The U.S. Supreme Court has agreed to tackle the question of whether class action defendants must provide additional evidence to support their bids to transfer cases from state to federal court.
The high court granted the petition for writ of certiorari filed by Dart Energy Corp., which argued that the Tenth Circuit had erred when it upheld a lower court’s decision that Dart hadn’t provided enough evidence to support its bid to transfer the suit to federal court and couldn’t cure the defect by submitting evidence later on. Royalty owner Brandon Owens had brought the suit in Kansas state court. The case involves a multimillion-dollar dispute over oil and gas royalty payments in Kansas.
The decision splits with at least seven other circuit courts that have concluded that the notice of removal must satisfy only a notice-pleading standard — which requires a “short and plain statement of the grounds for removal” — or that district courts are allowed or required to consider post-notice of removal evidence when determining whether removal was proper according to defendant’s petition for certiorari.
In urging the Supreme Court to reject Dart’s petition, attorneys for Owens argued that the notice-of-removal evidence requirement is long-standing case law in the Tenth Circuit and doesn’t conflict with other circuits’ holdings. Granting Dart’s petition would allow class action defendants to use CAFA to sweep virtually all class actions into federal court, they argued.
Owens launched the putative class action seeking unspecified royalty payments under certain Kansas oil and gas leases. According to its Supreme Court petition, Dart filed a notice to remove the case to federal court, saying that the putative class included approximately 400 people who owned royalty rights in approximately 700 oil and gas wells and that it believed the amount of money at stake exceeded $8 million.
Owens then moved to have the case remanded to state court, arguing that Dart’s removal notice was deficient as a matter of law because it contained no admissible evidence supporting its jurisdictional allegations.
Dart subsequently provided evidence to support its removal bid, including updated damages calculations, but Owens argued that evidence couldn’t be presented in response to a remand motion. A Kansas federal court granted Owens’ bid to send the case back to state court, concluding that the general and conclusory allegations of Dart’s removal notice didn’t sufficiently show that the amount in controversy exceeded $5 million, according to Dart’s petition.
Dart appealed the case to the Tenth Circuit, where a divided panel backed Owens in June and denied Dart’s petition for a rehearing en banc in a 4-4 decision in September.
The U.S. Chamber of Commerce filed an amicus brief in support of Dart’s petition, arguing that the Tenth Circuit ruling goes against Congress’ intent in enacting CAFA.
The case is Dart Cherokee Basin Operating Company LLC et al. v. Brandon W. Owens, case number 13-719 in the U.S. Supreme Court.