14‐455‐cv Cutrone v. Mortgage Electronic Registration Systems, Inc.

1 In the 2 United States Court of Appeals 3 For the Second Circuit 4 5 August Term, 2013 6 No. 14‐455‐cv

7 BRIAN CUTRONE AND JESSICA CERVONE, INDIVIDUALLY AND ON 8 BEHALF OF ALL OTHERS SIMILARLY SITUATED, 9 Plaintiffs‐Appellees,

10 v.

11 MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., 12 Defendant‐Appellant. 13

14 Appeal from the United States District Court 15 for the Eastern District of New York. 16 No. 13 CV 3075 ― Eric N. Vitaliano, Judge. 17 18 19 ARGUED: APRIL 1, 2014 20 DECIDED: APRIL 17, 2014 21 22 23 Before: WALKER, CHIN, and DRONEY, Circuit Judges. 24 CUTRONE V. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.

1 Appeal from an order of the United States District Court for

2 the Eastern District of New York (Eric N. Vitaliano, Judge), holding

3 the defendant‐appellant’s notice of removal untimely and

4 remanding this putative class action to state court. We granted

5 MERS’s petition for permission to appeal the remand order and

6 instructed the parties to address: (1) whether this Court’s decision in

7 Moltner v. Starbucks Coffee Co.,

(2d Cir. 2010) (per

8 curiam), which held that the removal “clocks” of

(b)

9 are not triggered until the plaintiff files a document that explicitly

10 specifies the amount of damages sought, applies to actions removed

11 under the Class Action Fairness Act of 2005 (“CAFA”) and (2)

12 whether a defendant may remove a case under CAFA if neither of

13 the two 30‐day periods set forth in

(b)(1) and (b)(3)

14 is triggered because the initial pleading and other documents are

15 indeterminate with respect to removability but the defendant later

16 asserts removability on the basis of its own investigation. We

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1 answer both questions in the affirmative. We hold that Moltner

2 applies to cases removed pursuant to CAFA and that the defendant‐

3 appellant’s notice of removal was timely. Accordingly, we

4 VACATE the district court’s order and REMAND.

5 6 7 CHARLES C. MARTORANA, Hiscock & Barclay, 8 LLP, Buffalo, NY, for Defendant‐Appellant.

9 ANDREW S. LOVE (Samuel H. Rudman, Mark S. 10 Reich, William J. Geddish, Susan K. Alexander, on 11 the brief), Robbins Geller Rudman & Dowd LLP, 12 San Francisco, CA, and Melville, NY, for Plaintiffs‐ 13 Appellees.

14

15 DRONEY, Circuit Judge:

16 Defendant‐appellant Mortgage Electronic Registration

17 Systems, Inc. (“MERS”) appeals from an order of the United States

18 District Court for the Eastern District of New York (Eric N.

19 Vitaliano, Judge) granting the motion of the putative class member

20 plaintiffs‐appellees (“plaintiffs”), to remand this case to New York

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1 state court on the ground that MERS’s notice of removal was

2 untimely. The district court concluded that the plaintiffs’ complaint

3 contained sufficient information to put MERS on notice of the size of

4 the putative class and amount in controversy to establish subject

5 matter jurisdiction pursuant to

(d), and it held that

6 MERS’s notice of removal, filed more than 30 days after receipt of

7 the complaint, was therefore untimely under

(b)(1).

8 We reverse and hold that, in Class Action Fairness Act

9 (“CAFA”) cases, the 30‐day removal periods of

1446(b)(1) and (b)(3) are not triggered until the plaintiff serves the

11 defendant with an initial pleading or other paper that explicitly

12 specifies the amount of monetary damages sought or sets forth facts

13 from which an amount in controversy in excess of $5,000,000 can be

14 ascertained. We also hold that where a plaintiff’s papers fail to

15 trigger the removal clocks of

(b)(1) and (b)(3), a

16 defendant may remove a case when, upon its own independent

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1 investigation, it determines that the case is removable; thus, the 30‐

2 day removal periods of

(b)(1) and (b)(3) are not the

3 exclusive authorizations for removal in CAFA cases.

4 Here, neither the plaintiffs’ initial complaint nor their

5 response to MERS’s demand for a bill of particulars in the state court

6 explicitly specified the amount of damages sought or provided

7 MERS with sufficient information to conclude the threshold amount

8 in controversy was satisfied. The named plaintiffs’ identification of

9 their damages ($6,835.20) and their allegation that the potential class

10 “includes hundreds, and likely thousands, of persons and entities,”

11 were not adequate to trigger the 30‐day removal periods of 28 U.S.C.

