Firm attorney Stephen P. Smith shares insight on the Supreme Court’s decision last month regarding the pleading standard for notices of removal and, specifically, the pleading standard for the amount in controversy.
In this case, the defendant’s notice of removal alleged the amount in controversy was $8,200,000. The plaintiff moved to remand the case to state court, specifically arguing that the notice of removal was deficient as a matter of law because the defendant had not provided any evidence in the notice of removal that the amount in controversy exceeded the jurisdictional threshold of $5,000,000 needed to remove a non-diverse class action to federal court under the Class Action Fairness Act.
By way of reminder, to remove a case from a state court to a federal court, a defendant must file in the federal court a notice of removal “containing a short and plain statement of the grounds for removal,” including the amount in controversy. 28 U.S.C. § 1446(a).
The Supreme Court held that a notice of removal need only satisfy Rule 8(a)’s short and plain statement standard and need not contain evidentiary submissions. In support of that conclusion, the majority noted that Congress had borrowed the language of Rule 8 in the language of 1446(a). This intent to apply the same pleading standard to notices of removal as is applied to other pleadings was specifically reflected in the legislative history of the statute.
It further noted that the amount in controversy allegation made by a plaintiff in invoking a federal court’s jurisdiction in a complaint is accepted in good faith and that the same should be true for a defendant’s notice of removal, unless the plaintiff or the court contests/questions that allegation.
In the event the plaintiff contests the amount in controversy allegation in the notice of removal, both sides must submit proof and the court is to decide (using a preponderance of the evidence standard) whether the amount in controversy requirement has been satisfied or not. In the absence of such a challenge, the defendant’s allegation regarding the amount in controversy is accepted.
The dissents challenged the majority opinion only as to the procedural grounds upon which the case ended up in the Supreme Court.
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