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CAFA Law Blog

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

Jurisdiction under CAFA Denied Because the Defendant Suffered From Foot in Mouth Disease

Posted in Case Summaries

Aparicio v. Abercrombie & Fitch Stores, Inc., 2014 WL 545795 (C.D. Cal. Feb. 10, 2014).

A District Court in California remanded the case to the state court finding that the plaintiff relied on the defendant’s data to reach her settlement demand for $16 million; whereas the defendant refuted that it ever produced such a data.  Because the defendant refuted the sole reason for the plaintiff’s amount-in-controversy calculation, the District Court remanded the case.

The plaintiff, Jessica Aparicio, filed this putative class action in the state court against the defendant Abercombie & Fitch Stores, her employer, and certain fictitious defendants.  The complaint alleged failure to provide rest breaks, waiting time penalties, violations of the Unfair Competition Law (“UCL”), and a cause of action under the Private Attorneys General Act.  The plaintiff alleged that the amount-in-controversy exceeded $25,000 and that the class consisted of 90 hourly employees.  The plaintiff sought compensatory damages, penalties, interest, restitution under the UCL, costs, and attorneys’ fee.  The plaintiff also sought an order enjoining the defendant from failing to provide plaintiffs with proper rest breaks.

The defendant made a request to settle, and the plaintiff responded seeking $16 million in damages.  The plaintiff calculated her damages as follows: (1) rest break premium at $682,848; (2) interest at $99,246; (3) § 203 penalties at $7 million; and (4) PAGA penalties at around $9 million.  The damages model appeared to calculate rest break damages assuming a class of 3,338 former employees, 2,999 current employees, an average hourly rate of $8.87, 76,984 shifts worked, and a rest break violation during 100% of the shifts.  The defendants then removed the action to the federal court.

The first question before the District Court was whether the removal was timely.  The District Court noted that 28 U.S.C. § 1446(b) provides that an action must be removed within 30 days from the defendant’s receipt of the initial pleading.  If the amount-in-controversy is not clear on the face of the initial pleading, then the 30 day period begins only after the defendant receives a copy of an amended pleading, motion, or other paper from which it can determine that the case is removable.  Here, the District Court noted that the defendant became aware of the amount-in-controversy only after the plaintiff filed her paper seeking $16 million in settlement.  The District Court observed that this document in settlement demand in excess of the jurisdictional minimum constituted “other paper” sufficient to provide notice that a case is removable.  Accordingly, the District Court held that the removal was timely.

The next question was whether the District Court could exercise jurisdiction under CAFA.  Here, the District Court observed that the defendant failed to establish a minimal diversity.  The plaintiff did not allege her citizenship; instead, the plaintiff only stated that she was a resident of California, and the notice of removal likewise alleged that she was a resident of California.  The District Court found this was insufficient to establish citizenship.  The District Court, therefore, ruled that, because the defendant failed to allege the plaintiff’s citizenship and also failed to allege the citizenship of any other class member, it had failed to carry its burden of showing citizenship of the parties was minimally diverse.

Because the plaintiff’s damages model estimate that the class consisted of 3,338 former employees and 2,999 current employees, the CAFA’s numerosity requirement was satisfied.  The only other question left was that of the amount-in-controversy.  In that regard, the District Court noted that a settlement letter was relevant evidence that the amount-in-controversy if it appeared to reflect a reasonable estimate of the plaintiff’s claim.  However, a plaintiff’s damage estimate would not establish the amount-in-controversy if it appeared to be only a “bold optimistic prediction.”  This meant that the defendant still had the burden to show by preponderance of evidence that the amount-in-controversy far exceeded the jurisdictional minimum.  In her email to the defendant, the plaintiff asserted that her damages model made no assumptions, because it was based entirely on the data that the defendant provided.  However, the defendant’s attorney contended that it did not produce data that supported the assumption that all 3,338 former employees worked 8 hours per day and were not paid all wages due for 30 days after termination.

