Robert Rodriguez v. AT&T Mobility Services LLC

Filing

FILED OPINION (RICHARD C. TALLMAN, RICHARD R. CLIFTON and CONSUELO M. CALLAHAN) VACATED; REMANDED., Judge: RRC Authoring,. FILED AND ENTERED JUDGMENT. [8757268]

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

ROBERT RODRIGUEZ, individually
and on behalf of all others similarly
situated,
Plaintiff-Appellee,

No. 13-56149
D.C. No.
2:12-cv-03694GW-FMO

v.
AT&T MOBILITY SERVICES LLC, a
Delaware limited liability company,
Defendant-Appellant.

OPINION

Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted
August 5, 2013—Pasadena, California
Filed August 27, 2013
Before: Richard C. Tallman, Richard R. Clifton,
and Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Clifton

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SUMMARY*

Jurisdiction / Class Action
The panel vacated the district court’s order remanding to
state court a putative class action, which had been removed
to federal district court by the defendant under the Class
Action Fairness Act.
The panel held that the lead plaintiff’s waiver of any
claim in excess of the $5 million amount-in-controversy
requirement of 28 U.S.C. § 1332(d)(2) was ineffective, and
the waiver no longer had legal effect. The panel held that
Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994, 999 (9th
Cir. 2007) (imposing on defendants the burden to prove the
amount-in-controversy to a “legal certainty”), was effectively
overruled by the Supreme Court’s holding in Standard Fire
Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013), and that the
proper burden of proof imposed upon a defendant to establish
the amount-in-controversy is the preponderance of the
evidence standard. Because the district court’s remand order
relied solely on the waiver, the panel remanded to the district
court for consideration and application of the preponderance
standard to the amount-in-controversy evidence.

*

This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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COUNSEL
George W. Abele (argued), Elizabeth A. Brown, and Mario
C. Ortega, Paul Hastings LLP, Los Angeles, California; and
Laurie E. Barnes, AT&T Mobility Services LLC, Los
Angeles, California, for Defendant-Appellant.
Michael S. Morrison (argued), Alexander Krakow & Glick,
LLP, Santa Monica, California; Thomas W. Falvey and J.D.
Henderson, Law Offices of Thomas W. Falvey, Pasadena,
California; Jason W. Wucetich, Dimitrios V. Korovilas,
Wucetich & Korovilas LLP, El Segundo, California, for
Plaintiff-Appellee.

OPINION
CLIFTON, Circuit Judge:
Plaintiff Robert Rodriguez filed a putative class action in
state court, which Defendant removed to federal district court.
Defendant contended that there was federal jurisdiction over
the action under the Class Action Fairness Act of 2005
(“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (2005), and in
particular 28 U.S.C. § 1332(d)(2). Rodriguez alleged that the
amount in controversy did not exceed $5 million, as required
for federal jurisdiction, and purported to waive any claim by
the class in excess of that amount. Based on that waiver, the
district court granted Rodriguez’s motion to remand the case
to state court. The Supreme Court later held that such a
waiver was ineffective, however. Standard Fire Ins. Co. v.
Knowles, 133 S. Ct. 1345 (2013). As a result, we vacate the
district court’s order and remand to the district court for
further proceedings.

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In its remand order, the district court held that to establish
federal jurisdiction over a putative class action, Defendant
must demonstrate to a “legal certainty” that the amount in
controversy exceeded the $5 million threshold amount, based
upon our decision to that effect in Lowdermilk v. U.S. Bank
National Association, 479 F.3d 994, 999 (9th Cir. 2007). Our
reasoning there for imposing on defendants the burden to
prove the amount in controversy to a legal certainty, rather
than the ordinary preponderance of the evidence standard, is
clearly irreconcilable with the Supreme Court’s reasoning in
Standard Fire. As a result, we hold that Lowdermilk has been
effectively overruled, and that the proper burden of proof
imposed upon a defendant to establish the amount in
controversy is the preponderance of the evidence standard.
I. Background
Plaintiff Robert Rodriguez brought a putative class action
against AT&T Mobility Services, LLC, on behalf of himself
and all other similarly situated retail sales managers of AT&T
wireless stores in Los Angeles and Ventura counties.
Rodriguez asserted various claims under California law
related to alleged unpaid wages, overtime compensation, and
damages for statutory violations. Rodriguez filed his original
complaint in Los Angeles County Superior Court. AT&T
removed the case to federal court under 28 U.S.C.
§ 1332(d)(2).
Rodriguez moved to remand the case to California state
court, arguing that AT&T could not establish subject-matter
jurisdiction in federal court. Specifically, Rodriguez argued
that the total amount in controversy in this putative class
action did not exceed $5 million, the minimum amount for
federal jurisdiction as required by § 1332(d). Rodriguez

