Rodriguez v. AT&T Mobility Servs. LLC
| Decision Date | 27 August 2013 |
| Parties | ROBERT RODRIGUEZ, individually and on behalf of all others similarly situated, Plaintiff-Appellee, v. AT&T MOBILITY SERVICES LLC, a Delaware limited liability company, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
FOR PUBLICATION
OPINIONAppeal from the United States District Court
for the Central District of California
and Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Clifton
SUMMARY*
Jurisdiction / Class Action
The panel vacated the district court's order remanding to state court a putative class action, which had been removed to federal district court by the defendant under the Class Action Fairness Act.
The panel held that the lead plaintiff's waiver of any claim in excess of the $5 million amount-in-controversy requirement of 28 U.S.C. § 1332(d)(2) was ineffective, and the waiver no longer had legal effect. The panel held that Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 999 (9th Cir. 2007) (), was effectively overruled by the Supreme Court's holding in Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013), and that the proper burden of proof imposed upon a defendant to establish the amount-in-controversy is the preponderance of the evidence standard. Because the district court's remand order relied solely on the waiver, the panel remanded to the district court for consideration and application of the preponderance standard to the amount-in-controversy evidence.
George W. Abele (argued), Elizabeth A. Brown, and Mario C. Ortega, Paul Hastings LLP, Los Angeles, California; and Laurie E. Barnes, AT&T Mobility Services LLC, Los Angeles, California, for Defendant-Appellant.
Michael S. Morrison (argued), Alexander Krakow & Glick, LLP, Santa Monica, California; Thomas W. Falvey and J.D. Henderson, Law Offices of Thomas W. Falvey, Pasadena, California; Jason W. Wucetich, Dimitrios V. Korovilas, Wucetich & Korovilas LLP, El Segundo, California, for Plaintiff-Appellee.
Plaintiff Robert Rodriguez filed a putative class action in state court, which Defendant removed to federal district court. Defendant contended that there was federal jurisdiction over the action under the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4 (2005), and in particular 28 U.S.C. § 1332(d)(2). Rodriguez alleged that the amount in controversy did not exceed $5 million, as required for federal jurisdiction, and purported to waive any claim by the class in excess of that amount. Based on that waiver, the district court granted Rodriguez's motion to remand the case to state court. The Supreme Court later held that such a waiver was ineffective, however. Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013). As a result, we vacate the district court's order and remand to the district court for further proceedings.
In its remand order, the district court held that to establish federal jurisdiction over a putative class action, Defendant must demonstrate to a "legal certainty" that the amount in controversy exceeded the $5 million threshold amount, based upon our decision to that effect in Lowdermilk v. U.S. Bank National Association, 479 F.3d 994, 999 (9th Cir. 2007). Our reasoning there for imposing on defendants the burden to prove the amount in controversy to a legal certainty, rather than the ordinary preponderance of the evidence standard, is clearly irreconcilable with the Supreme Court's reasoning in Standard Fire. As a result, we hold that Lowdermilk has been effectively overruled, and that the proper burden of proof imposed upon a defendant to establish the amount in controversy is the preponderance of the evidence standard.
Plaintiff Robert Rodriguez brought a putative class action against AT&T Mobility Services, LLC, on behalf of himself and all other similarly situated retail sales managers of AT&T wireless stores in Los Angeles and Ventura counties. Rodriguez asserted various claims under California law related to alleged unpaid wages, overtime compensation, and damages for statutory violations. Rodriguez filed his original complaint in Los Angeles County Superior Court. AT&T removed the case to federal court under 28 U.S.C. § 1332(d)(2).
Rodriguez moved to remand the case to California state court, arguing that AT&T could not establish subject-matter jurisdiction in federal court. Specifically, Rodriguez argued that the total amount in controversy in this putative class action did not exceed $5 million, the minimum amount for federal jurisdiction as required by § 1332(d). Rodriguezpointed to his First Amended Complaint, in which he alleged as much, that "the aggregate amount in controversy is less than five million dollars." To bolster his position, in that pleading, Rodriguez also "waive[d] seeking more than five million dollars ($5,000,000) regarding the aggregate amount in controversy for the class claims alleged."
