Rutledge_v_Healthport_Technologies, LLC, 2017 WL 728375 (N.D. Cal. Feb. 24, 2017)

To satisfy the amount-in-controversy requirement for CAFA jurisdiction, defendants may draw reasonable inferences from the complaint, but the defendants still need to be a concrete basis for their estimate.

In Rutledge. v. Healthport Technologies, the defendants sought to remove a putative class action under CAFA. Both the plaintiffs and defendants agreed that two of the threshold requirements were met: the proposed class action exceeded 100 people and CAFA diversity existed.  The parties did disagree, however, on whether the amount-in-controversy requirement was met.

The defendants bear the burden of proving by a preponderance of the evidence that the amount-in-controversy exceeds five million dollars. In analyzing the issue, the court explained that defendants can draw reasonable inferences from the complaint and other evidence when the plaintiffs do not identify the amount of monetary damages they seek.  However, the court added that defendants cannot pull an estimate “out of thin air” and noted that there must be some concrete basis for the figure they arrive upon.

The allegations in this class action centered on claims that the employer-defendant failed to pay its employees for the hours they worked and for required breaks under California law. The defendants submitted a declaration from a human resources manager estimating the number of employees potentially affected and the average hourly wage for these employees; however, the declaration included no information regarding the lengths of these shifts nor the frequency of these shifts.

The court found that the defendant’s estimates for the amount-in-controversy were “too speculative” to satisfy CAFA’s requirements and remanded the case to state court.

Laura Cannon