Background
Nissan North America, Inc. appealed a district court order that sua sponte remanded the case to the Superior Court of California. The district court reasoned that the amount in controversy requirement should be adjusted for inflation to around one hundred seventy-five thousand dollars and held that Nissan failed to show the amount exceeded seventy-five thousand dollars because it included speculative civil penalties and attorneys’ fees.
The court’s reasoning
The Ninth Circuit reviewed the remand order de novo and concluded that a defendant’s notice of removal does not need to prove subject matter jurisdiction but must include only a plausible allegation that the amount in controversy exceeds the threshold. The court held that if the amount is contested or questioned, the district court must provide a fair opportunity for the defendant to submit evidence by a preponderance of the evidence. The appellate court found that Nissan’s notice plausibly alleged the amount exceeded seventy-five thousand dollars by including actual damages, civil penalties up to two times that amount, and attorneys’ fees. The court emphasized that the amount in controversy encompasses all relief a court may grant, including damages and attorneys’ fees awarded under fee shifting statutes. The district court erred by excluding these fees and penalties as speculative without allowing Nissan to submit proof.
What it means going forward
The decision reinforces that district courts cannot dismiss removal based on speculative calculations of the amount in controversy without first allowing the defendant an opportunity to present evidence supporting the jurisdictional threshold.