Michael A. SCOTT, on behalf of himself and all others similarly situated, Plaintiff-Appellee, v. CRICKET COMMUNICATIONS, LLC, f/k/a Cricket Communications, Inc., Defendant-Appellant. Chamber of Commerce of the United States of America, Amicus Supporting Appellant.
No. 16-2300
United States Court of Appeals, Fourth Circuit.
Decided: July 28, 2017
865 F.3d 189
Argued: May 11, 2017
AFFIRMED
Before GREGORY, Chief Judge, and DUNCAN and DIAZ, Circuit Judges.
DUNCAN, Circuit Judge:
This appeal concerns the degree of evidentiary specificity with which a removing defendant must prove jurisdiction to defeat a motion to remand under the Class Action Fairness Act (“CAFA“),
I.
A.
1.
Sometime between July 2013 and March 2014, Scott purchased two Samsung Galaxy S4 cellular phones from Cricket for “hundreds of dollars each.” J.A. 28. The phones are only operable on a network using Code Division Multiple Access (“CDMA“) technology. Known to Cricket, but not to Scott, at the time Scott purchased his phone Cricket had begun to shut down its CDMA network. When Cricket completed that process in 2015, Scott alleges that his phones—which were “locked” to Cricket‘s CDMA network—were rendered “useless and worthless.” J.A. 25.
On September 24, 2015, Scott filed a putative class action in the Circuit Court for Baltimore City, Maryland. Scott, the sole named plaintiff, alleged Cricket‘s actions violated Maryland‘s express warranties and implied warranties of merchantability and fitness for a particular purpose, which in turn was a violation of the Magnuson-Moss Warranty Act (“MMWA“),
On October 30, 2015, Cricket removed the case to the United States District Court for the District of Maryland. Cricket invoked CAFA, which grants district courts jurisdiction over putative class actions with (1) more than 100 class members, (2) an aggregate amount in controversy exceeding $5,000,000, and (3) minimal diversity between the parties.1
2.
On November 23, 2015, Scott moved to remand the case to state court. He argued that Cricket did not satisfy its burden to allege jurisdiction under CAFA because the class Cricket described in its notice of removal is broader than Scott‘s defined class. According to Scott, Cricket‘s assertion that it sold 50,000 handsets that were shipped to and activated in Maryland fails to meet CAFA‘s requirements because the
Cricket opposed remand, attaching another declaration from Cricket employee Rick Cochran (“Cochran Declaration“). The Cochran Declaration stated that “Cricket‘s records indicate that between July 12, 2013 and March 13, 2014, Cricket customers who listed addresses located in Maryland on their Cricket accounts . . . purchased at least 47,760 CDMA handsets that were ‘locked’ to Cricket‘s CDMA network.” J.A. 77. Again, using the conservative estimate of $200 per phone, Cricket alleged that the revised amount in controversy was $9,552,000, still well above the CAFA threshold. Cricket argued that it need not, and could not, provide the exact number of handsets Maryland citizens purchased. However, Cricket reasoned that the district court could infer that putative class members purchased enough phones to invoke CAFA jurisdiction because to meet CAFA‘s required $5,000,000 amount in controversy class members need to only have purchased 25,000 of the 47,760 phones. Cricket thus urged the district court to make the “‘reasonable inference[]’ that the vast majority of Cricket‘s Maryland customers are Maryland citizens.” ECF No. 18, at 12 (alteration in original).
The district court declined to do so and granted Scott‘s motion to remand. In explaining its decision, the district court found that, although Cricket sufficiently alleged federal jurisdiction under CAFA, it had not proven jurisdiction by a preponderance of the evidence. The district court held that Cricket‘s proffered evidence—the Cochran Declaration asserting that Cricket sold 47,760 locked phones during the relevant time period to customers who listed a Maryland address—was “over-inclusive” because “the Class includes only Maryland citizens, but Cricket‘s evidence pertains to all consumers who provided Maryland addresses.” J.A. 92. Relying on this court‘s precedent that “[r]esidency is not tantamount to citizenship,” J.A. 92, the district court rejected Cricket‘s proffered evidence as not sufficiently “tailor[ed] . . . to Scott‘s narrowly defined Class.” J.A. 95. According to the district court, the Cochran Declaration required the court to “speculate to determine the number of class members that purchased CDMA cell-phones and the amount in controversy.” J.A. 93. Although the district court concluded that Cricket failed to prove federal jurisdiction it did not make any finding of fact as to the amount in controversy. Cricket timely appealed.2
II.
A.
On appeal, Cricket maintains that the Cochran Declaration shows it is
B.
Article III courts are courts of limited jurisdiction, possessing only the authority granted by the Constitution and Congress. See Strawn v. AT & T Mobility LLC, 530 F.3d 293, 296 (4th Cir. 2008). In 2005, Congress enacted CAFA in response to perceived misuse of the class-action device. Johnson v. Advance Am., 549 F.3d 932, 935 (4th Cir. 2008). As relevant here, CAFA relaxes diversity jurisdiction requirements and provides district courts authority over class actions with (1) more than 100 class members, (2) an amount in controversy exceeding $5,000,000 and (3) minimally diverse parties.
If the plaintiff challenges removal, however, the defendant “bears the burden of demonstrating that removal jurisdiction is proper.” Strawn, 530 F.3d at 297. When a plaintiff‘s complaint leaves the amount of damages unspecified, the defendant must provide evidence to “show what the stakes of litigation are given the plaintiff‘s actual demands.” Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 449 (7th Cir. 2005) (emphasis omitted). To resolve doubts regarding a defendant‘s asserted amount in controversy, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Dart Cherokee, 135 S.Ct. at 554.
