UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1063
NICHOLAS BARTNIKOWSKI, Individually and on behalf of all
persons similarly situated; AIMEE MOORE, Individually and on
behalf of all persons similarly situated; AMBER WILCOX,
Individually and on behalf of all persons similarly
situated,
Plaintiffs – Appellees,
v.
NVR, INCORPORATED,
Defendant – Appellant.
Appeal from the United States District Court for the Middle
District of North Carolina, at Durham. James A. Beaty, Jr.,
Chief District Judge. (1:07-cv-00768-JAB-PTS)
Argued: October 31, 2008 Decided: January 16, 2009
Before WILKINSON and GREGORY, Circuit Judges, and Martin K.
REIDINGER, United States District Judge for the Western District
of North Carolina, sitting by designation.
Affirmed by unpublished opinion. Judge Gregory wrote the
opinion, in which Judge Reidinger joined. Judge Wilkinson wrote
a dissenting opinion.
ARGUED: Barry J. Miller, SEYFARTH & SHAW, L.L.P., Boston,
Massachusetts, for Appellant. Annette M. Gifford, DOLIN, THOMAS
& SOLOMON, L.L.P., Rochester, New York, for Appellees. ON
BRIEF: Lorie E. Almon, Devjani Mishra, SEYFARTH & SHAW, L.L.P.,
New York, New York; Richard L. Alfred, SEYFARTH & SHAW, L.L.P.,
Boston, Massachusetts; Keith M. Weddington, Joshua W. Dixon,
PARKER POE ADAMS & BERNSTEIN, L.L.P., Charlotte, North Carolina,
for Appellant. J. Nelson Thomas, Cristina A. Bahr, DOLIN,
THOMAS & SOLOMON, L.L.P., Rochester, New York; Caitlyn Fulghum,
THE FULGHUM LAW FIRM, P.L.L.C., Durham, North Carolina, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
GREGORY, Circuit Judge:
In this case, we are asked to determine whether NVR, Inc.
(“NVR”) -- the defendant below -- has satisfied the amount-in-
controversy requirement for federal removal jurisdiction under
the Class Action Fairness Act (“CAFA”), 28 U.S.C.A. § 1332(d)(2)
(West 2008). The district court, finding that NVR’s estimates
of the amount in controversy were too speculative to support
removal jurisdiction, granted Appellees’ motion for remand.
Because we agree with the district court that NVR’s estimates
rely on a wholly unsupported assumption that members of the
plaintiff class will claim to have worked an average of five
hours of overtime per week, we affirm the decision to remand to
state court.
I.
This litigation began in federal court in the Western
District of New York, in the case of Patrick Tracy v. NVR, Inc.
(Case No. 04-CV-06541 DGL). NVR is in the business of
constructing and selling new homes. Tracy, who worked as a
Sales Marketing Representative (“SMR”) 1 for NVR, filed a federal
1
SMRs handle lot sales in NVR’s newly developed
communities. SMRs work from a model home in the community,
where they meet with buyers and help them select a design and
finish for their new home. NVR then constructs the home for the
buyer.
3
Fair Labor and Standards Act (“FLSA”) claim against the company,
on behalf of a nationwide class of SMRs, for its failure to
provide SMRs with overtime compensation. At NVR’s request, the
Tracy district court dismissed the various state law claims
brought by class members, declining to exercise its supplemental
jurisdiction over them. To preserve these claims, various Tracy
class members then initiated state law actions in their
respective state courts. 2
On September 21, 2007, Plaintiffs-Appellees Nicholas
Bartnikowski, Aimee Moore, and Amber Wilcox (“Plaintiffs”) filed
an amended complaint against NVR in the Superior Court of Durham
County, North Carolina. Plaintiffs, present and former North
Carolina-based SMRs, claimed that NVR had wrongfully denied them
overtime compensation for the hours they worked in excess of
forty hours per week. In their complaint, Plaintiffs,
individually and on behalf of a class of all current and former
2
In addition to the instant action, state law actions have
also been initiated in Ohio (Geers, et al. v. NVR, Inc., Court
of Common Pleas, Hamilton County, Docket No. 07-6350 (filed on
July 18, 2007)), New Jersey (Gebhardt, et al. v. NVR, Inc.,
United States District Court for the District of New Jersey,
Docket No. 3:07-04456 (filed in Superior Court, Monmouth County
on July 18, 2007, then removed on Oct. 11, 2007)), Maryland
(Hart, et al. v. NVR, Inc., United States District Court for the
District of Maryland, Docket No. 8:07-02744 (filed in the
Circuit Court for Montgomery County on July 18, 2007, then
removed on Oct. 11, 2007)), and Pennsylvania (Graves, et al. v.
NVR, Inc., Court of Common Pleas, Allegheny County,
Pennsylvania, Docket No. 07-015569 (filed on July 18, 2007)).
4
SMRs at NVR’s North Carolina locations who had not been paid
overtime, claimed that NVR’s actions constituted a willful
violation of North Carolina’s wage and hour laws, including N.C.
Gen. Stat. § 95-25.6 (2007), as well as a breach of contract.