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pointed to his First Amended Complaint, in which he alleged
as much, that “the aggregate amount in controversy is less
than five million dollars.” To bolster his position, in that
pleading, Rodriguez also “waive[d] seeking more than five
million dollars ($5,000,000) regarding the aggregate amount
in controversy for the class claims alleged.”
AT&T attempted to establish that the amount in
controversy did in fact exceed $5 million by submitting
several sworn declarations from AT&T representatives
regarding the potential number of class members and size of
their claims. AT&T argued that Rodriguez’s allegations,
coupled with the sworn declarations, established that the
amount in controversy could not be less than roughly $5.5
million and was likely double that amount.
The district court rejected AT&T’s argument and ordered
remand to state court. The court noted that the amount in
controversy was the only jurisdictional requirement at issue
in this case and that a defendant seeking removal of an action
to federal court bears the burden of establishing the grounds
for federal jurisdiction, propositions that the parties did not
dispute. Citing our decision in Lowdermilk, the district court
held that AT&T “must demonstrate to a legal certainty that
more than $5,000,000 is at issue in this case.” AT&T could
not do so, the court held, because Rodriguez’s “‘disclaimer’
of any recovery exceeding $5,000,000 effectively foreclosed
the jurisdictional issue.” Because the waiver was controlling,
the court reasoned that it “need not address the issues
surrounding the parties’ respective calculations of the amount
in controversy as if there were no waiver or disclaimer of any
amount exceeding $5,000,000.”

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AT&T filed a petition to appeal under 28 U.S.C.
§ 1453(c)(1), which we granted on July 1, 2013.
II. Discussion
A defendant may remove to federal district court an
action first brought in state court when the district court
would have original jurisdiction. 28 U.S.C. § 1441. Federal
district courts have original subject matter jurisdiction over
class actions in which a member of the plaintiff class is a
citizen of a state different from any defendant and the
aggregate amount of the class members’ claims exceeds $5
million. 28 U.S.C. § 1332(d)(2). The party seeking the federal
forum bears the burden of establishing that the statutory
requirements of federal jurisdiction have been met. Lewis v.
Verizon Commc’ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010).
We review de novo a district court’s remand order. Abrego
Abrego v. Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006).
As in the district court, the $5 million amount-incontroversy requirement of 28 U.S.C. § 1332(d)(2) is the
only jurisdictional requirement disputed in this appeal.
A. Plaintiff’s Waiver of Claim Amount
The remand ordered by the district court was explicitly
based upon Rodriguez’s waiver of any claim in excess of $5
million. Recently, however, and after the district court
entered its order, the Supreme Court held that such a waiver
was ineffective. In Standard Fire Insurance Company v.
Knowles, 133 S. Ct. 1345 (2013), the Court held that a lead
plaintiff of a putative class could not foreclose a defendant’s
ability to establish the $5 million amount in controversy by

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stipulating prior to class certification that the amount in
controversy is less than $5 million. Id. at 1347.
The Court reversed the district court’s remand order
because plaintiff’s stipulation was not binding on the class
and therefore could not resolve the amount-in-controversy
question. Id. at 1350. The Court explained, “a plaintiff who
files a proposed class action cannot legally bind members of
the proposed class before the class is certified.” Id. at 1349.
Thus, a plaintiff’s “precertification stipulation does not bind
anyone but himself.” Id. Requiring courts to “ignore a
nonbinding stipulation,” the Court held, “does no more than
require the federal judge to do . . . what the statute requires,
namely ‘aggregat[e]’ the ‘claims of the individual class
members.’” Id. at 1350 (quoting 28 U.S.C. § 1332(d)(6)
(alteration in original)).
In our case, Rodriguez acknowledges that the district
court’s remand order must be vacated in light of Standard
Fire. His waiver no longer has legal effect. Because the order
to remand the case to state court relied solely on that waiver,
it must be vacated and the matter remanded to district court
for further consideration.
B. Burden of Proof
That brings us to the question of the standard to be
applied on remand. The district court held that a heightened
burden of proof applied to AT&T in establishing the requisite
jurisdictional minimum. Under Lowdermilk v. U.S. Bank
National Association, 479 F.3d 994 (9th Cir. 2007), when a
class action complaint alleges damages below the
jurisdictional minimum, the removing defendant must
establish to a “legal certainty” that the amount in controversy

