PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-2300
MICHAEL A. SCOTT, on behalf of himself and all others similarly situated,
Plaintiff – Appellee,
v.
CRICKET COMMUNICATIONS, LLC, f/k/a Cricket Communications, Inc.,
Defendant – Appellant.
------------------------------
CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,
Amicus Supporting Appellant.
Appeal from the United States District Court for the District of Maryland, at Baltimore.
George L. Russell, III, District Judge. (1:15-cv-03330-GLR; 1:15-cv-03759-GLR)
Argued: May 11, 2017 Decided: July 28, 2017
Before GREGORY, Chief Judge, and DUNCAN and DIAZ, Circuit Judges.
Vacated and remanded by published opinion. Judge Duncan wrote the opinion, in which
Chief Judge Gregory and Judge Diaz joined.
ARGUED: Charles Alan Rothfeld, MAYER BROWN LLP, Washington, D.C., for
Appellant. Benjamin Howard Carney, GORDON, WOLF & CARNEY, CHTD, Towson,
Maryland, for Appellee. ON BRIEF: Archis A. Parasharami, Matthew A. Waring,
MAYER BROWN LLP, Washington, D.C., for Appellant. Martin E. Wolf, GORDON,
WOLF & CARNEY, CHTD, Towson, Maryland, for Appellee. Kate Comerford Todd,
Warren Postman, UNITED STATES CHAMBER LITIGATION CENTER, INC.,
Washington, D.C.; Ryan L. Bangert, BAKER BOTTS L.L.P., Dallas, Texas, for Amicus
Curiae.
2
DUNCAN, Circuit Judge:
This appeal concerns the degree of evidentiary specificity with which a removing
defendant must prove jurisdiction to defeat a motion to remand under the Class Action
Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). Defendant-Appellant Cricket
Communications, LLC (“Cricket”) removed this class action from state court, invoking
CAFA jurisdiction. The district court granted Plaintiff-Appellee Michael Scott’s motion
to remand. Because the district court’s decision was based on a legal error, we remand
for further proceedings consistent with this opinion.
I.
A.
1.
Sometime between July 2013 and March 2014, Scott purchased two Samsung
Galaxy S4 cellular phones from Cricket for “hundreds of dollars each.” J.A. 28. The
phones are only operable on a network using Code Division Multiple Access (“CDMA”)
technology. Known to Cricket, but not to Scott, at the time Scott purchased his phone
Cricket had begun to shut down its CDMA network. When Cricket completed that
process in 2015, Scott alleges that his phones--which were “locked” to Cricket’s CDMA
network--were rendered “useless and worthless.” J.A. 25.
On September 24, 2015, Scott filed a putative class action in the Circuit Court for
Baltimore City, Maryland. Scott, the sole named plaintiff, alleged Cricket’s actions
violated Maryland’s express warranties and implied warranties of merchantability and
3
fitness for a particular purpose, which in turn was a violation of the Magnuson-Moss
Warranty Act (“MMWA”), 15 U.S.C. § 2301 et seq. Under the MMWA, a consumer
may bring a class action in state or federal court alleging a breach of warranty under state
law if there are more than 100 named plaintiffs. Id. § 2310(d). Seeking to bring a class
action on behalf of himself and similarly situated individuals, Scott defined the class as:
“All Maryland citizens who, between July 12, 2013 and March 13, 2014, purchased a
CDMA mobile telephone from Cricket which was locked for use only on Cricket’s
CDMA network.” J.A. 34.
On October 30, 2015, Cricket removed the case to the United States District Court
for the District of Maryland. Cricket invoked CAFA, which grants district courts
jurisdiction over putative class actions with (1) more than 100 class members, (2) an
aggregate amount in controversy exceeding $5,000,000, and (3) minimal diversity
between the parties. 1 28 U.S.C. §§ 1332(d)(2), (5). In support of its notice of removal,
Cricket attached the declaration of former Cricket employee Chad Walker. Based on his
personal familiarity with Cricket’s records, Walker attested that during the relevant
period “Cricket customers purchased at least 50,000 CDMA handsets that were shipped
to and activated in Maryland.” J.A. 63. Cricket thus asserted that the class consists of
more than 100 persons. Because Scott stated in his complaint that each phone cost
“hundreds of dollars,” J.A. 28, Cricket applied a conservative estimate of $200 per phone
1
There is no dispute that the parties are minimally diverse. Cricket is a Delaware
corporation with its principal place of business in Georgia and Scott is a Maryland
citizen.
