Judon v. Travelers Prop. Cas. Co. of Am.
| Decision Date | 12 December 2014 |
| Docket Number | Nos. 14–3406,14–4099.,s. 14–3406 |
| Parties | Francine JUDON, Individually and on Behalf of a Class of Similarly Situated Persons, v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
James C. Haggerty, Esq., Suzanne T. Tighe, Esq. [Argued], Haggerty, Goldberg, Schleifer & Kupersmith, Philadelphia, PA, for Appellee.
Matthew A. Goldberg, Esq., Joseph Kernen, Esq. [Argued], Brian M. Robinson, Esq., DLA Piper, Philadelphia, PA, for Appellant.
Before: SMITH, HARDIMAN, and KRAUSE, Circuit Judges.
This case concerns the applicable burdens of proof for establishing jurisdiction in a removal action under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §§ 1332(d), 1453. Defendant in this action, Travelers Property Casualty Co. of America (“Travelers”), removed the case to the United States District Court for the Eastern District of Pennsylvania. Plaintiff Francine Judon (“Judon”) timely sought remand. The District Court found CAFA's numerosity and amount-in-controversy requirements to be in dispute and placed the burden of proof on Travelers to establish jurisdiction under CAFA by a preponderance of the evidence. Concluding that Travelers failed to meet its burden, the District Court issued an order remanding the case to state court. Travelers appealed.
As Judon's complaint unambiguously pleaded that the numerosity requirement was satisfied, the District Court should have placed the burden of proof on Judon to show, to a legal certainty, that the numerosity requirement was not satisfied. But the District Court correctly applied the preponderance of the evidence standard to the amount-in-controversy requirement. Accordingly, we will affirm in part, vacate in part, and remand to the District Court for further proceedings.
On December 12, 2010, Judon was injured while riding in a passenger vehicle capable of transporting fewer than 16 passengers owned by Keystone Quality Transport Company and insured by Travelers. After the accident, Judon sought first-party medical benefits under the Travelers insurance policy of $7,636.40. Travelers paid Judon $5,000, up to the first-party medical benefits limit in the policy, but declined to pay Judon $2,636.40 for her claims over the policy limit.
On January 24, 2014, Judon filed a class-action complaint in the Court of Common Pleas of Philadelphia County. The primary basis of Judon's complaint was that Pennsylvania law required that the Travelers policy held by Keystone offer up to $25,000 in first-party medical benefits. Judon's complaint alleged two counts: (1) that Travelers' refusal to pay first-party medical benefits beyond $5,000 constituted breach of contract; and (2) that Travelers' denial of Judon's and other putative class members' claims was done in bad faith and in violation of 42 Pa.C.S.A. § 8371. Judon also asserted a claim on behalf of the following class members:
individuals injured in motor vehicle accidents who were occupants of common or contract carriers for motor vehicles capable of transporting fewer than 16 passengers insured under policies of insurance by the defendant, Travelers, and for whom first party medical expense benefits were not made available in an amount up to $25,000.00 but only in an amount up to $5,000.00.
Judon further alleged that “there are hundreds of members of the class” who were “wrongfully and illegally denied payment” of first-party benefits by Travelers.
Judon sought a court order requiring Travelers to “make payment of first-party medical expense benefits in an amount up to $25,000” to Judon and class members in connection with injuries sustained in motor vehicle accidents that were covered by Travelers' policies of insurance. Further, Judon requested that the court award, to Judon and class members, first-party benefits, interest, fees, costs, treble damages, and punitive damages for acting in bad faith pursuant to 42 Pa.C.S.A. § 8371.
On February 28, 2014, Travelers timely filed a notice of removal under CAFA. Travelers argued that the proposed class met the three requirements for CAFA removal under 28 U.S.C. § 1332(d). Travelers asserted, and Judon did not contest, that the parties were minimally diverse. Travelers also contended that Judon's reference to “hundreds of members” must mean at least 200, such that the proposed class consisted of at least 100 putative class members pursuant to § 1332(d)(5). Travelers also argued that the amount in controversy exceeded $5,000,000 pursuant to § 1332(d)(2). In order to reach that figure, Travelers asserted that the value of each putative class member's damages could amount to $20,000 (consisting of $25,000 in allegedly required first-party medical benefits minus the $5,000 in first-party medical benefits actually paid). The minimum total number of class members, 200, multiplied by the total amount each class member could be entitled to, $20,000, would yield $4,000,000 in potential compensatory damages. Trebling this amount as demanded by Judon, Travelers contended, yields an amount in controversy exceeding $5,000,000.
