Madriz-Rivas v. Grace Holmes, Inc.

Background

Grace Holmes, Inc. filed a notice removing this proposed class action from state court to federal court under the Class Action Fairness Act of 2005 (CAFA). The court reviewed the notice of removal and found that it did not adequately establish one of CAFA’s basic jurisdictional requirements: the amount in controversy.

Jurisdictional requirements

Under CAFA, a defendant may remove a class action to federal court if: (1) at least one proposed class member is a citizen of a different state or foreign country than the defendant; (2) the proposed class has at least 100 members; and (3) the total amount in controversy exceeds $5 million, excluding interest and costs.

A notice of removal generally needs only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Here, however, the complaint alleged no monetary amounts suggesting the amount at stake. Grace Holmes’s notice listed categories of damages but included only the conclusory statement that the amount in controversy exceeded $5 million. The court found that allegation insufficiently plausible on its face. The court noted that other removal notices had estimated the amount in controversy using calculations based on reasonable assumptions.

Order

Because the court questioned the amount-in-controversy allegation, it gave both sides an opportunity to submit proof. The court ordered Grace Holmes to show cause in writing and provide appropriate evidence by October 24, 2024, establishing that the amount in controversy meets CAFA’s jurisdictional requirements. Luis Madriz-Rivas may respond and provide evidence by November 7, 2024. The opinion does not state a final ruling on federal jurisdiction or the merits of the underlying case.