4
and asserted that “the total amount in controversy is, at a minimum, $10,000,000.”
J.A. 58.
2.
On November 23, 2015, Scott moved to remand the case to state court. He argued
that Cricket did not satisfy its burden to allege jurisdiction under CAFA because the class
Cricket described in its notice of removal is broader than Scott’s defined class.
According to Scott, Cricket’s assertion that it sold 50,000 handsets that were shipped to
and activated in Maryland fails to meet CAFA’s requirements because the class only
consists of Maryland citizens who purchased a CDMA phone.
Cricket opposed remand, attaching another declaration from Cricket employee
Rick Cochran (“Cochran Declaration”). The Cochran Declaration stated that “Cricket’s
records indicate that between July 12, 2013 and March 13, 2014, Cricket customers who
listed addresses located in Maryland on their Cricket accounts . . . purchased at least
47,760 CDMA handsets that were ‘locked’ to Cricket’s CDMA network.” J.A. 77.
Again, using the conservative estimate of $200 per phone, Cricket alleged that the revised
amount in controversy was $9,552,000, still well above the CAFA threshold. Cricket
argued that it need not, and could not, provide the exact number of handsets Maryland
citizens purchased. However, Cricket reasoned that the district court could infer that
putative class members purchased enough phones to invoke CAFA jurisdiction because
to meet CAFA’s required $5,000,000 amount in controversy class members need to only
have purchased 25,000 of the 47,760 phones. Cricket thus urged the district court to
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make the “‘reasonable inference[]’ that the vast majority of Cricket’s Maryland
customers are Maryland citizens.” ECF No. 18, at 12 (alteration in original).
The district court declined to do so and granted Scott’s motion to remand. In
explaining its decision, the district court found that, although Cricket sufficiently alleged
federal jurisdiction under CAFA, it had not proven jurisdiction by a preponderance of the
evidence. The district court held that Cricket’s proffered evidence--the Cochran
Declaration asserting that Cricket sold 47,760 locked phones during the relevant time
period to customers who listed a Maryland address--was “over-inclusive” because “the
Class includes only Maryland citizens, but Cricket’s evidence pertains to all consumers
who provided Maryland addresses.” J.A. 92. Relying on this court’s precedent that
“[r]esidency is not tantamount to citizenship,” J.A. 92, the district court rejected Cricket’s
proffered evidence as not sufficiently “tailor[ed] . . . to Scott’s narrowly defined Class.”
J.A. 95. According to the district court, the Cochran Declaration required the court to
“speculate to determine the number of class members that purchased CDMA cellphones
and the amount in controversy.” J.A. 93. Although the district court concluded that
Cricket failed to prove federal jurisdiction it did not make any finding of fact as to the
amount in controversy. Cricket timely appealed. 2
2
Generally, “[a]n order remanding a case to the State court from which it was
removed is not reviewable on appeal or otherwise.” 28 U.S.C. § 1447(d). CAFA,
however, creates an exception and permits a court of appeals to “accept” an appeal from a
remand order of a class action. Id. § 1453(c)(1). “If the court of appeals accepts” such
an appeal, it must render judgment within 60 days. Id. § 1453(c)(2).
Scott argues that we must deny Cricket’s appeal because 60 days have elapsed
since Cricket filed its petition for permission to appeal. However, the 60-day clock does
(Continued)
6
II.
A.
On appeal, Cricket maintains that the Cochran Declaration shows it is more likely
than not that the putative class includes more than 100 members and the amount in
controversy exceeds $5,000,000. Scott counters that Cricket failed to tailor its evidence
to the defined class of Maryland citizens. 3 Whether remand is appropriate turns on
whether the district court had subject matter jurisdiction under CAFA, a question we
review de novo. AU Optronics Corp. v. South Carolina, 699 F.3d 385, 390 (4th Cir.
