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Divided Justices Clarify Rules for Removing Cases

(CN) - The Supreme Court ruled Monday that a defendant seeking to remove a class action to federal court needs only to "plausibly" assert the amount of the controversy exceeds $5 million.

The justice split 5-4 in favor of the Dart Cherokee Basin Operating Co., which wanted to move a class action from Kansas state court to federal court without showing evidence that damages in the case would exceed the jurisdictional threshold required for transferring such cases.

Brandon Owens filed the 2012 lawsuit in Wilson County, Kans., against Dart Cherokee Basin Operating Company LLC and Cherokee Basin Pipeline LLC, alleging underpayment of royalties from wells in which the defendants have a working interest in Kansas wells, dating back to Jan. 1, 2002

The defendants removed the action to U.S. District Court, arguing that since it operates approximately 700 wells in Kansas, and that there are approximately 400 royalty owners with interests in the wells at issue, the amount in controversy exceeded $8.2 million.

After mediation proved unsuccessful, U.S. District Judge Julie Robinson remanded the case to state court in May 2013.

The ruling noted that the Owens never specified monetary damages in his petition, and that the defendants offered no documentation or affidavits explaining how they arrived at the $8.7 million figure.

Since the plaintiffs did not include a claim based on statutory liability nor a claim for punitive damages, the evidence simply did not support that the amount in controversy exceeds $5 million, the judge found.

A month later, the 10th Circuit shot down a request by the defendants to appeal. The brief order noted that one of the three judges on the panel would have green-lit the appeal. The Supreme Court granted certiorari in April.

Writing for the majority, Justice Ruth Bader Ginsburg said the question before the court was a question of sufficiency. In short, whether when issuing a removal notice, a defendant merely need to allege the requisite amount plausibly, or must incorporate evidence supporting their assertions into the notice.

"The answer, we hold, is supplied by the removal statute itself. A statement 'short and plain' need not contain evidentiary submissions," Ginsburg wrote.

"In remanding the case to state court, the District Court relief, in part, on a purported 'presumption' against removal. ... We need not here decide whether such a presumption is proper in mine-run diversity cases. it suffices to point out that no antiremoval presumption attends cases invoking [the Class Action Fairness Act], which Congress enacted to facilitate adjudication of certain class actions in federal court."

Justice Antonin Scalia filed a dissenting opinion, joined by Justices Anthony Kennedy and Elena Kagan and by Justice Clarence Thomas to all but the last sentence. Thomas also filed a separate dissenting opinion.

Scalia maintained the Ginsburg's framing of the question at hand was in error - yes, he writes, the court granted certiorari to decided whether notices of removal must contain evidence supporting federal jurisdiction.

But, he said, "After briefing we discovered a little snag: This case does not present that question. Because we are reviewing the Tenth Circuit's judgment, the only question before us is whether the Tenth Circuit abused its discretion in denying Dart permission to appeal the District Court's remand order.

"Once we found out that the issue presented differed from the issue we granted certiorari to review, the responsible course would have been to confess error and to dismiss the case as improvidently granted," Scalia wrote.

The justice went on to fault the court for the "tortured" logic it applied to rationalize moving forward with the case, namely that the 10th Circuit must have agreed with the District Court's incorrect analysis.

"It is hard to imagine a more obvious non sequitur," Scalia wrote. "And the argument not only tortures logic, it also distorts reality, resting as it does on the premise that henceforth no 'responsible attorney' will fail to include evidence supporting federal jurisdiction in a notion of removal."

Scalia also assailed his colleagues for maintaining that they needed to decide the case because the chances of the issue arising again before the circuit were "slim."

"Even in the legal utopia imagined by the Court -- a world in which all lawyers are responsible and no lawyers make mistakes -- it is easy to imagine ways in which the issue could come back to the circuit court," he said.

"Instead of correcting an erroneous district court opinion at the expense of an erroneous Supreme Court opinion, I would have dismissed this case as improvidently granted," Scalia wrote. "Failing that, my vote is to affirm the Court of Appeals, since we have absolutely no basis for concluding that it abused its discretion."

Justice Thomas disagreed with Scalia only to the extent that he believed the court lacked the jurisdiction to review "even the Court of Appeals' denial of permission to appeal."

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