12 §§ 1446(b)(1) and (b)(3). We also hold that MERS properly filed its

13 notice of removal after determining upon its own investigation that

14 the amount in controversy, number of plaintiffs, and diversity

15 between itself and at least one plaintiff class member satisfied the

16 CAFA subject matter jurisdictional requirements set forth in 28

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(d). We accordingly VACATE the order of the district

2 court and REMAND.

3 BACKGROUND

4 The Parties and the Class Complaint

5 Plaintiffs Brian Cutrone and Jessica Cervone filed the present

6 putative class action against MERS in the Supreme Court of the State

7 of New York, Kings County on February 20, 2013. Their complaint

8 asserts causes of action against MERS under New York state law for

9 common law breach of implied warranty, deceptive business

10 practices in violation of New York General Business Law Section

11 (“NYGBL”) § 349, and false advertising in violation of NYGBL § 350,

12 allegedly committed in connection with MERS’s facilitation of the

13 provision of “Esign”1 mortgages to consumer‐borrowers.

14 According to the plaintiffs’ complaint, MERS is a Delaware

15 corporation with its principal place of business in Virginia. MERS

1 MERS contests the plaintiffs’ categorization of the relevant electronic documents as “Esign” mortgages, but this dispute is not relevant to the present appeal.

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1 created an Internet‐based electronic process through which

2 borrowers can obtain paperless Esign mortgages and engage in

3 refinancing of mortgages, and members of the real estate mortgage

4 industry can more easily securitize and bundle mortgages. To

5 facilitate these transactions, MERS acts as the mortgagee of record in

6 local recording offices regardless of the number of times a mortgage

7 is refinanced or the relevant lenders change.

8 When a party executes an Esign mortgage, no physical

9 mortgage document, such as a mortgage note, is created. Instead,

10 the mortgage documents exist as electronic records registered on

11 MERS’s “eRegistry.” When a party later wishes to refinance an

12 Esign mortgage or otherwise assign it to another party, MERS inputs

13 the applicable changes into its eRegistry. Thus, although MERS

14 never physically holds a mortgage note or related instrument, MERS

15 asserts that it facilitates mortgage and note assignments, including

16 refinancing, utilizing its electronic database.

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1 New York state courts have held that a lender does not have

2 standing to commence a foreclosure action when its assignor, MERS,

3 neither received the right to transfer the mortgage note nor

4 physically possessed the underlying mortgage note. See, e.g., Bank of

5 N.Y. v. Silverberg,

, 538‐40 (2d Dep’t 2011). Esign

6 mortgages acquired through MERS’s electronic system may be

7 “non‐assignable,” which limits MERS’s customers’ ability to

8 refinance their mortgages electronically and avoid recording fees, as

9 well as MERS’s ability to transfer pools of mortgages as securities.

10 Cutrone and Cervone obtained their first mortgage on their

11 home in Brooklyn through an Esign mortgage that listed MERS as

12 the nominee and mortgagee on March 27, 2008, and paid $7,476.00 in

13 taxes as required by New York’s mortgage recording tax.2 See N.Y.

14 Tax Law § 253. Four years later, they refinanced their mortgage.

15 They were unable to utilize a New York Consolidation, Extension

2 MERS is not itself a lender and did not loan the plaintiffs the funds for the initial mortgage or refinanced mortgage.

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1 and Modification Agreement (“CEMA”), which permits a mortgagor

2 to consolidate his original and refinanced mortgages and pay only

3 the difference in mortgage recording tax between the two

4 mortgages. A CEMA could not be used because MERS could not

5 effectuate the assignment between the original and new lenders.

6 The plaintiffs thus paid a second mortgage recording tax of $6,835.20

7 on their refinanced mortgage on January 7, 2013.

8 In their putative class action complaint, which alleges that

9 other borrowers were also required to pay additional recording

10 taxes because of their Esign mortgages, the plaintiffs do not

11 specifically enumerate either the expected number of class members

12 that will join them or the total amount of additional mortgage

13 recording taxes paid by class members. The plaintiffs merely

14 provide the amount of the mortgage recording tax they paid on their

15 refinanced mortgage ($6,835.20) and estimate that the class includes

16 “hundreds, and likely thousands, of persons and entities.” The

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1 plaintiffs also failed to specify in their response to the defendant’s

2 demand for a bill of particulars in the state court the number of

3 members in the putative class, estimating again that there were more

4 than 100 likely plaintiffs and, as to the damages sought by the class,

5 that they “cannot reasonably state the precise amount in

6 controversy.”