The defendant’s attorney further contended that the defendant could not discern how the plaintiff calculated PAGA penalties.  According to the defendant’s attorney, the damages model identified no other source that purportedly supported the figures set forth in the model.  Because the plaintiff identified the defendant’s data as the sole source supporting her damages model and the defendant contended that its data did not support the model, the District Court remarked that it was unable to conclude that the model set forth a reasonable estimate as opposed to a bold optimistic prediction regarding damages.  Accordingly, the District Court concluded that the defendant did not appear to have established, by a preponderance of the evidence, that the amount-in-controversy exceeded the jurisdictional threshold.

Hart v. Rick’s NY Cabaret Intern., Inc., 2014 WL 301357 (S.D.N.Y. Jan. 28, 2014)

Posted in Case Summaries

Hart v. Rick’s NY Cabaret Intern., Inc., 2014 WL 301357 (S.D.N.Y. Jan. 28, 2014).

In an action asserting Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) claims, the District Court found that, despite the FLSA claims, it had jurisdiction over NYLL claims, because the plaintiffs had sufficiently established the requirements under CAFA.

Exotic dancers brought a collective action under FLSA and a putative class action under the NYLL against an adult entertainment club owner and two corporate parents.  The District Court advised counsel that it was weighing whether to resolve the FLSA claims first and afterwards, it would decide whether to exercise supplemental jurisdiction over the NYLL claims.  The plaintiffs took the position that the Court independently would have diversity jurisdiction over the NYLL claims under the CAFA, such that, in the event the federal claims were resolved ahead of the NYLL, the Court could still retain jurisdiction over the action.  For the purposes of future case management, the Court addressed the CAFA jurisdiction, although it was not required to do so at the initial stage.

The District Court concluded that it had jurisdiction under CAFA to try the NYLL claims.  The defendants did not dispute that the plaintiffs satisfied the 100 members requirement or the minimal diversity requirement.  The defendants, however, took exception to the plaintiffs’ contention that they satisfied the amount-in-controversy requirement.  The District Court noted that in determining the amount-in-controversy, the plaintiffs must show that it appeared to a “reasonable probability” that the aggregate claims of the plaintiff class were in excess of $5 million.

 The complaint alleged that the amount-in-controversy exceeded in $5 million, thereby creating a presumption that the CAFA requirement was satisfied.  To rebut this, the District Court noted that the defendants offered conclusory statements that plaintiffs’ allegations were pled inadequately and their estimation of damages was entirely speculative and insufficient to support CAFA jurisdiction.  In any event, the District Court determined that the evidence promulgated by the plaintiffs made it a reasonable probability that the damages aggregated across the class would exceed $5 million. 

 Next, the District Court determined that the defendants failed to establish any of the exceptions to CAFA jurisdiction, i.e., the “local controversy” exception, the “home state” exception, and the “interest of justice” exception.

 As to the local controversy exception, the plaintiffs argued that the defendants failed to establish two out of the four elements, contending that the defendants failed to establish that more than two-thirds of the class members were New York citizens and no other similar class actions were filed in the previous three-year period. 

 As to the citizenship of the class members, the District Court noted that, of the 3000 members, roughly about 70% of them had New York addresses.  The plaintiffs did not dispute the authenticity of the accuracy of the records.  However, they contended that the dancers’ last known addresses, standing alone, were insufficient to establish the two-thirds requirement.  The District Court found that the defendants’ records were not directed squarely to the issue of citizenship; instead, they captured the last known address given by a dancer.  Such an entry provided only limited insight into whether the dancer intended to make New York a dancer’s permanent home.  Because this was not sufficient to show that a dancer’s true fixed home and principal establishment was New York, the District Court ruled that the defendants failed to show that the dancers were New York citizens.

 Another requirement for the local controversy exception was that no other class action was filed within a three-year period preceding the filing.  The District Court found that as the defendants failed to prove two-thirds of the class were New York citizens, it need not definitively resolve whether there existed another class action. 

