The Western District of North Carolina held that a class
complaint is cemented at the time of removal and that jurisdiction
can't be undone through "post hoc
The plaintiffs brought a class action in the Superior Court of
Union County, North Carolina, alleging breach of warranty and
violations of the North Carolina Unfair and Deceptive Trade
Practices Act. Specifically, the plaintiffs alleged that a
fiber cement siding manufactured by the defendant, Certainteed, and
installed on the plaintiffs' homes suffered from an inherent
defect that caused the siding to crack and peel. The
plaintiffs' sought actual damages, in addition to treble
damages under the Unfair and Deceptive Trade Practice Act.
The defendant removed the action to the Western District of
North Carolina under CAFA.
The plaintiffs moved to remand, arguing that the defendants
failed to establish that this action met CAFA's jurisdictional
threshold of more than $5 million in controversy. The
plaintiffs' remand argument was based on one assertion: that
the class was in fact much smaller than suggested by the class
complaint, meaning the overall amount in controversy fell under the
$5 million threshold.
In its Notice of Removal, Certainteed submitted an affidavit
from its consumer warranty manager, who stated that the retail cost
of the siding for an average single-family home was $3000 to $4000
(excluding labor). The plaintiffs' Complaint alleged that they
were suing "on behalf of all persons and entities who own
homes, residences or other structures physically located in North
Carolina, on which the defendants or one of their related entities
or subcontractors installed Certainteed WeatherBoards Fiber Cement
exterior siding." In paragraph 49 of the Complaint, the
plaintiff alleged that "the Class is composed of thousands of
persons geographically dispersed throughout Indian Trail, North
Carolina as well as the state of North Carolina, the joinder of
whom in one action is impractical." The size of the class
– "thousands" – when multiplied by
the $3,000-$4,000 cost of siding, exceeded the $5 million
In their brief in support of remand, the plaintiffs conceded
that only 501 homes fell within the putative
class. Specifically, the plaintiffs contended that the class
complaint was not intended to encompass all of North Carolina but
was rather intended to cover the town of Indian Trail and
The Court refused to accept the plaintiffs' attempt to
recharacterize the size of their class, holding that amount in
controversy is determined by the allegations in the Complaint at
the time of removal. The Court held that when the plaintiffs
purport to represent a class of a specific size, the class size
evident from the face of the complaint should be used when
calculating the amount in controversy for jurisdictional purposes,
and that, conversely, courts should refuse to use plaintiffs'
"post hoc characterization" of its class for amount in
controversy purposes. The Court stated that the plaintiffs may
not redefine their class in an attempt to avoid federal
jurisdiction, and thus construed the plaintiffs' Complaint as
drafted and found that the class could potentially consist of
thousands throughout North Carolina.
The Court pointed that even if the plaintiffs had alleged the
class to be restricted to only 501 homeowners, the jurisdictional
threshold would still be met because treble damages the
plaintiffs' sought under the Unfair and Deceptive Trade
Practices Act placed the amount in controversy over $5 million.
Accordingly, the Court found that the defendants had met their
burden of establishing the requisite jurisdictional amount, and
denied the plaintiffs' motion to remand.
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In a recent decision characterizing precedent as a seven decade "aberration," the Supreme Court of California permitted plaintiff loan borrowers to introduce against a defendant banking institution parol evidence directly contradicting the very terms of the parties’ written loan agreement.