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in fact exceeds the jurisdictional requirement. Id. at 999.
Based on Lowdermilk, the district court’s decision in our case
was correct at the time.
AT&T contends, however, that Standard Fire fatally
undermines Lowdermilk’s legal certainty standard such that
it has been effectively overruled and should not apply on
remand. Rather, AT&T argues that it need only establish that
the amount in controversy exceeds $5 million by a
preponderance of the evidence, the standard that ordinarily
applies where a plaintiff “fails to plead a specific amount of
damages.” Id. at 998. Rodriguez disputes AT&T’s reading of
Standard Fire.
1. The Binding Nature of Prior Precedent
As a three-judge panel of this circuit, we are bound by
prior panel decisions such as Lowdermilk and can only
reexamine them when their “reasoning or theory” of that
authority is “clearly irreconcilable” with the reasoning or
theory of intervening higher authority. Miller v. Gammie,
335 F.3d 889, 893 (9th Cir. 2003) (en banc). “This is a high
standard.” Lair v. Bullock, 697 F.3d 1200, 1207 (9th Cir.
2012) (internal quotation marks omitted).
The test requires us to look at more than the surface
conclusions of the competing authority. The issues presented
in the two cases need not be identical in order for the
intervening higher authority to be controlling. Miller,
335 F.3d at 900. “Rather, the relevant court of last resort must
have undercut the theory or reasoning underlying the prior
circuit precedent in such a way that the cases are clearly
irreconcilable.” Id. But “[i]t is not enough for there to be
‘some tension’ between the intervening higher authority and

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the prior circuit precedent.” Lair, 697 F.3d at 1207 (quoting
United States v. Delgado-Ramos, 635 F.3d 1237, 1239 (9th
Cir. 2011)).
In United States v. Lindsey, 634 F.3d 541 (9th Cir. 2011),
we elaborated on the Miller standard. The prior circuit
precedent at issue provided that an erroneous denial of a
peremptory challenge required automatic reversal of a
criminal conviction. See id. at 546–47 (discussing the
automatic reversal rule of United States v. Annigoni, 96 F.3d
1132 (9th Cir. 1996) (en banc)). But in Rivera v. Illinois,
556 U.S. 148 (2009), the Supreme Court held that courts
could review improper denials of peremptory challenges for
harmless error without running afoul of the Federal
Constitution. Id. at 157. Rivera only addressed peremptory
challenges in state, not federal, court, and it did not foreclose
the possibility that automatic reversal could be held
appropriate in a federal prosecution. Lindsey, 634 F.3d at 550.
Nonetheless, Lindsey held that Rivera’s reasoning was clearly
irreconcilable with Annigoni’s automatic reversal rule such
that the en banc decision of the Ninth Circuit had been
effectively overruled. Id. (“It does not matter that the two
decisions are not identical.”).
Lindsey highlighted Miller’s instruction to focus on “the
reasoning and analysis in support of a holding, rather than the
holding alone.” Id. at 550. We noted that the result in Miller
was a consequence of the Supreme Court’s having taken an
“approach that [was] fundamentally inconsistent with the
reasoning of our earlier circuit authority.” Id. at 548 (quoting
Miller, 335 F.3d at 892) (internal quotation marks omitted).
Thus, because the conclusion reached in our circuit precedent
was no longer “supported for the reasons stated” in that

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decision, our court determined that it was no longer
appropriate to apply its holding. Lindsey, 634 F.3d at 551.
In contrast, we held in Lair v. Bullock that a district court
had erred when it eschewed our controlling circuit precedent
because of a subsequent decision by the Supreme Court.
697 F.3d at 1207. Our precedent, Montana Right to Life
Association v. Eddleman, 343 F.3d 1085 (9th Cir. 2003), and
the intervening higher authority, Randall v. Sorrell, 548 U.S.
230 (2006), reached opposite conclusions regarding campaign
contribution limits. Compare Eddleman, 343 F.3d at 1092–96
(upholding Montana’s campaign contribution limit) with
Randall, 548 U.S. at 236–37 (holding that Vermont’s
contribution limitations were unconstitutional). But that
tension was not enough to overrule Eddleman because
Randall “only clarified and reinforced” the principles on
which our prior decision relied. See Lair, 697 F.3d at 1207
(noting that Eddleman was based on the same Supreme Court
precedent on which Randall relied).
We must, then, follow our court’s directive to look
beyond the narrow conclusions of Lowdermilk and Standard
Fire. Instead, we focus on the respective bases for those
decisions to determine whether Standard Fire’s reasoning so
undercuts the principles on which Lowdermilk relied that our
prior decision cannot stand.
2. The Reasoning of Lowdermilk and Standard Fire
Lowdermilk involved a class complaint filed in Oregon
state court on behalf of a class of employees. 479 F.3d at 996.
Defendant removed the case to federal court, and plaintiff
opposed removal, arguing that the aggregate amount in
controversy did not exceed $5 million. Id. Plaintiff’s