On March 7, 2014, Travelers filed a motion to dismiss Judon's class-action complaint arguing, inter alia, that Travelers' denial of Judon's medical expenses was proper under applicable Pennsylvania law. In the alternative, Travelers argued that it had an objectively reasonable basis for refusing to make payment of Judon's medical expenses and, as a result, punitive damages were not warranted.
On March 24, 2014, Judon timely filed a motion to remand, contending that as the removing party, Travelers bore the burden of establishing jurisdiction under CAFA. According to Judon, Travelers did not meet that burden because it failed to show to a legal certainty both that: (i) the amount in controversy exceeded the statutory minimum of $5,000,000; and (ii) there were more than 100 class members. In order to do so, Judon argued, Travelers must submit proof regarding the actual number of class members and the actual amount of those putative class members' damages. Judon also argued that the potential for punitive or treble damages could not count towards the $5,000,000 amount-in-controversy requirement both because such potential damages would need to be actually translated into monetary sums for each putative class member and because Travelers had challenged the availability of punitive damages in its motion to dismiss.
The District Court granted Judon's motion to remand on June 30, 2014. The District Court reasoned that because Judon “vigorously contest[ed]” the facts Travelers relied on to establish jurisdiction, the “preponderance of the evidence standard [was] appropriate for resolving the dispute.” Because the District Court reasoned that Travelers was required to “put forward proof to a reasonable probability” that jurisdiction existed under 28 U.S.C. § 1332(d), and because Travelers provided no such extrinsic evidence, the District Court remanded the case to the Court of Common Pleas of Philadelphia County. Travelers timely petitioned for review of the remand order pursuant to 28 U.S.C. § 1453(c)(1). On October 3, 2014, we granted Travelers' petition.1
The District Court exercised jurisdiction pursuant to 28 U.S.C. § 1332(d). We exercise jurisdiction pursuant to 28 U.S.C. § 1453(c). A party asserting federal jurisdiction in a removal case bears the burden of showing “that the case is properly before the federal court.” Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir.2007) ; see also Morgan v. Gay, 471 F.3d 469, 473 (3d Cir.2006). Our review of issues of subject matter jurisdiction is de novo. Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 151 (3d Cir.2009).
At the core of this jurisdictional challenge is the nature of the burden of proof and evidentiary standards applicable in a case removed under CAFA. CAFA confers on district courts “original jurisdiction of any civil action” in which three requirements are met: (1) an amount in controversy that exceeds $5,000,000, as aggregated across all individual claims; (2) minimally diverse parties; and (3) that the class consist of at least 100 or more members (“numerosity requirement”). 28 U.S.C. § 1332(d)(2), (5)(B), (6) ; Standard Fire Ins. Co. v. Knowles, ––– U.S. ––––, 133 S.Ct. 1345, 1347, 185 L.Ed.2d 439 (2013).
In order to determine whether the CAFA jurisdictional requirements are satisfied, a court evaluates allegations in the complaint and a defendant's notice of removal. Frederico, 507 F.3d at 197 ; Morgan, 471 F.3d at 474.2 The proper test in a CAFA removal action depends on the nature of the jurisdictional facts alleged and whether they are in dispute.
We begin by demarcating the various jurisdictional tests applicable in a CAFA removal action. In Samuel–Bassett v. Kia Motors America, Inc., we closely analyzed the burden of proof for establishing the amount-in-controversy requirement under 28 U.S.C. § 1441 —the general removal statute. 357 F.3d 392, 396 (3d Cir.2004). This pre-CAFA decision reconciled two Supreme Court cases that established distinct burdens of proof to be applied depending on the nature of a party's jurisdictional challenge. Id. at 397–98 (reconciling St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938) with McNutt v. Gen. Motors Acceptance Corp. of Ind.,
298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936) ).
In McNutt v. General Motors Acceptance Corp. of Indiana, “a challenge to the amount in controversy had been raised in the pleadings [ the answer],” but “no evidence or findings in the trial court addressed that issue.” Samuel–Bassett, 357 F.3d at 397 ; McNutt, 298 U.S. at 179–80, 56 S.Ct. 780. The Supreme Court held that “the party alleging jurisdiction [must] justify his allegations by a preponderance of the evidence.” McNutt, 298 U.S. at 189, 56 S.Ct. 780. Accordingly, if the jurisdictional facts are challenged “in any appropriate...
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