Plaintiffs did not specify damages in their complaint; they
simply stated that they “frequently worked over 40 hours in a
week” (J.A. 12) and asked for the following relief:
(a) that all matters so triable be tried by a jury;
(b) an order preliminarily and permanently restraining
defendant from engaging [in] the aforementioned pay
violations;
(c) an award of the value of plaintiffs’ unpaid wages,
including fringe benefits;
(d) all relief available under North Carolina law;
(e) [a]n award of reasonable attorneys fees, expenses,
expert fees and costs incurred in vindicating
plaintiffs’ rights;
(f) [a]n award of pre- and post-judgment interest; and
(g) [s]uch other and further legal or equitable relief
as this Court deems to be just and appropriate.
(J.A. 13.)
On October 16, 2007, NVR removed the case to federal
district court in the Middle District of North Carolina,
pursuant to 28 U.S.C. § 1441(a) (2000), asserting that CAFA,
codified in relevant part at
28 U.S.C.A. § 1332(d)(2) (West
2008), gave the district court original jurisdiction over the
action. In its notice of removal, NVR alleged that the amount
5
in controversy in the case exceeded $5,000,000, thus satisfying
CAFA’s jurisdictional requirements. Plaintiffs then filed a
motion to remand to state court, questioning NVR’s ability to
prove the amount in controversy since the Plaintiffs’ complaint
had left the amount of damages unspecified.
In its response to Plaintiffs’ motion, NVR attached a
declaration from Dennis Littell, NVR’s payroll director.
Littell stated in the declaration that the average annual
compensation paid to SMRs in North Carolina during the two-year
time period relevant to the statutory claims 3 was $145,892, and
that North Carolina SMRs worked a total of 1174 “person-months”
in those two years. Littell did not define the term “person-
months,” nor did NVR in its memorandum of law opposing the
Plaintiffs’ motion to remand.
NVR used Littell’s estimates to define an amount-in-
controversy in excess of $5,000,000. Based on an average annual
3
NVR has defined this “relevant time period” as being
August 2005 to July 2007 because the statute of limitations for
North Carolina’s unpaid wages statute is two years, see N.C. Gen
Stat. § 95-25.22(f) (2007), and Plaintiffs have not disputed
this definition. While NVR has also separately suggested that
Plaintiffs may seek to recover for a longer period of unpaid
overtime (because their complaint suggests that their claims
have been tolled since being dismissed by the district court for
the Western District of New York), we consider this assertion
speculative and decline to consider a recovery period beyond two
years in assessing the amount in controversy since NVR has
offered no evidence of overtime rates or hours worked during the
suggested extended statutory period.
6
compensation of $145,892, NVR calculated that SMRs in North
Carolina had an average hourly wage of $70.14, which would make
their average hourly overtime wage $105.21 (or one and a half
times their average hourly wage). NVR then assumed that
putative class members will claim to have worked an average of 5
overtime hours per week, creating damages of $2,279.37 per
person-month. 4 With SMRs working a total of 1174 person-months,
NVR estimated damages for the statutory period at about
$2,676,000. Assuming then that Plaintiffs will seek statutory
double damages under the North Carolina unpaid wages statute,
NVR estimated total recovery on the statutory claim at
$5,352,000. Using similar calculations, NVR estimated damages
under Plaintiffs’ breach of contract claim at an additional
$963,855. Claiming that attorneys’ fees were recoverable on top
of these calculations, NVR argued that it easily cleared the
$5,000,000 jurisdictional hurdle.
The district court, unconvinced by NVR’s estimates, granted
Plaintiffs’ motion to remand on June 19, 2008. The court found
that NVR’s calculations were too speculative and that the record
was too bare to allow for a reasonable estimate of the amount in
4
$105.21 per hour x 5 hours per week = $526.05 per personweek. $526.05 x 4.333 weeks per month = $2,279.37 per person-month.
7
controversy. As such, the court noted, “the propriety of
federal jurisdiction remains doubtful.” (J.A. 158.)
NVR filed a petition for leave to appeal pursuant to 28
U.S.C.A. § 1453(c) (West 2008) and Federal Rule of Appellate
Procedure 5 on June 30, 2008. We grant that petition as timely
filed 5 and review de novo the district court’s order granting
Plaintiffs’ motion to remand this action to state court. See
Lontz v. Tharp,
413 F.3d 435, 439 (4th Cir. 2005).
5
Section 1453(c)(1) of Title 28 of the United States Code
allows an appellate court to accept an appeal from a district
court’s order granting or denying a motion to remand a class
action to state court so long as a petition for appeal is filed
“not less than 7 days after entry of the order.” 28 U.S.C.A.