2012). “We review the district court’s factual findings with respect to jurisdiction for
clear error and the legal conclusion that flows therefrom de novo.” Velasco v. Gov’t of
Indonesia, 370 F.3d 392, 398 (4th Cir. 2004). When a district court fails to make
findings of fact “because of an erroneous view of the law, the usual rule is that there
should be a remand for further proceedings to permit the trial court to make the missing
not begin until we grant Cricket’s petition and accept the appeal. See, e.g., Hart v. FedEx
Ground Package Sys. Inc., 457 F.3d 675, 678 (7th Cir. 2006). Consistent with this
court’s practice, we deferred action on the petition pending full merits briefing. See, e.g.,
Quicken Loans Inc. v. Alig, 737 F.3d 960, 962 (4th Cir. 2013); cf. Dart Cherokee Basin
Op. Co. v. Owens, 135 S. Ct. 547, 556 n.6 (2014) (“Section 1453(c)’s timing provision
. . . was designed to promote expedition, not to discourage Courts of Appeals from acting
on petitions for appeal.”). Therefore, the appeal is timely.
3
Scott also argues that the MMWA, which prohibits district courts from
exercising authority over class actions with fewer than 100 named plaintiffs, presents an
additional bar to federal jurisdiction because Scott is the sole named plaintiff.
15 U.S.C. § 2310(d)(3)(C). Cricket counters that CAFA provides an alternative basis for
jurisdiction irrespective of the number of named plaintiffs. Because we remand on the
issue of CAFA’s jurisdictional requirements, we decline to address the interaction
between the MMWA and CAFA.
7
findings.” Pullman-Standard v. Swint, 456 U.S. 273, 291 (1982); see also Cty. Sch. Bd.
of Henrico Cty., VA v. Z.P. ex rel. R.P., 399 F.3d 298, 310–11 (4th Cir. 2005).
B.
Article III courts are courts of limited jurisdiction, possessing only the authority
granted by the Constitution and Congress. See Strawn v. AT & T Mobility LLC, 530 F.3d
293, 296 (4th Cir. 2008). In 2005, Congress enacted CAFA in response to perceived
misuse of the class-action device. Johnson v. Advance Am., 549 F.3d 932, 935 (4th Cir.
2008). As relevant here, CAFA relaxes diversity jurisdiction requirements and provides
district courts authority over class actions with (1) more than 100 class members, (2) an
amount in controversy exceeding $5,000,000 and (3) minimally diverse parties.
28 U.S.C. § 1332(d)(2), (5). A defendant invoking CAFA to remove a class action from
state court must file a notice of removal in the proper district court “containing a short
and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). The defendant
bears the burden of alleging that CAFA jurisdiction exists, Strawn, 530 F.3d at 296, and
must file the notice of removal within 30 days from receipt of the initial pleading.
28 U.S.C. § 1446(b). Because “no antiremoval presumption attends cases invoking
CAFA . . . a defendant’s notice of removal need include only a plausible allegation that
the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin
Op. Co. v. Owens, 135 S. Ct. 547, 554 (2014) (citations omitted).
If the plaintiff challenges removal, however, the defendant “bears the burden of
demonstrating that removal jurisdiction is proper.” Strawn, 530 F.3d at 297. When a
plaintiff’s complaint leaves the amount of damages unspecified, the defendant must
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provide evidence to “show . . . what the stakes of litigation . . . are given the plaintiff’s
actual demands.” Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 449 (7th Cir.
2005) (emphasis omitted). To resolve doubts regarding a defendant’s asserted amount in
controversy, “both sides submit proof and the court decides, by a preponderance of the
evidence, whether the amount-in-controversy requirement has been satisfied.”
Dart Cherokee, 135 S. Ct. at 554.
Because Scott’s complaint limited the putative class to Maryland citizens,
jurisdiction exists only if at least 100 Maryland citizens purchased more than $5,000,000
worth of locked phones from Cricket. A person is a citizen of a state only if she is a
citizen of the United States and a domiciliary of that state. Brown v. Keene, 33 U.S. (8
Pet.) 112, 115 (1834). Whether a person is a domiciliary turns on the individual’s intent.
