Hubert Walker v. Trailer Transit, Inc. , 727 F.3d 819 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-8015
HUBERT E. WALKER, on behalf of
himself and all others similarly situated,
Plaintiff-Petitioner,
v.
TRAILER TRANSIT , INC .,
Defendant-Respondent.
Petition for Permission to Appeal from
the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:13-cv-124-TW P-DKL — Tanya Walton Pratt, Judge.
SUBMITTED JULY 17, 2013 — DECIDED AUGUST 23, 2013
Before BAUER, CUDAHY, and SYKES, Circuit Judges.
SYKES, Circuit Judge. Hubert Walker petitions for permission
to appeal the district court’s denial of his motion to remand
this case to state court. See 28 U.S.C. § 1453(c)(1). Representing
a class of truck owner-operators, Walker sued Trailer Transit,
2 No. 13-8015
Inc., a broker of trucking services, for breach of contract in
Indiana state court. Trailer Transit removed the suit to federal
court under the Class Action Fairness Act (“CAFA”), id.§ 1332(d)(2). Walker moved to remand, contending that the
removal was untimely.
The rules of procedure provide two different removal
windows. First, a defendant has 30 days after receiving the
plaintiff’s initial pleading to file a notice of removal (or 30 days
after receiving the summons if the initial pleading is not
required to be served). Id. § 1446(b)(1). However,
if the case stated by the initial pleading is not
removable, a notice of removal may be filed
within 30 days after receipt … 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.
Id. § 1446(b)(3). Under CAFA federal courts have original
jurisdiction over class actions on behalf of more than 100 class
members if the parties are minimally diverse and the amount
in controversy exceeds $5 million. Id. § 1332(d)(2), (d)(5)(B).
Walker argued that the notice of removal was untimely
because it was filed more than 30 days after Trailer Transit
“first ascertained” that the class’s theory of damages could
result in recovery of more than $5 million. The district judge
disagreed and denied the motion to remand. Walker petitioned
for permission to appeal.
We have never addressed the standard for determining
when the 30-day time period for removal begins to run.
Accordingly, we grant Walker’s petition to appeal. On the
No. 13-8015 3
merits we affirm the district court’s ruling. The 30-day removal
clock is triggered by the defendant’s receipt of a pleading or
other paper that affirmatively and unambiguously reveals that
the case is or has become removable. Here, Trailer Transit
never received a pleading or other paper from Walker specifi-
cally disclosing the damages demand. Trailer Transit based its
notice of removal on its own estimate of damages after Walker
introduced a new theory of damages into the case in response
to requests for admission. Because the removal clock never
started to run, the district court properly denied the motion to
remand.
I. Background
This lawsuit concerns a lease agreement between Walker,
who owns and operates a long-haul truck, and Trailer Transit,
a broker of trucking services. Under the agreement Trailer
Transit leased Walker’s equipment, and Walker picked up and
delivered shipments arranged by Trailer Transit. Trailer
Transit was obligated to pay Walker 71% “of the gross reve-
nues derived from use of” the truck, less “all items intended to
reimburse [Trailer Transit] for special services.” There are other
exceptions to Trailer Transit’s responsibility to share revenues,
but they are not at issue here.
Walker filed a class-action complaint in Indiana state court
asserting that Trailer Transit violated its lease agreements with
him and hundreds of other truckers. Walker alleged that
Trailer Transit charged “add-on fees” to customers that
exceeded the cost of providing special services. Because those
fees were allegedly not “intended to reimburse” Trailer
4 No. 13-8015
Transit, Walker contended that the truckers were entitled to a
portion of the fees under the lease agreement. The complaint
repeatedly maintains that the truckers are entitled to 71% of
Trailer Transit’s “profits” from the fees. For example, Walker
alleged that “Trailer Transit billed the customer $1665 for truck
‘escort services’ … that cost Trailer Transit only $200 (a profit
of $1465), yet Trailer Transit retained 100% of the charge.”
The state court certified the case as a class action, and the
case proceeded to briefing on Trailer Transit’s motion for
summary judgment. In its motion Trailer Transit argued that
the plaintiffs’ theory of damages tied to a percentage of
“profits” was untenable. According to Trailer Transit, there
were only two feasible options for recovery: either a fee was
“intended to reimburse” Trailer Transit so it could keep the
whole fee, or a fee was not “intended to reimburse” Trailer
Transit so the truckers would be entitled to 71% of the entire
fee. But the complaint alleged that truckers were entitled to
71% of the profits from the fee. The language of the lease
agreement, Trailer Transit argued, could not support an
interpretation entitling the class to that measure of damages.