§ 1453(c)(1) (West 2008). Most circuit courts that have
interpreted this statutory provision have concluded that the
phrase “not less than 7 days” was a typographical error and that
the provision should be read as “not more than 7 days.” See
Estate of Pew v. Cardarelli,
527 F.3d 25, 27-28 (2d Cir. 2008);
Morgan v. Gay,
466 F.3d 276, 277 (3d Cir. 2006); Miedema v.
Maytag Corp.,
450 F.3d 1322, 1326 (11th Cir. 2006); Amalgamated
Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs.,
Inc.,
435 F.3d 1140, 1145-46 (9th Cir. 2006); Pritchett v.
Office Depot, Inc.,
420 F.3d 1090, 1093 n.2 (10th Cir. 2005).
At least one circuit, however, has declined to follow this
approach. See Spivey v. Vertrue, Inc.,
528 F.3d 982, 983-85
(7th Cir. 2008) (choosing not to read § 1453(c)(1) as requiring
petitions for appeal to be filed “not more than” seven days
after entry of a remand order but agreeing that petitions filed
within seven days should also be accepted rather than
dismissed).
Because NVR filed its petition for appeal exactly seven
days after entry of the district court’s order, excluding
weekends, see Morgan, 466 F.3d at 277 n.1, we do not have to
decide this question of statutory construction. Under either
reading of the statute, NVR’s petition was timely filed.
8
II.
NVR claims that removal under 28 U.S.C. § 1441(a) (2000) is
proper because, under CAFA’s amendments to
28 U.S.C. § 1332
(2000), the district court has original jurisdiction over this
action. CAFA amended Title 28’s requirements for diversity
jurisdiction and removal in the case of class actions. Section
1332(d)(2) of Title 28 now provides:
The district courts shall have original jurisdiction
of any civil action in which the matter in controversy
exceeds the sum or value of $5,000,000, exclusive of
interest and costs, and is a class action in
which . . . any member of a class of plaintiffs is a
citizen of a State different from any defendant . . .
.6
To determine whether the jurisdictional minimum is satisfied,
the district court looks to the aggregated value of class
members’ claims. 28 U.S.C.A. § 1332(d)(6) (West 2008).
Defendants seeking removal bear the burden of demonstrating
that jurisdiction is proper. See Strawn v. AT&T Mobility LLC,
530 F.3d 293, 296-97 (4th Cir. 2008). This is true even in the
context of removals pursuant to CAFA. In Strawn, this Court
found that, while CAFA was intended to open the doors of the
federal courts to class action litigants, its statutory language
6
Section 1332(d)(5)(B) further limits federal courts’
original jurisdiction under CAFA to those class actions where
the class size is greater than or equal to 100 members.
9
did nothing to reverse the long-settled principle that a
defendant seeking to invoke a federal court’s removal
jurisdiction bears the burden of demonstrating that jurisdiction
would be proper. Id. at 297.
The question then becomes how that burden is to be
satisfied. Generally, the amount specified in the complaint
will determine whether the jurisdictional amount is satisfied
for purposes of removal. See Wiggins v. North Am. Equitable
Life Assurance Co., 644 F.2d 1014, 1016 (4th Cir. 1981).
Determining the amount in controversy becomes more difficult,
however, where, as here, Plaintiffs have left damages
unspecified in their complaint. In this case, both parties
agree that the defendant’s burden in these circumstances is to
establish the jurisdictional amount by a preponderance of the
evidence. 7 We review the evidence as to the amount in
controversy with that standard in mind.
7
A number of our sister circuits have explicitly adopted a
preponderance of the evidence standard as the appropriate burden
to which removing defendants should be held in proving
the amount in controversy where plaintiffs leave damages
unspecified. See, e.g., Smith v. Nationwide Prop. & Cas. Ins.
Co., 505 F.3d 401, 404-05 (6th Cir. 2007); Miedema v. Maytag
Corp.,
450 F.3d 1322, 1330 (11th Cir. 2006); Abrego Abrego v.
Dow Chem. Co.,
443 F.3d 676, 683 (9th Cir. 2006) (per curiam);
Garcia v. Koch Oil Co. of Tex. Inc.,
351 F.3d 636, 638-39
(5th Cir. 2003); McCord v. Minn. Mut. Life Ins. Co. (In re Minn.
Mut. Life Ins. Co. Sales Practices Litig.),
346 F.3d 830, 834
(8th Cir. 2003). This case does not require us to decide
whether a more stringent standard would be appropriate since we
(Continued)
10
III.
In considering Plaintiffs’ motion for remand, the district
court seemed to find virtually all of NVR’s calculations too
speculative and unsupported to satisfy its burden. We do not
agree fully. A number of NVR’s assumptions and calculations are
reasonable and supported by the record.
For example, NVR assumes that the base amount of overtime
compensation allegedly due under North Carolina’s unpaid wages
statute –- $2,676,000, according to NVR’s calculations -– can be
doubled to determine the amount in controversy because the North
Carolina statute authorizes double damages. Plaintiffs’
complaint does not make any specific claim for liquidated
damages but it does ask for “all relief available under North
Carolina law.” (J.A. 13.) Section 95-25.22(a1) of the North
Carolina General Statutes authorizes an award of liquidated
damages “in an amount equal to the amount found to be due” in
unpaid wages cases, subject only to a good faith defense. Given
that the complaint alleges that NVR “willfully violated its
obligations under North Carolina Law” (J.A. 13 (emphasis
added)), it appears likely that liquidated damages will be
find that NVR has failed to meet even a preponderance of the
evidence burden. See Martin v. Franklin Capital Corp., 251 F.3d
1284, 1290 (10th Cir. 2001).
