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Robert Rodriguez v. AT&T Mobility Servicers LLC, No. 13-56149, (9th Cir., August 27, 2013)

Federal district courts have subject matter jurisdiction over class actions in which a plaintiff class member is a citizen of a state different from any defendant and the aggregate amount of the claim exceeds $5 million. 28 U.S.C. § 1332(d)(2). These statutory requirements must be established by parties seeking to remove a case from state court to the federal forum. 

The U.S. Court of Appeals for the Ninth Circuit held that to establish federal jurisdiction over a putative class action, defendants must use the preponderance of the evidence standard to show that the class claim exceeds $5 million. Rodriguez v. AT&T Mobility Servicers LLC, Slip Op. No. 13-56149, (9th Cir., August 27, 2013, at 4).  Additionally, plaintiffs “seeking to represent a putative class below the jurisdictional minimum,” nor by waiving amounts in excess of $5 million. Rodriguez, supra, at 12. 

 

Plaintiff Robert Rodriguez (“Plaintiff”) filed a putative class action in California state court, alleging various wage and hour violations under the California Labor Code, against Defendant AT&T Mobility Servicers LLC (“Defendant”), on behalf of himself and similarly situated retail sales managers. Defendant removed Plaintiff’s action to federal court under the Class Action Fairness Act of 2005 and 28 U.S.C. § 1332(d)(2). 

Subsequently, Plaintiff argued that Defendant could not establish proper federal jurisdiction and moved to remand the case back to state court. Plaintiff alleged that the total amount in controversy did not exceed $5 million and, more importantly, pleaded a waiver to seek any amount in excess $5 million. The district court remanded the case back to state court as Plaintiff waived any claim by the class in excess of $5 million, which “effectively foreclosed the jurisdictional issue.” Rodriguez, supra, at 5. 

In making its determination, the district court relied heavily on the circuit court’s decision in Lowdermilk which held that “federal courts are courts of limited jurisdiction . . . her complaint’ and can plead to avoid federal jurisdiction.”  Rodriguez, supra, at 11-12, quoting Lowdermilk v. U.S. Bank Nat’l Ass’n. (9th Cir. 2007) 479 F.3d 994, 998-99. 

After the district court entered its order, in an unrelated case, the U.S. Supreme Court held that waivers, like the one Plaintiff made in Rodriguez, are invalid. Standard Fire Insurance Co. v. Knowles, (2013) 133 S. Ct. 1345, 1347-49 (holding that “a lead plaintiff of a putative class could not foreclose a defendant’s ability to establish the $5 million amount in controversy by stipulating prior to class certification that the amount in controversy is less than $5 million.”) 

The holding by the U.S. Supreme Court so undermines the “reasoning” in Lowdermilk, that the Lowdermilk decision “has been effectively overruled.” Rodriguez, supra, at 14. The Court of Appeals remanded Plaintiff’s claims against Defendant back to the district court to weigh the applicable evidence regarding the amount in controversy. 

In cases where the plaintiff does not plead a specific amount in controversy, a defendant seeking to remove a putative class action to federal court must demonstrate by a preponderance of the evidence that the jurisdictional requirements are met. Additionally, a lead plaintiff may not defeat a defendant’s burden by reducing the amount in controversy on behalf of absent class members.

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