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

30-Day Time Period for Removing Case Pursuant to 1446 Only Begins to Run when Amount-In-Controversy Is Apparent

Posted in Case Summaries

Graiser v. Visionworks of America, Inc., 2016 WL 1359048 (6th Cir. April 6, 2016).

The Sixth Circuit held that the 30-day removal period under CAFA does not begin if the plaintiff does not serve the defendant with an amended complaint, motion, other paper etc. from which a defendant can figure out that the amount-in-controversy exceeds CAFA’s jurisdictional threshold. The Sixth Circuit further held that if a defendant can determine from the documents served by the plaintiff that the amount-in-controversy could exceed $5 million, the defendant is not obligated to do so, unless the document is apparent.

In this case, the plaintiff brought an action in the Court of Common Pleas of Cuyahoga County, Ohio, alleging that the defendant’s “Buy One, Get One Free” promotion violated Ohio Administrative Code § 109:4-3-04 and the Ohio Consumer Sales Practices Act. The plaintiff contended that when he entered the defendant’s store to inquire about the promotion, the salesperson told him that the price for the eyeglasses was $409.93, with the second eyeglasses free, whereas, the plaintiff could buy a single pair of eyeglasses for $245.95. Accordingly, the plaintiff argued that the defendant violated the Ohio statutes because the price of the second pair of eyeglasses was not truly free.

The defendant removed the case to the federal court under diversity jurisdiction because complete diversity existed between the parties and because the injunctive relief and attorneys’ fees sought by the plaintiff were well in excess of $75,000. The plaintiff moved to remand arguing that pursuant to Article III of the United States Constitution, he lacked standing in the federal court to seek injunctive relief. The District Court agreed and granted the motion to remand. The plaintiff filed an amended complaint adding requests for actual and punitive damages, while maintaining his requests for statutory attorneys’ fees and declaratory, equitable and injunctive relief.

Thereafter, plaintiff’s counsel sent the defendant’s lawyers a letter on September 18, 2015, seeking to initiate class-wide settlement negotiations. On September 28, 2015, plaintiff’s counsel requested that the defendant provide specific, up-to-date sales figures up through and including October 15, 2015, prior to mediation. The defendant then removed the action to the federal court once again, but this time under CAFA. The defendant argued that after calculating the damages based on the proposed damages formula presented by plaintiff’s counsel in the letter sent on September 18, 2015, the amount-in-controversy exceeded $5 million. The plaintiff moved to remand once again, and the District Court granted Plaintiff’s motion to remand finding that the amended complaint was originally removable under diversity jurisdiction, and that Defendant should have removed within 30 days of the amended complaint.

The defendant appealed to the Sixth Circuit. The Sixth Circuit observed that defendants must remove an action to federal court either (i) 30 days from the date of filing of the action; or (ii) if the case is not initially removable, 30 days from the after receiving an amended complaint, motion, order, or any other paper etc. when it becomes apparent that the case can be removed.

The defendant first contended that the District Court erred in finding that it could have first ascertained that the case was removable under the CAFA from the amended complaint, or, alternatively, from the plaintiff’s September 18, 2015 letter. The Sixth Circuit relied on three cases: Romulus v. CVS Pharmacy, Inc., 770 F.3d 67 (1st Cir. 2014); Walker v. Trailer Transit, Inc., 727 F.3d 819 (7th Cir. 2013); and Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136 (9th Cir. 2013). (Editors’ Note: See the CAFA Law Blog analysis of Walker posted on November 25, 2013).

The Court observed that the First, Seventh, and the Ninth Circuits in these cases adopted a bright-line rule, and have held that in CAFA cases, the 30 day time period of § 1446(b) begins to run “only when the defendant receives a document from the plaintiff from which the defendant can unambiguously ascertain CAFA jurisdiction.” Applying the rule in this case, the Sixth Circuit found that the window to remove under the CAFA began for the defendant once the amount-in-controversy exceeded $5 million under Plaintiff’s theory of damages.

The Sixth Circuit remarked that the 30-day time period of § 1446(b)(3) never began in this case, because the plaintiff never served the defendant with a pleading or “other paper” from which the defendant could unambiguously ascertain that the CAFA jurisdiction existed. The Court noted that the plaintiff’s amended complaint did not state the number of individuals in the proposed class, nor did it set forth Plaintiff’s theory of damages. And although the plaintiff submitted his damages theory to the defendant in a letter on September 18, 2015, this letter applied the damages calculation to sales figures only through January 31, 2015 and concluded that the amount-in-controversy was only $3.9 million.

The Sixth Circuit opined that this did not provide the defendant with sufficient information from which it could ascertain CAFA removability. However, the court remarked that “certainly the defendant could have made extrapolations or engaged in guesswork after receiving the documents, and it could have investigated its own records, but it did not have a duty to do so.”

Therefore, the Sixth Circuit, held that once a defendant ascertains that a case is removable under the CAFA, a defendant may remove the case within the time constraints of § 1446(b)(1) and (b)(3)–even if the case was originally removable under a different theory of federal jurisdiction.

Accordingly, in this case, the defendant’s removal under CAFA was timely, and the District Court erred in granting Plaintiff’s motion to remand.

– Melissa Broussard Carroll