11
sought. Cf. Morgan v. Gay, 471 F.3d 469, 475 (3d Cir. 2006)
(finding punitive damages not properly includable in amount-in-
controversy calculation where defendants conclusorily alleged
that millions of dollars in punitive damages would be sought and
where plaintiffs had specifically claimed that damages would not
exceed $5 million). Statutory liquidated damages are properly
includable in the calculation of the jurisdictional amount here,
and we do not consider them too speculative in this case to be
factored into that calculation. See
28 U.S.C.A. § 1332(d)(2)
(West 2008) (excluding only “interest and costs” from
calculation of aggregate amount in controversy); see also Wall
v. Fruehauf Trailer Servs., Inc.,
123 F. App’x 572, 577 (4th
Cir. 2005).
NVR also argues that the “average annual compensation” and
average number of “person-months” worked, as provided in the
Littell declaration, are adequate measures from which the amount
in controversy can fairly be calculated. Plaintiffs themselves
have proffered no information about their expected damages, nor
have they explained why accepting the declaration of NVR’s
Payroll Director as to average annual SMR compensation would be
speculative or an improper means of estimating SMRs’ average
hourly wage and expected hourly overtime rate. We have no
difficulty accepting these figures.
12
The use of the “person-months” statistic is more
troublesome since NVR left the term undefined in its brief
before the district court. However, NVR has made clear in its
brief to this Court that a “person-month” is the monthly
equivalent of a “man-hour,” meaning a unit of one month’s work
by one person. According to the Littell declaration, SMRs in
North Carolina collectively worked a total of 1174 person months
during the statutory period of two years. 8 Multiplying this
number of months by the expected monthly amount of overtime pay
due to employees (if this number was discernible) would yield a
reasonable estimate of the amount of unpaid wages at stake under
the statutory claims in this case.
NVR’s ultimate estimate of the amount in controversy,
however, is fatally undermined by the wholly unsupported
assumption on which its calculations ultimately rest -- that
Plaintiffs and class members will each claim to have worked an
average of five hours of overtime per week. NVR concedes that
it has kept no records of the number of overtime hours worked by
8
The district court correctly points out that dividing 1174
by 24 months gives us approximately 49 as the average number of
SMRs working per month during the statutory period, which is far
short of the class-size minimum of 100 persons. See supra note
6. But, neither party contests that the 100-member class
requirement has been met. Moreover, a turnover rate of about
two SMRs per month would suffice to double the class.
13
class members, 9 and the Plaintiffs themselves have offered no
evidence on the issue either. The only evidence in the record
to which NVR can point for support is an affirmation from
Patrick Tracy, the named plaintiff in the FLSA action being
litigated in district court in New York. 10 Tracy, a New York-
based SMR, made vague references in his affirmation to working
55-hour weeks. According to NVR, this shows that its assumption
of five hours of overtime is, if anything, a conservative
estimate, since Tracy, who is supposed to be representative of a
nationwide class of SMRS including Plaintiffs, suggests that he
works fifteen hours of overtime per week. There are two
significant problems with this argument.
First, Tracy is located in New York. While it is true that
Plaintiffs are members of the Tracy class, Tracy is a completely
separate action. Tracy’s “representativeness” of the nationwide
class in the federal FLSA action does not make him, a New York-
9
According to NVR, it did not see any need to maintain such
records because it understood that the SMR position was exempt
from overtime pay.
10
It is worth noting that the Tracy affirmation was not
even a part of the record when, on December 10, 2007, NVR filed
its brief in opposition to Plaintiffs’ motion for remand, in
which it first articulated the “five hours per week” assumption.
The affirmation was only filed with the district court for the
Western District of New York on December 12, and NVR then
submitted a motion for leave to submit it as “additional”
evidentiary support on December 14.
14
based SMR, representative of a class of North Carolina-based
SMRs bringing state law claims. Second, even if Tracy could be
considered representative of the class in this case, his
affirmation does not actually state that he worked an average of
55 hours per work week. Instead, it states as follows:
Thus, visiting two lots, in one month, equates to 40
minutes a month. If working four 55-hour weeks in a
month (or 220 hours = 13,200 minutes in a month) my
lot visits outside the model took less than 1% of the
time. Even if I had worked only 40 hours a week
(equating to 160 hours per month = 9600 minutes), such
visits still took less than 1% of my time in a month.
(J.A. 96 (emphasis added).) The statement was made in the
context of explaining what percentage of time Tracy spent on lot
visits away from the model home in a given month. Tracy was not
giving an estimate of the number of overtime hours he worked per
week.
Tracy’s affirmation is the only piece of evidence NVR
offers to anchor its assumption that plaintiff class members
worked an average of five overtime hours per week, making the
assumption highly speculative. Cf. Brill v. Countrywide Home
Loans, Inc., 427 F.3d 446, 449 (7th Cir. 2005) (“Thus part of
the removing party’s burden is to show not only what the stakes
of the litigation could be, but also what they are given the
plaintiff’s actual demands.”) (emphasis in original).
On top of Plaintiffs’ statutory claims, they have also
raised a breach of contract claim for their unpaid overtime.