 The District Court next found that the defendants failed to establish that the alternative home state exception applied.  Under that exception, a district court must decline to exercise jurisdiction where two-thirds or more of the members of all the proposed plaintiff classes in the aggregate, and the primary defendants were citizens of the state in which the action was originally filed.  The District Court noted that for this exception to apply, then at least two-thirds of the class members must have been citizens of New York and the primary defendants must have been citizens of New York.  Because the first element was not established by the defendants, the District Court ruled that the home state exception did not apply.

 Finally, the District Court remarked that it would not decline jurisdiction in the interest of justice, rather it would wait for the records to develop to ascertain as a matter of fact if the defendant Rick’s NY Cabaret International, Inc. was indeed the primary defendant.

 Accordingly, the District Court exercised jurisdiction over the NYLL claims.

Alexandra D. Lahav, Symmetry and Class Action Litigation, 60 UCLA L. Rev. 1494 (Aug. 2013)

Posted in Legal Publications and Articles

Alexandra D. Lahav, Symmetry and Class Action Litigation, 60 UCLA L. Rev. 1494 (Aug. 2013).

In her article, Alexandra D. Lahav, a Professor of Law at the University of Connecticut, discusses the resources that parties often have to devote to their lawsuit in terms of both human as well as financial capital, the effect of such resources on lawsuits, and the impact of such resources on class actions.

The question that Lahav aims to answer is to what extent should procedural law take into account the resources of participants in the legal system?  Lahav notes that the assumption in the United States is that the legal system does not require symmetry between litigants, and the courts take the litigants as they find them.  Lahav points three exceptions to this general rule: (1) the provision of an attorney by the state in certain limited circumstances; (2) fee shifting in the prevailing plaintiff’s favor; and (3) the class action lawsuit. 

Lahav focuses on the baseline assumption that the courts take litigants as they find them.  She outlines that current developments of the class action doctrine reinforces the asymmetry that exists between individual plaintiffs and organizational defendants outside litigation.  The trends favoring settlement classes over litigated classes are driven, at least in part, by a belief that litigation class actions pressure defendants into settling meritless cases to the detriment of defendants and society.

This Article first considers the power dynamics between parties in class actions.  Part I explains those dynamics and demonstrates how they create a disparity between class actions certified for settlement only and those certified for litigation. This section begins by describing the doctrinal background and then discusses recent decisions that point to a renaissance in settlement-only class actions. 

Lahav points that, until recently, the trend in class action doctrine moved in one direction—class actions were increasingly difficult to certify for both litigation and settlement purposes.  The biggest barriers to class actions were the courts’ concern for future claimants in the mass tort context, their openness to collateral attacks on settlements, and the increasingly narrow reading of the requirements of Rule 23, especially the commonality requirement for all class actions and the predominance requirement for money damages class actions.

Lahav noted that, in the last twelve months, the barriers to certifying settlement class actions have appeared to diminish. Courts have given certification requirements a more generous reading, and they have been more tolerant of differences among class members when presented with a settlement than when presented with a motion to certify a class for litigation.

Lahav notes that the recent renaissance in settlement classes allows defendants to obtain global peace when they agree to a settlement price, but they can resist collective resolution in all other cases so that litigation is extremely costly for plaintiffs to pursue.  For example, after the settlement announcement, more claimants than were expected may come out of the woodwork and dilute the settlement fund, or there may be fraudulent claims or other problems that increases the cost of settling or of administering the settlement.   For this reason, defendants are pushing for leniency in the certification of settlement class actions, even as they would like to limit litigation classes.  Lahav opines that the defendants may find themselves arguing for a lenient interpretation of predominance in settlement and a rigorous application in litigation, although in both cases the same provision of the rule is in play.

The recent decisions imposing very onerous standards for certifying litigated classes and looser standards for certifying settlement classes, according to Lahav, would alter the power dynamics in favor of defendants and undo the symmetry between parties that the class action procedure was intended to achieve.  Lahav notes that the defendants can use class certification as a way to obtain global peace when they agree to a settlement price, but they can resist collective resolution in all other cases so that litigation is extremely costly for plaintiffs to pursue.