When the amount in controversy hinges on the citizenship of class members, a removing defendant need not conclusively establish domicile, but the record must show more than “naked averment[s]” of citizenship. Robertson v. Cease, 97 U.S. 646, 648, 24 L.Ed. 1057 (1878). As courts of limited jurisdiction, we are constitutionally prohibited from “inferr[ing] argumentatively” that a person‘s residency is her domicile. Brown, 33 U.S. at 115. When citizenship is questioned, a court must make an individualized inquiry relying on certain factors such as voter registration; current residence; the location of real and personal property; location of bank and brokerage accounts; membership in clubs, churches, or other associations; place of employment or business; driver‘s license and automobile registration; and the state to which a person pays taxes. 13 Fed. Prac. & Proc. Juris. § 3612 (3d ed. 2009); see also Webb v. Nolan, 484 F.2d 1049, 1051 (4th Cir. 1973). No single factor is dispositive.
With this background in mind, we turn to the district court‘s decision here.
C.
1.
First, we agree with the district court that Cricket‘s initial statement that it sold “at least 50,000 CDMA mobile telephones that were shipped to and activated in Maryland,” J.A. 17, during the relevant time period suffices to allege jurisdiction under CAFA. While Cricket‘s assertion is broader than the proposed class, that does not, as Scott argues, make the notice of removal “incurably defective.” ECF No. 15-1, at 3. The Supreme Court was clear in Dart Cherokee: the liberal rules of pleading apply to removal allegations. 135 S.Ct. at 553. Cricket‘s short and plain statement contains enough “factual content that allows the court to draw the reasonable inference” that the amount in controversy exceeds $5,000,000.4 Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted); see also J.A. 56-58 (alleging that the number of putative class members is greater than 100 and that the amount in controversy is $10,000,000).
2.
Once Scott challenged Cricket‘s allegations through a motion to remand, Cricket was required to prove CAFA jurisdiction exists by a preponderance of the evidence. See Dart Cherokee, 135 S.Ct. at 554; Strawn, 530 F.3d at 297. Because the district court committed legal
“Estimating the amount in controversy is not nuclear science,” as a removing defendant is somewhat constrained by the plaintiff. S. Fla. Wellness, Inc. v. Allstate Ins. Co., 745 F.3d 1312, 1317 (11th Cir. 2014). After all, as “masters of their complaint” plaintiffs are free to purposely omit information that would allow a defendant to allege the amount in controversy with pinpoint precision. Lincoln Prop. Co. v. Roche, 546 U.S. 81, 94, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005). In many removal cases, a defendant‘s allegations rely to some extent on reasonable estimates, inferences, and deductions. Thus, that Cricket‘s evidence is overinclusive is not, as the district court reasoned, dispositive. The key inquiry in determining whether the amount-in-controversy requirement is met is not what the plaintiff will actually recover but “an estimate of the amount that will be put at issue in the course of the litigation.” See McPhail v. Deere & Co., 529 F.3d 947, 956 (10th Cir. 2008).5 A removing defendant can use overinclusive evidence to establish the amount in controversy so long as the evidence shows it is more likely than not that “a fact finder might legally conclude that” damages will exceed the jurisdictional amount. Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002); see also Raskas v. Johnson & Johnson, 719 F.3d 884, 887 (8th Cir. 2013); Lewis v. Verizon Commc‘ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010).
Because Scott chose to limit the class to Maryland citizens Cricket must show it is more likely than not that enough Maryland citizens purchased locked phones to meet the $5,000,000 threshold. Using the conservative estimate of $200 per phone based on the complaint‘s allegation that each phone cost “hundreds of dollars,” J.A. 28, Cricket must demonstrate by a preponderance of the evidence that at least 100 Maryland citizens purchased 25,000 locked phones. Cricket contends that it cannot acquire information narrowly tailored to the proposed class because it is “an impossible task given that definitive determination of domicile requires consideration of numerous” factors including the location where someone votes, pays taxes, and works. Appellant‘s Br. at 2. However, Cricket does not need to make a “definitive determination of domicile.” Id. Further, many factors relevant to the domicile inquiry are publicly available, including business and professional licensures, property ownership, property taxes, and voter registration.6
To meet its burden, Cricket must provide enough facts to allow a court to determine—not speculate—that it is more likely than not that the class action belongs in federal court. Cf. Iqbal, 556 U.S. at 678. While Cricket need not tailor its evidence to exactly match Scott‘s proposed class, it must provide enough factual detail for the district court to discharge its constitutional duty and assess whether jurisdiction exists.
In making such a determination, the district court “may consider which party has better access to the relevant information.” Amoche v. Guar. Trust Life Ins. Co., 556 F.3d 41, 51 (1st Cir. 2009). Cricket “need not concede liability” to win jurisdiction, Lewis, 627 F.3d at 400, but as the party invoking jurisdiction Cricket ultimately bears the burden of proof. Scott is the master of his complaint, but Cricket is the master of its notice of removal.
III.
Because we conclude that the district court applied the wrong legal standard to Cricket‘s evidence, we vacate the district court‘s judgment and remand for reconsideration consistent with the principles set forth in this opinion.
VACATED AND REMANDED