Summary
The United States District Court for the Central District of California issued an order to show cause why the action should not be remanded for lack of subject matter jurisdiction. The court questioned whether the defendants had established by a preponderance of the evidence that the amount in controversy exceeded $75,000 for diversity jurisdiction and ordered written responses within fourteen days.
Topics
Practice areas
Questions Presented
- Whether the Notice of Removal adequately demonstrated that the amount in controversy exceeded $75,000 for purposes of diversity jurisdiction under 28 U.S.C. § 1332(a).
- Whether the parties should be required to show cause why the action should not be remanded for lack of subject matter jurisdiction.
Holdings
- When the court questions the amount-in-controversy allegations supporting federal jurisdiction, the party asserting jurisdiction must submit proof establishing by a preponderance of the evidence that the amount in controversy exceeds $75,000.
- A federal district court must examine its subject matter jurisdiction sua sponte before proceeding to the merits, and must dismiss or remand when jurisdiction is lacking.
Key quotations
“Federal courts are courts of “limited jurisdiction,” possessing “only that power authorized by the Constitution and statute[.]”” (at 1)
“A complaint filed in federal court must contain “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.”” (at 1)
“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” (at 1)
“The parties should consider this Order to be a two-pronged inquiry into the facial and factual sufficiency of Defendant’s demonstration of jurisdiction.” (at 2)
Factual background
The action was removed to federal court, with defendants asserting federal jurisdiction. The court reviewed the Notice of Removal and found that its allegations did not demonstrate by a preponderance of the evidence that the amount in controversy exceeded $75,000. The order did not resolve the merits of the underlying claims or finally determine jurisdiction; it requested further submissions before deciding whether remand was required.
Procedural history
Defendants removed the action to the United States District Court for the Central District of California. Upon reviewing the Notice of Removal, the court was unable to determine whether diversity jurisdiction existed because defendants had not demonstrated by a preponderance of the evidence that the amount in controversy exceeded $75,000. The court ordered the parties, particularly the removing defendants, to submit written responses and supporting evidence within fourteen days.
Remand instructions
The parties were ordered to show cause in writing, within fourteen days of the order, why the action should not be remanded for lack of subject matter jurisdiction. Responses could include evidence or judicially noticeable facts, were limited to ten pages, and were to address both the facial and factual sufficiency of defendants' jurisdictional showing. Defendants' failure to respond timely and adequately would result in remand without further notice.