaintiff cannot stipulate away CAFA jurisdiction by disavowing aggregate classwide damages over $5 million. Although a named plaintiff can bind himself, he cannot bind putative class members. In light of Standard Fire, the Ninth Circuit vacated the district court’s remand order.

The Ninth Circuit also concluded that Standard Fire required a change to the circuit’s standards for CAFA removal. As noted, before Standard Fire, defendants in the Ninth Circuit had to prove the amount in controversy by a legal certainty. The Rodriguez court concluded that Standard Fire “effectively overruled” the legal-certainty standard. In its place, the Ninth Circuit adopted a preponderance-of-the-evidence standard.

The trend toward a more liberal removal policy continues.

Rodriguez is the latest in a steady stream of decisions (and the second recent decision from the Ninth Circuit) relaxing the standards for removal under CAFA. Those decisions suggest that Standard Fire has caused a shift back toward interpreting CAFA in a manner consistent with Congress’s intent to provide a federal forum for large class actions.

For defendants, that is a welcome trend.

This advisory is published by Alston & Bird LLP’s Class Action practice area to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.

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Alex Wolfe
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