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Thursday, May 9, 2013

Kuxhausen v. BMW: Ninth Circuit Issues Decision on Timeliness of CAFA Removal

A quick note on this decision. In Kuxhausen v. BMW Financial Services NA LLC (9th Cir. 2/25/13) the Ninth Circuit held that where an initial pleading does not state the amount in controversy, the plaintiff has not pled all the facts necessary for diversity jurisdiction under the Class Action Fairness Act (CAFA), and the removal clock under Section 1446(b) is not triggered.

The plaintiff filed a putative class action against a car dealer and financing company, asserting ten California causes of action, including alleged violations of the Consumer Legal Remedies Act (CLRA), and the Automobile Sales Finance Act. She sought statutory damages of up to $1,000 per consumer and $5,000 for senior-citizen consumers under the CLRA. The plaintiff filed a first amended complaint, and the defendants removed the action to district court. The district court remanded, and the defendants appealed.

The Ninth Circuit reversed, holding:

"To avoid saddling defendants with the burden of investigating jurisdictional facts, we have held that 'the ground for removal must be revealed affirmatively in the initial pleading in order for the first thirty-day clock under § 1446(b) to begin.'" Slip op. at 7.

The complaint's statement that it sough to "provide remedies for hundreds of affected consumers" satisfied CAFA's requirement that the proposed class must have at least 100 members because "hundreds" means "at least 200." Slip op. at 8.

However, because the complaint did not state that each of the 200 alleged class members was owed at least $25,000 (200 x $25,000 = $5 million), it did not allege that the amount in controversy was at least $5 million, and "it fell short of triggering the removal clock under Section 1446(b)." Slip op. at 8-11.

The opinion is available here.

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