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

Plaintiff’s Failure to Show that it is Legally Impossible to Recover More Than $5,000,000 Defeats Remand

Posted in Case Summaries

Dammann v. Progressive Direct Insurance Company, 856 F.3d 580 (8th Cir. May 11, 2017).

In this action, while affirming the judgment of a district court which denied the plaintiffs’ motion to remand, the Eighth Circuit found that after the party seeking to remove has shown CAFA’s jurisdictional minimum by a preponderance of the evidence, remand is only appropriate if the plaintiff can establish to a legal certainty that the claim is for less than the requisite amount.

The plaintiffs, purchasers of automobile insurance policies from the defendant Progressive Direct Insurance Company, brought a class action in Minnesota state court alleging that the defendant sold insurance policies with benefits below the statutory minimum required by Minnesota law. The Minnesota No-Fault Act requires all Minnesota automobile drivers to obtain insurance plans that provide coverage for $20,000 medical expenses loss and $20,000 for economic loss. The plaintiffs in this case were those who incurred medical expenses of $20,000 or more, but received only $19,900 in benefit payments, which is $100 below the statutory minimum.

The defendant timely removed the case to federal court pursuant to CAFA. The plaintiffs moved to remand on the ground that CAFA’s amount in controversy requirement did not exceed $5,000,000which the district court denied. On appeal, the Eighth Circuit affirmed.

The plaintiffs argued that the district court erred when it determined that the amount in controversy exceeded $5,000,000. Specifically, the plaintiffs argued that the district court should have restricted its analysis of the amount in controversy to what could be recovered by the class of individuals who had actually made claims for covered losses and were paid less than the statutory minimum. The district court calculated the amount in controversy relying on premiums collected on all the defendant policies which included the challenged deductibles, regardless of whether the policyholders had made claims which led to application of the deductibles.

The district court noted that the facts in the instant case were similar to those in Raskas v. Johnson & Johnson, 719 F.3d 884, 886 (8th Cir. 2013). In Raskas, a group of plaintiffs filed a lawsuit in Missouri state court alleging that various manufacturers of medications had conspired to deceive customers into throwing away medications after their expiration dates, despite the defendants’ knowledge that the medications were still safe and effective. The defendants removed to federal court based on their sales revenue in Missouri during the class period. The plaintiffs argued that the defendants’ evidence in support of the amount in controversy was over-inclusive because it encompassed more than just the sales attributable to the challenged practice. The Raskas court rejected the plaintiffs’ argument and held that when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they were. (Editor’s Note: See the CAFA Law Blog analysis of Raskas posted on December 16, 2013).

As in Raskas, the plaintiffs argued here that the evidence provided by the defendant to satisfy CAFA’s amount in controversy requirement was over-inclusive because it included all premiums collected on policies with the challenged deductibles, not just the premiums collected from members of the narrowly defined class. The Eighth Circuit ruled that the district court correctly concluded that the instant case was like Raskas and that the defendant carried its burden of establishing by a preponderance of the evidence that the amount in controversy exceeded CAFA’s jurisdictional minimum.

The Eighth Circuit found that after the party seeking to remove has shown CAFA’s jurisdictional minimum by a preponderance of the evidence, remand is only appropriate if the plaintiff can establish to a legal certainty that the claim is for less than the requisite amount. The Eighth Circuit in Raskas, pointed out that even if it was highly improbable that the plaintiffs would recover the amounts defendants had put into controversy, it did not meet the legally impossible standard. The Eighth Circuit ruled that the plaintiffs here failed to show that it is legally impossible for them to recover more than $5,000,000. The Eighth Circuit explained that while they put the defendant’s sales practices at issue and sought a refund of their premium payments, they had not offered evidence to establish the amount they collectively paid in premiums. The Eighth Circuit stated that without such information, it could not determine whether it would be legally impossible for them to recover $5,000,000.

The Eighth Circuit therefore concluded that the district court properly denied the motion for remand and accordingly, affirmed its decision.

John T. Rouse