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Tuesday, November 30, 2010

Rhoades v. Progressive Casualty: Ninth Circuit Reverses CAFA Remand

In an unpublished opinion, the Ninth Circuit Court of Appeals in Rhoades v. Progressive Casualty Ins. Co. (Case No. 10-17129, 9th Cir., November 23, 2010) reversed a district court order remanding a wage and hour class action to state court after the district court found that the defendant failed to carry its burden under the Class Action Fairness Act (CAFA) of showing that the amount in controversy exceeded $5 million. The Court held:
Under CAFA, as in other diversity cases, “the party asserting federal jurisdiction has the burden of showing the case meets the statutory requirements for the exercise of federal jurisdiction and therefore belongs in federal court.” Lewis v. Verizon Communications, Inc., __ F.3d ___, 2010 WL 4645465, 4 (9th Cir. 2010). However, “‘[o]nce the proponent of federal jurisdiction has explained plausibly how the stakes exceed $5 million, . . . then the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.’” Id. (quoting Spivey v. Vertrue, Inc., 528 F.3d 982, 986 (7th Cir. 2008). In assessing whether the defendant has established that the amount in controversy exceeds $5 million, “we expressly contemplate the district court's consideration of some evidentiary record.” Id.
Slip op. at 2. Without discussion, the Court held that the defendant met its burden, and the plaintiff failed to demonstrate that it was "legally impossible" for them to recover $5 million. Slip op. at 3.

Judge Ikuta dissented, noting that Progressive removed the case for a second time after the remand order at issue, the District Court remanded the case for a second time, and Progressive failed to appeal from the second removal order, making its appeal from the first removal order moot. Slip op. at 5-6.

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