Brandon Moe v. Geico Indemnity Company ( 2023 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BRANDON L. MOE, individually and No. 22-35161
on behalf of all individuals of the class
similarly situated, D.C. No. 2:19-
cv-00023-BMM
Plaintiff-Appellant,
v.
OPINION
GEICO INDEMNITY COMPANY;
GOVERNMENT EMPLOYEES
INSURANCE COMPANY; JOHN
DOES, II - XX,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Montana
Brian M. Morris, District Judge, Presiding
Argued and Submitted February 7, 2023
Portland, Oregon
Filed July 12, 2023
Before: Milan D. Smith, Jr., Danielle J. Forrest, and
Jennifer Sung, Circuit Judges.
Opinion by Judge Forrest
2 MOE V. GEICO INDEMNITY CO.
SUMMARY *
Class Action Fairness Act / Jurisdiction
The panel vacated the district court’s judgment in a
lawsuit that GEICO Indemnity Co. removed to federal court
under the Class Action Fairness Act (CAFA), and remanded
for the district court to conduct the necessary evidentiary
inquiry and determine whether GEICO can sufficiently
establish that more than $5 million is in dispute.
Plaintiff Brandon Moe filed individual and class claims
in Montana state court against GEICO after GEICO failed to
advance pay Moe’s medical bills and lost wages following a
car accident caused by GEICO’s insured.
The panel held that it could sua sponte question a
defendant’s allegation of CAFA jurisdiction. The panel
further concluded that the current record did not sufficiently
demonstrate that CAFA’s amount-in-controversy
requirement was met because it was not evident from the
face of the complaint and the nature of the class claims that
this controversy involved more than $5 million, nor did
GEICO’s notice of removal and supporting declaration
satisfactorily establish that more than $5 million was in
dispute.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
MOE V. GEICO INDEMNITY CO. 3
COUNSEL
Daniel P. Buckley (argued), Buckley Law Office PC,
Bozeman, Montana; Mark J. Luebeck, Angel Coil &
Bartlett, Bozeman, Montana; for Plaintiff-Appellant.
Andrew M. Jacobs (argued), Sheila Carmody, Courtney L.
Henson, and Dylan Burstein, Snell & Wilmer LLP, Phoenix,
Arizona; Kelly H. Dove, Snell & Wilmer LLP, Las Vegas,
Nevada; Ian McIntosh and William McIntosh Morris,
Crowley Fleck PLLP, Bozeman, Montana; for Defendants-
Appellees.
OPINION
FORREST, Circuit Judge:
Plaintiff Brandon Moe filed individual and class claims
in Montana state court against GEICO Indemnity Co. and
claims adjuster Government Employees Insurance Company
(collectively, GEICO) after GEICO failed to advance pay
medical bills and lost wages that Moe incurred following a
car accident caused by GEICO’s insured. GEICO removed
the lawsuit to federal court, asserting jurisdiction under the
Class Action Fairness Act (CAFA), 28 U.S.C. § 1332.1Neither Moe nor the district court questioned whether CAFA
jurisdiction was proper. Nevertheless, we have “an
independent obligation to ensure subject matter jurisdiction
exists,” Chavez v. JPMorgan Chase & Co., 888 F.3d 413,
1
The parties also asserted that the district court had jurisdiction over
Moe’s individual state law claims under 28 U.S.C. § 1367.
4 MOE V. GEICO INDEMNITY CO.
415 (9th Cir. 2018) (citation omitted), and we question
whether CAFA’s amount-in-controversy requirement is met
here. Because we are uncertain whether federal subject-
matter jurisdiction exists, we do not consider the merits of
Moe’s appeal at this point. Rather, we remand to the district
court so that it can conduct the necessary evidentiary inquiry
and determine whether GEICO can sufficiently establish that
more than $5 million is in dispute in this case.
I. Background
On March 15, 2015, Moe was injured when a GEICO-
insured driver rear-ended the car that he was riding in while
stopped at a redlight. Two days later, Moe told GEICO that
he was experiencing back pain and planned to seek medical
care. Moe was treated at Health in Motion Physical Therapy
(HIMPT), and HIMPT submitted his medical bills to GEICO
for payment. Moe’s employer also sent a wage verification
form to GEICO stating that Moe had to use some of his sick
leave for missed workdays related to his injury. HIMPT
turned Moe’s account over to collections for nonpayment,
and a dispute arose between Moe and GEICO regarding
whether GEICO was obligated to advance pay his medical
bills and lost wages. 2
2
Montana’s Unfair Trade Practices Act (UTPA) requires insurers to
promptly pay expenses before a final settlement is reached where
liability is reasonably clear and the expenses are causally related to the
accident. See Mont. Code Ann. § 33-18-201; Ridley v. Guar. Nat. Ins.
Co., 286 Mont. 325 (1997), as modified on denial of reh’g (Jan. 30,
1998); DuBray v. Farmers Ins. Exch., 307 Mont. 134, 137–38 (2001).
However, “[a]n insurer may not be held liable . . . if the insurer had a
reasonable basis in law or in fact for contesting the claim or the amount
of the claim.” Mont. Code Ann. § 33-18-242(6).
