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

Defendant Meets the Legal Certainty Standard to Defeat Remand Challenge

Posted in Case Summaries, Jurisdictional Amount

Watson v. American National Property and Casualty Co, 2015 WL 5007967 (W.D. Penn. Aug. 20, 2015)

The Court denied the plaintiff’s petition for remand, finding that the defendant met the legal certainty standard supporting federal jurisdiction in an action alleging that the defendant improperly rejected underinsured motorist (“UIM”) coverage for people that had been in accidents and made UIM coverage claims due to a UIM waiver form not complying with Pennsylvania law.

Plaintiff’s Allegations:

Plaintiff’s motor vehicles were insured by the defendant under a policy which indicated the plaintiff had rejected UIM coverage. In order to reject the UIM coverage, the plaintiff signed a rejection form prepared by the defendant. The plaintiff’s complaint alleged that the defendant’s UIM rejection form was invalid because the form wording failed to comply with the statutorily required language.

The plaintiff’s complaint, filed in Pennsylvania’s Court of Common Pleas, was on behalf of all  Pennsylvania citizens who were insured by the defendant under an insurance policy where UIM benefits were rejected, for whom the defendant could not produce a “valid” UIM coverage rejection form as required by 75 Pa.C.S.A. § 1731, and who were injured in motor vehicle accidents by an underinsured motorist on or after June 5, 2009.

Importantly, Plaintiff’s complaint alleged that the number of persons in the proposed class is believed to be less than 100 persons, and that the amount in controversy for the class, including attorneys’ fees, compensatory damages, punitive damages, and interest would not exceed the jurisdictional minimum of $5,000,000.

While plaintiff’s complaint defined the class, plaintiff did not know the exact class size. Defendant filed its removal notice arguing the proposed class contained more than 100 members, and the amount in controversy greatly exceeded $5,000,000.

Legal Standard:

The court engaged in a lengthy review of removal cases, focusing on the post-CAFA case of Frederico, which held “the party seeking to remove the case to federal court bears the burden to establish that the amount in controversy is satisfied.” Frederico, 507 F.3d at 193 quoting, Morgan, 471 F.3d at 473

Based on Morgan and Frederico the Court stated “the proponent of the federal subject matter jurisdiction is held to a higher burden; that is, the proponent of jurisdiction must show, to a legal certainty, that the amount in controversy exceeds the statutory threshold.”

Because the parties contested the number of putative class members, which had a direct impact on the amount in controversy, the court held the defendant had to prove, to a legal certainty, that the amount in controversy was greater than $5,000,000.

Defendant’s Evidence Supporting Removal:

The defendant filed a removal notice and supporting evidence based on the class description provided by the plaintiff’s complaint. To support removal the defendant reviewed its business records and determined there were 119 claimants who met the plaintiff’s proposed class definition. The defendant’s records also revealed the amount in controversy based on the 119 proposed class members would be $33,315,000—a sum clearly exceeding the $5,000,000 jurisdictional threshold.

Plaintiff opposed removal by arguing the spreadsheet was unreliable, identifying two people they allege did not meet the class criteria. The defendant submitted counter-evidence showing the two people were properly included.

Court’s Findings:

The Court held that the defendant’s spreadsheet was reliable because the data presented “comports with the description of the class criteria supplied by Plaintiff in paragraph 20 of his Complaint.”

The Court noted that the spreadsheet identified each claim and the relevant policy number for the 119 people involved in a motor vehicle accident on or after June 5, 2009, each of whom was a named insured, or an insured under a policy for which UIM coverage was rejected using defendant’s allegedly improper UIM Form.

The court also note the defendant correctly calculated the “aggregate UIM benefits equal to the entire bodily injury liability limit for each applicable American National policy and stacking those UIM benefits for each vehicle insured under each applicable American National policy” to reach an amount in controversy of $33,315,000.

Accordingly, the Court held the defendant proved with legal certainty that the number of individuals and the amount in controversy exceeded the statutory minimums under CAFA, and denied the plaintiff’s remand petition.

 

Nicholas Kopcho