Lorah v. Suntrust Mortgage, Inc., No. 08-703, 2009 WL 413113 (E.D. Pa. Feb. 17, 2009) concerned the allocation of the burden of proof with respect to the propriety of the removal of a state court putative class action under CAFA and the interplay between CAFA and Pennsylvania’s "opt-in" class action rule. In Lorah, the plaintiffs commenced a state court "opt-in" class action under Rule 1711(b) of the Pennsylvania Rules of Civil Procedure. Pennsylvania’s "opt-in" class action rule allows putative class members to decide whether to opt into a class action as opposed to requiring putative class members to opt out, as is the case under Rule 23 of the Federal Rules of Civil Procedure and the civil procedure rules of most states.

For a putative class action to be removable under CAFA, it must involve an amount in controversy in excess of $5 million and a minimum of 100 class members. In an effort to preclude removal, the plaintiffs alleged in their complaint that CAFA’s requirements for removal could not be satisfied because it was uncertain whether at least 100 putative class members would opt in or, as a consequence, that the amount in controversy would exceed $5 million. After we removed the case under CAFA, the plaintiffs moved to remand the matter to state court.

On February 17, 2009, the court denied the plaintiffs' remand motion. First, the court reconciled the Third Circuit’s decisions in Samuel-Bassett v. KIA Motors Am. Inc., 357 F.3d 392 (3d Cir. 2004) and Morgan v. Gay, 471 F.3d 469 (3d Cir. 2006) as to which party bears the burden of proving the existence or nonexistence of federal jurisdiction. The court held that unless a class action complaint specifically and unequivocally states that less than $5 million is in controversy, the plaintiff will bear the burden of proving that removal was improper. The court explained that the plaintiffs bore the burden of proving to a legal certainty that the CAFA requirements were not satisfied because their complaint did not "specifically and precisely" state that the amount in controversy would be less than $5 million. Second, the court rejected the plaintiffs' arguments predicated upon Pennsylvania's opt-in class action rule. The court rejected the plaintiffs' argument that the requirements for CAFA removal were not satisfied because the class might number fewer than 100 people and the amount in controversy might prove to be less than $5 million. The court concluded that the plaintiffs had not established, "to a legal certainty, that the putative class cannot reach the requisite count of 100 persons or that the putative class cannot recover $5 million dollars." The plaintiffs could not do so because they had alleged that the putative class could potentially number more than 175 people and because the defendant had alleged in its Notice of Removal that the requested relief was well above $5 million.

Ballard Spahr's Consumer Financial Services Group and Litigation Department have vast experience in defending banks, other consumer financial services providers, and other types of companies in class actions filed in state and federal courts throughout the country. The Group and the Litigation Department have been involved in several cases removed to federal court that raised issues of first impression under CAFA. For further information, please contact Alan S. Kaplinsky, CFS Group Chair, 215.864.8544 or kaplinsky@ballardspahr.com; or Martin C. Bryce, Jr., 215.864.8238 or bryce@ballardspahr.com.

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