15
According to NVR, the statute of limitations on Plaintiffs’
contract claim is three years, giving them one additional year
for which they can recover. Using a similar calculation to that
used for the statutory claim, NVR estimates that the contract
claim puts an additional $963,855 at stake. 11 But this estimate
relies on the same unsupported “five hours of overtime per week”
assumption. 12
11
The average annual compensation for SMRs in North
Carolina from August 2004 to July 2005 was $127,742, yielding a
regularly hourly rate of $61.41 and an overtime rate of $92.11.
Assuming class members averaged five hours of overtime per week,
NVR estimates that Plaintiffs’ damages would be $1,995.56 per
month. SMRs worked 483 person-months during the relevant time
period, thus total damages available under the contract claim
would be $963,855.48.
12
NVR also suggests that attorneys’ fees are properly
includable in the calculation of the amount in controversy since
North Carolina’s unpaid wages statute authorizes their award.
See N.C. Gen. Stat. § 95-25.22(d) (2007). CAFA specifies that
the amount in controversy should be calculated “exclusive of
interests and costs.”
28 U.S.C.A. § 1332(d)(2) (West 2008).
However, since the North Carolina statute provides for the
recovery of attorneys’ fees as a substantive right, they are
properly includable in the amount in controversy estimate. See
Mo. State Life Ins. Co. v. Jones,
290 U.S. 199, 202 (1933). At
this stage of litigation, however, an estimate of attorneys’
fees is pure speculation, and thus, on this record, cannot be
used to augment the amount-in-controversy calculation.
Similarly, NVR suggests in passing that since “Plaintiffs’
complaint includes a demand for injunctive relief, the value of
that injunction is included in the calculation of the relief.”
(Appellant’s Br. at 9 n.11.) Neither party has attempted to
give us any estimate of the value of the injunctive relief
sought, and thus we will not consider it in assessing the amount
in controversy.
16
The “five hours of overtime” assumption is in fact quite
crucial to NVR’s calculations of the amount in controversy. If
the actual amount of overtime claimed was only one to three
hours per week, NVR, using its own calculation methods, could
not satisfy the jurisdictional minimum. 13 At four hours, NVR
would clear the jurisdictional hurdle only by a hair. 14 Given
the centrality of the “five hours” number to NVR’s claims, we
cannot simply take NVR’s word that this is really a
“conservative” estimate (Appellant’s Br. 12) of the overtime
hours that will be claimed by Plaintiffs.
The dissent contends that NVR has carried its burden of
proof by presenting credible evidence on the “five hours” issue,
and that therefore the burden of production should shift to
Plaintiffs to show that the jurisdictional amount has not been
13
Assuming the class averaged only one hour of overtime per
week, the amount in controversy on the statutory claims would be
$105.21 per hour x 1 hours per week x 4.333 weeks per month x
1,174 person-months x 2 = $1,070,394.34. The amount in
controversy on the contract claim would be $92.11 per hour x 1
hour per week x 4.333 weeks per month x 483 person-months =
$192,771.40. The total amount in controversy then is
$1,263,165.74. At two hours, the total becomes $2,526,331.47
($2,140,788.67 in statutory damages + $385,542.80 in contract
damages). At three hours, the total becomes $3,789,497.21
($3,211,183.01 in statutory damages + $578,314.20 in contract
damages).
14
At four hours, the total becomes $5,052,662.94
($4,281,577.34 in statutory damages + $771,085.60 in contract
damages).
17
satisfied. But NVR has put forth no evidence of its own to
support the number; rather, it has presented only a conjectural
argument. Plaintiffs have no burden in these circumstances and
are under no obligation to put forth any evidence. See
Birkenbuel v. M.C.C. Constr. Corp., 962 F. Supp. 1305, 1306
(D. Mont. 1997) (“MCC complains that ‘Birkenbuel offers no
evidence regarding the amount of his interim earnings, or indeed
any evidence that he has or ever will earn interim income.’
However, it is MCC, not Birkenbuel, which has the burden of
proof.”). Even if, as NVR contends, Plaintiffs are the “sole
custodians” of information about the amount of overtime they
worked (Appellant’s Reply Br. at 13), this does not give NVR
license to pull numbers from thin air in determining the amount
in controversy. See Morgan,
471 F.3d at 474 (“CAFA does not
change the proposition that the plaintiff is the master of her
own claim”); Brill,
427 F.3d at 449 (noting that “a removing
defendant can’t make the plaintiff’s claim for him”). Because
NVR has presented no credible evidence to support the “five
hours” assumption, NVR simply cannot satisfy its burden of
demonstrating that jurisdiction would be proper.
We note that this case is readily distinguishable from that
of Strawn, 530 F.3d 293, where this Court reversed the district
court’s grant of a motion to remand. Indeed, this case is much
18
more reminiscent of the facts of the Eleventh Circuit case
Miedema v. Maytag Corp., 450 F.3d 1322 (11th Cir. 2006).
In Strawn, the plaintiffs claimed that AT&T had illegally
used an opt-out policy for its “Roadside Assistance” program,
under which it charged its West Virginia cellular customers
$2.99 per month automatically unless they affirmatively asked to
be removed from the program after an initial free-trial period.
