Patrick LaCROSS; Robert Lira; Matthew Lofton, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. KNIGHT TRANSPORTATION INC., an Arizona Corporation; Knight Truck and Trailer Sales, LLC, an Arizona Limited Liability Company, Defendants-Appellants.
No. 14-56780
United States Court of Appeals, Ninth Circuit
Argued and Submitted Dec. 8, 2014. Filed Jan. 8, 2015.
775 F.3d 1200
III
We vacate the district court‘s judgment and remand on an open record for further proceedings consistent with this opinion.5
VACATED and REMANDED. Each party shall bear its own costs on appeal.
Richard H. Rahm (argued), James E. Hart, Carly Nese, and Thomas J. White-
amount in controversy is challenged], both sides submit proof and the court dеcides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Dart, 135 S.Ct. at 554.
Jamеs M. Trush (argued), Trush Law Office, Costa Mesa, CA; Ellen R. Serbin, Todd H. Harrison, and Brennan S. Kahn, Perona, Langer, Beck, Serbin, Mendoza & Harrison, APC, Long Beach, CA, for Plaintiffs-Appellees.
Before: SUSAN P. GRABER, RONALD M. GOULD, and CONSUELO M. CALLAHAN, Circuit Judges.
OPINION
GOULD, Circuit Judge:
With this appeal pending, we decided Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, No. 14-56779 (9th Cir. Jan. 8, 2015), filed simultaneously with this opinion, and addrеssed what proof a defendant seeking removal must produce to prove the amount in controversy requirement under the Class Action Fairness Act of 2005 (“CAFA“),
I
Defendants Knight Transportation, Inc., and Knight Truck and Trailer Sales, LLC (collectively, “Knight“), are Arizona corporations licensed to do business in California. Thе named plaintiffs Patrick LaCross, Robert Lira, and Matthew Lofton are truck drivers or “Owner Operators” who performed work for Knight. Plaintiffs filed a putative class action against Knight in California state court, alleging that Knight misclassified them as independent contractors and asserting other labor law violations.
Knight removed the case to federal court and estimated the amount in controversy for reimbursing the drivers’ lease-related and fuel costs to be at least $44 million. The lease-related and fuel costs are at stake because if plaintiffs prevail on their claim that they are employеes, Knight will be liable for its employees’ expenditures related to the ownership and operation of the trucks. See
The sole dispute here is whether CAFA‘s requirement that the amount in controversy exceed $5 million is met. In Ibarra, we adhered to the rule that the defendant seeking removal bears the burden of proof to establish by a preponderance of the evidence that the amount-in-controversy requirement is satisfied. Ibarra, 775 F.3d at 1197. As the Supreme Court has held, a removing party must initially file a notice of removal that includes “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co. v. Owens, — U.S. —, 135 S.Ct. 547, 554, — L.Ed.2d — (2014). When, as here, “a defendant‘s assertion of the amount in controversy is challenged ... both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at —, 135 S.Ct. at 554. As we further held in Ibarra, when the defendant relies on a chain of reasoning that includes assumptions to satisfy its burden of proof, the chain of reasoning and its underlying assumptions must be reasonable ones. Ibarra, 775 F.3d. at 1199.
We apply our framework of analysis in Ibarra to Knight‘s evidence but start by noting an important distinction in the complaints. Unlike the complаint in Ibarra, which alleged a “pattern and practice” of labor law violations but not universal violations, the complaint here clearly defined the class to include only the truck drivers, all of whom allеgedly should have been classified as employees rather than as independent contractors. As our first source of reference in determining the amount in controversy, plaintiffs’ complaint сlaimed that the truck drivers, as employees, should be reimbursed for their business expenses. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938) (directing courts to first look to the complaint in determining the amount in contrоversy). Were plaintiffs to succeed on their claim that they are employees, Knight will need to reimburse them for expenditures related to the ownership and operation of their trucks, including leаse-related costs and fuel costs. See
Knight calculated its potential liability for the drivers’ fuel costs as follows. Knight provides its drivers with fuel cards to pay for fuel at a discount. The drivers are not required to use the cards, so the fuel costs invoiced on Knight‘s fuel cards may be less than the actual fuel costs. The total fuel costs invoiced on Knight‘s fuel cards in the first quartеr of 2014 were $2,369,628. Knight contends that if we multiply the quarterly fuel costs of $2.3
Knight further extrapolated a more conservative еstimate of total fuel costs by taking into account that the number of drivers varied each year. For example, there were 116 drivers in 2010 as opposed to 207 drivers in 2014, so a more accurate calculation of the fuel costs in each quarter of 2010 should be $1,327,907 ($2,369,628 × 116/207). Knight‘s number of drivers was the lowest in 2010, and even using the lowest number of drivers in 2010 for all 16 quarters during the relevant class period, the total estimated fuel сosts would be $21 million ($1,327,907 × 16 quarters).
The district court erred in concluding that “all of Knights calculations rely on the assumption that ... the class ... worked for the entirety of the year.” Contrary to the district court‘s conclusion, the foregoing method of calculation extrapolated fuel costs based on the actual invoiced fuel costs in the first quarter of 2014 and the actual number of drivers who signed the independent сontractor agreements with Knight during the relevant class period, without relying on the assumption that each driver worked the entire year.
Reviewing the district court‘s remand order de novo, Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006) (per curiam), we conclude that Knight has produced sufficient evidence to establish by a preponderance of the evidence that the amount in controversy exceeds $5 million. We also conclude that the chain of rеasoning and its underlying assumption to extrapolate fuel costs for the entire class period using the actual invoiced fuel costs of one quarter are reasonable for several reasons. First, the complaint alleges that the class includes only truck drivers, so the fuel costs are necessary expenses in the discharge of the drivers’ duties. See
At oral argument, plaintiffs contended that the class may not be able to prove all the elements for reimbursement under
Even when defendants have persuaded a court upon a CAFA removal that the amount in controversy exceeds $5 million, they are still free to challenge the actual amount of damages in subsequent proceedings and at trial. This is so because they are not stipulating to damages sufferеd, but only estimating the damages that are in controversy.
III
We reverse the district court‘s judgment and remand for further proceedings consistent with this opinion.
REVERSED and REMANDED.