Carter v. Westlex Corp., 643 Fed. Appx. 371 (5th Cir. 2016) (per curiam)

In this case, the Fifth Circuit affirmed the denial of plaintiffs’ remand motion where plaintiffs submitted only conclusory allegations to contest defendants’ evidence that CAFA’s amount-in-controversy requirement was satisfied.

Plaintiffs asserted a putative class action in Texas state court against Toyota and various car dealerships, asserting products liability claims based on alleged heat damage to the dashboards and interior panels of Lexus and Toyota vehicles.  Defendants removed the case, invoking the federal district court’s subject-matter jurisdiction under CAFA.

The parties did not dispute that there was minimal diversity and that the aggregate number of proposed class members exceeded 100.  Thus, the only jurisdictional element in dispute was CAFA’s amount-in-controversy requirement, which requires that the amount in controversy for all putative class members exceed $5 million.

In the complaint, plaintiffs only alleged that the class members’ collective damages exceeded $100,000.  In support of their notice of removal, defendants submitted the declaration of a Toyota representative who stated that, based on his personal knowledge of repairs to heat-damaged vehicles, the average cost to repair a heat-damaged dashboard and heat-damaged door panels of Toyota and Lexus vehicles was $1,215.45 and $1,663.42, respectively.  Based on these estimates, if each of the 1,001 proposed class members needed both repairs, the total economic damages for the class would be $2,881,737.  This amount, combined with exemplary damages allowed under Texas law, would raise the total class damages to at least $5,763,474.  In their motion to remand, plaintiffs did not present any evidence to refute defendants’ damages calculations.  Consequently, the district court denied the remand motion, and plaintiffs appealed.

On appeal, the Fifth Circuit applied the standard recently articulated by the Supreme Court in Dart Cherokee Basin Operations Company, LLC v. Owens, 135 S. Ct. 547 (2014), for asserting, challenging, and evaluating amount-in-controversy allegations in class actions removed under CAFA.  Under that standard, “[i]f the plaintiff contests defendant’s [amount-in-controversy] allegation[s],” then “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at 553–54.

The Fifth Circuit found that plaintiffs did not follow the Dart standard in moving to remand.  In particular, plaintiffs did not present their own evidence to refute defendants’ declaration that CAFA’s amount-in-controversy requirement was satisfied.  Plaintiffs only criticized defendants’ evidence, and the district court’s interpretation of that evidence, as conclusory and flawed.  The Fifth Circuit, however, rejected plaintiffs’ argument that the repair estimates in the Toyota declaration were conclusory, as those estimates were based on the declarant’s own personal knowledge.  In addition, the Fifth Circuit found that the district court properly included the maximum amount of exemplary damages allowed under Texas law (i.e., double damages), since it is “what the plaintiff is claiming” and not what “the plaintiff is likely to . . . be awarded” that determines whether CAFA’s amount-in-controversy requirement is satisfied. See Robertson v. Exxon Mobil Corp., 814 F.3d 236, 240 (5th Cir. 2015).

Because plaintiffs presented no independent evidence to dispute defendants’ amount-in-controversy calculation, the Fifth Circuit held that defendants established CAFA’s $5 million amount-in-controversy requirement by a preponderance of the evidence.

This decision, although unpublished, provides some instructive practice pointers, and pitfalls to avoid, under the Supreme Court’s Dart standard.  As illustrated in this case, if the defendant supports its notice of removal with evidence that CAFA’s $5 million amount in controversy is satisfied, the plaintiff, in moving to remand, must present its own evidence to establish that the amount in controversy is not met.  The converse is also true.  If the plaintiff supports its motion to remand a CAFA case with evidence that the amount in controversy is not satisfied, the defendant cannot rest on the jurisdictional allegations in its notice of removal.  Instead, the defendant must refute the motion to remand with evidence that establishes CAFA’s amount in controversy is satisfied.  Finally, this case illustrates that either party can potentially establish or refute the amount in controversy through summary-judgment type evidence (e.g., affidavits, declarations, and exhibits).