530 F.3d at 294. In its notice of removal, AT&T included an
affidavit stating the following to show the jurisdictional
amount had been satisfied: (1) that approximately 58,800
consumers in West Virginia were automatically enrolled in the
Roadside Assistance program after the trial period, and (2) that
under the West Virginia Consumer Credit and Protection Act, the
minimum statutory damages per person were $200.
Id. at 295.
Because plaintiffs offered no evidence to suggest that the
58,800-customer figure was inaccurate, this Court found that
AT&T had met its burden.
Id. at 299.
Likewise, we can accept NVR’s evidence on average annual
compensation and the number of person-months worked by SMRs
during the statutory period because Plaintiffs have offered no
contradictory evidence. But its “five hours of overtime per
week” estimate is not evidence; it is an assumption. It is
nothing like the affidavit produced by AT&T showing that 58,800
customers had been automatically enrolled in the roadside
19
assistance program. Nor is it even an assumption that finds
some support in the record; at this point, it seems the “five
hours of overtime per week” was nothing more than the result of
some strategic guesswork on NVR’s part, and Plaintiffs are under
no obligation to rebut this bare assertion.
NVR’s calculations are more like the ones rejected as being
too speculative in Miedema. In that case, the named plaintiff
filed a class action involving negligence, breach of express
warranty, and state statutory claims against Maytag for a defect
found in the motorized door latch of its ranges/ovens sold in
Florida. Miedema, 450 F.3d at 1324-25. Maytag then removed to
federal court.
Id. at 1325. Affirming the district court’s
grant of a motion to remand, the Eleventh Circuit found that
Maytag had failed to establish the amount in controversy
required under CAFA by a preponderance of the evidence.
Id. at
1331. Maytag’s notice of removal had included an affidavit of
one of its information analysts that stated that a total of
6,279 ranges/ovens had been sold in Florida, with a total value
of $5,931,971.
Id. at 1325. However the 6,279 figure was not
based on actual sales data, but was merely a guess extrapolated
from the fact that Maytag had received a total of 2,493 product
registrations from Florida consumers.
Id. at 1332. The court
found that “great uncertainty” remained about the amount in
20
controversy and that such uncertainty needed to be resolved in
favor of remand. Id. (internal quotations omitted).
NVR’s “five hours of overtime a week” assumption is even
more speculative than Maytag’s extrapolations in Miedema. In
Miedema, Maytag at least had data on the number of product
registrations in Florida and an estimate of nationwide
registration rates to anchor its estimate of the number of units
sold. Here, by contrast, NVR’s estimate of overtime hours is
pure guesswork, and leaves significant uncertainty about the
actual amount in controversy.
While NVR suggests that CAFA mandates that we resolve any
such uncertainties in favor of federal jurisdiction, the long-
standing tradition of strictly construing removal jurisdiction
suggests otherwise. See, e.g., Strawn, 530 F.3d at 297
(rejecting the argument that CAFA’s legislative history
demonstrates that the statute intended to flip the presumption
that doubts about jurisdiction are resolved in favor of remand
to state court); Miedema,
450 F.3d at 1328-29 (same).
We reach our decision to affirm the district court not
unmindful of the difficulty that CAFA defendants face in
demonstrating that the amount in controversy is met when
plaintiffs have left their damages unspecified. Plaintiffs may
well use their pleadings in state court tactically, leaving
damages unspecified to block removal without foreclosing an
21
ultimate recovery of more than the federal jurisdictional
minimum. See Lowdermilk v. U.S. Bank Nat’l Assoc., 479 F.3d
994, 1002 (9th Cir. 2007). We are reassured, however, by the
fact that a CAFA defendant who cannot meet his burden for
removal at the early stages of litigation may still have
recourse to the federal courts later, as Congress has eliminated
the one-year time limit on CAFA removal actions. 15 See
28
U.S.C.A. § 1453(b) (West 2008); Lowdermilk,
479 F.3d at 1002-03.
NVR argues that it is contrary to the purpose of CAFA to
subject defendants to this kind of “wait and see” approach in
state court. But CAFA is quite explicit about how it relaxes
the jurisdictional requirements for bringing a class action in
federal court. To the extent that Congress sought to relax a
CAFA defendant’s burden for removal, it has done so explicitly.
See, e.g., 28 U.S.C.A. § 453(b) (West 2008). Where Congress has
not spoken directly to the issue, we must fall back on our long-
standing view that, because federal courts are courts of limited
subject matter jurisdiction, our removal jurisdiction must be
strictly construed. See Md. Stadium Auth. v. Ellerbe Becket
15
Although CAFA eliminates the one-year time limit on
removal actions, a defendant must still file a notice of removal
“within thirty days after receipt by the defendant . . . of a
copy of an amended pleading, motion, order or other paper from
which it may first be ascertained that the case is one which is
or has become removable.” 28 U.S.C. § 1446(b) (2000); see also
28 U.S.C.A. § 1453(b) (West 2008).
22
Inc., 407 F.3d 255, 260 (4th Cir. 2005) (“We are obliged to
construe removal jurisdiction strictly because of the
significant federalism concerns implicated.”) (internal citation
and quotations omitted). Where federal jurisdiction is
doubtful, a remand to state court has traditionally been
considered the proper course of action. Mulcahey v. Columbia
Organic Chems. Co., Inc.,
29 F.3d 148, 151 (4th Cir. 1994).
This is no less true in the context of CAFA than in other
removal actions. See Strawn,
530 F.3d at 297; Miedema,
450 F.3d
at 1328-29.