Lahav points that the courts’ leniency toward class settlements leads to a paradox.  While judges are concerned that a litigated class will exert undue pressure on the defendant to settle, they readily approve of settlements of claims they believe lack merit.  One might respond that defendant has consented to the settlement, but arguably courts should also be concerned that the defendant’s purported consent is in fact a response to the duress imposed by the threat of a class action. Lahav suggests that the reason for courts’ exclusive concern over defendant’s duress in litigated classes is that litigated class actions upend the status quo ante whereas settlement classes reinforce it.  Ultimately, if judges continue to treat settlement and litigation classes differently, the courts will reflect the asymmetry between plaintiffs and defendants in the real world.

 In Part II, the article considers the problem created by the fact that the class action alters the status quo ante. Lahav asks whether it is possible to defend an egalitarian ideal of adjudication in a society with unequal resource distribution.  One possible justification for an egalitarian court system focuses on the special role of the courts in a social order structured around legal rights and obligations that are enforced through litigation.  The adjudicative process must treat individuals with equal respect and concern for them to be able to realize rights and enforce obligations. There is much more to be said on this subject.

In conclusion, Lahav remarks that the frustrating thing about litigation is that there is always someone equal and opposite you trying to undo everything you do.  The class action creates symmetry between litigants where outside the courtroom they are unequal.  In doing so, it sets in motion a process that lives up to the promise of the American litigation system, with all its flaws.  In her article, Lahav suggests that much of the ire against the class action stems from the fact that this procedural device alters the status quo ante by creating symmetry between litigants.  If the inconsistent treatment of the settlement and litigation classes persists, this symmetry would be undone and the power dynamic favoring organizations in the larger social order would be enforced within the courts.  Lahav hopes that her article would be the beginning of a conversation on the role of egalitarian principles in litigation.

Ullman v. Safeway Ins. Co., 2013 WL 7141522 (D.N.M. Dec. 31, 2013)

Posted in Case Summaries

Ullman v. Safeway Ins. Co., 2013 WL 7141522 (D.N.M. Dec. 31, 2013).

In a personal injury action, the District Court ruled that diversity jurisdiction asserted by the insurance company could not be satisfied and remanded the case to the state court.

The plaintiff, an insured in an automobile accident, filed a putative class action in the state court alleging that the insurer did not adequately inform her of her options to purchase uninsured/underinsured motorist (UM/UIM) coverage or obtain waiver of UM/UIM coverage equal to limits of liability coverage or waiver of stacking UM/UIM coverage.  The plaintiff alleged that the defendants improperly denied benefits under the UM/UIM insurance coverage to her and others similarly situated.  The defendants removed the case to the federal court based on the diversity jurisdiction, because the plaintiff was New Mexico citizen and the defendants were incorporated in Illinois with their principal place of business in Illinois.

A vehicle driven by another driver, Richard Bailey, struck the passenger side of the plaintiff’s vehicle, injuring the plaintiff and totaling her vehicle.  The plaintiff made Bailey a defendant as well.  Bailey was a New Mexico citizen as well, and the defendant, Safeway Insurance, argued that the plaintiff fraudulently joined and procedurally misjoined Bailey to defeat diversity jurisdiction, and, thus, the Court should ignore Bailey’s citizenship.  The plaintiff filed a motion to remand.

The District Court noted that, in its notice of removal, Safeway Insurance asserted that the amount-in-controversy exceeded the jurisdictional minimum of $75,000.  Although Safeway Insurance did mention CAFA as an alternative basis for removal at the hearing, it stated that it was not pursuing removal under CAFA.  The plaintiff conceded that her damages likely would exceed the jurisdictional minimum, but citing Lovell v. State Farm Mutual Automobile Insurance Co., 466 F.3d  893 (10th Cir. 2006), argued that Safeway Insurance also must demonstrate that each putative class member’s damages exceeded $75,000. Lovell noted that, in multiple plaintiff cases, each plaintiff individually must satisfy the amount in controversy requirement.

