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The Southern District of California’s recent decision in Montalvo v. Swift Transportation Corp., No. 11-cv-1827-L(BLM), 2011 WL 6399457 (S.D. Cal. Dec. 19, 2011) demonstrates how a class action plaintiff’s artful pleading regarding the amount in controversy can keep a case in state court.  Plaintiff Montalvo was employed as a driver for Defendant, a truckload carrier service.  Plaintiff filed a class action complaint in San Diego Superior Court alleging unpaid payment of wages, in particular wages for hours attending orientations and/or training.  In her complaint, Plaintiff expressly stated that the requested relief, including attorneys’ fees, did “not exceed an aggregate of $4,999,999.00.”  Defendants sought to remove the case to federal court under the Class Action Fairness Act (CAFA), which among other things, requires the amount in controversy for the removal of class action claims to exceed $5 million.  Relying on the Ninth Circuit’s Lowdermilk decision, the court found that “when a plaintiff has pled an amount in controversy less than the jurisdictional threshold in a state-court complaint, the ‘party seeking removal must prove with a legal certainty that CAFA’s jurisdictional amount is met.’” (quoting Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994, 1000 (9th Cir. 2007)).

As demonstrated in Montalvo, the “legal certainty” standard is a high bar to meet.  Defendants provided several damages estimates that they deemed to be “very conservative,” which exceeded CAFA’s $5 million threshold.  However, the court found the defendants’ estimates did not meet the “legal certainty” standard.  The court quoted Lowdermilk in concluding that “absent evidence of bad faith, ‘there are cases—as in the instant case—in which the plaintiffs cannot anticipate from the outset the value of their case,” and in such cases, “[t]hey are not obligated to overstate their damages to satisfy the defendant’s interest in a federal forum, but may plead conservatively to secure a state forum.”  (citing Lowdermilk, 479 F.3d at 1003).

Montalvo demonstrates that courts in the Ninth Circuit will give substantial weight to the plaintiff’s alleged damage amount when conducting the jurisdictional analysis under CAFA.  While a removing defendant will be afforded an opportunity to present evidence to rebut the plaintiff’s damage allegations, unless the defendant can show to a “legal certainty” that the amount in controversy exceeds $5,000,000, removal will not be permitted.

CAFA: Ninth Circuit Gives Deference to Plaintiff’s Jurisdictional Allegations Avoiding CAFA Removal