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

Plaintiff’s Jurisdictional Allegations Were Cemented at the Time of Removal

Posted in Case Summaries

Hardig v. Certainteed Corp., 2012 WL 423512 (W.D.N.C. Feb. 9, 2012).

The Western District of North Carolina held that a class complaint is cemented at the time of removal and that jurisdiction can’t be undone through “post hoc characterization.”

The plaintiffs brought a class action in the Superior Court of Union County, North Carolina, alleging breach of warranty and violations of the North Carolina Unfair and Deceptive Trade Practices Act. Specifically, the plaintiffs alleged that a fiber cement siding manufactured by the defendant, Certainteed, and installed on the plaintiffs’ homes suffered from an inherent defect that caused the siding to crack and peel. The plaintiffs’ sought actual damages, in addition to treble damages under the Unfair and Deceptive Trade Practice Act.

The defendant removed the action to the Western District of North Carolina under CAFA. 

The plaintiffs moved to remand, arguing that the defendants failed to establish that this action met CAFA’s jurisdictional threshold of more than $5 million in controversy. The plaintiffs’ remand argument was based on one assertion: that the class was in fact much smaller than suggested by the class complaint, meaning the overall amount in controversy fell under the $5 million threshold.

In its Notice of Removal, Certainteed submitted an affidavit from its consumer warranty manager, who stated that the retail cost of the siding for an average single-family home was $3000 to $4000 (excluding labor). The plaintiffs’ Complaint alleged that they were suing “on behalf of all persons and entities who own homes, residences or other structures physically located in North Carolina, on which the defendants or one of their related entities or subcontractors installed Certainteed WeatherBoards Fiber Cement exterior siding.” In paragraph 49 of the Complaint, the plaintiff alleged that “the Class is composed of thousands of persons geographically dispersed throughout Indian Trail, North Carolina as well as the state of North Carolina, the joinder of whom in one action is impractical.” The size of the class – “thousands” – when multiplied by the $3,000-$4,000 cost of siding, exceeded the $5 million threshold.  

In their brief in support of remand, the plaintiffs conceded that only 501 homes fell within the putative class. Specifically, the plaintiffs contended that the class complaint was not intended to encompass all of North Carolina but was rather intended to cover the town of Indian Trail and surrounding area.

The Court refused to accept the plaintiffs’ attempt to recharacterize the size of their class, holding that amount in controversy is determined by the allegations in the Complaint at the time of removal. The Court held that when the plaintiffs purport to represent a class of a specific size, the class size evident from the face of the complaint should be used when calculating the amount in controversy for jurisdictional purposes, and that, conversely, courts should refuse to use plaintiffs’ “post hoc characterization” of its class for amount in controversy purposes. The Court stated that the plaintiffs may not redefine their class in an attempt to avoid federal jurisdiction, and thus construed the plaintiffs’ Complaint as drafted and found that the class could potentially consist of thousands throughout North Carolina. 

The Court pointed that even if the plaintiffs had alleged the class to be restricted to only 501 homeowners, the jurisdictional threshold would still be met because treble damages the plaintiffs’ sought under the Unfair and Deceptive Trade Practices Act placed the amount in controversy over $5 million.

Accordingly, the Court found that the defendants had met their burden of establishing the requisite jurisdictional amount, and denied the plaintiffs’ motion to remand.