The District Court noted that each putative class members’ claims arose from separate contracts, and so, as in Lovell, the claims may not be aggregated to meet the amount-in-controversy requirements.  The Court found that a significant difference between that case and the present matter, however, was that, in the instant matter, the parties agreed that the plaintiff’s claims exceeded $75,000.  The Court found that Safeway Insurance had not established that every putative class members’ claims exceed the jurisdictional minimum amount, but it need not do so, because the Court could exercise supplemental jurisdiction over the other claims.

Accordingly, the District Court concluded that Safeway Insurance had demonstrated, and the plaintiff agreed, that the plaintiff’s claims likely exceeded $75,000.  Thus, the Court would exercise supplemental jurisdiction over the other putative class members’ claims as long as the other requirements for diversity jurisdiction are met.

Safeway Insurance mainly argued that Bailey was joined fraudulently to defeat the diversity jurisdiction.  Safeway Insurance argued that the plaintiff was seeking damages from it rather than Bailey and that, by attempting to reform the insurance policy to include the UM/UIM coverage, the plaintiff had not asserted a basis to recover from Bailey.  The District Court disagreed and explained the principles of personal injury.  When driver A runs his car into driver B, there is a possibility that driver B can recover against driver A for negligence.  The plaintiff might not have much success getting any money from Bailey, but she did have a legal right to pursue her claim and get judgment.  Accordingly, the District Court ruled that Bailey was neither fraudulently joined nor was he misjoined. 

Because Bailey’s mere presence in the suit destroyed Safeway Insurance’s attempts to establish complete diversity, the District Court ruled that it did not have subject matter jurisdiction and remanded the case.

A Plaintiff’s Dual Role as Class Counsel and Lead Plaintiff Did Not Divest a Federal Court of Its Jurisdiction

Posted in Case Summaries

Hoffman v. DSE Healthcare Solutions, LLC, 2014 WL 1155472 (D.N.J. March 21, 2014).

A district court in New Jersey retained federal jurisdiction under CAFA, finding that under the Standard Fire principle, a plaintiff’s dual role as the class counsel and the lead plaintiff did not divest a federal court of its jurisdiction.

The plaintiff filed a consumer fraud class action against the defendant DSE Healthcare Solutions, LLC in the Superior Court of New Jersey, alleging that the defendant made false claims of product efficacy about Lipo–Flavonoid Plus, a dietary supplement.  The plaintiff was a New Jersey citizen and sought treble damages, interest, fees, costs, attorneys’ fees and civil penalties for the defendant’s alleged violation of the New Jersey Consumer Fraud Act (“NJCFA”).  The complaint expressly limited the overall amount-in-controversy to less than $5 million.  The defendant removed the lawsuit under CAFA.  The plaintiffs filed a motion to remand.

The plaintiff argued that his dual role as both the class counsel and the class representative prohibited class certification in federal court, resulting in the inability of the class to recover the minimum CAFA jurisdictional requirement.  To support his argument, the plaintiff cited precedent where such dual status was held to create a conflict of interest.

The defendant responded that the plaintiff could not unilaterally divest the District Court of the CAFA jurisdiction by asserting this dual role.  The defendant pointed to the unanimous Supreme Court decision in Standard Fire Ins. Co. v. Knowles, 133 S.Ct. 1345 (2013).  In Standard Fire, the Supreme Court interpreted CAFA to hold that a named plaintiff cannot unilaterally circumvent CAFA by his own non-binding actions.  Specifically, the Supreme Court rejected a plaintiff’s attempt to evade the scope of CAFA jurisdiction by stipulating that the class he sought to represent would not seek damages that exceed the $5 million jurisdictional threshold.  (Editors’ Note: see CAFA law blog analysis of Standard Fire posted on April 12, 2013).