7 Federal District Court Proceedings

8 On May 24, 2013, more than 90 days after the plaintiffs filed

9 their initial complaint in New York state court, MERS filed a notice

10 of removal in the United States District Court for the Eastern District

11 of New York asserting diversity jurisdiction under CAFA, 28 U.S.C.

12 § 1332(d). The notice alleges that MERS examined its own records

13 and concluded that its eRegistry contained more than 3,000

14 registered promissory notes in electronic form secured by mortgages

15 on real property located in New York. The notice also estimates

16 that, given the large number of relevant promissory notes in MERS’s

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1 eRegistry, “even using a conservative estimate of damages for each

2 possible class member, there is a reasonable probability that the

3 matter in controversy exceeds the value of $5,000,000 as required by

4

(d).”3 Finally, the notice states that MERS is a

5 Delaware corporation with its principal place of business located in

6 Virginia and that the named plaintiffs and all members of the

7 purported class are citizens of New York, thus satisfying minimal

8 diversity requirements.

9 On June 24, 2013, the plaintiffs filed a motion to remand,

10 asserting that MERS’s removal was untimely under

1446(b)(1) because the plaintiffs’ complaint provided MERS with

12 sufficient information to determine the likely number of plaintiffs

13 and total amount in controversy. By order dated October 28, 2013,

3 A declaration filed by MERS on July 16, 2013, further explains: “Assuming that even half of the registered eNotes secured by a MERS mortgage in New York are the basis for claims that Plaintiffs were wrongly forced to pay a mortgage tax, using a conservatively low number of $3,000.00 in damages for each potential plaintiff in the putative class, Plaintiffs’ aggregate claims would reach $5.5 million.”

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1 the district court granted the plaintiffs’ motion, concluding that,

2 although the complaint filed on February 20, 2013, did not specify

3 either the total amount of damages sought or an exact number of

4 class members, it provided MERS with “all it needed to know in

5 order to enable it to make an intelligent assessment as to CAFA

6 removability.” Cutrone v. Mortg. Elec. Registration Sys., Inc., No. 13‐

7 CV‐3075 (ENV) (VMS),

(E.D.N.Y. Nov. 6,

8 2013). Because MERS did not file its notice of removal within 30

9 days of receiving the complaint, the court held, its notice was

10 untimely pursuant to

(b)(1).

.

11 The district court rejected MERS’s argument that our holding

12 in Moltner v. Starbucks Coffee Co.,

(2d Cir. 2010) (per

13 curiam), that “the removal clock does not start to run until the

14 plaintiff serves the defendant with a paper that explicitly specifies

15 the amount of monetary damages sought” should be applied to

16 CAFA cases. Cutrone,

, at *5‐7. The district court

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1 also reasoned that tying the removal clocks of

(b) to

2 the serving of an explicit statement of damages would be

3 problematic here because it would mean that the jurisdictional

4 amount in controversy requirement of

(d) was never

5 satisfied.

. Thus, the district court ruled that it lacked subject

6 matter jurisdiction and remanded the case to the Supreme Court of

7 the State of New York, Kings County.

.

8 Appellate Proceedings

9 On November 15, 2013, MERS petitioned this Court for

10 permission to appeal the district court’s remand order pursuant to

11

(c)(1) and Federal Rule of Appellate Procedure 5(a).

12 It argued that its notice of removal was timely because plaintiffs’

13 initial complaint failed to trigger the 30‐day removal clock of 28

(b)(1) and urged this Court to extend the rule of Moltner

15 to CAFA cases. We granted MERS’s petition for permission to

16 appeal on February 19, 2014. We instructed the parties to brief the

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1 following two questions: (1) whether this Court’s decision in Moltner

2 applies to cases removed under CAFA and (2) whether a defendant

3 may remove a case under CAFA if neither of the two 30‐day periods

4 set forth in

(b)(1) and (b)(3) is triggered because the

5 initial pleading and other documents are indeterminate with respect

6 to removability but the defendant later asserts removability on the

7 basis of its own investigation. As explained below, we now answer

8 both questions in the affirmative.