Not all those physically present within a state are residents. See Ecker v. Atl. Refining
Co., 222 F.2d 618, 621 (4th Cir. 1955). A resident intends to live in the place for the
time being and a citizen has an intention to remain in the state indefinitely. Id.
Therefore, “[f]or purposes of diversity jurisdiction, residency is not sufficient to establish
citizenship.” Johnson, 549 F.3d at 937 n.2.
When the amount in controversy hinges on the citizenship of class members, a
removing defendant need not conclusively establish domicile, but the record must show
more than “naked averment[s]” of citizenship. Robertson v. Cease, 97 U.S. 646, 648
(1878). As courts of limited jurisdiction, we are constitutionally prohibited from
“inferr[ing] argumentatively” that a person’s residency is her domicile. Brown, 33 U.S.
at 115. When citizenship is questioned, a court must make an individualized inquiry
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relying on certain factors such as voter registration; current residence; the location of real
and personal property; location of bank and brokerage accounts; membership in clubs,
churches, or other associations; place of employment or business; driver’s license and
automobile registration; and the state to which a person pays taxes. 13 Fed. Prac. & Proc.
Juris. § 3612 (3d ed. 2009); see also Webb v. Nolan, 484 F.2d 1049, 1051 (4th Cir. 1973).
No single factor is dispositive.
With this background in mind, we turn to the district court’s decision here.
C.
1.
First, we agree with the district court that Cricket’s initial statement that it sold “at
least 50,000 CDMA mobile telephones that were shipped to and activated in Maryland,”
J.A. 17, during the relevant time period suffices to allege jurisdiction under CAFA.
While Cricket’s assertion is broader than the proposed class, that does not, as Scott
argues, make the notice of removal “incurably defective.” ECF No. 15-1, at 3. The
Supreme Court was clear in Dart Cherokee: the liberal rules of pleading apply to removal
allegations. 135 S. Ct. at 553. Cricket’s short and plain statement contains enough
“factual content that allows the court to draw the reasonable inference” that the amount in
controversy exceeds $5,000,000. 4 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation
4
Scott also argues that Cricket did not sufficiently allege or prove more than 100
class members. We focus our discussion on the amount-in-controversy, but the district
court on remand should use the same principles outlined here to assess whether Cricket
has proven that the class includes more than 100 members.
10
omitted); see also J.A. 56–58 (alleging that the number of putative class members is
greater than 100 and that the amount in controversy is $10,000,000).
2.
Once Scott challenged Cricket’s allegations through a motion to remand, Cricket
was required to prove CAFA jurisdiction exists by a preponderance of the evidence.
See Dart Cherokee, 135 S. Ct. at 554; Strawn, 530 F.3d at 297. Because the district court
committed legal error in disregarding Cricket’s evidence as overinclusive, we are unable
to engage in appellate review to determine whether Cricket met its burden to prove
jurisdiction. However, because the sufficiency of Cricket’s evidence will undoubtedly
arise again on remand, we discuss it below. See United States v. Oyegoke-Eniola, 734
F.3d 1262, 1264 (10th Cir. 2013).
“Estimating the amount in controversy is not nuclear science,” as a removing
defendant is somewhat constrained by the plaintiff. S. Fla. Wellness, Inc. v. Allstate Ins.
Co., 745 F.3d 1312, 1317 (11th Cir. 2014). After all, as “masters of their complaint”
plaintiffs are free to purposely omit information that would allow a defendant to allege
the amount in controversy with pinpoint precision. Lincoln Prop. Co. v. Roche, 546
U.S. 81, 94 (2005). In many removal cases, a defendant’s allegations rely to some extent
on reasonable estimates, inferences, and deductions. Thus, that Cricket’s evidence is
overinclusive is not, as the district court reasoned, dispositive. The key inquiry in
determining whether the amount-in-controversy requirement is met is not what the
plaintiff will actually recover but “an estimate of the amount that will be put at issue in
the course of the litigation.” See McPhail v. Deere & Co., 529 F.3d 947, 956 (10th Cir.