 The District Court agreed with the defendant that, just as a class representative could not bind a class with a stipulation to limit the class’ damages in order to avoid federal jurisdiction in Standard Fire, a class representative cannot bind the class by unilaterally deciding to select himself as counsel.

Next, the District Court remarked that the primary issue was whether the defendant could show “to a legal certainty” that the individual claims of all proposed class members aggregate to more than $5 million.  The plaintiff proposed a class that comprised all U.S. purchasers of Lipo–Flavonoid Plus for the four year period.  The defendant submitted a certification from William D. Everett, Jr., the Vice President of Finance of DSE, that in the four-year period covered by the complaint DSE’s total nationwide sales of Lipo–Flavonoid Plus were over $9 million.  The District Court remarked that this evidence, coupled with the plaintiff’s demand for treble damages, was sufficient to prove “to a legal certainty” that the claims of the proposed class exceed $5 million in the aggregate.

Accordingly, the District Court denied the plaintiff’s motion to remand.

District Court Affirms Magistrate Court’s Lack of Sua Sponte if Outside Scope of Its Referral

Posted in Uncategorized

Lowell v. Summer Bay Mgmt., L.C., 2014 WL 1092187 (E.D. Tenn. March 17, 2014).

In an action, a Tennessee District Court adopted the magistrate judge’s recommendation, where he refused to dismiss a case sua sponte on the issue of subject matter jurisdiction.  The magistrate judge was of the view that when a case is referred to a magistrate by district court, he is bound to the extent of referral, which in this case was class certification; as a result, dismissing the case sua sponte would mean that he would be exceeding his jurisdiction.

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District Court Allows Discovery to Proceed in Part for Plaintiff to Establish CAFA Jurisdiction

Posted in Uncategorized

Kanowitz v. Broadridge Fin. Solutions, Inc., 2014 WL 1338370 (E.D.N.Y. March 31, 2014).

A district court in New York granted in part and denied in part a defendant’s motion to stay discovery while a motion to dismiss for lack of jurisdiction under CAFA was pending.  The District Court found that although the putative class satisfied the local controversy and the home state exceptions under CAFA, defendant should produce unredacted information on the putative class members’ to allow Plaintiffs an opportunity to verify Plaintiffs’ state citizenship, which had been withheld at the initial stage of the litigation.

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Defendants’ Citation to State Actions Alleging Similar Claims Insufficient Evidence to Establish CAFA’s Amount in Controversy

Posted in Case Summaries

Hochstrassen v. Broadspire Servs., Inc., 2013 WL 5536465 (N.D.W. Va. Oct. 8, 2013).

In this case, the district court held that defendants failed to establish CAFA’s amount-in-controversy requirement by citing state-court cases in which plaintiffs alleged similar invasion of privacy claims.  According to the district court, the damages awarded in those state cases were not illustrative of what class members could potentially recover in this case.

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PAGA Penalties Divided Among Employees and State of California May Not Be Aggregated To Satisfy CAFA’S Amount-In-Controversy Requirement

Posted in Case Summaries

Main v. Dolgen California, LLC, 13-01637, 2013 WL 5799019 (E.D. Cal. Oct. 28, 2013).

In this case, a California district court remanded a putative class action after finding that plaintiffs’ individual recoveries under the California Labor Code’s Private Attorneys General Act (“PAGA”) could not be aggregated with civil penalties under the Act that inure to the benefit of the State of California.

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Red Light Means Stop! District Court Finds CAFA’s Amount in Controversy Is Sufficiently Demonstrated in Removal of Traffic Violation Fine Case

Posted in Case Summaries

Hung v. American Traffic Solutions, Inc., 2014 WL 1689303 (E.D. Mo. April 29, 2014).

In an action brought on behalf of citizens of Missouri who had paid traffic violation fees, a district court in Missouri found that the allegations in the complaint were sufficient to satisfy the jurisdictional threshold considering that there were thousands of violations, and each violator paid a fine of $100.

