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(Article from Securities Law Alert, December 2014)

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28 U.S.C. § 1446(a) provides in relevant part that a defendant “desiring to remove any civil action from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal … containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings and orders served.” When a defendant seeks removal based on diversity of citizenship, the defendant must assert that the amount-in-controversy satisfies 28 U.S.C. § 1332.

In a decision dated December 15, 2014, the Supreme Court considered the requirements for “assert[ing] the amount in controversy adequately in the removal notice.” Dart Cherokee Basin Operating Co., LLC v. Owens, 2014 WL 7010692 (2014) (Ginsburg, J.). The “single question” before the Court was this: “does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation?” Justice Ginsburg, writing for the majority, held that “a defendant’s notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” The Court found that its conclusion was compelled “by the removal statute itself,” which “tracks the general pleading requirement stated in Rule 8(a) of the Federal Rules of Civil Procedure.” The Court explained that “[a] statement ‘short and plain’ need not contain evidentiary submissions.”

The Court reasoned that “[w]hen a plaintiff invokes federal-court jurisdiction, the plaintiff’s amount-in-controversy allegation is accepted if made in good faith.” “Similarly, when a defendant seeks federal-court adjudication,” the Court found that “the defendant’s amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court.”

However, “[i]f the plaintiff contests [or the court questions] the defendant’s allegation,” then  “[e]vidence establishing the amount is required by § 1446(c)(2)(B).”[1] “In such a case, both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.”