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

Plaintiffs’ Stipulation In A Complaint That The Amount In Controversy Is Less Than $5 Million Does Not Take A Case Outside CAFA’s Scope

Posted in Case Summaries

Watson_v_Prestige_Delivery_Systems_Inc., 2017 WL 635388 (W.D. Penn. Feb. 16, 2017).

In this action, while granting the plaintiffs’ motion to remand, the United States District Court, Western District of Pennsylvania (the “District Court”) found that pre-certification stipulation in a complaint stating the amount in controversy is less than $5 million does not, by itself, take a case outside the Class Action Fairness Act’s (“CAFA”) scope because the stipulation can bind only the named plaintiff and not the entire proposed class.

The plaintiffs, delivery drivers, brought a putative class action in the Court of Common Pleas of Allegheny County, Pennsylvania (the “ PA State Court”) alleging the defendants misclassified them as independent contractors rather than employees, and thus denied them benefits, rights, and privileges owed to employees under the law.

The plaintiffs moved for class certification of a class, including all the defendant Prestige Delivery Systems, Inc. (“Prestige”) drivers from September 10, 2006 to the present, as well as a subclass of drivers who worked for Prestige while Prestige was under contract with defendant NICA from 2006 to 2009. Prestige acknowledged the plaintiffs were seeking to certify a class of drivers from 2006 to the present, though it disputed the plaintiffs had clearly delineated the class period in their complaints.  The PA State Court granted the plaintiffs’ motion for class certification.  The state court further denied reconsideration of its order.

Subsequently, Prestige filed its notice of removal under CAFA asserting the amount of damages in dispute exceeded $5 million, and that the notice of removal was timely filed within thirty days of the PA State Court’s order denying reconsideration. The plaintiffs moved to remand arguing Prestige’s removal was untimely because Prestige failed to remove the action to federal court within the 30 day period prescribed by 28 U.S.C. § 1446(b).

The District Court noted that under 28 U.S.C. § 1446(b) a notice of removal “may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” The District Court further noted that although § 1446(b) does not define “other paper,” the statute is clear the time for removal begins to run when the defendant receives the requisite written notice of facts which make the case removable.

Prestige claimed it was not on notice the putative class period ran from 2006 to the present, and thus was not aware the amount in controversy exceeded $5 million until the PA State Court denied reconsideration and entered a final class certification order. The plaintiffs asserted each and every iteration of the complaint defined the class as extending from “September 10, 2006 to the present.”

The District Court found the plaintiffs’ motion for class certification explicitly sought certification of a class of Prestige drivers from September 10, 2006 to the present. The District Court therefore held the record in the case indisputably demonstrated Prestige knew the class period ran from 2006 to the present long before it filed its notice of removal.

Prestige argued it could not have known that the case was removable under CAFA because the PA State Court complaints expressly provided the amount in controversy was less than $5 million. The District Court, however, attached no significance to the plaintiffs’ assertions in their complaints that the amount in controversy was less than $5 million.  The District Court noted the United States Supreme Court held in Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345 (2013), that this type of pre-certification stipulation in a complaint does not, by itself, take a case outside CAFA’s scope, because the stipulation can bind only the named plaintiff and not the entire proposed class.  The District Court therefore stated Prestige should have known the plaintiffs’ allegations regarding the jurisdictional amount in controversy were not binding.

The District Court further opined that even if the complaints did not, on their face, demonstrate removability, other litigation documents clearly put Prestige on notice the amount in controversy exceeded $5 million. The District Court noted Prestige acknowledged the plaintiffs had expressed their intent to certify a class extending from 2006 to the present.  Prestige had also conceded in its notice of removal that, as soon as it was on notice the plaintiffs sought to certify a class extending from 2006 to the present, it knew the amount in controversy exceeded $5 million.  The District Court thus concluded Prestige knew the plaintiffs sought to certify a class that covered the period 2006 to the present and that the amount in controversy exceeded $5 million, years before it filed its notice of removal.  Thus, Prestige’s notice of removal in the instant case was not timely.

Accordingly, the District Court granted the plaintiffs’ motion to remand.

Yaron Shaham