Walker’s response, filed on November 19, 2012, included
this explanation of how a jury could award damages based on
either Trailer Transit’s “profits” or based on the entire “fees”:
A reasonable jury could draw at least two con-
clusions from the circumstance where Trailer
Transit charged an Add-On Fee in an amount
that grossly exceeded its costs: (A) the jury could
conclude that the entire fee was a scam fee that
was not ‘intended to reimburse’ Trailer Transit,
No. 13-8015 5
and therefore that 71% of the entire fee should
have been paid to the Drivers; or (B) the jury
could conclude that the portion of the fee that
exceeded Trailer Transit’s costs was a scam fee
that was ‘not intended to reimburse’ it, and
therefore that 71% of that excess should have
been paid to the Drivers. The Plaintiff has never
limited his theory of recovery to a single one of
these two possibilities, and both are consistent
with the language of the Lease Agreement.
Soon after this response was filed, Trailer Transit’s attorney
sent an e-mail to Walker’s attorney seeking to clarify whether
the class was seeking 71% of the entire fees, rather than just
71% of Trailer Transit’s profits from the fees. Walker’s attorney
responded by copying and pasting the above passage from the
summary-judgment response. Trailer Transit then served
requests for admission on Walker formally requesting clarifica-
tion of the theory of damages. On December 21, 2012, Walker
responded, admitting that the class was seeking 71% of the
entire fees.
Within 30 days of receiving Walker’s response to the
requests for admission, Trailer Transit filed a notice of removal
under CAFA.1 See 28 U.S.C. § 1453(b). The notice of removal
1
The notice of removal was filed on January 22, 2013, which under the
time-counting rules is deemed the 30th day after Walker’s response to the
requests for admission. The 30th calendar day after the response was
Sunday, January 20, 2013, and the following day was M artin Luther King,
Jr. Day, a federal holiday. Therefore, if Walker’s response to the requests for
(continued...)
6 No. 13-8015
included an affidavit from a Trailer Transit executive estimat-
ing the total damages at stake. According to the executive, the
possible damages could exceed $5 million if the class sought
71% of the entire amount of the disputed fees, but not if the
class sought 71% of the profits from those fees. Walker did not
contest this analysis and acknowledged that CAFA’s amount-
in-controversy requirement was satisfied. But he moved to
remand on timeliness grounds, arguing that Trailer Transit
became aware earlier in the litigation that the class sought 71%
of the entire amount of the disputed fees and thus satisfied the
amount-in-controversy requirement. Specifically, Walker
argued that the 30-day clock started when he filed his
summary-judgment response, or at the latest, when his
attorney responded to Trailer Transit’s e-mail—both of which
occurred more than 30 days before removal.2 The district court
denied remand, concluding that neither Walker’s summary-
judgment response nor his counsel’s e-mail clearly disclosed
that the damages potentially exceeded $5 million.
(...continued)
admission started the 30-day removal clock, Tuesday, January 22, 2013, was
the 30th day. See F ED . R. C IV . P. 6(a)(1)(C).
2
In his petition for leave to appeal, Walker argues that his complaint was
sufficient to trigger the 30-day removal clock under 28 U.S.C. § 1446(b)(1).
The district court held that Walker “implicitly conceded” during oral argu-
ment that his complaint was not sufficient by arguing that the earliest date
on which the amount in controversy should have been “ascertainable” was
the date of his summary-judgment response. Like the district court, we hold
Walker to that concession.
No. 13-8015 7
II. Analysis
This appeal concerns the jurisdictional damages threshold
for removal under CAFA, which requires an amount in
controversy in excess of $5 million. 28 U.S.C. § 1332(d)(2),
(d)(5)(B). Because the case was removed under CAFA, we have
discretion to review the district court’s denial of Walker’s
remand motion. See id. § 1453(c)(1). Trailer Transit urges us not
to accept the appeal because it turns on the time limits speci-
fied in the general removal statute, 28 U.S.C. § 1446, which is
not “an important CAFA-related question.” BP Am., Inc. v.
Oklahoma ex rel. Edmondson, 613 F.3d 1029, 1034 (10th Cir. 2010).
But when a petition meets the requirements of 28 U.S.C.
§ 1453(c)(1)—as this one does because it involves the question
of remanding a class action—we are not required to limit our
review solely to CAFA-specific issues. See Brill v. Countrywide
Home Loans, Inc., 427 F.3d 446, 451 (7th Cir. 2005) (“[W]e are
free to consider any potential error in the district court's
decision, not just a mistake in application of the Class Action
Fairness Act. When a statute authorizes interlocutory appellate
review, it is the district court’s entire decision that comes
before the court for review.”).
