Ibarra v. Manheim Invs., Inc., 14–56779.

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: GOULD, Circuit Judge
• Citation: 775 F.3d 1193
• Parties: Jose L. IBARRA, an individual; Does, 1–50, on behalf of themselves and in a representative capacity for all others similarly situated and on behalf of the general public, Plaintiffs–Appellees, v. MANHEIM INVESTMENTS, INC., a Nevada Corporation; Cox Enterprises, Inc., a Delaware Corporation, Defendants–Appellants.
• Docket Number: No. 14–56779.,14–56779.
• Decision Date: 08 January 2015

775 F.3d 1193

Jose L. IBARRA, an individual; Does, 1–50, on behalf of themselves and in a representative capacity for all others similarly situated and on behalf of the general public, Plaintiffs–Appellees
v.
MANHEIM INVESTMENTS, INC., a Nevada Corporation; Cox Enterprises, Inc., a Delaware Corporation, Defendants–Appellants.

No. 14–56779.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 8, 2014.
Filed Jan. 8, 2015.

775 F.3d 1195

Thomas R. Kaufman (argued), and Paul Berkowitz, Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, CA, for Defendants–Appellants.

Raul Cadena (argued), Cadena Churchill, LLP, San Diego, CA; Paul D. Jackson, JacksonLaw, LLP, San Diego, CA, for Plaintiff–Appellee.

Appeal from the United States District Court for the Southern District of California, Cathy Ann Bencivengo, District Judge, Presiding. D.C. No. 3:13–cv–00857–CAB–BLM.

Before: SUSAN P. GRABER, RONALD M. GOULD, and CONSUELO M. CALLAHAN, Circuit Judges.

OPINION

GOULD, Circuit Judge:

We must decide what proof a defendant seeking removal must produce to prove the amount-in-controversy requirement under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d), when the complaint does not include a facially apparent amount in controversy or the plaintiff may have understated the true amount in controversy.

CAFA gives federal district courts original jurisdiction over class actions in which the class members number at least 100, at least one plaintiff is diverse in citizenship from any defendant, and the aggregate amount in controversy exceeds $5 million, exclusive of interest and costs. Id. A CAFA-covered class action may be removed to federal court, subject to more liberalized jurisdictional requirements, i.e., the one-year limitation under § 1446(c)(1) does not apply, the case may be removed even if one or more defendants are citizens of the state in which the action was brought, and the case may be removed by any defendant without the consent of co-defendants. Id. §§ 1441(a), 1453(b).

But even with this special liberalization, there still must be a requisite amount in controversy that exceeds $5 million. In this case, plaintiffs sued in state court alleging that damages do not exceed $5 million, and defendants Manheim Investments, Inc., and Cox Enterprises, Inc. (collectively, “Manheim”), removed the case to federal court, asserting that more than $5 million was at stake. The district court concluded that Manheim's proof of the amount in controversy was inadequate and remanded the case to state court. Manheim appealed, bringing the issue to us.

For the reasons that follow, we vacate and remand because neither side has submitted proof regarding the violation rate. As the Supreme Court has held, a removing party must initially file a notice of removal that includes “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart Basin Operating Co. v. Owens, ––– U.S. ––––, 135 S.Ct. 547, 554, 190 L.Ed.2d 495 (2014). When, as here, “a defendant's assertion of the amount in controversy is challenged ... 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 554 (citing 28 U.S.C. § 1446(c)(2)(B) ). We conclude that “both sides” should have an opportunity to submit evidence and argument to the district court in light of the standards we state here. We therefore vacate and remand for further proceedings consistent with this opinion.

775 F.3d 1196

I

The named plaintiff Jose Ibarra filed a putative class action in California state court on December 22, 2011, against his former employer, Manheim, alleging Manheim's violations of the California Labor Code for failure to pay minimum wages and overtime, failure to provide meal and rest periods, failure to furnish compliant wage statements, and failure to pay timely wages upon termination. In his complaint, Ibarra also asserted claims under the unfair business practices statute, and claims for theft of labor, declaratory relief, an accounting, and injunctive relief. Ibarra sought to represent a putative class of all current and former non-exempt hourly-paid employees of Manheim within four years before filing the complaint until the date of certification. Ibarra explicitly alleged in his complaint that “the aggregate claims of the individual class members do not exceed the $5,000,000 jurisdictional threshold for federal court under the Class Action Fairness Act.”

Manheim removed the case to federal court, and the district court remanded the case to state court. The district court relied on our decision in Lowdermilk v. U.S. Bank National Ass'n, 479 F.3d 994 (9th Cir.2007), and held that Manheim did not prove to a legal certainty that the amount in controversy exceeded $5 million. But about three weeks later, the Supreme Court decided Standard Fire Insurance Co. v. Knowles, ––– U.S. ––––, 133 S.Ct. 1345, 1350, 185 L.Ed.2d 439 (2013), which held that a class action plaintiff's precertification stipulation that the plaintiff and the class will not seek damages over $5 million does not preclude a defendant's ability to remove the case under CAFA.

Manheim filed a second notice of removal on April 9, 2013, in light of Standard Fire. The district court again remanded the case to state court on July 12, 2013, holding that Standard Fire was not irreconcilable with Lowdermilk. Manheim appealed the district court's remand order. While the appeal was pending, we decided Rodriguez v. AT & T Mobility Services LLC, 728 F.3d 975, 977 (9th Cir.2013), in which we concluded that Lowdermilk had been overruled by Standard Fire and that “the proper burden of proof imposed upon a defendant to establish the amount in controversy is the preponderance of the evidence standard.” Pursuant to Rodriguez, we vacated the district court's July 12, 2013 remand order and remanded the case back to the district court.

On remand, plaintiffs renewed their motion to remand the class action to state court, Manheim opposed plaintiffs' motion, and plaintiffs filed a reply in support of their remand motion. The district court considered the amount-in-controversy question for a third time. After evaluating the record, the parties' briefs, and the evidence proffered by Manheim with its post-Rodriguez notice of removal, the district court concluded that Manheim had not satisfied its burden of proving that the amount in controversy exceeded $5 million, because Manheim did “not provide a basis in the complaint or in evidence for [its] assumption that plaintiffs were never provided breaks.” The district court once more remanded the case to state court. Manheim petitioned for permission to appeal, which we granted on November 10, 2014.

II

We have jurisdiction under 28 U.S.C. § 1453(c), and we review the district court's remand order de novo. Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 679 (9th Cir.2006) (per curiam). The parties do not contest CAFA's jurisdictional requirements of minimum diversity and class numerosity on appeal; the sole dispute

775 F.3d 1197

is whether CAFA's requirement that the amount in controversy exceed $5 million is met here.

Congress designed the terms of CAFA specifically to permit a defendant to remove certain class or mass actions into federal court. 28 U.S.C. § 1332(d). Congress intended CAFA to be interpreted expansively. S.Rep. No. 109–14, at 42 (Feb. 28, 2005). A defendant seeking removal must file in the district court...