The plaintiffs brought a putative class action in the Circuit Court for the City of St. Louis, Missouri.  The complaint stated that the defendant American Traffic Solutions, Inc. contracted with the City of St. Louis (the “City”) to aid enforcement of City Ordinance 66868 (“Ordinance”).  The Ordinance authorizes installation and use of traffic cameras to detect certain red light traffic violations.  The plaintiffs claimed that by contracting with the City to help enforce the Ordinance, the defendant violated Article I, Section 10 of the Missouri Constitution and the Missouri Merchandising Practices Act.  The plaintiffs alleged that the red light Ordinance impermissibly placed the burden on the accused to rebut a presumption of guilt, which is ultimately based on the registered owner of the vehicle, rather than the driver.  The defendant removed the action under CAFA, and the plaintiffs moved to remand.

The only dispute between the parties was whether the defendant satisfied CAFA’s amount-in-controversy requirement.  The defendant contended that the amount-in-controversy exceeded $5 million, based on the face of the petition and on the declaration of the defendant’s Senior Account Manager Damon Cross.  The defendant argued that in assessing the amount-in-controversy, the Court should consider the value of punitive damages, attorney fees, and injunctive relief sought by the plaintiffs.  The plaintiffs in turn claimed that the defendant merely speculated as to the amount-in-controversy, and had failed to offer any evidence of its suggestion that punitive damages and attorney fees would drive the amount-in-controversy over $5 million.

The District Court found that the defendant had demonstrated amount-in-controversy requirement by a preponderance of the evidence.  The District Court remarked that a plain reading of the petition alone showed that the amount-in-controversy exceeded $5 million.  Specifically, the District Court stated that the plaintiffs asserted that a $100 fine was typically assessed against those accused of red light violations.  The plaintiffs also asserted that the class and sub–class collectively contained thousands of members who paid fines for violating the Ordinance.  Further, the plaintiffs contended that the defendant issued several thousand red light camera violations per month.  The District Court remarked that assuming that the defendant issued 2,000 violations per month, and only half of those violations resulted in payment of the $100 fine, the amount-in-controversy would still be $6 million dollars for the most recent five years of the Ordinance’s enforcement.

The plaintiffs argued that the defendant’s hypothetical was speculative and insufficient to warrant jurisdiction.  The District Court disagreed.  Citing Hartis v. Chicago Title Insurance Company, 694 F.3d 935, 944–46 (8th Cir.2012), the Court explained that the Eighth Circuit had engaged in a similar analysis to conclude the removing party met CAFA’s amount-in-controversy requirement.  In Hartis, the plaintiff class of consumers sought to recover against the defendant title insurance company for allegedly overcharging for recording fees in many transactions.  In assessing the amount-in-controversy, the Eighth Circuit first noted the average amount allegedly overcharged was $12.  The plaintiff class alleged the defendant engaged in transactions in 17 states.  In fact, the plaintiffs had claimed that in Missouri alone, the defendant engaged in 71,000 transactions. Using the Missouri data, the Eighth Circuit estimated that the defendant engaged in a total of 1,207,000 relevant transactions.  Given the plaintiff class alleged “many” of the total transactions involved overcharged fees, the Eighth Circuit found that, even construing the term “many” as “one-half,” the amount-in-controversy would exceed $7.2 million.

In light of Hartis, the Hung Court concluded that the defendant’s hypothetical was compelling.  In addition, the Court noted that in his declaration, Cross stated, from January 1, 2009 through December 31, 2013, the City issued over 280,000 violation notices, which were paid in full or in part, based on automated traffic control systems.  The District Court remarked that given the standard fee of $100 per violation, the amount-in-controversy would be as much as $28 million, half of which would be $14 million.  Considering the five year period that the plaintiffs claimed, the amount-in-controversy would be as high as $35 million.

Finding that the defendants had adequately established the amount-in-controversy threshold under CAFA, the District Court denied the plaintiffs’ motion to remand.