11
2008). 5 A removing defendant can use overinclusive evidence to establish the amount in
controversy so long as the evidence shows it is more likely than not that “a fact finder
might legally conclude that” damages will exceed the jurisdictional amount. Kopp v.
Kopp, 280 F.3d 883, 885 (8th Cir. 2002); see also Raskas v. Johnson & Johnson,
719 F.3d 884, 887 (8th Cir. 2013); Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 400
(9th Cir. 2010).
Because Scott chose to limit the class to Maryland citizens Cricket must show it is
more likely than not that enough Maryland citizens purchased locked phones to meet the
$5,000,000 threshold. Using the conservative estimate of $200 per phone based on the
complaint’s allegation that each phone cost “hundreds of dollars,” J.A. 28, Cricket must
demonstrate by a preponderance of the evidence that at least 100 Maryland citizens
purchased 25,000 locked phones. Cricket contends that it cannot acquire information
narrowly tailored to the proposed class because it is “an impossible task given that
definitive determination of domicile requires consideration of numerous” factors
including the location where someone votes, pays taxes, and works. Appellant’s Br. at 2.
However, Cricket does not need to make a “definitive determination of domicile.” Id.
Further, many factors relevant to the domicile inquiry are publicly available, including
5
To the extent Cricket argues that its evidence categorically proves jurisdiction
because Scott did not provide any rebuttal evidence, we reject that contention. Although
Dart Cherokee states that “both sides submit proof” when a plaintiff challenges removal,
135 S. Ct. at 554, we do not read that to mean that if only one party submits proof it
automatically carries the day. Rather, Dart Cherokee clarifies that a motion to remand
challenging the amount in controversy reopens the record allowing both parties to submit
evidence. When only one party submits evidence, we accept it as uncontroverted but
must still test whether the responsible party has met its burden.
12
business and professional licensures, property ownership, property taxes, and voter
registration. 6
To meet its burden, Cricket must provide enough facts to allow a court to
determine--not speculate--that it is more likely than not that the class action belongs in
federal court. Cf. Iqbal, 556 U.S. at 678. While Cricket need not tailor its evidence to
exactly match Scott’s proposed class, it must provide enough factual detail for the district
court to discharge its constitutional duty and assess whether jurisdiction exists.
In making such a determination, the district court “may consider which party has
better access to the relevant information.” Amoche v. Guar. Trust Life Ins. Co., 556 F.3d
41, 51 (1st Cir. 2009). Cricket “need not concede liability” to win jurisdiction, Lewis,
627 F.3d at 400, but as the party invoking jurisdiction Cricket ultimately bears the burden
of proof. Scott is the master of his complaint, but Cricket is the master of its notice of
removal.
6
We note that CAFA-exception cases holding that “a rebuttable presumption that
a person’s residence is his domicile” are inapplicable to the determination of whether the
amount in controversy is met here. Mason v. Lockwood, Andrews & Newman, P.C., 842
F.3d 383, 390 (6th Cir. 2016). In CAFA-exception cases, the court has necessarily
determined that jurisdiction exists and is only considering whether the exceptions impose
a limit. The Sixth Circuit in Mason explained as much. Id., 842 F.3d at 392 (noting that
because “the local controversy exception is not jurisdictional . . . a party asserting the
exception does not encounter” presumptions against federal jurisdiction); see also
Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1023 (9th Cir. 2007) (holding that CAFA
exceptions are nonjurisdictional because they “require federal courts--although they have
jurisdiction . . . to ‘decline to exercise jurisdiction’ when” CAFA’s threshold
requirements are met) (citation omitted); cf. Arbaugh v. Y&H Corp., 546 U.S. 500, 515
(2006) (holding that jurisdictional terms are those that Congress “clearly states [as]
threshold limitation[s] on a statute’s scope”) (emphasis added).
13
III.
Because we conclude that the district court applied the wrong legal standard to
Cricket’s evidence, we vacate the district court’s judgment and remand for
reconsideration consistent with the principles set forth in this opinion.
VACATED AND REMANDED
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