IV.
On the record as it stands, we find that NVR has not
satisfied its burden of showing that the amount in controversy
is sufficient to meet CAFA’s jurisdictional requirements. As
such, we affirm the order of the district court remanding this
case to state court. 16
AFFIRMED
16
Plaintiffs have also filed a motion to strike certain
documents from the joint appendix, and we deny this motion as
moot.
23
WILKINSON, Circuit Judge, dissenting:
Petitioner put forth a prima facie case establishing that
the damages at issue in this action meet the jurisdictional
threshold under the CAFA. In response, respondent offered
nothing to rebut petitioner’s claims; it merely charged that the
claims are too speculative. In accepting this argument, the
majority conflates burdens of proof with burdens of production.
Moreover, the majority’s holding – that petitioner has failed to
meet its burden of proof despite presenting a prima facie case
that respondent has not contradicted – is in some tension with
circuit precedent in Strawn v. AT&T Mobility LLC, 530 F.3d 293
(4th Cir. 2008). I therefore respectfully dissent.
I.
The party seeking removal in a CAFA case has the burden of
alleging federal jurisdiction and establishing it if challenged.
Strawn, 530 F.3d at 298. But once petitioner has set forth a
prima facie case establishing jurisdiction, the onus is on
respondent to offer something of its own. See
id. at 298-99.
Strawn held that the petitioner in that case had met its burden
by identifying the number of class members (based on the terms
of the respondent’s complaint) and by calculating the minimum
statutory damages due each member of the class, where the
respondent “offered nothing to suggest that the [figure put
24
forth by the petitioner] is not an accurate number.” Id. The
court thus held for the petitioner based on the petitioner’s
calculations and the facts presented in the complaint, even
though respondent’s counsel even went so far as to stipulate
that they would not accept an award over $5 million. See
id. at
295, 299.
The case before us is strikingly similar. NVR, the
petitioner here, met its initial burden by offering a prima
facie case based on the terms of respondents’ complaint and
petitioner’s own calculations of overtime pay. In the
complaint, the class action plaintiffs (respondents here) raised
a statutory claim for overtime pay that had a statute of
limitations period of two years. They also asserted a breach of
contract claim that reached back three years. Both claims
sought overtime pay of one-and-a-half times the regular rate of
pay; further, the statutory claim asserts that petitioner acted
willfully, which under North Carolina law would allow a court to
award double damages. See 28 U.S.C. § 1332(d)(2) (excluding
only “interest and costs” from the amount in controversy under
the CAFA);
N.C. Gen. Stat. §§ 95-25.22(a1) (providing for the
award of liquidated damages in an amount equal to the damages
due). Finally, respondents claim attorneys’ fees, which are
recoverable under North Carolina wage and hour laws. See
N.C.
Gen. Stat. § 95-25.22(d); see also
28 U.S.C. § 1332(d)(2).
25
Based on these claims, petitioner estimates that respondents
will seek damages of $5,352,000 on the statutory claim alone,
and that the total amount of damages could exceed $6 million
even without attorneys’ fees.
To support its calculations, petitioner submitted a
declaration from its payroll director, Dennis Littell. Mr.
Littell reviewed the payroll records of the relevant category of
employees, Sales and Marketing Representatives, for two time
periods: August 2004 to July 2005 (for the breach of contract
claim), and August 2005 to July 2007 (for the statutory claim).
Based on this review, Mr. Littell computed the average annual
compensation paid to the employees and the number of person-
months worked during each time period. NVR then looked at
respondents’ claims in this and other proceedings and estimated
that respondents would claim they had worked an average of five
overtime hours per week. This figure yielded petitioner’s
estimates of respondents’ total damages.
The majority does not suggest that someone other than the
payroll director would be better fit to put forth this
information. It does not suggest what information petitioner
could offer that would meet its burden under the CAFA. Although
petitioner bears the ultimate burden of proving by a
preponderance of the evidence that the jurisdictional amount is
in controversy, it need not produce reams of personnel records
26
simply to present a prima facie case. To require more would
lead to voluminous discovery requests and document production at
the preliminary stages of what is itself a preliminary
jurisdictional issue. Encouraging this sort of deluge adds more
litigiousness to already litigious class action undertakings.
