Ninth Circuit rules on CAFA amount in controversy determination: Perez v. Rose Hills Company

In Perez v. Rose Hills Company, (9th Cir.)           F.3d           (Mar. 17, 2025), the Court of Appeals for the Ninth Circuit clarified the amount in controversy requirement of the Class Action Fairness Act of 2005 (CAFA).

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Plaintiff brought a class action alleging various wage and hour violations. Defendant removed the case to federal court under CAFA, alleging the amount in controversy exceeded $15 million. The district court found Defendant failed to provide evidence for the amount and remanded the case to state court. The Ninth Circuit granted Defendant permission to appeal.

On appeal, the Ninth Circuit vacated the order remanding the case to state court, following Arias v. Residence Inn by Marriott (9th Cir. 2019) 936 F.3d 920. It held that defendants calculating the amount in controversy under CAFA may rely on “a chain of reasoning that includes assumptions” based solely on the allegations in the complaint. (Id. at 925, internal citations omitted.) The district court should have considered whether Defendant’s calculation was a reasonable interpretation of the complaint, not whether it was supported by evidence. The court distinguished Ibarra v. Manheim Invs., Inc. (9th Cir. 2015) 775 F.3d 1193, where the defendant had to provide evidence because its interpretation of the complaint was found to be unreasonable.

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