Lowdermilk v. U.S. Bank National Ass'n

• Decision Date: 02 March 2007
• Docket Number: No. 06-36085.,06-36085.
• Parties: Willene LOWDERMILK, Plaintiff-Appellee, v. UNITED STATES BANK NATIONAL ASSOCIATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

479 F.3d 994

Willene LOWDERMILK, Plaintiff-Appellee, v. UNITED STATES BANK NATIONAL ASSOCIATION, Defendant-Appellant.

No. 06-36085.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 8, 2007.

Filed March 2, 2007.

Timothy R. Volpert, Davis Wright Tremane LLP, Portland, OR, for the defendant-appellant.

Jacqueline L. Koch, Koch & Deering, Portland, OR, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Oregon; Ancer L. Haggerty, District Judge, Presiding. D.C. No. CV-06-00592-ALH.

Before THOMPSON, KLEINFELD, and BYBEE, Circuit Judges.

BYBEE, Circuit Judge.

In this case we are called upon to resolve a question of first impression: Under the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. 109-2, 119 Stat. 4 (2005), when the plaintiff has pled damages less than the jurisdictional amount, what must the defendant prove in order to remove the case to federal court? We reserved this question in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 683 n. 8 (9th Cir.2006) (per curiam). We answer that the party seeking removal must prove with "legal certainty" that the amount in controversy is satisfied, notwithstanding the prayer for relief in the complaint. We conclude that the defendant in this case failed to meet this burden, and we affirm the judgment of the district court.

I

Willene Lowdermilk ("Plaintiff") filed a complaint in Oregon state court on March 28, 2006, on behalf of herself and a class of employees "who worked for U.S. Bank as hourly employees in the past six years." Plaintiff sought relief for two alleged violations of Oregon law. First, she claimed U.S. Bank ("Defendant") denied her full compensation for the hours she worked because Defendant had a policy of rounding actual hours worked down to the nearest tenth of an hour and that this resulted in employees not being compensated for one to five minutes of the time they worked per day. She sought unpaid wages plus penalty wages under Or. REV. STAT. § 653.055. Second, Plaintiff alleged that Defendant failed to promptly pay Plaintiff her wages upon termination, for which she sought damages and penalty wages under Or. REV. STAT. § 652.150. In addition to damages and penalty wages, Plaintiff sought costs, attorneys' fees, and interest, a sum Plaintiff alleged in her prayer for relief was "in total, less than five million dollars." In the jurisdiction section of her complaint, Plaintiff further alleged that "[t]he aggregate total of the claims pled herein do not exceed five million dollars."

On April 26, 2006, Defendant filed a Notice of Removal to federal court under CAFA, see 28 U.S.C. §§ 1332, 1441, 1453, and argued that the actual amount in controversy far exceeded CAFA's jurisdictional amount. Plaintiff opposed removal and continued to argue that "the aggregate total of the claims [for unpaid and late wages] pled[in her complaint] does not exceed five million dollars" and, therefore, did not meet CAFA's requirements for federal jurisdiction. See 28 U.S.C. § 1332(d).

On August 16, 2006, the district court held that it was bound by the complaint as to the amount in controversy "unless plaintiff's prayer is determined to have been made in bad faith." It held that Defendant had not proved that Plaintiff's allegation was made in bad faith nor had it met its burden of establishing jurisdiction under CAFA. Consequently, the district court remanded the case to state court. Defendant filed a petition for permission to appeal,¹ which we granted on December 22, 2006.

Under CAFA, we have 60 days from the time we accept the appeal to "complete all action on such appeal, including rendering judgment," 28 U.S.C. § 1453(c)(2); Bush v. Cheaptickets, Inc., 425 F.3d 683, 685-86 (9th Cir.2005), unless (1) all parties agree to an extension or (2) the extension "is for good cause shown and in the interests of justice." 28 U.S.C. § 1453(c)(3). In the latter case, we may obtain an extension of ten days only. At oral argument, Defendant's counsel agreed to an extension. Plaintiff's counsel, however, refused consent even though she had previously requested and received her own extension of time and a stay was in place in the state court action. On February 20, 2007, we issued an order granting the court, for good cause shown and in the interests of justice, a ten day extension to, and including, March 2, 2007.²