9 DISCUSSION

10 I. Appellate Jurisdiction and Standard of Review

11 We have jurisdiction to hear this appeal pursuant to 28 U.S.C.

12 § 1453(c)(1), which provides that “a court of appeals may accept an

13 appeal from an order of a district court granting or denying a

14 motion to remand a class action to the State court from which it was

15 removed if application is made to the court of appeals not more than

16 10 days after entry of the order.” See also DiTolla v. Doral Dental IPA

17 of N.Y.,

, 274‐75 (2d Cir. 2006). Here, the district court

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1 entered its order on November 6, 2013, and MERS filed a petition for

2 leave to appeal on November 15, 2013, thus satisfying the applicable

3 10‐day filing requirement.

4 We review de novo a district court’s subject matter jurisdiction

5 determination. See id. at 275.

6 II. Applicability of Moltner to CAFA Cases

7 We begin with a brief explication of the relevant statutory

8 framework for the removal of CAFA cases. In 2005, Congress

9 enacted the Class Action Fairness Act, Pub. L. No. 109‐2,

10 (2005) (codified, in part, at

(d)), which conferred

11 federal jurisdiction over any class action involving: “(1) 100 or more

12 class members, (2) an aggregate amount in controversy of at least

13 $5,000,000, exclusive of interest and costs, and (3) minimal diversity,

14 i.e., where at least one plaintiff and one defendant are citizens of

15 different states.” Blockbuster, Inc. v. Galeno,

(2d Cir.

16 2006) (citing

(d)(2), (5)(b), (6)). In CAFA cases, the

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1 defendant bears the burden of establishing federal subject matter

2 jurisdiction. See

. To establish the requisite amount in

3 controversy for CAFA jurisdiction pursuant to

(d), a

4 defendant must “show that it appears to a ‘reasonable probability’

5 that the aggregate claims of the plaintiff class are in excess of $5

6 million.”

(internal citation omitted).

7 A defendant’s ability to remove any case satisfying federal

8 jurisdictional predicates, including a CAFA case, is subject to

9 statutorily‐imposed time limits. The general removal statute

10 delineates two 30‐day periods during which removal may occur. See

11 generally

(b). The first statutory provision requires

12 that a defendant file its notice of removal within 30 days of the

13 service or receipt of the initial pleading.4

(b)(1). The

14 second section provides that if the case is not immediately

15 removable, the defendant may file a notice of removal within 30

4

(b)(1) also provides a removal time period of “within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant….”

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1 days of receiving “a copy of an amended pleading, motion, order or

2 other paper from which it may first be ascertained that the case is one

3 which is or has become removable.”

(b)(3)

4 (emphasis added); see Moltner,

.

5 Neither provision specifies the information that must be

6 included in a plaintiff’s initial pleading or other paper to trigger the

7 30‐day periods of

(b) or how a defendant should

8 “ascertain” removability. See Moltner, 624 F.3d at 36‐38. The issue

9 therefore arises, as it did in this case, of whether an indeterminate

10 complaint or subsequent document triggers the removal clocks of 28

(b) in CAFA cases.

12 We addressed this issue in Moltner v. Starbucks Coffee Co., 624

13 F.3d at 36‐38, a personal injury suit initially filed in New York state

14 court. There, the plaintiff allegedly suffered severe burns while

15 drinking tea purchased from the defendant.

at 35‐36. It was only

16 in response to a letter from the defendant three months after the

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1 plaintiff filed suit that the plaintiff disclosed she sought more than

2 $75,000 in damages, the threshold amount for diversity jurisdiction

3 under

(a).

. The defendant filed a notice of

4 removal within 30 days of receiving the plaintiff’s letter.

In

5 determining whether removal was timely under

1446(b)(3), we rejected the plaintiff’s argument that the defendant

7 should have concluded from the state court complaint that the

8 amount in controversy would exceed $75,000 by applying “a

9 reasonable amount of intelligence” to the complaint’s general

10 description of the plaintiff’s severe injuries.

. Instead, we

11 held that “the removal clock does not start to run until the plaintiff

12 serves the defendant with a paper that explicitly specifies the

13 amount of monetary damages sought.”

. We stated that “a

14 bright line rule is preferable to the approach [the plaintiff]

15 advocates. Requiring a defendant to read the complaint and guess

16 the amount of damages that the plaintiff seeks will create

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1 uncertainty and risks increasing the time and money spent on

2 litigation.”

