Ninth Circuit Determines Removing Defendant’s Burden

In Guglielmino v. McKee Foods Corp., No. 05-16144, 2007 WL 2916193 (9th Cir. Oct. 9, 2007), the Ninth Circuit determined as a matter of first impression the burden that a removing defendant must meet to establish federal jurisdiction where plaintiff moves to remand but the complaint specifically alleges damages below the diversity amount.

Here, defendants removed a case in which the complaint alleged damages of “less than $75,000,” and plaintiff’s motion to remand under 28 U.S.C. § 1447 attached affidavits with similar disclaimers. The appellate court observed that its precedents have placed three different burdens on removing defendants, depending on the circumstances. First, when the complaint alleges an amount on its face suffucuent to meet the jurisdictional threshold, the Ninth Circuit presumes that federal jurisdiction is satisfied "unless it appears to a 'legal certainty' that the plaintiff cannot actually recover that amount." (That could be called the "we take the plaintiff at his word unless it is undeniably only wishful thinking" rule.) Second, when the complaint is unclear or ambiguous about the jurisdictional amount, the removing defendant must establish by a preponderance of the evidence that the jurisdictional amount is met. Finally, when a complaint specifically alleges an amount in controversy that is less than the jurisdictional threshold, the party seeking removal must prove with legal certainty that the jurisdictional amount is met.

The new wrinkle here is that the complaint did not allege an amount but also pled that, whatever the damages were, they were less than $75,000. The Ninth Circuit concluded that this situation fit the second category of complaints best because the controlling factor was the ambiguity of the allegations. Thus, where a plaintiff specifically alleges damages are below the jurisdictional amount for diversity, but does not allege an actual total amount in controversy, the defendant must support removal by a “preponderance of the evidence.”

I have wondered about why, in a situation in which plaintiff is the movant -- having filed a motion to remand -- the court expresses its view in terms of the burden the non-movant defendant faces. Usually the movant bears the burden on his own motion. Why shouldn't the plaintiff have the burden of demonstrating the lack of federal jurisdiction by a preponderance of the evidence, rather than the defendant having the burden to establish the existence of federal jurisdiction? Perhaps the answer is that federal jurisdiction is never assumed and always must be established to the court's satisfaction. It follows that whoever is the proponent of the federal forum has to bear the burden of estabilshing entitlement to that forum, and in this case it is the removing defendant. That principle apparently trumps the ordinary rule that a movant bears his own burden.

Judge O'Scannlain filed a concurrence in Guglielmino examining the issue of defendants' and plaintiffs' competing burdens that the majority glossed over. He disagreed with the majority's imposition of a "legal certainty" burden on the removing defendant, a party seeking to invoke federal jurisdiction, rather than the moving plaintiff, a party seeking to defeat federal jurisdiction. He concluded that "in all cases where removal to federal court is challeneged in any appropriate way, it is incumbent upon the party seeking federal jurisdiction to prove the facts giving rise to such jurisdiction by a preponderance of the evidence. Only then, and only by proof to a legal certainty, can a party defeat the exercise of federal jurisdiction which those established fact support." He quoted approvingly from Judge Frank Easterbrook's opinion in Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006), which he says attempted to organize and clarify that court's removal law into a coherent whole. He observed that his proposal was consistent with the views of the Fifth, Sixth, Seventh and Eighth Circuits, and would resolve the multiple approaches of his own court into a single standard.