Trial Practice and Procedure - John O'shea Sullivan, Ashby L. Kent, and Amanda Wilson

• Publication year: 2011

Trial Practice and Procedure

by John O'Shea Sullivan* Ashby L. Kent** and Amanda Wilson***

The 2010 survey period yielded several noteworthy decisions relating to federal trial practice and procedure in the United States Court of Appeals for the Eleventh Circuit, several of which involved issues of first impression.¹ This Article analyzes several recent developments in the Eleventh Circuit, including significant rulings in the areas of statutory interpretation, removal, subject matter jurisdiction, and civil procedure.

I. Statutory Interpretation: Jurisdiction Under the Class Action Fairness Act of 2005

A. Whether a Defendant May Submit Evidence to Establish the Amount in Controversy When Removing a Case Under the First Paragraph of 28 U.S.C. § 1446(b)

In Pretka v. Kolter City Plaza II, Inc. ,² the Eleventh Circuit reexamined the scope of its holding in Lowery v. Alabama Power Co.³ and held

* Partner in the firm of Burr & Forman, LLP, Atlanta, Georgia. University of Georgia (A.B.J., 1991); Mercer University, Walter F. George School of Law (J.D., cum laude, 1995). Member, Mercer Law Review (1993-1995); Managing Editor (1994-1995). Member, State Bars of Georgia and North Carolina.

** Associate in the firm of Burr & Forman, LLP, Atlanta, Georgia. Vanderbilt University (B.A., magna cum laude, 2000) (Phi Beta Kappa)); Emory University School of Law (J.D., with honors, 2003). Member, State Bar of Georgia.

*** Associate in the firm of Burr & Forman, LLP, Atlanta, Georgia. Florida State University (B.S., magna cum laude, 2007); Emory University School of Law (J.D., with honors, 2010). Member, State Bar of Georgia.

1. For analysis of Eleventh Circuit trial practice and procedure for the prior survey period, see John O'Shea Sullivan & Ashby L. Kent, Trial Practice and Procedure, 2009 Eleventh Circuit Survey, 61 MERCER L. REV. 1193 (2010).

2. 608 F.3d 744 (11th Cir. 2010).

3. 483 F.3d 1184 (11th Cir. 2007).

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that, because Lowery's "receipt from the plaintiff' rule does not apply in cases removed under the first paragraph of 28 U.S.C. § 1446(b),⁴ a removing defendant may present evidence to establish the amount in controversy and "is not limited to that which it received from the plaintiff or the court."⁵ The dispute arose when the plaintiffs, a putative class of prospective condominium purchasers, filed a class action complaint in Florida state court against the developer, Kolter City Plaza II, Inc. (Kolter), after Kolter refused to let the plaintiffs out of their purchase contracts.⁶ The complaint did not specify the amount of damages sought, although it did seek the return of "all sums deposited" with Kolter by the plaintiffs.⁷ Under the Class Action Fairness Act of 2005 (CAFA),⁸ Kolter removed the case to the United States District Court for the Southern District of Florida.⁹ Kolter's notice of removal stated that the case satisfied the $5 million amount in controversy requirement under CAFA because Kolter had collected purchase deposits for the subject units totaling more than $5 million.¹⁰ In support, Kolter attached the sworn declaration (the Declaration) of its Chief Financial Officer, who testified that Kolter had collected more than $5 million in purchase deposits.¹¹

The plaintiffs moved to remand, arguing that Lowery prohibited the district court's consideration of the Declaration because "it was not a document received from the plaintiffs."¹² Kolter opposed remand and submitted an additional declaration from a Kolter officer, along with relevant portions of the plaintiffs' purchase agreements to support the amount in controversy.¹³ The district court granted the plaintiffs' motion to remand, relying on Lowery and finding that: (1) it could not consider the declarations and contracts submitted by Kolter because they were not documents received by Kolter from the plaintiffs; (2) it could not consider documents submitted by Kolter that were not submitted

4. 28 U.S.C. § 1446(b) (2006).

5. Pretka, 608 F.3d at 767-68.

6. Id. at 747. The plaintiffs asserted claims against Kolter for violations of the Florida Condominium Act and breach of contract, and sought to rescind their purchase and sale contracts and to receive refunds of their deposits. Id. at 747-48.

7. See id. at 748 n.3.

8. Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.).

9. Pretka, 608 F.3d at 749.

10. Id. Kolter's notice of removal stated that the proposed class consisted of more than 100 members, that the parties were minimally diverse, and that the aggregate amount in controversy exceeded $5 million, exclusive of interest and costs. Id.

