Tenth Circuit Adopts Preponderance Standard for Proving Amount in Controversy
In Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242 (10th Cir. 2012), the Tenth Circuit Court of Appeals further defined the burden that a defendant must carry to prevent remand in a CAFA suit. The Tenth Circuit reviewed a Colorado district court’s decision to remand based on the district court’s reasoning that it lacked jurisdiction when the plaintiff’s complaint explicitly limited compensatory and punitive damages to “an amount no more than $4,999,999.99.”
Analyzing the issue under its pre-Federal Courts Jurisdiction and Venue Clarification Act of 2011 precedent, the Tenth Circuit joined the First, Second, Fourth, Sixth, Seventh, Eighth, and Eleventh Circuits and adopted the standard that a “defendant seeking to remove under CAFA must show that the amount in controversy exceeds $5,000,000 by a preponderance of the evidence.” Under this preponderance standard, “[s]tate pleading standards do not affect a defendant’s entitlement to present [its own estimate of the stakes], and a plaintiff’s attempt to limit damages in the complaint is not dispositive when determining the amount in controversy.” If the defendant can meet this burden, remand is only appropriate if the plaintiff establishes that recovery of more than $5,000,000 is legally impossible.
Applying this standard to the putative class action, the Tenth Circuit reversed the district court’s decision to remand because it had treated the plaintiff’s pleadings as dispositive and did not analyze Hartford’s claims regarding the amount in controversy.