Moreover, the five-hour estimate is not so speculative as
to not even require a response from respondents. The
affirmation of Patrick Tracy, the named plaintiff in a parallel
proceeding in the Western District of New York, states that “in
many weeks [Tracy] worked beyond the model home open hours on
[his] scheduled days” and that he also came to work on his days
off. (JA 99.) He not only refers to working four 55-hour weeks
in a month (JA 96), but states that he “frequently worked over
forty hours in a week” because of his extra hours during the
week and “the extra hours” on his days off. (JA 100)
Therefore, Tracy’s statements buttress the petitioner’s argument
that an estimate of five hours per week is not only a credible
estimate, but a very conservative one. And there is no reason
to believe that Tracy’s experience in New York differs from that
of SMRs in North Carolina: the named plaintiffs in the North
Carolina action are part of the class that Tracy represents, and
respondents have stated that NVR kept “very regimented policies”
and followed the same sales model “at all of its locations.”
Pl’s Mem. of Law in Support of Mot. for Class Certification,
27
Tracy v. NVR, Inc., No. 04-CV-06541 (W.D.N.Y. filed on Jan. 11,
2008).
Finally, the majority acknowledges that respondents would
reach the jurisdictional amount if they claimed just four hours
per week of overtime. Maj. Op. at 17. Four hours overtime per
week is precious little to seek in a class action suit brought
to recover overtime pay. And petitioners can reach this
jurisdictional threshold without counting attorneys’ fees and
the value of injunctive relief, which the majority notes
constitute part of the amount in controversy. See Maj. Op. at
16, n.12.
These calculations, along with the Littell Declaration,
make up petitioner’s prima facie case and put a burden on the
respondents to offer something in response. See Strawn, 530
F.3d at 299. If the five-hour estimate was indeed too
speculative or inaccurate, it would make the response even
easier to tender. The respondents, who are in possession of all
information regarding their pay claims, could shoot down an
inaccurate estimate without breaking a sweat. But then
respondents have never claimed that they are requesting less
than $5 million in damages. In fact, respondents have been
litigating class action overtime pay cases against petitioner
since 2004, but have passed on every opportunity to submit an
affidavit or even make a declaration as to the likely amount of
28
damages they will claim. See, e.g., Tracy v. NVR, Inc., No.
6:04-06541 (W.D.N.Y. filed on Oct. 29, 2004). To be sure,
respondents may be under no obligation to do so, but the court
is likewise under no obligation to relieve them of the
consequences of inaction.
Requiring some sort of minimal response in no way shifts
the ultimate burden of proof to respondents, but recognizes that
respondents have some modest role to play in making the
adversary process function. In ruling otherwise, the majority
confuses the burden of proof with the burden of production when
it states that respondents “are under no obligation to put forth
any evidence.” Maj. Op. at 18. Our cases in the Title VII
context are instructive. As we noted when discussing the
McDonnell Douglas framework in Burns v. AAF-McQuay, Inc., 96
F.3d 728, 731 (4th Cir. 1996), the burden of proof throughout a
Title VII proceeding remains with the plaintiff. But once the
plaintiff puts forth a prima facie case of discrimination, the
burden of production shifts to the defendant to show a
nondiscriminatory motive for its actions. Burns,
96 F.3d at
731-32.
Similarly, in the CAFA context, the burden of proof remains
with the party seeking to invoke federal jurisdiction –
typically, the class action defendant (petitioner here). See
Strawn, 530 F.3d at 297-98. But once petitioner has put forth
29
credible evidence on the jurisdictional question, the burden of
production shifts to the respondent to offer something in
response. E.g., Strawn, 530 F.3d at 298-99. Thus, the burden
of production may switch without diminishing or reallocating in
any way the burden of proof. The majority seems to recognize
this burden-shifting when it notes that it “accept[s] NVR’s
evidence on average annual compensation and the number of
person-months worked . . . because [respondents] have offered no
contradictory evidence.” Maj. Op. at 19.
Finally, not requiring any response from respondents lets
them have their cake and eat it too – avoiding federal
jurisdiction without being bound by any declaration of damages
that might haunt them in state court. See, e.g., Morgan v. Gay,
471 F.3d 469, 477 (3d Cir. 2006) (“[P]laintiffs in state court
should not be permitted to ostensibly limit their damages to
avoid federal court only to receive an award in excess of the
federal amount in controversy requirement.”). Further, not
requiring even so much as a response invites a game of judicial
ping-pong. At this point, the case will proceed with discovery
in state court, but petitioner will surely renew its notice of
removal if respondents later claim, as no doubt they will, over
$5 million in damages. See
28 U.S.C. § 1446(b) (stating that
the defendant may remove a case from state court by filing a
notice of removal within 30 days of receiving an amended
30
pleading or other document indicating that federal jurisdiction
is proper); see also 28 U.S.C. § 1453(b) (noting that the one-
year limitation on removals under § 1446 does not apply to class
actions). The parties will then be litigating this case once
again in federal court.
I recognize that CAFA cases may turn on questions of state
law and there is a policy argument, with which I have some
sympathy, for having these cases resolved at the state level.
But we are not at liberty to assign cases to forums where we,
not Congress, think they belong. Congress has enacted CAFA and
no one is claiming that CAFA is beyond the congressional power
to establish the jurisdiction of the federal courts. Here,
petitioner offered a prima facie case for federal jurisdiction
and respondents offered absolutely nothing in response. Strawn
does not permit this very situation, and it gives rise to gaming
the system. I would reverse the judgment and let the case
proceed in district court.
31
