Cook County Record

Saturday, December 14, 2019

Seventh Circuit: Defendants can use plaintiffs own estimate of class size to take class action to federal court

By Angela Underwood | Nov 24, 2017

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CHICAGO — A recent federal appellate court decision has shed some light on how courts may interpret a U.S. Supreme Court ruling on class action damages, and whether defendants can use plaintiffs own class size estimates to transfer a case from state court to federal jurisdiction.

Michael Pennington, an attorney at the firm of Bradley Arant in Birmingham, Ala., told the Cook County Record there has been some confusion about how to interpret the Supreme Court’s 2014 decision in Dart Cherokee Basin Operating Co., LLC v. Owens 2014 regarding whether a plaintiff’s own allegations still count with respect to things like class size estimates once removal to a federal court is challenged.

Dart Cherokee allows a defendant to remove based on good faith allegations that the elements of (Class Action Fairness Act) removal jurisdiction are met, but [it] generally requires the defendant to back that up with an evidentiary showing if removal is challenged,” Pennington said. “The question this opinion resolves, at least in the Seventh Circuit, is whether the plaintiff’s own allegations and estimates can be part of that evidentiary showing.”

The U.S. Seventh Circuit Court of Appeals tackled that question in a case in which plaintiff Sabrina Roppo sought to vacate a federa district judge’s decision to dismiss her class action suit against defendant Traveler’s Commercial Insurance Co.

Roppo had initially filed the case in state court, alleging the insurer failed to disclose its umbrella policies during her personal injury suit.

The insurer then sought to move the case to federal court under CAFA, arguing the law’s requirements that a class have at least 100 members and the amount of damages in question exceeds $5 million. 

Roppo, however, attempted to keep her case in state court, alleging that the insurance company had failed to “establish CAFA’s required amount in controversy… and the minimum number of class members,” according to the appellate court decision.

The district judge ruled against Roppo's request to remand the case to state court. The judge based his decision on the fact that Roppo “herself [had] describe[d] the size of the class to be ‘approximately 500 persons.'"

"... Because there was ‘no basis in the record that the plaintiff’s estimate was incorrect,’ Travelers could rely on that representation in establishing the class-number requirement,” Seventh Circuit Judge Kenneth Ripple wrote in the appellate court decision.

A week later, Traveler’s filed a motion to dismiss, which was granted with prejudice, prompting Roppo's appeal. 

The appellate judges, however, affirmed the lower court’s decision. 

“Travelers may rely on the estimate of the class number set forth in the complaint,” Ripple wrote in the appellate court opinion. “Illinois Supreme Court Rule 137(a) requires counsel to sign pleadings filed in state court, and that signature certifies ‘that[,] to the best of [counsel’s] knowledge, information, and belief formed after reasonable inquiry[,] it is well grounded in fact.’ Travelers should be able to take counsel at his word.”

Pennington said the decision shows that plaintiffs have some power when it comes establishing class size and the amount in controversy.

“A plaintiff’s own allegation in a complaint, even if portrayed as an estimate, has at least some probative value on the question of the size of the class plaintiff has alleged exists,” Pennington said.  “Given CAFA’s broad underlying policies in favor of federal jurisdiction over class actions, a defendant should not be forced to try to actually identify all members of the alleged class in order to satisfy CAFA’s removal requirement.”

Pennington said defense attorneys do not need to fear that they are inadvertently admitting the allegations against their clients are true by using the other side’s calculations to show that CAFA’s requirements are met.

“If you are [a] class-action defense counsel evaluating CAFA removal, don’t be shy about using the complaint’s own allegations as part of your showing of that the class size is above CAFA’s 100-person threshold and that the amount in controversy exceeds CAFA’s floor of $5 million,” Pennington said. “You are not admitting the allegations of the complaint by doing that, but simply demonstrating what that complaint itself places in controversy.”

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Organizations in this Story

Illinois Supreme CourtBradley Arant Boult Cummings LLPU.S. Court of Appeals for the Seventh Circuit