3 Under the Moltner standard, defendants must still “apply a

4 reasonable amount of intelligence in ascertaining removability.” See

5 Whitaker v. Am. Telecasting, Inc.,

(2d Cir. 2001); see

6 also Kuxhausen v. BMW Fin. Servs. NA LLC,

(9th

7 Cir. 2013). However, defendants have no independent duty to

8 investigate whether a case is removable. See Whitaker,

206 (observing that the “reasonable amount of intelligence” standard

10 “does not require a defendant to look beyond the initial pleading for

11 facts giving rise to removability”). If removability is not apparent

12 from the allegations of an initial pleading or subsequent document,

13 the 30‐day clocks of

(b)(1) and (b)(3) are not

14 triggered.

15 In drawing a bright line rule requiring service of a document

16 explicitly stating the amount in controversy to trigger either 30‐day

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1 period in

(b) in Moltner, we joined the Eighth Circuit.

2 See

(citing In re Willis,

(8th Cir. 2000)

3 (per curiam) (“We find the thirty‐day time limit of section 1446(b)

4 begins running upon the receipt of the initial complaint only when

5 the complaint explicitly discloses the plaintiff is seeking damages in

6 excess of the federal jurisdictional amount[;] [t]his rule promotes

7 certainty and judicial efficiency by not requiring courts to inquire

8 into what a particular defendant may or may not subjectively

9 know.” (internal citation and quotation marks omitted))). That

10 bright line rule was also consistent with the approach adopted by

11 the Tenth Circuit. See Akin v. Ashland Chem. Co.,

, 1036

12 (10th Cir. 1998) (“We disagree with cases from other jurisdictions

13 which impose a duty to investigate and determine removability

14 where the initial pleading indicates that the right to remove may

15 exist. Rather, this court requires clear and unequivocal notice from

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1 the pleading itself, or a subsequent ‘other paper’ such as an answer

2 to interrogatory.” (emphasis in original) (footnote omitted)).

3 Since we decided Moltner, at least three of our sister circuits

4 have also adopted a rule requiring that the initial pleading or other

5 subsequent paper contain an “unequivocal statement from the

6 plaintiff regarding the damages sought” to trigger the removal

7 clocks of

(b)(1) and (b)(3). Walker v. Trailer Transit,

8 Inc.,

(7th Cir. 2013); see Mumfrey v. CVS Pharmacy,

9 Inc.,

(5th Cir. 2013); Kuxhausen,

.

10 Two of those decisions involved actions brought pursuant to CAFA.

11 In Walker v. Trailer Transit Inc., the Seventh Circuit held that

12 “[t]he 30‐day removal clock does not begin to run until the

13 defendant receives a pleading or other paper that affirmatively and

14 unambiguously reveals that the predicates for removal are present.”

15

. With respect to the amount in controversy, the

16 Seventh Circuit explained that “the pleading or other paper must

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1 specifically disclose the amount of monetary damages sought,”

2 and held that, with reference to § 1446(b)(3), the removal clock

3 “commences only when the defendant receives a post‐complaint

4 pleading or other paper that affirmatively and unambiguously

5 specifies a damages amount sufficient to satisfy the federal

6 jurisdictional minimums,” id. at 825 (emphasis in original). The

7 Seventh Circuit explained that this “bright‐line rule promotes clarity

8 and ease of administration for the courts, discourages evasive or

9 ambiguous statements by plaintiffs in their pleadings and other

10 litigation papers, and reduces guesswork and wasteful protective

11 removals by defendants,” id. at 824, and admonished that

12 “[a]ssessing the timeliness of removal should not involve a fact‐

13 intensive inquiry about what the defendant subjectively knew or

14 should have discovered through independent investigation,” id. at

15 825.

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1 In Kuxhausen v. BMW Financial Services NA LLC, the Ninth

2 Circuit reached a similar decision in a CAFA case in which the

3 named plaintiff claimed damages “exceeding $50,000” for herself

4 and asserted that the class had “hundreds” of members but failed to

5 specify the particular amount of damages the other class members

6 would each claim. 707 F.3d at 1140‐41. On appeal, the plaintiff

7 argued that the defendant should have either utilized the plaintiff’s

8 stated amount of damages or consulted its records to determine a

9 representative amount in controversy and then multiplied either

10 number by “hundreds” of class members to ascertain the likely

11 amount in controversy. Id. at 1141. The Ninth Circuit rejected this

12 reasoning, observing that “[n]owhere in th[e] pleading does [the

13 plaintiff] allege the value, even as an approximation, of other class

14 members’ vehicle financing contracts,” id. at 1140‐41, and holding

15 that “because nothing in [the plaintiff’s] complaint indicated that the

16 amount demanded by each putative class member exceeded [an

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1 amount that, when aggregated, would satisfy the jurisdictional

