Robert E. Bartkus, Defendants Removal Burden, New Jersey Law Journal (Feb. 19, 2007).

On February 19, 2007, Robert E. Bartkus, published a short article in the New Jersey Law Journal, regarding the burden of proof for removal cases under the new provisions of CAFA. Bartkus cites heavily the Third Circuit case of Morgan v. Gay and the Second Circuit case of Blockbuster v. Galeno throughout the article. Bartkus states that in recent cases where defendants have removed actions to federal court on the basis of CAFA, they have attempted to change the traditional rule that the party asserting federal subject matter jurisdiction has the burden of proving jurisdiction, with no success. (Editors’ Note: See the CAFA Law Blog analysis of Blockbuster posted on January 24, 2007 along with our analysis of its holding posted on January 26, 2007. As for the three Morgan cases, the district court opinion was analyzed on October 24, 2006, the first Third Circuit opinion was analyzed on December 7, 2006, and the second Third Circuit opinion was analyzed on January 19, 2007. You avid readers already know our position on this issue.  But just in case you don’t, see our law review article on the subject). 

Bartkus outlines the courts’ holdings showing that defendants have not fared well in this battle. First, he states that precedent favors placing the burden of proof on a party seeking the court’s jurisdiction. Overcoming precedent requires a higher authority such as a holding from the United States Supreme Court or statute. 

According to Bartkus, all the circuits that have considered the issue have concluded that CAFA’s legislative history is insufficient to overcome this hurdle. Our loyal readers know that he is correct, at least for now.  The Third Circuit in the Morgan case did look to the statutory language and held that it was unambiguous by its silence. The Third Circuit did not change the long established rule of placing the burden of proving jurisdiction on the parties asserting it. Also, the Third Circuit noted that it should take more than a few lines in a Senate report and some vague language in a statute’s findings and purposes section to reverse a well established proposition. (Editors’ Note:  A fair reading of this statement is that Morgan recognized that Section 2 is vague and ambiguous with respect to the burden of proof question, which should have then, under general rules of statutory interpretation, caused that Court to look to the legislative history for guidance).

The author also noted that there are jurisprudential reasons for placing the burden of proof as the amount of controversy on defendants in CAFA cases. Federal courts are courts of limited jurisdiction; they are especially weary of accepting jurisdiction and seeing a case to conclusion in the district court, only to find that all is for naught when the appellate court finds that jurisdiction was lacking.

Another issue is what standard of proof should the defendant bear in CAFA removal cases. The Second Circuit in Blockbuster used a standard whereby a defendant must prove to a reasonable probability that there is the necessary minimal diversity and amount in controversy. The Third Circuit in Morgan, on the other hand, held that the defendant must prove to a legal certainty that the amount in controversy exceeds the statutory threshold. This holding goes against Samuel-Bassett v. Kia Motors Am.., Inc., 357 F.3d 392, 398 (3d Cir. 2004) where the Third Circuit held that factual findings as to damages are to be governed by a preponderance of the evidence standard as established by the United States Supreme Court in McNutt v. General Motors. Once the findings of fact have been made then the legal certainty test for jurisdiction, set out in St. Paul Mercury Indem. Co. v. Red Cab Company, 303 U.S. 283 (1938), can be applied. 

The author concludes by noting that it is unlikely that the Supreme Court will review these burden of proof issues. Unless CAFA is amended, defendants in the Third Circuit will face a more difficult time removing class actions at the margin of CAFA’s jurisdictional requirements. Also, plaintiffs in the Third Circuit will not be able to plead damages below CAFA’s requirements and then request more at trial, if the state courts honor the Third Circuit’s decision in Morgan

So, if your client is a defendant in the Third Circuit, you have your work cut out for you.