In a case with a tortured procedural history involving three attempts at removal, a federal district court in Oregon remands a class action to state court based upon the defendant’s failure to satisfy CAFA’s amount in controversy
In Perez v. Del Monte Fresh Produce, N.A., Inc., No. 3:11-cv-01243, 2012 U.S. Dist. Lexis 96577 (D. Or. July 12, 2012), the plaintiffs brought a class action alleging state wage and hour law violations. The plaintiffs subsequently amended their complaint. The defendants moved to dismiss for failure to join a necessary party and failure to state facts sufficient to constitute a claim. The plaintiffs moved to file a second amended complaint setting forth the specific amount of damages sought. Before the motion to amend could be decided by the state court, the defendant removed the case based on diversity jurisdiction under 28 U.S.C. § 1332(a). The plaintiffs re-filed their motion to amend the complaint in federal court. The defendant then filed an amended notice of removal asserting CAFA jurisdiction as well. The plaintiffs moved for remand. The court granted the motion finding that the defendant had failed to prove a sufficient amount in controversy for both federal diversity jurisdiction and CAFA jurisdiction.
Following remand to state court, the defendant took discovery relating to damages, including the total damages sought by the class, the attorneys’ fees and costs incurred in the pending litigation, and the attorneys’ fees and costs incurred in a related case filed against the defendant. In May of 2010, the plaintiffs moved for leave to file a second amended complaint containing a statement that the “aggregate of all claims does not exceed five million dollars.” The state court granted the motion directing the plaintiffs to file their second amended complaint by June 14, 2010. Before the plaintiffs filed their second amended complaint, the defendant removed the case a second time on the basis of both diversity and CAFA jurisdiction. The defendant relied upon information learned from plaintiffs during discovery regarding the number of class members and their damages.
The plaintiffs filed another motion to remand. The magistrate judge recommended that the case be remanded, relying in part on the allegations in the proffered second amended complaint even though it had not yet been filed at the time of removal. The magistrate judge found that the defendant had not established by a preponderance of the evidence the requisite amount in controversy under federal diversity jurisdiction or CAFA jurisdiction.
Shortly after the magistrate judge issued the remand recommendation, the defendant filed a notice of new facts in support of removal. These facts consisted of the filing by plaintiffs’ counsel of a petition for attorneys’ fees in a related action against the defendant. In that fees petition, the plaintiffs’ counsel sought significantly higher fees than the fees figure used by the magistrate judge to determine the amount in controversy for purposes of CAFA. The defendant contended that it had proved by a preponderance of the evidence that the amount in controversy exceeded $5 million based on the fee application. The court adopted the magistrate’s recommendation for remand anyway. The court found that the first amended complaint was the operative complaint, and that the defendant had not carried its burden of proof as to CAFA’s amount in controversy, even after considering the notice of new facts.
Following this second remand, the plaintiffs filed a second amended complaint in state court on September 15, 2011. The second amended complaint, however, differed from the one proffered with the initial motion for leave to file second amended complaint filed in May of 2010. In this new version of the second amended complaint, the plaintiffs changed the class definition to expand the class period from two years to seven years. The defendant moved for a stay of the state court proceedings. Shortly thereafter, the defendant removed the case to federal court for a third time. In its third notice of removal, the defendant claimed that the enlargement of the class period brought the amount in controversy within CAFA’s requirement. The plaintiffs moved for remand, asserting that the change in the complaint was inadvertent. The plaintiffs also filed a motion to amend their second amended complaint to correct the error.
The magistrate judge recommended that the court either remand the action, or allow the plaintiffs to amend their complaint, with the further recommendation that the defendant could not rely solely on the mistake to support the removal. The court followed the magistrate’s first recommendation and remanded the case. The court reasoned that the second amended complaint was not the operative complaint for purposes of removal. The first time the plaintiffs moved to file their second amended complaint, the defendant removed the action before the motion could be decided by the state court judge. The second time the plaintiffs moved to file a second amended complaint, the motion was granted. However, before the complaint could be filed in accordance with the state court’s June 14, 2010 deadline, the defendant removed the case for a second time. When the case was remanded for a second time, the plaintiffs filed a second amended complaint in state court on September 15, 2011, but this was done well beyond the original June 14, 2010 deadline without leave of the state court, and without permission from the defendant. Consequently, the second amended complaint filed on September 15, 2011 had no legal effect and could not be used to satisfy the amount in controversy requirement.