Blanca Argelia Arias v. Residence Inn by Marriott ( 2019 )


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  •                      FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    BLANCA ARGELIA ARIAS,                              No. 19-55803
    individually and on behalf of herself
    and others similarly situated,                       D.C. No.
    Plaintiff-Appellee,            2:18-cv-08818-
    RGK-JPR
    v.
    RESIDENCE INN BY MARRIOTT, a                         OPINION
    Delaware limited liability company;
    MARRIOTT INTERNATIONAL, INC., a
    Delaware corporation,
    Defendants-Appellants.
    Appeal from the United States District Court
    for the Central District of California
    R. Gary Klausner, District Judge, Presiding
    Argued and Submitted August 13, 2019
    Pasadena, California
    Filed September 3, 2019
    Before: Consuelo M. Callahan, D. Michael Fisher, *
    and Morgan Christen, Circuit Judges.
    Opinion by Judge Callahan
    *
    The Honorable D. Michael Fisher, United States Circuit Judge for
    the U.S. Court of Appeals for the Third Circuit, sitting by designation.
    2           ARIAS V. RESIDENCE INN BY MARRIOTT
    SUMMARY **
    Class Action Fairness Act / Amount in Controversy
    The panel vacated the district court’s order sua sponte
    remanding to state court a putative class action brought by
    employees against Residence Inn by Marriott, which had
    been removed to federal court under the Class Action
    Fairness Act.
    The panel held that when a notice of removal plausibly
    alleges a basis for federal court jurisdiction, a district court
    may not remand the case back to state court without first
    giving the defendant an opportunity to show by a
    preponderance of the evidence that the jurisdictional
    requirements were satisfied. Marriott’s notice of removal
    alleged that the amount in controversy requirement was
    satisfied, and the district court did not conclude that
    Marriott’s allegations were implausible. The panel held that
    by remanding the case to state court sua sponte, the district
    court deprived Marriott of a fair opportunity to submit proof.
    The panel concluded that this error warranted vacatur of the
    remand order.
    The panel held that when a defendant’s allegations of
    removal jurisdiction are challenged, the defendant’s
    showing on the amount in controversy may rely on
    reasonable assumptions. The panel held that Marriott’s
    notice of removal included personnel and payroll data, and
    with that data, Marriott estimated the amount-in-controversy
    **
    This summary constitutes no part of the opinion of the court. It
    has been prepared by court staff for the convenience of the reader.
    ARIAS V. RESIDENCE INN BY MARRIOTT                 3
    by making assumptions that were plausible and may prove
    to be reasonable in light of allegations in the complaint. The
    panel held that on remand Marriott must show that its
    estimated amount in controversy relied on reasonable
    assumptions.
    The panel held that when a statute or contract provides
    for the recovery of attorneys’ fees, prospective attorneys’
    fees must be included in the assessment of the amount in
    controversy.
    The panel rejected plaintiff’s contention that the position
    taken by Marriott in its summary judgment motion in state
    court – that plaintiff’s claims are barred by a release from a
    prior class action settlement – defeated federal court
    jurisdiction.
    The panel remanded on an open record for the district
    court to permit the parties to submit evidence and arguments
    on the amount in controversy.
    COUNSEL
    Brian P. Long (argued), Seyfarth Shaw LLP, Los Angeles,
    California; William Dritsas, Seyfarth Shaw LLP, San
    Francisco, California; for Defendants-Appellants.
    Samvel Gashgian (argued) and Ramin R. Younessi, Law
    Offices of Ramin R. Younessi, Los Angeles, California, for
    Plaintiff-Appellee.
    4           ARIAS V. RESIDENCE INN BY MARRIOTT
    OPINION
    CALLAHAN, Circuit Judge:
    Blanca Arias filed a putative class action against
    Residence Inn by Marriott, LLC and Marriott International,
    Inc. (“Marriott”) in California superior court, alleging that
    Marriott failed to compensate its employees for wages and
    missed meal breaks and failed to issue accurate itemized
    wage statements. Marriott removed the action to federal
    court alleging diversity jurisdiction under the Class Action
    Fairness Act (“CAFA”). The district court sua sponte
