On January 7, the United States Court of Appeals for the Ninth Circuit reversed and remanded the district court’s decision to grant a plaintiff’s motion to remand and kept a putative employment class action against trucking company Knight Transportation Inc. in federal court. In so doing, the Ninth Circuit held that defendants trying to establish an amount-in-controversy under the Class Action Fairness Act must only use “reasonable assumptions” to establish the requisite jurisdictional amount-in-controversy.
A putative class of truck drivers challenged their classification as “independent contractors,” thereby denying them certain reimbursements that would otherwise have been provided to “employees.” The defendant estimated the size of the class and then provided estimates for the dollar amounts of the reimbursements sought (e.g., fuel costs). While the district court ruled that Knight wrongly assumed all drivers worked 50 weeks a year to peg the amount in controversy at $44 million, the panel held the calculations were reasonable. In particular, notwithstanding the fact that the defendant’s math was based on extrapolated fuel costs and staffing levels, the defendant still showed it met the $5 million threshold required under CAFA to stay out of state court. “While the number of drivers varied during the class period, even using the lowest number of drivers in 2010 for all 16 quarters during the class period, the fuel costs would still exceed $5 million,” Circuit Judge Ronald M. Gould wrote for a unanimous panel. The decision applied the Ninth Circuit’s latest CAFA precedent, decided the same day in Ibarra v. Manheim Investments Inc., that when a defendant relies on assumptions to satisfy the statute’s amount in controversy burden, those assumptions must only be reasonable. The panel ruled that under the Ibarra framework, Knight relied on a “reasonable chain of logic.”
Troutman Sanders LLP has extensive experience in removing cases under CAFA jurisdiction and then defending against requests to remand. Troutman Sanders LLP will continue to monitor this and other similar developments.