MOE V. GEICO INDEMNITY CO. 5
Several months later, GEICO issued a check for Moe’s
medical bills and lost wages. Moe asserts that GEICO’s
payment was insufficient because it did not cover the
roughly $855 in collections fees and interest incurred on his
medical bills. Moe sued GEICO in Montana state court on
behalf of himself and an asserted class of similarly situated
individuals, alleging, among other things, common law bad
faith and violations of the UTPA. Moe alleged that GEICO
“programmatically” misrepresents its policy provisions and
the law to claimants and illegally fails to promptly pay
medical bills and lost wages, among other failures. Moe
sought declaratory and injunctive relief, general and special
damages, and punitive damages.
GEICO removed Moe’s lawsuit to federal district court.
GEICO asserted subject-matter jurisdiction under CAFA, 28
U.S.C. § 1332(d)(2), because:
(1) there are potentially more than 100
members in the putative class proposed by
Plaintiff Brandon L. Moe (“Plaintiff” or
“Moe”); (2) Plaintiff is a citizen of a different
state than GEICO; and (3) based upon the
allegations in the Complaint and the facts set
forth in the attached Declaration of David
Antonacci, the claims paid and the damage
exposure, not liability, to the potential
members of the putative class proposed by
Plaintiff, exceeds the sum or value of $5
million in the aggregate, exclusive of interest
and costs.
GEICO also submitted a declaration from David Antonacci,
“a Technical Supervisor at GEICO,” who stated that he
6 MOE V. GEICO INDEMNITY CO.
“generated data and can state that the claims paid by GEICO
Indemnity Co., and the damage exposure, not liability, to the
potential members of the putative class proposed by Plaintiff
exceeds the sum or value of $5 million in the aggregate.”
Moe did not challenge GEICO’s removal, nor did the district
court question its subject-matter jurisdiction over the case.
Following removal, GEICO moved to dismiss the action,
which the district court granted in part and denied in part. 3
GEICO also moved for summary judgment. The district
court stayed briefing on class certification and class-related
discovery pending resolution of the summary judgment
motion. After a magistrate judge recommended that
GEICO’s motion be granted, Moe requested that the district
court certify five questions to the Montana Supreme Court.
The district court adopted the magistrate judge’s findings
and recommendations in full, granted summary judgment for
GEICO, and denied Moe’s motion for certification. Moe
timely appealed.
II. Discussion
Although neither Moe nor the district court questioned
whether subject-matter jurisdiction exists under CAFA, we
may raise this issue sua sponte on appeal if we question
jurisdiction. It is well established that we have an
independent obligation to ensure that both the district court
and this court have subject-matter jurisdiction. See, e.g.,
Mitchell v. Maurer, 293 U.S. 237, 244 (1934); Henderson ex
3
Before the district court issued its order on GEICO’s initial motion to
dismiss, Moe filed an amended complaint adding Government
Employees Insurance Company as a defendant, which Moe alleged was
GEICO’s adjusting company. GEICO also moved to dismiss the
amended complaint, which the court again granted in part and denied in
part.
MOE V. GEICO INDEMNITY CO. 7
rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011). In
order “to facilitate adjudication of certain class actions in
federal court,” Dart Cherokee Basin Operating Co. v.
Owens, 574 U.S. 81, 89 (2014), Congress conferred federal
jurisdiction over class actions involving at least 100
members who are minimally diverse from the defendants
where the amount in controversy exceeds $5 million. Id. at
84–85; 28 U.S.C. § 1332(d). A defendant’s notice of
removal to federal court must “contain[] a short and plain
statement of the grounds for removal.” Dart Cherokee, 574
U.S. at 87 (quoting 28 U.S.C. § 1446(a)). If a defendant
claims CAFA jurisdiction and the complaint does not specify
the damages sought, the defendant ordinarily may satisfy the
amount-in-controversy requirement by making a plausible
assertion of the amount at issue in its notice of removal. See
id.; see also Ibarra v. Manheim Invs., Inc., 775 F.3d 1193,
1197–98 (9th Cir. 2015).
“[T]he defendant’s amount-in-controversy allegation
should be accepted when not contested by the plaintiff or
questioned by the court.” Dart Cherokee, 574 U.S. at 87
(emphasis added). Although the Supreme Court did not
specify whether “questioned by the court” includes the
courts of appeal, as well as district courts, we conclude that
it does. There is no basis for limiting the ability to question
a defendant’s allegation of jurisdiction only to the district
court where the court of appeals has an independent duty to
“satisfy itself not only of its own jurisdiction, but also of that
of the lower courts in a cause under review.” Mitchell, 293
U.S. at 244; see also Henderson, 562 U.S. at 434.
Having concluded that we may sua sponte question a
defendant’s allegation of CAFA jurisdiction, we further
conclude that the current record in this case does not
sufficiently demonstrate that CAFA’s amount-in-
8 MOE V. GEICO INDEMNITY CO.
controversy requirement is met. The amount in controversy
“encompasses all relief a court may grant . . . if the plaintiff
is victorious.” Chavez, 888 F.3d at 414–15; see also Arias v.
Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019)
(“[T]he amount in controversy reflects the maximum
recovery the plaintiff could reasonably recover.”); Greene v.
Harley-Davidson, Inc., 965 F.3d 767, 772 (9th Cir. 2020)
(explaining that a defendant may satisfy “the amount-in-
controversy requirement under CAFA if it is reasonably
possible that it may be liable for the proffered punitive
damages amount”). As noted above, in removing a case to
federal court, a defendant need only make a “plausible
allegation that the amount in controversy exceeds the
jurisdictional threshold.” Dart Cherokee, 574 U.S. at 89. But
when the asserted amount in controversy is challenged or
questioned, more is required. The Supreme Court has made
clear that whether the amount is “contested by the plaintiff
or questioned by the court,” “[e]vidence establishing the
amount is required by [28 U.S.C.] § 1446(c)(2)(B).” Id. at
87, 89. Both sides must have an opportunity to “submit
proof,” and the defendant has the burden to show that the
amount-in-controversy requirement is met by a
preponderance of the evidence. See id. at 88–89; see also
§ 1446(c)(2)(B). In meeting its burden, the defendant may
rely on reasonable assumptions in calculating the amount in
dispute. Jauregui v. Roadrunner Transp. Servs., Inc., 28
F.4th 989, 993 (9th Cir. 2022); see also Harris v. KM Indus.,
Inc., 980 F.3d 694, 701 (9th Cir. 2020) (“CAFA’s
requirements are to be tested by consideration of real
evidence and the reality of what is at stake in the litigation,
using reasonable assumptions underlying the defendant’s
theory of damages exposure.” (citation omitted)).
MOE V. GEICO INDEMNITY CO. 9
Here, we question whether CAFA’s amount in
controversy is met because it is not evident from the face of
the complaint and the nature of the class claims that this
controversy involves more than $5 million, nor does
GEICO’s notice of removal and supporting declaration
satisfactorily establish that more than $5 million is in
dispute. Moe seeks to certify a class that includes tort victims
who were injured by tortfeasors with coverage under a
GEICO policy issued in Montana and who are entitled to
advance payments for expenses incurred because of the
covered accident. Moe’s claimed damages in his individual
claim are under $1,000, and there is little indication what the
average amount of damages the purported class members
may have suffered. Further, it is unclear how large the
purported class may be given that Montana’s statute of
limitations for a common law bad-faith claim is three years,
see Brewington v. Emps. Fire Ins. Co., 297 Mont. 243, 249
(1999), and the statute of limitations for a UTPA claim is
even shorter—two years from the date of violation for an
insured, and one year within the date of settlement or entry
of judgment on the underlying claim for a third-party
claimant, Mont. Code Ann. § 33-18-242(7). That is, we are
faced with a narrowly defined class of accident victims
injured by someone insured under a GEICO policy issued in
Montana where the applicable statutes of limitation are short
and the delay-based individual damages of each class
member may be relatively minimal. This discussion is not to
suggest that GEICO cannot meet its burden in establishing
that the amount in controversy exceeds $5 million. Rather,
we are simply explaining that the required amount in
controversy is not clearly evident from the nature of the case
or the parties’ assertions, which leads us to have unresolved
questions about this issue that need to be addressed.
10 MOE V. GEICO INDEMNITY CO.
We recognize that “courts should be especially reluctant
to sua sponte challenge a defendant’s allegations [of
jurisdiction]” because “no antiremoval presumption attends
cases invoking CAFA.” Ehrman v. Cox Commc’ns, Inc., 932
F.3d 1223, 1228 (9th Cir. 2019) (quoting Dart Cherokee,
574 U.S. at 89). But CAFA does impose specific
requirements that must be satisfied before federal
jurisdiction is conferred. Therefore, we must balance the
need for restraint with our obligation to ensure that subject-
matter jurisdiction exists. See Chavez, 888 F.3d at 415; see
also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021 (9th
Cir. 2007). And here, as explained, we conclude that the
existing record does not satisfactorily demonstrate federal
jurisdiction.
Where we have sua sponte questioned the amount-in-
controversy requirement in non-CAFA cases, we have
remanded for the district court to conduct the necessary
evidentiary inquiry. See, e.g., Matheson v. Progressive
Specialty Ins. Co., 319 F.3d 1089, 1090–91 (9th Cir. 2003);
Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116–18 (9th Cir.
2004). We do the same here and instruct the district court to
conduct the necessary proceedings on remand to determine
whether GEICO can show by a preponderance of the
evidence that the $5 million amount-in-controversy
requirement is satisfied. See, e.g., Matheson, 319 F.3d at
1090–91; Valdez, 372 F.3d at 1116–18. And we decline to
consider the merits of Moe’s appeal where we question both
the district court’s and our jurisdiction over this case. See
Matheson, 319 F.3d at 1091 (“We cannot consider the merits
of the appeal before assuring ourselves that the district court
had jurisdiction.”).
VACATED AND REMANDED for further
proceedings.