In this action, while reversing a district court’s order remanding the case to the state court, the Ninth Circuit found the amount in controversy is simply an estimate of the total amount in dispute, and is a concept distinct from “the amount of damages ultimately recoverable.” It further held that in determining the amount in controversy, the court accepts the allegations contained in the complaint as true and assumes the jury will return a verdict in the plaintiff’s favour on every claim.
The plaintiff, a truck driver, brought an action in the California state court alleging that the defendant, transportation service provider, misclassified him, as well as all other truck drivers as independent contractors and denied them costs and expenses of leasing and operation of the trucks.
The defendant removed the action to the federal court pursuant to CAFA. The district court remanded the case to state court for lack of jurisdiction. On Appeal, the Ninth Circuit reversed the district court’s order.
In the operative complaint, the plaintiff sought to represent all individuals who worked for the defendant in California as a truck driver during the four years preceding the complaint’s filing and were classified as an independent contractor. In post-removal proceedings, the plaintiff asserted that the class was comprised of only California residents who drove in California and sought reimbursement only for work performed in California. The Ninth Circuit found that the complaint itself did not contain these limitations, and noted that it is axiomatic that whether remand is proper must be ascertained on the basis of the pleadings at the time of removal. The Ninth Circuit found that the plaintiff’s post-removal change to the complaint was not merely a clarification, but instead was an amendment that altered the scope of the class itself, and thus, the plaintiff’s post-removal amendment did not affect the district court’s jurisdiction.
In the complaint, the plaintiff sought, among other things, reimbursement for all costs and expenses of owning and/or leasing, repairing, maintaining, and fuelling the trucks and vehicles that the truck drivers drove while conducting work for the defendant in violation of California Labor Code. In opposing the plaintiff’s motion to remand, the defendant provided evidence of the amount that California-resident truck drivers paid in “lease-related payments.”
The plaintiff argued that lease payments could not be considered for purposes of the amount in controversy because they were not recoverable as a matter of law. The Ninth Circuit noted that the amount in controversy is simply an estimate of the total amount in dispute, and is a concept distinct from the amount of damages ultimately recoverable. In determining the amount in controversy, the court accepts the allegations contained in the complaint as true and assumes the jury will return a verdict in the plaintiff’s favour on every claim. The Ninth Circuit found that the complaint stated multiple times that the plaintiff sought reimbursement for “all costs and expenses of … leasing” the trucks. The Ninth Circuit therefore opined that lease-related payments had been placed into controversy and were properly considered for purposes of CAFA jurisdiction.
The Ninth Circuit concluded that the defendant had produced sufficient evidence to establish by a preponderance of the evidence that the amount in controversy exceeded $5 million. Specifically, the defendant provided a declaration from its Vice President and Chief Financial Officer, who attested that during the class period, independent-owner truck drivers who provided a California address as his or her primary residence and worked in California paid more than $2,250,000 in lease-related payments and more than $7,450,000 in deductions for fuel. The Ninth Circuit ruled that this declaration was sufficient to carry the defendant’s burden and, accordingly, reversed the district court’s remand order.
– Kevin Lampone