II

A civil action in state court may be removed to federal district court if the district court had "original jurisdiction" over the matter. 28 U.S.C. § 1441(a).³ As amended by CAFA, 28 U.S.C. § 1332(d) vests district courts with "original jurisdiction of any civil action in which, inter alia, the amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," and in which the aggregate number of proposed plaintiffs is 100 or greater, and any member of the plaintiff class is a citizen of a state different from any defendant. 28 U.S.C. § 1332(d). We recently affirmed that "under CAFA the burden of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction." Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 685 (9th Cir.2006) (per curiam); see also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 2007 WL 601984 (9th Cir. Feb. 22, 2007) (holding that the proponent of federal jurisdiction bears the burden of proving jurisdiction). Accord Morgan v. Gay, 471 F.3d 469, 472-73 (3d Cir. 2006) (holding that under CAFA, the party seeking removal bears the burden of establishing the requisite amount in controversy); Miedema v. Maytag Corp., 450 F.3d 1322, 1328-29 (11th Cir.2006) (holding that CAFA does not alter the traditional rule that the proponent of federal jurisdiction bears the burden of proving the amount in controversy); Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir.2005) (finding that "none [of CAFA's language] is even arguably relevant" to the question of burden shifting).

A

The questions of minimal diversity and class numerosity are not contested on appeal, and we are satisfied that the evidence supports the district court's decision. With respect to minimal diversity, Defendant is a citizen of Ohio because its main office is located in that state, Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 126 S.Ct. 941, 944-45, 163 L.Ed.2d 797 (2006), and at least one member of the class is a citizen of Oregon. As to numerosity, Plaintiff asserts in her complaint that the class "exceeds 30 persons" but admits that "[t]his number may increase, depending upon the turnover rate for employees" of U.S. Bank. As we discuss below, there are potentially thousands of former employees of U.S. Bank that are eligible class members. We conclude, as did the district court, that the suit satisfies CAFA's requirements of minimal diversity and numerosity.

B

Whether the amount in controversy is met here is a more difficult question. In her complaint, Plaintiff claimed only damages "in total, less than five million dollars," although she also asked for attorneys' fees, which Oregon law authorizes. See OR. REV. STAT. §§ 652.200(2), 653.055(4). Defendant has provided some evidence that the Plaintiff's actual claims necessarily exceed $5,000,000. Additionally, Defendants argue that we should count potential attorneys' fees towards the amount in controversy.

Although Defendant bears the burden of proving that the Plaintiff's suit meets the requirements of 28 U.S.C. § 1332(d), we must consider what level of proof the Defendant must meet. In Abrego Abrego, we discussed three different scenarios. First, when the plaintiff fails to plead a specific amount of damages, the defendant seeking removal "must prove by a preponderance of the evidence that the amount in controversy requirement has been met." 443 F.3d at 683 (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992)). Second, if the complaint alleges damages in excess of the federal amount-in-controversy requirement, then the amount-in-controversy requirement is presumptively satisfied unless "it appears to a `legal certainty' that the claim is actually for less than the jurisdictional minimum." Id. at 683 n. 8 (citing Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 402 (9th Cir.1996)). Third, if the complaint alleges damages less than the jurisdictional amount, "`more difficult problems are presented,'" for which we found "no binding precedent in this circuit" and as to which "we reach[ed] no resolution." Id. (quoting 14 C CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE & PROCEDURE § 3725, at 84 (1998 & Supp.2006)).

Defendant argues that this case falls within the first scenario described above, and that because Plaintiff failed to specify her damages, Defendant must prove only by a preponderance of the evidence that the damages claimed exceed $5,000,000. Our starting point is "whether it is `facially apparent' from the complaint that the jurisdictional amount is in controversy." Abrego Abrego, 443 F.3d at 690 (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.1997)). We have reserved the preponderance of evidence standard for situations where a plaintiff "seeks no specific amount in damages," Abrego Abrego, 443 F.3d at 688 (footnote omitted), and a court is forced to look beyond the complaint to determine whether the suit meets the jurisdictional requirements.⁴ Here, we need not look beyond the four corners of the complaint to determine whether the CAFA jurisdictional amount is met, as Plaintiff avers damages ("less than five million dollars") that do not reach the threshold for federal jurisdiction. We hold that Plaintiff did plead a "specific amount in damages," and therefore, the preponderance of the evidence standard does not apply.

We now turn to the question we reserved in Abrego Abrego: What proof must the defendant adduce to contradict the plaintiff's claim that her damages are less than the...