CAFA Amount In Controversy Is Not Limited To Damages Incurred Prior To Removal And Includes Future Attorneys’ Fees Recoverable By Statute Or Contract
In Fritsch v. Swift Transp. Co. of Ariz., LLC, No. 18-55746 (Aug. 18, 2018), the Ninth Circuit clarified, in a unanimous published decision, that, where a party may recover its attorney’s fees by statute or contract, the Court must include future fees as well as those already incurred in assessing whether a case meets the amount-in-controversy threshold under the Class Action Fairness Act (“CAFA”).
Plaintiff Grant Fritsch filed a class action lawsuit in California state court claiming that his employer, Swift Transportation Company of Arizona, LLC (“Swift”), did not provide him and other drivers with meal breaks, overtime pay, or sufficient wage statements. At mediation, Fritsch provided Swift with a damages estimate of $5.9 million, including $150,000 in attorney’s fees and costs and $948,192 for unpaid rest period premiums.
In October, Swift removed the case to federal court, alleging that the damages sought exceeded the $5 million threshold for CAFA jurisdiction. Swift argued that, beyond the $150,000 in attorneys’ fees and costs already incurred as of October 2017, the court could also consider the fees and costs that would accrue over the course of the litigation increasing the amount in controversy to $6,553,375.
In considering its jurisdiction, the District Court found that Fritsch had not alleged missed rest periods in his complaint, reducing the amount in controversy below $5 million. Although Swift argued that future attorneys’ fees and costs should be considered in calculating the amount in controversy, the District Court held “that when calculating attorneys’ fees to establish jurisdiction, the only fees that can be considered are those incurred as of the date of removal.” Thus, only fees and costs of $150,000 incurred to date by Fritsch were considered, and the District Court remanded for lack of jurisdiction finding that Swift was unable to prove the amount in controversy exceeded $5 million.
Swift appealed. While the appeal was pending, on April 20, 2018, the Ninth Circuit issued its decision in Chavez v. JPMorgan Chase & Co., which held that “the amount in controversy is not limited to damages incurred prior to removal – for example it is not limited to wages a plaintiff-employee would have earned before removal (as opposed to after removal),” but rather “is determined by the complaint operative at the time of removal and encompasses all relief a court may grant on that complaint if the plaintiff is victorious.” 888 F.3d 413, 414-15 (9th Cir. 2018).
Although Chavez had noted that the amount in controversy could include damages, costs of compliance with injunctions, and attorneys’ fees awarded under contract of fee-shifting statutes, it had not addressed specifically whether attorneys’ fees incurred after removal were properly included in the amount in controversy calculation. The Ninth Circuit addressed this open question in Fritsch: “in light of Chavez and our precedents . . . [w]e have long held . . . that attorneys’ fees awarded under fee-shifting statutes or contracts are part of the amount in controversy” and “include all relief to which the plaintiff is entitled if the action succeeds.” The panel continued: “We may not depart from this reasoning to hold that one category of relief — future attorneys’ fees — are excluded from the amount in controversy as a matter of law.”
Therefore, after Fritsch, there is no doubt in the Ninth Circuit, that future attorneys’ fees are “at stake” in the litigation, and under Fritsch the court must include future attorneys’ fees recoverable by statute or contract when assessing whether the amount-in-controversy requirement is met.