    remanded the case back to state court, and Marriott appeals.
    In some of our early cases interpreting CAFA, we
    adopted legal standards that were influenced by a general
    “presumption against federal jurisdiction.” See Lowdermilk
    v. U.S. Bank Nat’l Ass’n, 
    479 F.3d 994
    , 999 (9th Cir. 2007).
    The Supreme Court has made clear that regardless of
    whether such a presumption exists in run-of-the-mill
    diversity cases, “no antiremoval presumption attends cases
    invoking CAFA.” Dart Cherokee Basin Operating Co., LLC
    v. Owens, 
    135 S. Ct. 547
    , 554 (2014). Because some
    remnants of our former antiremoval presumption seem to
    persist, 1 we reaffirm three principles that apply in CAFA
    removal cases. First, a removing defendant’s notice of
    removal “need not contain evidentiary submissions” but
    only plausible allegations of the jurisdictional elements.
    Ibarra v. Manheim Investments, Inc., 
    775 F.3d 1193
    , 1197
    1
    A recent example of this persistence is reflected in a district court
    decision we reversed in Ehrman v. Cox Communications Inc., No. 19-
    55658, 
    2019 WL 3720013
    (9th Cir. Aug. 8, 2019). See 
    id. at *3
    (“Because ‘no antiremoval presumption attends cases invoking CAFA,’
    Dart 
    Cherokee, 135 S. Ct. at 554
    , courts should be especially reluctant
    to sua sponte challenge a defendant’s allegations of citizenship.”).
    ARIAS V. RESIDENCE INN BY MARRIOTT                     5
    (9th Cir. 2015). Second, when a defendant’s allegations of
    removal jurisdiction are challenged, the defendant’s
    showing on the amount in controversy may rely on
    reasonable assumptions. See 
    id. at 1197–99.
    Third, when a
    statute or contract provides for the recovery of attorneys’
    fees, prospective attorneys’ fees must be included in the
    assessment of the amount in controversy. Fritsch v. Swift
    Transp. Co. of Ariz., LLC, 
    899 F.3d 785
    , 794 (9th Cir. 2018).
    We vacate the district court’s order remanding the action to
    state court, and we remand for further proceedings to allow
    the parties to present evidence and argument on the amount
    in controversy.
    I.
    Arias works for defendant Residence Inn by Marriott,
    LLC in Los Angeles, California. On August 23, 2018, Arias
    filed a putative class action in state court against Marriott
    alleging that Marriott failed to pay wages, provide rest
    breaks, and provide itemized wage statements, all in
    violation of state wage and hour laws. Arias seeks
    certification of a class of all employees of Marriott “who
    were subjected to individual wage and hour violations,
    during the period within four years from the filing of th[e]
    Complaint and continuing through trial.” In addition to
    compensatory damages, Arias seeks civil penalties under the
    California Private Attorney General Act, disgorgement of
    “ill-gotten gains” under California’s Unfair Competition
    Law, and attorneys’ fees.
    On October 12, 2018, Marriott removed the case to
    federal district court, invoking CAFA jurisdiction. 2
    2
    The removal statute requires that a notice of removal be filed
    within 30 days after the defendant is served with the complaint.
    6           ARIAS V. RESIDENCE INN BY MARRIOTT
    Specifically, Marriott alleged that the district court had
    original jurisdiction over the matter because the class action
    satisfied CAFA’s requirements of minimum diversity (any
    member of the class is a citizen of a state different from any
    defendant), class size (at least 100), and amount in
    controversy (exceeding $5,000,000).            See 28 U.S.C.
    § 1332(d)(2), (d)(5)(B). To show minimum diversity,
    Marriott alleged that it is a citizen of Maryland and Delaware
    and it relied on the allegation in the complaint that Arias is a
    citizen of California. To satisfy the class size requirement,
    Marriott provided a declaration from a human resources
    officer stating that Marriott employed at least 2193
    nonexempt employees during the period identified in the
    complaint.
    To satisfy the amount-in-controversy requirement,
    Marriott relied on a combination of the complaint’s
    definition of the class, Marriott’s employee data (e.g.,
    number of nonexempt employees, hourly rate of pay, and
    number of workweeks worked by putative class members),
    and assumptions about the frequency of the violations
    alleged in the complaint. Based on its assumptions and