2 requirement], it fell short of triggering the removal clock under

3 Section 1446(b),” id. at 1141 (emphasis in original) (internal

4 quotation marks and alterations omitted). The Ninth Circuit

5 explained that it would not charge defendants in CAFA cases “with

6 notice of removability until they’ve received a paper that gives them

7 enough information to remove,” and observed that the defendant

8 was not obligated to supply information that the plaintiff had

9 omitted, even when it had access to such data. Id. (internal

10 quotation marks and citation omitted). The court noted that this

11 bright line rule would avoid a “Catch‐22” for defendants seeking a

12 federal forum but lacking sufficient removal‐related information and

13 that it would require “plaintiffs to assume the costs associated with

14 their own indeterminate pleadings.” Id.

15 We agree with these circuits and hold that, in CAFA cases, the

16 removal clocks of

(b) are not triggered until the

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1 plaintiff serves the defendant with an initial pleading or other

2 document that explicitly specifies the amount of monetary damages

3 sought or sets forth facts from which an amount in controversy in

4 excess of $5,000,000 can be ascertained. While a defendant must still

5 apply a “reasonable amount of intelligence” to its reading of a

6 plaintiff’s complaint, we do not require a defendant to perform an

7 independent investigation into a plaintiff’s indeterminate allegations

8 to determine removability and comply with the 30‐day periods of 28

(b)(1) and (b)(3). See Whitaker,

; see also

F.3d at 823‐25; Mumfrey, 719 F.3d at 398‐400; Kuxhausen,

11 707 F.3d at 1140‐41; Moltner, 624 F.3d at 37‐38. Thus, a defendant is

12 not required to consider material outside of the complaint or other

13 applicable documents for facts giving rise to removability, and the

14 removal periods of

(b)(1) and (b)(3) are not

15 triggered until the plaintiff provides facts explicitly establishing

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1 removability or alleges sufficient information for the defendant to

2 ascertain removability.

3 The plaintiffs in this case do not object to the application of

4 Moltner to CAFA cases, but they argue that Moltner should only be

5 applied where “plaintiffs are in possession of information to

6 explicitly specify damages.” They advocate an individual analysis

7 of the timeliness of removal based upon the availability of

8 information to the parties. They also argue that requiring the service

9 of a paper explicitly stating the amount in controversy to trigger the

10 removal clocks encourages gamesmanship and delay by defendants.

11 They point out that, in this case, MERS failed to perform an

12 examination of its records until more than two months after

13 plaintiffs filed their complaint.

14 We rejected this argument in Moltner,

, and we

15 also reject it here. As we explained in Moltner, a bright line rule is

16 preferable to the uncertainties faced by defendants in determining

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1 removability.

This approach also avoids courts “expending

2 copious time determining what a defendant should have known or

3 have been able to ascertain at the time of the initial pleading [or

4 other relevant filing].” Mumfrey,

. Application of the

5 Moltner standard is particularly helpful in CAFA cases removed

6 pursuant to

(b) because the size of the putative class

7 and the $5,000,000 amount in controversy requirements are high

8 enough that it may often initially be unclear whether they will be

9 exceeded.

10 Applying a bright line rule here, neither the plaintiffs’

11 complaint nor their subsequent response to MERS’s bill of

12 particulars explicitly specifies the aggregate amount in controversy

13 or alleges sufficient information for the defendant to ascertain

14 removability. The only amount provided in the complaint is that

15 which the two named plaintiffs are seeking to recover: the $6,835.20

16 they paid in New York state mortgage recording taxes upon

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1 refinancing their mortgage. Plaintiffs argue that MERS could have

2 easily ascertained the aggregate amount in controversy for the class

3 from the face of their complaint by multiplying $6,835.20 by the

4 estimated number of putative class members, identified in the

5 complaint as “hundreds, and likely thousands.” However,

6 “[n]owhere in th[e] pleading[s] do[] [the plaintiffs] allege the value,

7 even as an approximation, of other class members’ [second

8 mortgage recording tax payments].” Kuxhausen, 707 F.3d at 1140‐41.

9 Because neither the plaintiffs’ complaint nor their subsequent

10 response to MERS’s demand for a bill of particulars explicitly

11 specifies the aggregate amount in controversy or provides MERS

12 with sufficient information to conclude the threshold amount in

13 controversy was satisfied, the 30‐day removal clocks of

1446(b) were never triggered. Thus, MERS did not run afoul of the

15 statutory timeliness requirements governing removal.

