Dart Cherokee Basin Operating Co. v. Owens
730 F.3d 1234
10th Cir.2013Background
- Owens filed a putative class action in Kansas state court alleging underpayment of royalties; the petition did not specify a damage amount.
- Petitioners (defendants) removed to federal court under CAFA, alleging the amount in controversy exceeded $8.2 million and explaining their calculation in the notice of removal.
- Owens moved to remand; Petitioners later submitted an uncontested declaration showing potential liability exceeding $14 million.
- The district court granted remand, holding the notice of removal was inadequate because it lacked evidentiary support (e.g., economic analysis or settlement estimates) and that Petitioners should have alleged jurisdictional facts with supporting evidence in the initial notice.
- Petitioners sought permission to appeal under 28 U.S.C. § 1453(c); a divided Tenth Circuit panel denied permission and an evenly divided poll denied rehearing en banc.
Issues
| Issue | Plaintiff's Argument (Owens) | Defendant's Argument (Petitioners) | Held |
|---|---|---|---|
| Whether a notice of removal under CAFA must include evidentiary proof of the amount in controversy at the time of filing | Notice lacked evidentiary support so remand was proper; removal should require supporting evidence in the notice | A short and plain statement suffices under Rule 8 and § 1446(a); evidentiary proof is only required if jurisdictional facts are later challenged | District court required evidence in the notice; dissent argues this requirement is unsupported and incorrect, but en banc rehearing was denied (tie) |
| Whether a removing party may rely on supporting evidence submitted after the notice when the plaintiff challenges the amount in controversy | The notice was insufficient because evidence existed at removal but was not submitted until later | Evidence submitted after challenge (declaration showing >$14M) is competent proof to meet preponderance standard and may be considered | District court refused to consider late evidence as untimely; dissenters contend evidence after challenge should be allowed and the remand ruling was erroneous |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading plausibility standard)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (pleading vs. evidentiary stages for jurisdictional facts)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (party asserting diversity jurisdiction must support jurisdictional allegations with competent proof when challenged)
- McPhail v. Deere & Co., 529 F.3d 947 (10th Cir. 2008) (amount-in-controversy proved by preponderance when challenged)
- Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006) (preponderance standard applies but evidence is required only when allegations are challenged)
- McNutt v. General Motors Acceptance Corp., 298 U.S. 178 (1936) (requirement to support jurisdictional allegations by competent proof when challenged)