    calculations, Marriott alleged a potential amount in
    controversy exceeding $15 million with its most
    “conservative estimate” totaling over $5.5 million,
    excluding attorneys’ fees (which Marriott alleged should be
    included in the calculation). Marriott’s calculation in its
    notice of removal breaks down as follows:
    28 U.S.C. § 1446(b). Marriott alleged that its notice of removal was
    timely because Marriott was served with the complaint on September 12,
    2018.
    ARIAS V. RESIDENCE INN BY MARRIOTT              7
    Unpaid Overtime. Marriott cited Arias’s allegation that
    Marriott “routinely” failed to pay its employees overtime
    wages. Using an assumption of 30 minutes per week
    (6 minutes per day) of unpaid overtime wages, Marriott
    calculated an amount in controversy for this claim of
    $1,617,017.70. Marriott suggested that, based on the
    allegations in the complaint, an assumed violation rate of
    60 minutes per week would be reasonable and would double
    the estimated amount in controversy for unpaid overtime.
    Rest Break Premiums. Marriott cited Arias’s allegation
    that Marriott failed to provide employees with uninterrupted
    rest periods and failed to compensate employees for missed
    rest periods. In Marriott’s most conservative estimate, it
    assumed a denial of one rest break per week and calculated
    an amount in controversy for this claim of $2,155,493.
    Marriott also suggested that assuming three missed rest
    periods per week would also be “conservative” and would
    yield an amount in controversy of $6,466,480 “in potential
    damages for penalties alone.” Marriott also suggested that
    the complaint could reasonably be interpreted as seeking one
    rest period premium per day, in which case the amount in
    controversy for this claim alone would be over $10 million.
    Wage Statement Penalties. Marriott cited Arias’s
    allegation that Marriott failed to provide employees timely
    and accurate wage statements and that none of the paystubs
    actually given to employees complied with the Labor Code.
    Based on the penalties provided by statute, Marriott
    calculated an amount in controversy for this claim of
    $1,788,150.
    8                 ARIAS V. RESIDENCE INN BY MARRIOTT
    Attorneys’ Fees. Marriott argued that a reasonable
    estimate of attorneys’ fees likely to be recovered should be
    included in the estimate of the amount in controversy. It
    argued that 25 percent of the amount of estimated damages
    should be added to the amount in controversy to account for
    attorneys’ fees.
    Table 1. Marriott’s Estimate of Amount in Controversy
    em k
    ts
    s
    % h
    m
    Pr rea
    es
    e
    en
    25 wi t
    O aid
    St age
    al
    m
    iu
    fe
    m
    B
    ot
    rti
    np
    l
    W
    ate
    ta
    st
    bt
    ve
    U
    Re
    To
    Su
    “Conservative”
    $ 1,617,018   $ 2,155,493    $ 1,788,150   $ 5,560,661         $ 6,950,826
    Estimate
    Higher Estimate    $ 3,234,035   $ 10,777,466   $ 1,788,150   $ 15,799,651        $ 19,749,564       -
    One month after Marriott filed the notice of removal, the
    district court issued an order sua sponte remanding the case
    to state court.       The district court found Marriott’s
    calculations of the amount in controversy “unpersuasive,”
    concluding that the calculations rested on speculation and
    conjecture. The court faulted Marriott for not offering
    evidentiary support for its assumptions of violation rates and
    reasoned that “[e]qually valid assumptions could be made
    that result in damages that are less than the requisite
    $5,000,000 amount in controversy.” The court also
    concluded that “prospective attorneys’ fees are too
    speculative” to be included in the amount in controversy.
    The court thus concluded that Marriott “failed to satisfy [its]
    burden that the amount in controversy meets the
    jurisdictional requirement.”
    ARIAS V. RESIDENCE INN BY MARRIOTT                9
    The parties report that since the district court’s remand
    order, litigation has gone forward in the state court.
    According to the parties, on July 18, 2019, Marriott filed a
    motion for summary judgment, arguing that a release from a
    related class action settlement bars all of Arias’s claims.
    Marriott timely filed a petition for permission to appeal
    under 28 U.S.C. § 1453(c)(1), which we granted.
    II.
    “We review remand orders in CAFA cases de novo.”
    
