In Back Doctors v. Metropolitan Property and Casualty Insurance Co., a group of medical providers brought a state-court class action against Metropolitan Property and Casualty, which removed the action to federal court under the Class Action Fairness Act (CAFA). The district court remanded, holding that doubts are construed against removal because it is disfavored, and finding that the insurer had not established “a reasonable probability” that the amount in controversy exceeds $5 million because the complaint did not seek punitive damages or allege wanton or malicious conduct.
The Seventh Circuit Court of Appeals vacated the remand order, rejected the district court’s application of a “reasonable probability” standard, and held that the correct test for determining whether the amount in controversy requirement has been met is whether “recovery of an amount exceeding the jurisdictional minimum is legally impossible.” The panel stated that “when a plaintiff does not tie its own hands, the defendant is entitled to present a goodfaith estimate of the stakes. If that estimate exceeds the jurisdictional minimum, it controls and allows removal unless recovery exceeding the jurisdictional minimum would be legally impossible.” The Seventh Circuit found it instructive that the complaint did not affirmatively disclaim punitive damages, and was persuaded by the medical providers’ failure to cite a single Illinois case holding that an omission of punitive damages allegations from a complaint makes a punitive award impossible. The panel also rejected the district court’s contention that there are presumptions against federal jurisdiction or removal, holding that CAFA “must be implemented according to its terms, rather than in a manner that disfavors removal of large-stakes, multi-state class actions.”