This case presents the opportunity to clarify the standard
for determining when the 30-day time limit under § 1446(b)(3)
is triggered—an issue that has divided district courts in this
circuit. See Kohl’s Dep’t Stores, Inc. v. Perkowitz & Ruth Architects,
No. 10-CV-378, 2010 WL 4386677, at *2–3 (E.D. Wis. Oct. 28,
2010) (describing divergent standards district courts have
applied). Accordingly, we grant the petition for permission to
appeal. See Koral v. Boeing Co., 628 F.3d 945, 946 (7th Cir. 2011)
8 No. 13-8015
(granting petition to appeal under CAFA because “the appeal
presents novel issues”). Because the parties’ submissions on the
petition adequately present the issue, we proceed directly to
the merits.
The general removal statute includes two different 30-day
time limits for removal. The first applies to cases that are
removable based on the initial pleading. In such a case, the
notice of removal “shall be filed within 30 days after the receipt
by the defendant … of a copy of the initial pleading setting
forth the claim for relief” or within 30 days of service of the
summons “if such initial pleading has then been filed in court
and is not required to be served on the defendant.” 28 U.S.C.
§ 1446(b)(1). However,
if the case stated by the initial pleading is not
removable, a notice of removal may be filed
within 30 days after receipt by the defendant,
through service or otherwise, 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.
Id. § 1446(b)(3).3
The short removal time limit forces the defendant to make
a prompt decision about removal once a pleading or other
3
In addition to the 30-day time limits, diversity cases must be removed
within “1 year after commencement of the action, unless the district court
finds that the plaintiff has acted in bad faith in order to prevent a defendant
from removing the action.” 28 U.S.C. § 1446(c)(1). The one-year time limit
for removal does not apply to CAFA cases like this one. See id. § 1453(b).
No. 13-8015 9
litigation document provides clear notice that the predicates
for removal are present. See Price v. Wyeth Holdings Corp.,
505 F.3d 624, 628–29 (7th Cir. 2007); Wilson v. Intercollegiate (Big
Ten) Conference Athletic Ass’n, 668 F.2d 962, 965 (7th Cir. 1982)
(“The purpose of the 30-day limitation is twofold: to deprive
the defendant of the undeserved tactical advantage that he
would have if he could wait and see how he was faring in state
court before deciding whether to remove the case to another
court system; and to prevent the delay and waste of resources
involved in starting a case over in a second court after signifi-
cant proceedings, extending over months or even years, may
have taken place in the first court.”).
It’s clear that the 30-day removal clock is triggered only by
the defendant’s receipt of a pleading or other litigation paper
facially revealing that the grounds for removal are present.
Every circuit that has addressed the question of removal
timing has applied § 1446(b) literally and adopted some form
of a bright-line rule that limits the court’s inquiry to the clock-
triggering pleading or other paper and, with respect to the
jurisdictional amount in particular, requires a specific, un-
equivocal statement from the plaintiff regarding the damages
sought. See Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 399
(5th Cir. 2013) (clock begins running only when initial pleading
“affirmatively reveals on its face” that the plaintiff seeks
damages sufficient for federal-court jurisdiction (internal
quotation marks and emphasis omitted)); Kuxhausen v. BMW
Fin. Servs., 707 F.3d 1136, 1139 (9th Cir. 2013) (clock begins
running only when the basis for removal is “revealed affirma-
tively in the initial pleading” (internal quotation marks
omitted)); Moltner v. Starbucks Coffee Co., 624 F.3d 34, 38 (2d Cir.
10 No. 13-8015
2010) (clock begins running only when “the plaintiff serves the
defendant with a paper that explicitly specifies the amount of
monetary damages sought”); In re Willis, 228 F.3d 896, 897 (8th
Cir. 2000) (clock begins running “only when the complaint
explicitly discloses the plaintiff is seeking damages in excess of
the federal jurisdictional amount”); Akin v. Ashland Chem. Co.,
156 F.3d 1030, 1036 (10th Cir. 1998) (clock begins running only
upon “clear and unequivocal notice from the pleading itself, or
a subsequent ‘other paper’ ” that case is removable); Lovern v.
Gen. Motors Corp., 121 F.3d 160, 162–63 (4th Cir. 1997) (grounds
for removal must be “apparent within the four corners of the
initial pleading or subsequent paper”).
We follow the lead of our sister circuits and now adopt the
same approach. The 30-day removal clock does not begin to
run until the defendant receives a pleading or other paper that
affirmatively and unambiguously reveals that the predicates
for removal are present. With respect to the amount in contro-
versy in particular, the pleading or other paper must specifi-
cally disclose the amount of monetary damages sought. This
bright-line rule promotes clarity and ease of administration for
the courts, discourages evasive or ambiguous statements by
plaintiffs in their pleadings and other litigation papers, and
reduces guesswork and wasteful protective removals by
defendants.4
4
We note that all three states in our circuit restrict the plaintiff’s ability to
quantify the amount of damages sought in the complaint. See W IS . S TAT .
§ 802.02(1m) (“With respect to a tort claim seeking the recovery of money,
the demand for judgment may not specify the amount of money the pleader
(continued...)