    Fritsch, 899 F.3d at 792
    .
    “Congress designed the terms of CAFA specifically to
    permit a defendant to remove certain class or mass actions
    into federal court. 28 U.S.C. § 1332(d). Congress intended
    CAFA to be interpreted expansively.” 
    Ibarra, 775 F.3d at 1197
    . As in Ibarra, the parties here “do not contest
    CAFA’s jurisdictional requirements of minimum diversity
    and class numerosity on appeal; the sole dispute is whether
    CAFA’s requirement that the amount in controversy exceed
    $5 million is met here.” 
    Id. at 1196–97.
    Marriott raises several challenges to the district court’s
    remand order. First, Marriott argues the district court
    imposed an erroneous burden of proof by sua sponte
    remanding the case to state court without allowing Marriott
    an opportunity to support its allegations with evidence.
    Second, Marriott argues the district court erred in
    disallowing Marriott’s use of assumed violation rates in its
    estimate of the amount in controversy. Third, it argues the
    district court erred by “refusing to consider prospective
    attorneys’ fees in the amount in controversy.”
    10        ARIAS V. RESIDENCE INN BY MARRIOTT
    A.
    We agree with Marriott that when a notice of removal
    plausibly alleges a basis for federal court jurisdiction, a
    district court may not remand the case back to state court
    without first giving the defendant an opportunity to show by
    a preponderance of the evidence that the jurisdictional
    requirements are satisfied.
    “[W]hen a defendant seeks federal-court adjudication,
    the defendant’s amount-in-controversy allegation should be
    accepted when not contested by the plaintiff or questioned
    by the court.” Dart 
    Cherokee, 135 S. Ct. at 553
    . “[A]
    defendant’s notice of removal need include only a plausible
    allegation that the amount in controversy exceeds the
    jurisdictional threshold.” 
    Id. at 554.
    Marriott’s notice of removal alleged that the amount-in-
    controversy requirement was satisfied. The notice of
    removal discussed each of the claims alleged in the
    complaint and explained the components of Marriott’s
    estimate of the amount in controversy (e.g., number of class
    members as defined in the complaint, number of workweeks
    worked during the class period, and assumed violation rates).
    The notice of removal thus provided “a short and plain
    statement of the grounds for removal.” 
    Id. at 551
    (quoting
    28 U.S.C. § 1446(a)); see also 
    Ibarra, 775 F.3d at 1197
    .
    The district court did not conclude that Marriott’s
    allegations were implausible. Instead, the district court
    stated that Marriott failed to meet its burden of proving the
    amount in controversy. In rejecting Marriott’s assumed
    violation rates, the district court cited a lack of “evidence
    supporting [Marriott’s] assumptions.” But a notice of
    removal “need not contain evidentiary submissions.” Dart
    