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1 III. Exclusivity of the 30‐Day Removal Periods of

1446(b)(1) and (b)(3) in CAFA Cases 3 4 MERS’s removal in this case is thus not precluded by the 30‐

5 day clocks of

(b)(1) and (b)(3). Here, MERS, after

6 its own investigation, determined that the number of class members,

7 amount in controversy, and minimal diversity were satisfied

8 sufficient for CAFA jurisdiction pursuant to

(d). The

9 question remains whether a defendant may, as MERS did here,

10 remove an action outside of the 30‐day removal limits delineated in

11

(b)(1) and (b)(3) or if they are the exclusive time

12 periods during which a defendant may remove.

13 As an initial matter, we note, as have our sister circuits, that

14 “[t]he moment a case becomes removable and the moment the 30‐

15 day removal clock begins to run ‘are not two sides of the same

16 coin.’” Walker,

(quoting Kuxhausen,

17 n.3) (citing Mumfrey,

n.13). Thus, even if a defendant

18 could remove immediately upon the filing of a complaint because the

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1 case satisfies the requirements of federal subject matter jurisdiction,

2 a complaint or other document from the plaintiff that does not

3 explicitly convey the removability of a case does not trigger the

4 removal clocks of

(b)(1) and (b)(3). See Mumfrey,

5

n.13. That is, whether a basis for removal exists and

6 whether removal is timely are two separate questions.

7 As the Seventh Circuit explained in Walker:

8 Whether the jurisdictional prerequisites [of

1332(d)] are in fact met is a separate determination [from 10 whether removal is timely] and often involves 11 consideration of materials outside the state‐court 12 pleadings. The removing defendant has the burden of 13 proving the jurisdictional predicates for removal. In 14 contrast, the timeliness inquiry [governed by

1446(b)(1) and (b)(3)] is limited to [] examining contents of 16 the clock‐triggering pleading or other litigation paper; the 17 question is whether that document, on its face or in 18 combination with earlier‐filed pleadings, provides specific 19 and unambiguous notice that the case satisfies federal 20 jurisdictional requirements and therefore is removable. 21 22 727 F.3d at 824‐25 (emphasis in original) (internal citation omitted);

23 see also Mumfrey, 719 F.3d at 398‐99 (distinguishing between

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1 “amount disputes” pursuant to

(d) and “timeliness

2 disputes” under

(b)(1) and (b)(3) and observing

3 that even though the defendant could have removed the case upon

4 receipt of the plaintiff’s complaint, the removal clock was not

5 triggered by the face of the complaint); Kuxhausen,

6 n.3 (noting that the plaintiff was incorrect in asserting that because

7 the defendant “could have ventured beyond the pleadings to

8 demonstrate removability initially (as it did later upon receipt of the

9 First Amended Complaint) it was therefore obligated to do so.”

10 (emphases in original)). If a complaint is vague, indeterminate, or

11 otherwise fails to convey these jurisdictional predicates, the removal

12 clocks of

(b)(1) and (b)(3) are not triggered, but the

13 defendant is not necessarily prohibited from removing.

14 When neither 30‐day removal clock of

(b) was

15 triggered, may MERS remove based on its own investigation?

16 Implicit is the question of whether the two 30‐day periods listed in

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1

(b)(1) and (b)(3) are the exclusive authorizations for

2 removal. The Ninth Circuit has resolved this question, and we agree

3 with its approach. In Roth v. CHA Hollywood Medical Center, L.P., 720

(9th Cir. 2013), the Ninth Circuit considered a CAFA

5 case in which the plaintiff in a state court action failed to specify an

6 amount of damages in her complaint but the defendants determined

7 removability from their own investigation. On appeal, the issue was

8 whether the defendants could remove under

(a)

9 independently of the 30‐day periods set forth in

1446(b)(1) and (b)(3).

.

11 The Ninth Circuit held that “§§ 1441 and 1446, read together,

12 permit a defendant to remove outside the two thirty‐day periods [of

13

(b)] on the basis of its own information, provided

14 that it has not run afoul of either of the thirty‐day deadlines.”

at

15 1125. Because the complaint in that case did not reveal on its face

16 that there was a sufficient basis for jurisdiction under CAFA, the

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1 Ninth Circuit held that it was appropriate for the defendants to

2 remove the case after they completed their own investigation.

