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Of all the recent landscape-shifting opinions the Supreme Court has issued in the class-action arena, perhaps none appear as straightforward as Standard Fire Insurance Co. v. Knowles, 133 S.Ct. 1345 (2013). Recall that in Standard Fire the Court laid down an explicit rule that a putative class-action plaintiff’s stipulation to seek damages of less than $5 million could not be used to defeat federal removal jurisdiction under the Class Action Fairness Act (“CAFA”). The rule was clear: because CAFA was enacted to ease class-action removal whenever $5 million or more was in dispute (along with minimal diversity), named plaintiffs could not get around CAFA by artificially stipulating to seek damages below the $5 million threshold.

Yet, as the Court’s term comes to close this month, it is becoming apparent that life after Standard Fire might not be as easy to apply as once thought. What the opinion left unaddressed—and what remains subject to a circuit split—is the standard of proof by which a defendant must prove more than $5 million is in dispute. Must a defendant prove with legal certainty that CAFA jurisdiction exists? Or need a defendant just establish the jurisdictional threshold by a preponderance of the evidence?

It is a question that Standard Fire did not directly decide, although the implication of the decision points toward a preponderance of the evidence standard. After all, the driving force behind the Standard Fire decision was the evident Congressional purpose in CAFA to thwart manipulative tactics at blocking federal jurisdiction through artificial means. If a defendant had to prove CAFA jurisdiction with legal certainty, then a damages stipulation would appear to remain a viable path for plaintiffs to artificially avoid federal jurisdiction in exchange for the friendlier confines of particular state venues.

Currently, some Circuits apply a preponderance of the evidence standard for defendants attempting to remove under CAFA. See Bell v. Hershey Co., 557 F.3d 953 (8th Cir. 2009); Smith v. Nationwide Property &amp; Cas. Ins. Co., 505 F.3d 401 (6th Cir. 2007). Others require a legal certainty standard. See Lowdermilk v. United States Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007); Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007). Standard Fire does not say for sure which should apply. In the absence of clarity, district courts appear to be filling in gaps.

The Northern District of California recently held, for instance, that the Ninth Circuit’s legal certainty standard still applies when a class complaint is silent as to damages as opposed to stipulating an artificially low amount of damages below the $5 million threshold. <a href="https://classactionlawsuitdefense.bakerhostetlerblogs.com/wp-content/uploads/sites/9/2013/06/Deaver.pdf">Deaver v. BBVA Compass Consulting &amp; Benefits, Inc.</a>, 2013 WL 2156280 (N.D. Cal. May 17, 2013). In slight contrast, the Central District of California noted this month that when a class complaint alleges less than $5 million in dispute, it is an open question whether the Ninth Circuit’s legal certainty standard will continue to apply after Standard Fire. But because the defendant in that case could not show by a preponderance of the evidence that more than $5 million was in dispute, the court did not have to answer the question. <a href="https://classactionlawsuitdefense.bakerhostetlerblogs.com/wp-content/uploads/sites/9/2013/06/Ornelas.pdf">Ornelas v. Children’s Place Retail Stores, Inc</a>., 2013 WL 2468388 (C.D. Cal. June 5, 2013).

As clear-cut as Standard Fire appeared to be, the post-decision battleground most likely will not fade away. Instead, in legal certainty jurisdictions, defendants may still have to fight for a preponderance of the evidence standard to remove under CAFA.

After Standard Fire Uncertainty Continues About the Legal Certainty Standard for CAFA Removal in California District Courts