    Cherokee, 135 S. Ct. at 551
    . Instead, evidence showing the
    ARIAS V. RESIDENCE INN BY MARRIOTT                      11
    amount in controversy is required “only when the plaintiff
    contests, or the court questions, the defendant’s allegation.”
    
    Id. at 554.
    “[W]hen a defendant’s assertion of the amount in
    controversy is challenged . . . both sides submit proof and
    the court decides, by a preponderance of the evidence,
    whether the amount-in-controversy requirement has been
    satisfied.” 
    Id. The district
    court clearly questioned
    Marriott’s allegation, but by remanding the case to state
    court sua sponte, the district court deprived Marriott of “a
    fair opportunity to submit proof.” 
    Ibarra, 775 F.3d at 1200
    .
    This error warrants vacatur of the remand order. 3
    B.
    We also agree with Marriott that in assessing the amount
    in controversy, a removing defendant is permitted to rely on
    “a chain of reasoning that includes assumptions.” 
    Id. at 1199.
    Such “assumptions cannot be pulled from thin air
    but need some reasonable ground underlying them.” 
    Id. An assumption
    may be reasonable if it is founded on the
    allegations of the complaint. See 
    id. at 1198–99.
    For
    example, in Ibarra, we noted that the complaint alleged “a
    ‘pattern and practice’ of labor law violations but d[id] not
    allege that this ‘pattern and practice’ is universally followed
    every time the wage and hour violation could arise.” 
    Id. at 1199.
    Because “a ‘pattern and practice’ of doing something
    does not necessarily mean always doing something,” we
    reasoned, the defendant’s assumed violation rate of 100%
    may or may not have been valid. 
    Id. at 1198–99.
    We thus
    3
    Marriott conceded at oral argument that the notice of removal did
    not identify how many potential class members worked part-time and
    how many worked full-time. But Marriott was entitled to an opportunity
    to make this showing in response to a challenge by Arias or the district
    court.
    12         ARIAS V. RESIDENCE INN BY MARRIOTT
    vacated the district court’s remand order and remanded “to
    allow both sides to submit evidence related to the contested
    amount in controversy.” 
    Id. LaCross v.
    Knight Transportation, Inc., 
    775 F.3d 1200
    (9th Cir. 2015), a case decided the same day as Ibarra,
    provides an example of when a maximum assumption is
    reasonable in light of the plaintiff’s allegations. The plaintiff
    in LaCross alleged that the defendant misclassified truck
    drivers as independent contractors and sought, on behalf of
    a putative class, reimbursement of expenses related to
    ownership and operation of the trucks, including fuel costs.
    
    Id. at 1202.
    The defendant included all fuel costs during the
    class period in its calculation of the amount in controversy,
    and we held that the assumption was reasonable because the
    plaintiff alleged that all class members were truck drivers.
    
    Id. at 1203
    (reversing the district court’s remand order and
    determining as a matter of law that the amount-in-
    controversy requirement was satisfied).
    Marriott’s notice of removal included personnel and
    payroll data (e.g., number of employees meeting class
    description, average rate of pay, and number of workweeks
    worked during the class period). With that data, Marriott
    estimated the amount in controversy by making assumptions
    about the frequency of violations of the sort alleged in the
    complaint. Marriott tied its assumed violation rates to the
    complaint as follows:
    ARIAS V. RESIDENCE INN BY MARRIOTT              13
    Allegations of the        Marriott’s
    Complaint                Lowest
    Assumed
    Violation Rate
    Unpaid          “Defendants routinely     6 minutes
    Overtime        failed to pay Plaintiffs  unpaid overtime
    and other aggrieved       per day (30
    employees . . . overtime  minutes unpaid
    wages . . . .”        ¶ 35overtime per
    (emphasis added).         week).
    Rest Break      “Defendants               1 missed rest
    Premiums        routinely failed to pay   break per week
    Plaintiffs and other
    aggrieved employees
    . . . compensation for
    missed rest and meal
    breaks . . . .”       ¶ 35
    (emphasis added).
    Wage            “Defendants failed to 100% of wage
    Statements      provide the Plaintiffs statements
    with      timely       and
    accurate wage and hour
    statements . . . . Not one
    of the paystubs that
    Plaintiffs        received
    complied with Labor
    Code § 226 . . . .” ¶ 48
    (emphasis added).
    Marriott’s assumptions are plausible and may prove to
    be reasonable in light of the allegations in the complaint.
    The district court rejected Marriott’s assumptions because it
    was reasonably possible that the damages at issue might be
    14           ARIAS V. RESIDENCE INN BY MARRIOTT
    less than $5 million. 4 This reasoning recognized that
    Marriott, as the removing party, will bear the burden of
    proof, but it also reflects a misapprehension of the amount-
    in-controversy requirement.
    “The amount in controversy is simply an estimate of the
    total amount in dispute, not a prospective assessment of
    defendant’s liability.” Lewis v. Verizon Commc’ns, Inc.,
    
