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Ibarra v. Manheim Invs., Inc.

United States Court of Appeals, Ninth Circuit

January 8, 2015

JOSE L. IBARRA, an individual; DOES, 1-50, on behalf of themselves and in a representative capacity for all others similarly situated and on behalf of the general public, Plaintiffs-Appellees,
v.
MANHEIM INVESTMENTS, INC., a Nevada Corporation; COX ENTERPRISES, INC., a Delaware Corporation, Defendants-Appellants

Argued and Submitted, Pasadena, California December 8, 2014.

Page 1194

Appeal from the United States District Court for the Southern District of California. D.C. No. 3:13-cv-00857-CAB-BLM. Cathy Ann Bencivengo, District Judge, Presiding.

SUMMARY[*]

Class Action Fairness Act / Amount in Controversy

The panel vacated the district court's order remanding the putative class action to state court, and remanded to the district court to allow both parties the opportunity to submit evidence and arguments whether the $5 million amount in controversy requirement under the Class Action Fairness Act had been satisfied where the complaint did not include a facially apparent amount in controversy or may have understated the true amount in controversy.

The plaintiff putative class of employees sued in state court alleging violations of California's Labor Code, and explicitly alleging that damages did not exceed $5 million. Defendant Manheim Investments, Inc. removed the case to federal court under the Class Action Fairness Act, asserting more than $5 million was at stake based on a " pattern and practice" of labor law violations.

The panel held that because the complaint did not allege that Manheim universally, on each and every shift, violated labor laws by not giving rest and meal breaks, Manheim bore the burden to show that its estimated amount in controversy relied on reasonable assumptions. The panel also held that a remand to the district court was necessary to allow both sides to submit evidence -- direct or circumstantial -- related to the contested amount in controversy. The panel further held that if the damages assessment included assumptions, the chain of reasoning and the assumptions needed some reasonable ground underlying them. The panel concluded that Manheim relied on an assumption about the rate of its alleged labor law violations that was not grounded in real evidence, and remanded on an open record for both sides to submit proof related to the disputed amount in controversy.

Thomas R. Kaufman (argued), and Paul Berkowitz, Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California, for Defendants-Appellants.

Raul Cadena (argued), Cadena Churchill, LLP, San Diego, California; Paul D. Jackson, JacksonLaw, LLP, San Diego, California, for Plaintiff-Appellee.

Before: Susan P. Graber, Ronald M. Gould, and Consuelo M. Callahan, Circuit Judges. Opinion by Judge Gould.

OPINION

Page 1195

GOULD, Circuit Judge:

We must decide what proof a defendant seeking removal must produce to prove the amount-in-controversy requirement under the Class Action Fairness Act of 2005 (" CAFA" ), 28 U.S.C. § 1332(d), when the complaint does not include a facially apparent amount in controversy or the plaintiff may have understated the true amount in controversy.

CAFA gives federal district courts original jurisdiction over class actions in which the class members number at least 100, at least one plaintiff is diverse in citizenship from any defendant, and the aggregate amount in controversy exceeds $5 million, exclusive of interest and costs. Id. A CAFA-covered class action may be removed to federal court, subject to more liberalized jurisdictional requirements, i.e., the one-year limitation under ยง 1446(c)(1) does not apply, the case may be removed even if one or more defendants are citizens of the state in ...


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