LaCross v. Knight Transportation

A defendant when removing a case to federal court may use assumptions and a reasonable chain of logic to show by a preponderance that the amount in controversy exceeds $5 million.

Plaintiffs are a group of “Owner Operators” who worked for defendant, Knight Trucking (“Knight”), as independent contractors. Plaintiffs believe they were really employees of Knight and sought to recover leasing costs and fuel costs. Knight attempted to remove the case to federal court and the district court found that Knight had not met the amount in controversy requirement, because Knight calculated fuel costs based on employees working all year when some employees only worked part of the year. The Ninth Circuit recently ruled in Ibarra v. Manheim, that when establishing the amount in controversy for removal, a defendant may use a “chain of reasoning that includes assumptions to satisfy its burden by a preponderance of the evidence.” On appeal, the panel applied Ibarra to the facts here, and found that Knight had met the case in controversy requirement. Knight had calculated the amount in controversy by multiplying the amount that drivers charged to fuel cards each quarter, which did not reflect the total universe spent on fuel, to the sixteen quarters in question. The total amount estimated in this calculation was over $21 million. The panel held that this assumption of the number of drivers and estimate of fuel costs was adequate to meet the $5 million case in controversy requirement. REVERSED AND REMANDED.