    627 F.3d 395
    , 400 (9th Cir. 2010). In that sense, the amount
    in controversy reflects the maximum recovery the plaintiff
    could reasonably recover. See Chavez v. JPMorgan Chase
    & Co., 
    888 F.3d 413
    , 417 (9th Cir. 2018) (explaining that the
    amount in controversy includes all amounts “at stake” in the
    litigation at the time of removal, “whatever the likelihood
    that [the plaintiff] will actually recover them”). An assertion
    that the amount in controversy exceeds the jurisdictional
    threshold is not defeated merely because it is equally
    possible that damages might be “less than the requisite . . .
    amount,” as the district court reasoned. Where a removing
    defendant has shown potential recovery “could exceed
    $5 million and the [p]laintiff has neither acknowledged nor
    sought to establish that the class recovery is potentially any
    less,” the defendant “has borne its burden to show the
    amount in controversy exceeds $5 million.” 
    Lewis, 627 F.3d at 401
    (emphasis added).
    The district court characterized Marriott’s assumed
    violation rates as being “speculation and conjecture,”
    apparently because Marriott did not provide evidence
    proving the assumptions correct. The district court seems to
    have imposed a requirement that Marriott prove it actually
    violated the law at the assumed rate. But assumptions made
    4
    The district court did not identify the “[e]qually valid assumptions”
    that might result in an amount in controversy of less than $5 million.
    ARIAS V. RESIDENCE INN BY MARRIOTT                15
    part of the defendant’s chain of reasoning need not be
    proven; they instead must only have “some reasonable
    ground underlying them.” 
    Ibarra, 775 F.3d at 1199
    ; see also
    
    Lewis, 627 F.3d at 400
    (“To establish the jurisdictional
    amount, Verizon need not concede liability for the entire
    amount, which is what the district court was in essence
    demanding by effectively asking Verizon to admit that at
    least $5 million of the billings were ‘unauthorized’ within
    the meaning of the complaint.”). On remand, Marriott will
    “bear[] the burden to show that its estimated amount in
    controversy relie[s] on reasonable assumptions.” 
    Ibarra, 775 F.3d at 1199
    .
    C.
    The district court suggested that courts within the circuit
    are split on whether attorneys’ fees should be considered in
    the amount in controversy. The district court sided with
    other district courts that have concluded “prospective
    attorneys’ fees are too speculative for inclusion into amount
    in controversy.”
    In perceiving a split of authority, the district court
    overlooked our precedent. As we stated in Fritsch, “[w]e
    have long held (and reiterated [in early 2018]) that attorneys’
    fees awarded under fee-shifting statutes or contracts are
    included in the amount in 
    controversy.” 899 F.3d at 794
    . In
    Fritsch, we reaffirmed that “a court must include future
    attorneys’ fees recoverable by statute or contract when
    assessing whether the amount-in-controversy requirement is
    met.” 
    Id. “The defendant
    retains the burden, however, of
    proving the amount of future attorneys’ fees by a
    preponderance of the evidence.” 
    Id. at 788.
    Here, by her complaint, Arias seeks recovery of
    attorneys’ fees, and there is no dispute that at least some of
    16          ARIAS V. RESIDENCE INN BY MARRIOTT
    the California wage and hour laws that form the basis of the
    complaint entitle a prevailing plaintiff to an award of
    attorneys’ fees. See 
    id. (citing Cal.
    Labor Code §§ 218.5,
    226, 1194). The district court thus erred in excluding
    prospective attorneys’ fees from the amount in controversy.
    Marriott argues that attorneys’ fees should be estimated
    at 25 percent of the potential damages. Although such an
    estimate might be reasonable, we have declined to adopt a
    per se rule that “the amount of attorneys’ fees in controversy
    in class actions is 25 percent of all other alleged recovery.”
    
