In Hargis v. Access Capital Funding LLC, 674 F.3d 783 (8th Cir. 2012), the plaintiff borrower filed a putative class action on behalf of herself and similarly situated borrowers alleging that the defendants, a bank and a broker, were unjustly enriched and had engaged in the unauthorized practice of law in violation of a state law by charging processing and administration fees in connection with the refinancing of her mortgage. The defendants removed the case pursuant to CAFA. The plaintiff’s motion for remand was denied and she appealed.
The defendants considered consumers nationwide for purposes of calculating the amount in controversy under CAFA because the plaintiff had not limited the putative class to just Missouri customers. The plaintiff objected, asserting that the amount in controversy was less than $5 million because class consisted of only Missouri residents. The district court denied the plaintiff’s remand motion, but allowed the plaintiff to amend her complaint to provide a clearer class definition. The plaintiff filed an amended complaint limiting the class to just Missouri customers. The defendants moved for summary judgment. In response to the summary judgment motion, the plaintiff sought leave to amend her complaint again. The district court granted judgment to the defendants and denied the motion for leave to file a second amended class action complaint.
On appeal, the Eighth Circuit initially addressed whether the case had been properly removed under CAFA. The court noted that the removing party must establish by a preponderance of the evidence that CAFA’s amount in controversy has been met, regardless of whether the complaint contains an allegation of an amount in controversy below the jurisdictional minimum. The court explained that the preponderance standard is not whether the damages are greater than that amount, but whether the finder of fact might legally conclude that they are. The court also observed that to in order to avoid CAFA jurisdiction, a plaintiff may include with the complaint a binding stipulation that the plaintiff will not seek damages greater than the jurisdictional minimum. Once the removing party establishes CAFA’s amount in controversy by a preponderance of the evidence, the party seeking remand must prove to a legal certainty that the claim is for less than that amount.
The Eighth Circuit examined the plaintiff’s contention that the district court erred in considering a nationwide class for purposes of determining the amount in controversy under CAFA because the class was limited to just Missouri customers and involved violation of Missouri law. The plaintiff asserted that the amount in controversy did not exceed $5 million if this geographical restriction of the class was followed. The Eighth Circuit noted, however, that the operative complaint at the time of removal was the original complaint. The class was not restricted to just Missouri customers in that complaint. Furthermore, the plaintiff failed to submit a binding stipulation with the original complaint limiting the damages sought by the class to less than $5 million. The defendant, therefore, was free to calculate the amount in controversy based upon the allegations in the original complaint which did not restrict the class to Missouri customers.
The Eighth Circuit affirmed the district court’s order denying remand. The court also ruled that since the plaintiff lacked standing to bring the claim, the district court should have dismissed the claim instead of reaching the merits of the defendants’ summary judgment motion. The case was remanded with instructions consistent with the court’s ruling.© 2013 Dinsmore & Shohl LLP. All rights reserved.