Spivey v. Vertrue, Inc.
528 F.3d 982, 2008 WL 2357099, 2008 U.S. App. LEXIS 12419 (2008)
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Rule of Law:
For a defendant to remove a class action to federal court under the Class Action Fairness Act (CAFA), it need only plausibly show that the amount in controversy exceeds the $5 million jurisdictional minimum; the case will remain in federal court unless the plaintiff can demonstrate to a legal certainty that the class cannot recover that amount.
Facts:
- Quinten Spivey sued Vertrue, a marketer of discount services.
- Spivey alleged that Vertrue systematically submitted unauthorized charges to his and other customers' credit cards.
- The lawsuit sought to represent a class of all persons who had been charged without authorization through 22 of Vertrue's discount programs.
- Spivey's complaint alleged that making unauthorized charges was a standard practice for Vertrue and demanded refunds for all such charges.
- Vertrue submitted evidence that its billings for just 4 of the 22 programs in Illinois alone amounted to almost $7 million.
Procedural Posture:
- Quinten Spivey filed a class-action lawsuit against Vertrue in an Illinois state court.
- Vertrue removed the action to the U.S. District Court for the Southern District of Illinois under the Class Action Fairness Act (CAFA).
- Spivey filed a motion to remand the case to state court, arguing the amount-in-controversy requirement was not met.
- The district court granted Spivey's motion and ordered the case remanded to state court.
- Vertrue filed a petition for leave to appeal the remand order with the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
For the purpose of establishing the amount in controversy required for federal jurisdiction under the Class Action Fairness Act, must a removing defendant prove or admit liability for the jurisdictional amount, or is it sufficient to show that the plaintiff’s complaint places that amount in dispute?
Opinions:
Majority - Easterbrook, Chief Judge
No. To establish the amount in controversy, a defendant is not required to admit liability but must only show plausibly how the stakes exceed the jurisdictional minimum based on the plaintiff's claims. The court first addressed a threshold jurisdictional issue regarding the timeliness of Vertrue's appeal. The statute, 28 U.S.C. § 1453(c)(1), requires an application for appeal be made 'not less than 7 days' after the district court's order. Despite other circuits reading this apparent legislative error to mean 'not more than 7 days,' the court applied the statute's plain text, holding that Vertrue's petition on the 10th day was timely. The court reasoned that any potential for indefinite appeals is prevented by Federal Rule of Appellate Procedure 5(a)(2), which imposes a default 30-day limit. On the merits, the court held that the amount 'in controversy' refers to what the plaintiff is claiming, not what the plaintiff is certain to recover. The defendant's burden is a pleading requirement to plausibly explain how the stakes exceed $5 million, not a demand for proof or a confession of liability. Once the defendant makes this showing, the case belongs in federal court unless it is a 'legal impossibility' for the plaintiff to recover that much. Here, Vertrue met its burden by showing its billings, which Spivey's complaint put entirely into dispute, exceeded $7 million, and the district court erred by requiring Vertrue to prove what portion of those charges was unauthorized.
Analysis:
This decision reinforces a textualist approach to statutory interpretation, establishing that courts should enforce a statute's plain language even when it appears to be a legislative error. It creates a circuit split regarding the appellate deadline under CAFA. More significantly, it solidifies a defendant-friendly standard for establishing the amount in controversy under CAFA, requiring only a 'plausible' showing from the defendant while imposing a high 'legal impossibility' burden on the plaintiff to defeat removal. This interpretation facilitates the removal of large-scale class actions from state to federal court, aligning with what many see as CAFA's primary legislative purpose.