    Fritsch, 899 F.3d at 796
    ; cf. 
    id. n.6 (“We
    do not hold that a
    percentage-based method is never relevant when estimating
    the amount of attorneys’ fees included in the amount in
    controversy, only that a per se rule is inappropriate.”). As
    we did in Fritsch, “we leave the calculation of the amount of
    the attorneys’ fees at stake to the district court on remand.”
    
    Id. 5 D.
    Arias argues that the position taken by Marriott in its
    summary judgment motion in state court—that Arias’s
    claims are barred by a release from a prior class action
    settlement—defeats federal court jurisdiction. Arias is
    wrong for two reasons. First, “[i]t is well settled that ‘post-
    filing developments do not defeat jurisdiction if jurisdiction
    was properly invoked as of the time of filing.’” Visendi v.
    Bank of Am., N.A., 
    733 F.3d 863
    , 868 (9th Cir. 2013)
    (quoting United Steel, Paper & Forestry, Rubber, Mfg.,
    5
    Of course, if the district court on remand were to find Marriott’s
    lowest estimate of potential damages reasonable, there would be no need
    to calculate attorneys’ fees because the damages in controversy would
    exceed the jurisdictional threshold.
    ARIAS V. RESIDENCE INN BY MARRIOTT                         17
    Energy, Allied Indus. & Serv. Workers Int’l Union v. Shell
    Oil Co., 
    602 F.3d 1087
    , 1091–92 (9th Cir. 2010)). Second,
    the strength of any defenses indicates the likelihood of the
    plaintiff prevailing; it is irrelevant to determining the amount
    that is at stake in the litigation. Arias’s argument
    “conflat[es] the amount in controversy with the amount of
    damages ultimately recoverable.” 
    LaCross, 775 F.3d at 1203
    . As we stated in Ibarra,
    Even when defendants have persuaded a
    court upon a CAFA removal that the amount
    in controversy exceeds $5 million, they are
    still free to challenge the actual amount of
    damages in subsequent proceedings and at
    trial. This is so because they are not
    stipulating to damages suffered, but only
    estimating the damages that are in
    
    controversy. 775 F.3d at 1198
    n.1.
    Arias also suggests that jurisdiction is defeated because
    she “has stipulated that this action is not valued at
    $5,000,000 for CAFA jurisdiction or otherwise.” Even if
    this vague statement in Arias’s appellate brief were binding
    on her, 6 it would be irrelevant to the CAFA analysis. The
    Supreme Court has held that when “a class-action plaintiff
    . . . stipulates, prior to certification of the class, that he, and
    the class he seeks to represent, will not seek damages that
    exceed $5 million in total,” the district court should “ignore[]
    6
    It is not clear that the value of a case is the same as the amount at
    stake in the case. More likely, the value of a case—unlike the amount in
    controversy—reflects both the amount at stake and the plaintiff’s
    likelihood of prevailing.
    18          ARIAS V. RESIDENCE INN BY MARRIOTT
    that stipulation” when assessing the amount in controversy.
    Standard Fire Ins. Co. v. Knowles, 
    568 U.S. 588
    , 590, 596
    (2013). This is so because although individual plaintiffs “are
    the masters of their complaints” and may “stipulat[e] to
    amounts at issue that fall below the federal jurisdictional
    requirement,” the same is not true for a putative class
    representative, who “cannot yet bind the absent class.” 
    Id. at 595–96.
    III.
    We vacate the district court’s judgment and remand on
    an open record for further proceedings consistent with this
    opinion.    The district court may hold such further
    proceedings as it deems appropriate to permit the parties to
    submit evidence and arguments on the amount in
    controversy. The parties shall bear their own costs on
    appeal. 7
    VACATED and REMANDED.
    7
    Arguing that this appeal is frivolous, Arias requests sanctions. We
    deny the request.
    

Document Info

Docket Number: 19-55803

Filed Date: 9/3/2019

Precedential Status: Precedential

Modified Date: 9/3/2019