No. 13-8015 11
Walker insists that the 30-day removal clock should begin
to run the first moment it becomes possible for the defendant
to remove the case. No court of appeals has adopted this rule,
and for good reason. The moment a case becomes removable
and the moment the 30-day removal clock begins to run “are
not two sides of the same coin.” Kuxhausen, 707 F.3d at
1141 n.3; see also Mumfrey, 719 F.3d at 400 n.13. Walker’s
proposed rule conflates the timeliness question with the factual
inquiry into whether the case is substantively appropriate for
removal. Whether the jurisdictional prerequisites are in fact
met is a separate determination and often involves consider-
ation of materials outside the state-court pleadings. The
removing defendant has the burden of proving the jurisdic-
tional predicates for removal. See Oshana v. Coca-Cola Co.,
472 F.3d 506, 511 (7th Cir. 2006) (“Because [the removing
defendant] is the proponent of jurisdiction, it has the burden of
showing by a preponderance of the evidence facts that suggest
the amount-in-controversy requirement is met.”).
In contrast, the timeliness inquiry is limited to the examin-
ing contents of the clock-triggering pleading or other litigation
paper; the question is whether that document, on its face or in
combination with earlier-filed pleadings, provides specific and
4
(...continued)
seeks.”); 735 I LL . C O M P . S TAT . 5/2-604 (“[N]o ad damnum may be pleaded
except to the minimum extent necessary to comply with the circuit rules of
assignment where the claim is filed.”); I N D . R. T RIA L P RO . 8(A)(2) (“[I]n any
complaint seeking damages for personal injury or death, or seeking
punitive damages, no dollar amount or figure shall be included in the
demand.”). Jurisdictional requests for admission are a common device for
determining whether the amount-in-controversy minimums are met.
12 No. 13-8015
unambiguous notice that the case satisfies federal jurisdictional
requirements and therefore is removable. Assessing the
timeliness of removal should not involve a fact-intensive
inquiry about what the defendant subjectively knew or should
have discovered through independent investigation.
See Kuxhausen, 707 F.3d at 1140–41; Lovern, 121 F.3d at 162.
Again, as the text of the rule itself makes clear, the 30-day clock
is triggered by pleadings, papers, and other litigation materials
actually received by the defendant or filed with the state court
during the course of litigation. See 28 U.S.C. § 1446(b)(1) (first
30-day removal period begins to run once defendant receives
“a copy of the initial pleading” or upon service of the sum-
mons “if such initial pleading has then been filed in court and
is not required to be served on the defendant”); see id.§ 1446(b)(3) (second 30-day removal period begins to run “after
receipt by the defendant, through service or otherwise, of a
copy of an amended pleading, motion, order or other paper”).
And with respect to § 1446(b)(3) in particular, the text keys
the 30-day removal clock to the defendant’s receipt of a
pleading or other paper “from which it may first be ascer-
tained” that the case is or has become removable. As applied
to the amount-in-controversy requirement, the clock com-
mences only when the defendant receives a post-complaint
pleading or other paper that affirmatively and unambiguously
specifies a damages amount sufficient to satisfy the federal
jurisdictional minimums. This approach conforms to the
standard adopted by our sister circuits. See Mumfrey, 719 F.3d
at 400; Kuxhausen, 707 F.3d at 1139; Moltner, 624 F.3d at 38;
Willis, 228 F.3d at 897; Akin, 156 F.3d at 1036; Lovern, 121 F.3d
at 162–63.
No. 13-8015 13
Applying this standard, we can resolve this appeal easily.
Neither Walker’s summary-judgment response nor the follow-
up e-mail was sufficient to start the removal clock. The
summary-judgment response intimated for the first time that
the class was seeking 71% of the entire disputed fees rather
than just 71% of Trailer Transit’s profits from those fees. While
this passage alerted Trailer Transit that the class might be
pursuing a new theory of damages, it was not unambiguous;
nor did it affirmatively reveal that the damages could be
greater than $5 million. The follow-up e-mail from Walker’s
counsel did not resolve the ambiguity; it simply reiterated
what was in the summary-judgment response.
The earliest possible trigger for the removal clock was
Walker’s response to Trailer Transit’s requests for admission
seeking formal clarification of the theory of damages. In that
response Walker confirmed that the class was indeed seeking
damages based on a percentage of the total disputed fees. Even
that document, however, did not affirmatively specify a
damages figure under the class’s new theory. So the removal
clock never actually started to run. Although Trailer Transit
filed its notice of removal within 30 days of receiving that
response, the removal was not based on Walker’s response to
the requests for admission alone; it took Walker’s admission
and an estimate from a Trailer Transit executive to show that
the jurisdictional limits were met. Removal was not untimely,
and the district court properly denied the motion to remand.
For the foregoing reasons, we GRANT the petition to appeal
and AFFIRM the decision of the district court.