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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Can’t Peek Outside If You Are Not Certain

Posted in Case Summaries

Pittman v. Westgate Planet Hollywood Las Vegas, LLC, 2012 WL 254115 (D. Nev. Jan. 27, 2012).

In this action, a District Court in Nevada held that the estimated class size and estimated recovery of a similar class action cannot be taken into consideration for determining the amount in controversy in absence of real class size or recovery.

The plaintiffs, employees of the defendants, brought a putative class action in Nevada state court seeking overtime compensation. The defendants removed the action to the federal district court alleging jurisdiction under CAFA.

The plaintiffs filed the motion to remand arguing that the defendants have failed to satisfy the $5 million amount in controversy requirement of CAFA. 

The District Court agreed and remanded the action to state court.  

As an initial matter, the Court noted that the removing party has the burden of demonstrating by a preponderance of the evidence that the amount in controversy exceeds CAFA’s $5 million threshold.  Jurisdiction, however, cannot be based on mere “speculation and conjecture.”  In determining whether the amount in controversy exceeds the jurisdictional requirement, the court may consider facts in the notice of removal as well as “summary judgment type evidence relevant to the amount in controversy at the time of removal.”

Here, the Court found that the defendants had not established the amount in controversy exceeded $5 million by a preponderance of the evidence.  The defendants argued that the amount in controversy was reached by multiplying the estimated class size by the estimated recovery per person of a similar action against defendants currently in federal court.  The Court, however, remarked that the defendants’ calculations were not based on any real class size or recovery, but only on estimated class size and recovery; thus, the defendants’ stated amount in controversy was based on “speculation and conjecture” rather than actual evidence.  Therefore, the Court remanded this matter to the state court.

The plaintiffs sought attorney’s fees alleging wrongful removal. The Court noted that fees may be awarded when removal, “while fairly supportable, was wrong as a matter of law.”  Here, the Court declined to exercise its discretion in awarding attorney’s fees because the defendants’ removal, although ultimately improper, was not completely meritless as it was based on figures from a similar, though distinct, action currently being litigated in federal court.