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complaint alleged damages “in total, less than five million
dollars.” Id. at 996. The district court remanded the case to
state court. Id.
We affirmed the order of remand. Because plaintiff had
alleged that the amount in controversy was less than $5
million, we held that “we need not look beyond the four
corners of the complaint to determine whether the CAFA
jurisdictional amount is met.” Id. at 998. We further held that
“a plaintiff may sue for less than the amount she may be
entitled to if she wishes to avoid federal jurisdiction and
remain in state court.” Id. at 999. Plaintiff, being the “master
of her complaint,” could elect to remain in state court by
merely forgoing any damages above the jurisdictional
minimum. Id. at 998–99. Accordingly, we held that “the
familiar ‘legal certainty’ standard best capture[d] the proof
the defendant must produce,” noting, at 999, that the Third
Circuit had reached a similar conclusion in Morgan v. Gay,
471 F.3d 469 (3d Cir. 2006).1
Lowdermilk rested on two principles. 479 F.3d at 998
(“There are two principles that inform our judgment here.”).
First, federal courts are courts of limited jurisdiction, which
is to be strictly construed. Id. Second, “plaintiff is the ‘master

1

No other circuit has adopted this heightened standard, and most circuits
have adopted a preponderance standard. See Frederick v. Hartford
Underwriters Ins. Co., 683 F.3d 1242, 1246 (10th Cir. 2012) (rejecting the
legal certainty test and reviewing cases); Pretka v. Kolter City Plaza II,
Inc., 608 F.3d 744, 752 (11th Cir. 2010); Bell v. Hershey Co., 557 F.3d
953, 958 (8th Cir. 2009); Amoche v. Guarantee Trust Life Ins. Co.,
556 F.3d 41, 50 (1st Cir. 2009); Smith v. Nationwide Prop. & Cas. Ins.
Co., 505 F.3d 401, 404 (6th Cir. 2007); Meridian Sec. Ins. Co. v.
Sadowski, 441 F.3d 536, 540–41 (7th Cir. 2006). The Third Circuit has not
spoken on the legal certainty standard after Standard Fire.

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of her complaint’ and can plead to avoid federal jurisdiction.”
Id. at 998–99. Lowdermilk adopted the “legal certainty” test,
in part, to “preserve the plaintiff’s prerogative . . . to forgo a
potentially larger recovery to remain in state court.” Id. at
999.
It was the second principle that primarily explained our
decision in Lowdermilk. That federal courts are courts of
limited jurisdiction is inherently true for all cases in which
federal jurisdiction is at issue, but we do not routinely impose
a heightened “to a legal certainty” burden of proof in
determining whether there is federal jurisdiction in other
contexts. See McNutt v. Gen. Motors Acceptance Corp. of
Ind., 298 U.S. 178, 189 (1936) (discussing a party’s burden
to show that federal jurisdiction is appropriate and that he
“justify his allegations by a preponderance of the evidence”);
Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir.
2004) (holding that a defendant must carry its burden to
establish by a preponderance of the evidence that the amount
in controversy exceeded $75,000 because plaintiff’s
complaint “[fell] short of even seeking the threshold
amount”).
That second principle is, however, directly contradicted
by Standard Fire. The Court held that a plaintiff seeking to
represent a putative class could not evade federal jurisdiction
by stipulating that the amount in controversy fell below the
jurisdictional minimum. Standard Fire, 133 S. Ct. at 1350. As
a consequence, we cannot now say that a plaintiff, in the class
action context, has the “prerogative . . . to forgo a potentially
larger recovery to remain in state court.” See Lowdermilk,
479 F.3d at 999 (adopting the legal certainty standard to
“preserve” that choice). Plaintiff may not “sue for less than

