Levanoff, et al. v. SoCal Wings LLC, et al., 2015 WL 248338 (C.D. Cal. Jan. 16, 2015).

In Levanoff, a district court in California remanded the case to state court and held that a  notice of removal was untimely filed where the removing defendant could have ascertained the amount in controversy from the pleadings in a timely manner.

The plaintiffs brought an employment class action in state court on September 28, 2011. On October 22, 2012, the plaintiffs filed a statement of damages (the “Statement of Damages”), estimating that the proposed class sustained damages of at least $8,160,000.  In October 2013, plaintiffs filed their second amended complaint, including an additional defendant, Dragas Homes Inc. (“Dragas Homes”).

In May 2014, the plaintiffs filed a motion seeking class certification, which the state court granted. On November 24, 2014, three years after the case was initiated and almost one year after Dragas Homes was named as a defendant, Dragas Homes removed the action to the district court.  The plaintiffs moved to remand arguing that the removal was untimely.

The District Court noted that CAFA provides for federal jurisdiction over class actions in which the amount in controversy exceeds $5 million, there is minimal diversity between the parties, and the number of proposed class members is at least 100. 28 U.S.C. §§ 1332(d)(2), (d)(5)(B). Under 28 U.S.C. § 1446(b), a defendant may remove a state court action to the federal court within thirty days if the case stated by the initial pleading is “removable on its face.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 885 (9th Cir. 2010).  Where the basis for removal is not apparent from the face of the complaint, a notice of removal may be filed within 30 days after receipt by the defendant of a “copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” 28 U.S.C. §1446(b)(3). The District Court noted that untimely removal was a procedural defect that may defeat removal if properly raised by the party seeking remand. Smith v. Mylan Inc., 761 F.3d 1042, 1045 (9th Cir. 2014).

Dragas Homes cited to Roth v. CHA Hollywood Medical Center, L.P., 720 F.3d 1121 (9th Cir. 2013), and argued that, prior to October 2014, it could not determine that the amount-in-controversy exceeded $5 million until it conducted its own investigation into the damages the plaintiffs were seeking.  Roth, 720 F.3d at 1125 (concluding that although a defendant does not have a duty to investigate, if it does conduct its own investigation and discover that the case is removable the defendant is entitled to remove the case within 30 days of discovering the information).

Here, however, the District Court remarked that the facts and circumstances strongly suggested that Dragas Homes could have reasonably and intelligently ascertained the amount in controversy well before October 2014. While it is true that “defendants need not make extrapolation or engage in guesswork” to determine the amount in controversy, the Ninth Circuit has found that the removal statute “requires a defendant to apply a reasonable amount of intelligence in ascertaining removability.” Kuxhausen v. BMW Fin. Serv. NA LLC, 707 F.3d 1136, 1140 (9th Cir. 2013) (internal citation and quotation marks omitted).

The District Court observed that, after being served with the second amended complaint in December 2013, Dragas Homes actively litigated the case, filed a voluminous opposition to the plaintiffs’ motion for class certification, and had access to the state court docket. The Statement of Damages, although filed with the state court prior to the second amended complaint, clearly outlined that the proposed class suffered at least $8,160,000 in damages as of October 22, 2012.  In fact, for the purposes of showing that the amount-in-controversy was met under CAFA, Dragas Homes submitted this exact statement in its opposition to the plaintiffs’ motion to remand.

The District Court held that Dragas Homes “should not be able to ignore pleadings or other documents from which removability may be ascertained and seek removal only when it becomes strategically advantageous for it to do so.” Roth, 720 F.3d at 1125; see also 28 U.S.C. § 1446(c)(3)(A) (stating that information relating to the amount in controversy in the record of the state proceeding may be used to ascertain whether a case is removable). Accordingly, the District Court found that the removal was untimely because Dragas Homes could have intelligently ascertained the amount in controversy within the requisite time period, and thus remanded the case to the state court.