11. Id.

12. Id. (citing Lowery, 483 F.3d at 1213).

13. See id. at 750.

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with the notice of removal; and (3) Kolter could not "impermissibl[y] speculat[e]" on the "potential damage claim of putative class members, as opposed to named plaintiffs."¹⁴

The Eleventh Circuit granted Kolter permission to appeal, acknowledging that the appeal "brings us important issues of federal removal jurisdiction and [CAFA], the decision of which requires that we take a close look back at [Lowery]."¹⁵ The court first noted that "CAFA does not change the traditional rule that the party seeking [removal] . . . bears the burden of establishing federal jurisdiction."¹⁶ The court further reasoned that when the "plaintiff has not pled a specific amount of damages, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional requirement."¹⁷ Using these fundamental principles, the court then examined the "impermissible speculation" rule, which was based on the court's statement in Lowery that "[t]he absence of factual allegations pertinent to the existence of jurisdiction is dispositive and, in such absence, the existence of jurisdiction should not be divined by looking to the stars."¹⁸ The Eleventh Circuit clarified the scope of this statement as follows:

Lowery did not say, much less purport to hold, that the use of deduction, inference, or other extrapolation of the amount in controversy is impermissible, as some district courts have thought. That was not the question in Lowery. Instead, the question was how to apply the preponderance of the evidence standard in the "fact-free context" of that particular case. The answer we gave is that without facts or specific allegations, the amount in controversy could be "divined [only]

14. Id. (quoting Pretka v. Kolter City Plaza II, Inc., No. 09-80706-CIV, 2009 WL

4547042, at *3-4 (S.D. Fla. Nov. 30, 2009)) (internal quotation marks omitted).

15. Id. at 747.

16. Id. at 752 (quoting Evans v. Walter Indus, Inc., 449 F.3d 1159, 1164 (11th Cir.

2006)) (internal quotation marks omitted).

17. Id. (quoting Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001)).

18. Id. at 753 (quoting Lowery, 483 F.3d at 1215) (internal quotation marks omitted). In Lowery, the removing defendant's notice of removal contained only a conclusory allegation that the amount in controversy requirement had been satisfied. Id. at 752. After the plaintiffs moved to remand, the defendant filed a supplement to its notice of removal pointing to recent mass tort cases in Alabama with jury verdicts exceeding what would be required, per plaintiff, to meet the $5 million requirement. Id. at 752-53. The Eleventh Circuit held in Lowery that the record only consisted of "naked pleadings," lacking specific factual details, discovery, affidavits or declarations, testimony, interrogatories, or other evidence sufficient to establish the jurisdictional amount in controversy. 483 F.3d at

1209.

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by looking at the stars"-only through speculation-and that is impermissible.¹⁹

Distinguishing Pretka from the "fact-free context" of Lowery, the court noted that "[a] different question is presented . . . when a removing defendant makes specific factual allegations establishing jurisdiction and can support them (if challenged by the plaintiff or the court) with evidence combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations."²⁰

The court then noted that "[t]he substantive jurisdictional requirements of removal do not limit the types of evidence that may be used to satisfy the preponderance of the evidence standard," and that Lowery did not hold to the contrary.²¹ Rather, the court reiterated that "[d]efen-dants may introduce their own affidavits, declarations, or other documentation[] provided of course that removal is procedurally proper."²² The court also noted that other circuits that have addressed the issue agreed "that defendants may submit a wide range of evidence in order to satisfy the jurisdictional requirements of removal."²³ In fact, the court found that "[n]o court of appeals decision we could find holds that a defendant may not submit its own evidence in order to satisfy the jurisdictional requirements ofremoval, and we conclude that the defendant can."²⁴ Applying this reasoning to the case at bar, the Eleventh Circuit held that Kolter had established the amount in controversy by a preponderance of the evidence.²⁵

The court then turned to LoweryS "receipt from the plaintiff' rule.²⁶ The district court in Pretka had found that, under Lowery, it was barred

19. Pretka, 608 F.3d at 754 (alteration in original) (citations omitted) (quoting Lowery, 483 F.3d at 1209, 1215).

20. Id. ("The point is that a removing defendant is not required to prove the amount in controversy beyond all doubt or to banish all uncertainty about it.").

21. Id. at 755. Based on the body of Eleventh Circuit precedent holding that defendants may submit evidence to satisfy the preponderance ofthe evidence standard, the court noted that "there would be a serious prior panel precedent problem" if it read Lowery as holding to the contrary. Id.

22. Id.

23. Id. (citing cases from the United States Courts of Appeals for the First, Second,

Third,...