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the amount she may be entitled to if she wishes to avoid
federal jurisdiction and remain in state court.” Id.
In addition, Lowdermilk held that district courts “need not
look beyond the four corners of the complaint to determine
whether the CAFA jurisdictional amount is met” so long as
a plaintiff avers damages below $5 million. Id. at 998. Under
Standard Fire, the district court’s inquiry is not so narrow.
Standard Fire instructed district courts to look to the potential
claims of the absent class members, rather than plaintiff’s
complaint, holding that section 1332(d) so requires: “[t]he
statute tells the District Court to determine whether it has
jurisdiction by adding up the value of the claim of each
person who falls within the definition of [the] proposed
class.” 133 S. Ct. at 1348.
Put another way, Lowdermilk reasoned that the initial
jurisdictional determination derives from the complaint, while
Standard Fire mandates that courts determine their
jurisdiction by aggregating all potential class members’
individual claims. See id. at 1350 (“[T]o ignore a nonbinding
stipulation does no more than require the federal judge to do
what she must do in cases without a stipulation and what the
statute requires, namely ‘aggregate’ the ‘claims of the
individual class members.’” (quoting 28 U.S.C.
§ 1332(d)(6)). To do so, district courts must necessarily “look
beyond the four corners of the complaint” when the
complaint alleges damages below the jurisdictional minimum,
contrary to Lowdermilk’s instruction. Lowdermilk, 479 F.3d
at 998.
Lowdermilk adopted the legal certainty standard to
reinforce plaintiff’s prerogative, as master of the complaint,
to avoid federal jurisdiction by forgoing a portion of the

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recovery on behalf of the putative class. That choice has been
taken away by Standard Fire. Further, Standard Fire instructs
courts to look beyond the complaint to determine whether the
putative class action meets the jurisdictional requirements.
Standard Fire, 133 S. Ct. at 1350.
The theory supporting our adoption of the legal certainty
standard no longer holds true. Lowdermilk’s legal certainty
standard is a consequence of a plaintiff’s ability to plead to
avoid federal jurisdiction. That principle is not viable in
actions involving absent class members. The reasoning
behind Lowdermilk’s imposition of the legal certainty
standard is clearly irreconcilable with Standard Fire. We hold
that Standard Fire has so undermined the reasoning of our
decision in Lowdermilk that the latter has been effectively
overruled. A defendant seeking removal of a putative class
action must demonstrate, by a preponderance of evidence,
that the aggregate amount in controversy exceeds the
jurisdictional minimum. This standard conforms with a
defendant’s burden of proof when the plaintiff does not plead
a specific amount in controversy. See Guglielmino v. McKee
Foods, 506 F.3d 696, 701 (9th Cir. 2007).2 This is the burden
AT&T must satisfy on remand.
C. Application of the Preponderance Standard
The district court, relying on Rodriguez’s waiver of
damages in excess of $5 million, did not undertake an
analysis of AT&T’s evidence regarding the amount in
controversy. We decline AT&T’s invitation to do so in the

2

Nothing in our opinion should be construed to comment on our court’s
decision in Abrego Abrego v. Dow Chem. Co., 443 F.3d 676 (9th Cir.
2006). That decision concerned issues not presented in this appeal.

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first instance on appeal. See Horphag Research Ltd. v.
Pellegrini, 337 F.3d 1036, 1041 (9th Cir. 2003) (remanding
when intervening Supreme Court authority altered the
standard at issue).
AT&T also contends that Rodriguez waived challenging
the amount in controversy under a preponderance standard
because Rodriguez never argued it below. AT&T cites no
authority for that proposition, nor could it. The preponderance
standard did not apply to AT&T’s burden of proof prior to
Standard Fire, so Rodriguez did not waive that challenge. See
In Re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988,
992 (9th Cir. 2010) (describing three exceptions to the
discretionary determination of waiver, including “when a new
issue arises while appeal is pending because of a change in
the law”).
Because we hold that the legal certainty standard no
longer applies to AT&T’s burden of proof on remand, and we
vacate the district court’s order remanding the case to state
court, we need not address AT&T’s bad faith argument.
III.

Conclusion

A lead plaintiff of a putative class cannot reduce the
amount in controversy on behalf of absent class members, so
there is no justification for assigning to the allegation weight
so significant that it affects a defendant’s right to a federal
forum under § 1332(d)(2). Our reasons for applying a legal
certainty standard are now clearly irreconcilable with
intervening Supreme Court authority. Accordingly,
Lowdermilk has been effectively overruled by Standard Fire.
VACATED and REMANDED.