AT&T attempted to establish that the amount in controversy did in fact exceed $5 million by submitting several sworn declarations from AT&T representatives regarding the potential number of class members and size of their claims. AT&T argued that Rodriguez's allegations, coupled with the sworn declarations, established that the amount in controversy could not be less than roughly $5.5 million and was likely double that amount.
The district court rejected AT&T's argument and ordered remand to state court. The court noted that the amount in controversy was the only jurisdictional requirement at issue in this case and that a defendant seeking removal of an action to federal court bears the burden of establishing the grounds for federal jurisdiction, propositions that the parties did not dispute. Citing our decision in Lowdermilk, the district court held that AT&T "must demonstrate to a legal certainty that more than $5,000,000 is at issue in this case." AT&T could not do so, the court held, because Rodriguez's "'disclaimer' of any recovery exceeding $5,000,000 effectively foreclosed the jurisdictional issue." Because the waiver was controlling, the court reasoned that it "need not address the issues surrounding the parties' respective calculations of the amount in controversy as if there were no waiver or disclaimer of any amount exceeding $5,000,000."
AT&T filed a petition to appeal under 28 U.S.C. § 1453(c)(1), which we granted on July 1, 2013.
A defendant may remove to federal district court an action first brought in state court when the district court would have original jurisdiction. 28 U.S.C. § 1441. Federal district courts have original subject matter jurisdiction over class actions in which a member of the plaintiff class is a citizen of a state different from any defendant and the aggregate amount of the class members' claims exceeds $5 million. 28 U.S.C. § 1332(d)(2). The party seeking the federal forum bears the burden of establishing that the statutory requirements of federal jurisdiction have been met. Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010). We review de novo a district court's remand order. Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006).
As in the district court, the $5 million amount-in-controversy requirement of 28 U.S.C. § 1332(d)(2) is the only jurisdictional requirement disputed in this appeal.
The remand ordered by the district court was explicitly based upon Rodriguez's waiver of any claim in excess of $5 million. Recently, however, and after the district court entered its order, the Supreme Court held that such a waiver was ineffective. In Standard Fire Insurance Company v. Knowles, 133 S. Ct. 1345 (2013), the Court held that a lead plaintiff of a putative class could not foreclose a defendant's ability to establish the $5 million amount in controversy bystipulating prior to class certification that the amount in controversy is less than $5 million. Id. at 1347.
The Court reversed the district court's remand order because plaintiff's stipulation was not binding on the class and therefore could not resolve the amount-in-controversy question. Id. at 1350. The Court explained, "a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified." Id. at 1349. Thus, a plaintiff's "precertification stipulation does not bind anyone but himself." Id. Requiring courts to "ignore a nonbinding stipulation," the Court held, "does no more than require the federal judge to do . . . what the statute requires, namely 'aggregat[e]' the 'claims of the individual class members.'" Id. at 1350 (quoting 28 U.S.C. § 1332(d)(6) (alteration in original)).
In our case, Rodriguez acknowledges that the district court's remand order must be vacated in light of Standard Fire. His waiver no longer has legal effect. Because the order to remand the case to state court relied solely on that waiver, it must be vacated and the matter remanded to district court for further consideration.
That brings us to the question of the standard to be applied on remand. The district court held that a heightened burden of proof applied to AT&T in establishing the requisite jurisdictional minimum. Under Lowdermilk v. U.S. Bank National Association, 479 F.3d 994 (9th Cir. 2007), when a class action complaint alleges damages below the jurisdictional minimum, the removing defendant must establish to a "legal certainty" that the amount in controversyin fact exceeds the jurisdictional requirement. Id. at 999. Based on Lowdermilk, the district court's decision in our case was correct at the time.
AT&T contends, however, that Standard Fire fatally undermines Lowdermilk's...
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