3 The court noted, “It would be odd, even perverse, to prevent

4 removal in this case, and we see nothing in the text of §§ 1441 and

5 1446 to require such a result.” Id. We also note that this result is

6 consistent with our sister circuits that have addressed this issue and

7 concluded, at least implicitly, that removal is permissible outside of

8 the 30‐day periods of

(b)(1) and (b)(3) where a

9 defendant’s own investigation yields evidence of removability. See

10 Mumfrey, 719 F.3d at 398‐99, 400 n.13; Kuxhausen,

11 n.3.

12 We agree with the Ninth Circuit that the text of

1446(b) does not indicate that the two 30‐day periods listed therein

14 are the exclusive authorizations of removal. See Roth, 720 F.3d at

15 1125. Section 1446(b) imposes a time limit only in cases in which the

16 plaintiff’s initial pleading or subsequent document has explicitly

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1 demonstrated removability. Defendants are permitted to remove

2 outside of these periods when the time limits of

(b)

3 are not triggered.

4 The plaintiffs here suggest this approach could result in

5 “gamesmanship” and intentional delay by defendants. However,

6 the Ninth Circuit addressed this argument in Roth. The Ninth

7 Circuit noted that, because there is no one‐year limitation on

8 removals in CAFA cases pursuant to

(b), it is “at

9 least theoretically possible in a CAFA case for a defendant to wait

10 until the state court has shown itself ill‐disposed to defendant, or

11 until the eve of trial in state court, before filing a notice of removal.”

12

. But, the Ninth Circuit observed:

13 [P]laintiffs are in a position to protect themselves. If 14 plaintiffs think that their action may be removable and 15 think, further, that the defendant might delay filing a 16 notice of removal until a strategically advantageous 17 moment, they need only provide to the defendant a 18 document from which removability may be ascertained. 19 Such a document will trigger the [§ 1446(b)(3)] 30‐day 20 removal period[.]

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1 2 Id. (internal citation omitted). We also believe that, in most cases,

3 defendants will likely remove as soon as the existence of federal

4 jurisdictional predicates becomes apparent.

5 MERS presented facts adequate to establish a reasonable

6 probability that the number of the putative class is 100 or greater,

7 that the amount in controversy likely exceeds $5,000,000, and that

8 there is minimal diversity between the parties.5 See Galeno,

at 57‐59; Lupo v. Human Affairs Intʹl, Inc.,

, 273‐74 (2d Cir.

10 1994). MERS thus properly removed this action once it determined

11 removability. Because we already held above that the plaintiffs’

12 filings failed to trigger the 30‐day periods of

(b)(1)

13 and (b)(3), we conclude that MERS’s removal based on its own

5 The plaintiffs in this case do not argue that MERS failed to allege adequate facts to establish removability in its notice of removal or subsequent declaration.

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1 investigation was permissible. We accordingly hold that MERS’s

2 removal was timely.6

3 CONCLUSION

4 We hold that, in CAFA cases, the 30‐day removal periods of

5

(b)(1) and (b)(3) are not triggered until the plaintiff

6 serves the defendant with an initial pleading or other document that

7 explicitly specifies the amount of monetary damages sought or sets

8 forth facts from which an amount in controversy in excess of

9 $5,000,000 could be ascertained. We also hold that where these

10 documents fail to trigger the removal periods of

1446(b)(1) and (b)(3), a defendant may remove a case when, upon its

12 own independent investigation, it determines that the case is

13 removable. Thus, we hold that the 30‐day removal periods of 28

6 Given our holding that MERS timely removed this case, we do not reach the question, as MERS urges us, of whether the plaintiffs’ cause of action presents a federal question sufficient for jurisdiction pursuant to

.

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(b)(1) and (b)(3) are not the exclusive authorizations of

2 removal in CAFA cases.

3 In this case, the plaintiffs never served MERS with a

4 complaint or subsequent document explicitly stating the amount in

5 controversy or providing MERS with sufficient information to

6 conclude the threshold amount in controversy was satisfied.

7 Therefore, the removal clocks of

(b)(1) and (b)(3)

8 did not commence. After MERS determined upon its independent

9 investigation that

(d) conveyed CAFA federal

10 jurisdiction because the amount in controversy, number of plaintiffs,

11 and minimal diversity requirements were satisfied, it properly

12 removed the case by alleging facts adequate to establish the amount

13 in controversy in its notice of removal. We therefore VACATE the

14 district court’s order remanding the case to state court and

15 REMAND the case for proceedings consistent with this opinion.

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