Opinion
Case No. 14-cv-1323-SC
06-16-2014
NATASHA ARENS, Plaintiff, v. POPCORN, INDIANA, LLC, and DOES 1-100, Defendants.
ORDER ON MOTION TO REMAND
I. INTRODUCTION
Plaintiff Natasha Arens brought this putative class action in California Superior Court against Defendant Popcorn, Indiana, LLC ("Popcorn Indiana"). The complaint includes numerous allegations regarding Popcorn Indiana's labeling of its products. Defendants removed the action to federal court pursuant to 28 U.S.C. § 1441.
Now before the Court is Plaintiff's motion to remand the matter to state court. The motion is fully briefed and is suitable for determination without oral argument per Civil Local Rule 7-1(b). For the reasons set forth below, Plaintiff's motion is DENIED.
ECF Nos. 17 ("Mot."), 18 ("Opp'n"), 19 ("Reply"), 21-1 ("Sur-Reply"). Popcorn Indiana has also moved for leave to file a short sur-reply to address issues raised for the first time in Plaintiff's reply. ECF No. 21. The motion is unopposed, and the Court finds that the reply clarifies outstanding ambiguities and presents new evidence that warrants a response from Defendant. The Court GRANTS the motion and will consider the sur-reply.
II. BACKGROUND
Popcorn Indiana produces snack foods, including its "FIT" popcorn products. Mot. at 2. Plaintiff alleges that Popcorn Indiana has labeled and advertised its products as healthy food that can help consumers lose weight when, in fact, Popcorn Indiana's products are high in fat and calories. Id. Plaintiff Natasha Arens purports to represent "all California residents who, within the last four years, purchased a FIT Popcorn an unlawfully labeled product [sic]." ECF No. 1-1 ("Compl.") ¶ 67-68.
Plaintiff's attorneys have clarified that they intended to strike the phrase "an unlawfully labeled" from this sentence, and that the class includes only purchasers of FIT products. ECF No. 19-2 ("Gertler Decl.") ¶ 2.
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III. LEGAL STANDARD
Defendants to a civil action brought in state court may remove the matter to federal district court, so long as the district court has original jurisdiction. 28 U.S.C. § 1441. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C.A. § 1447(c). Courts "strictly construe the removal statute against removal jurisdiction," and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). When CAFA is the basis for federal jurisdiction, "the party seeking federal jurisdiction on removal bears the burden of establishing that jurisdiction." Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 686 (9th Cir. 2006).
Popcorn Indiana's claimed basis for federal jurisdiction in this case is the Class Action Fairness Act of 2005 ("CAFA"). ECF No. 1 ("Removal Notice") at 3; see 28 U.S.C. § 1332(d). CAFA provides for federal jurisdiction in cases filed as class actions in which (1) the number of members in the proposed plaintiff class is at least one hundred; (2) any member of the plaintiff class is a citizen of a state different from any defendant; and (3) the total amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d). In the Ninth Circuit, determining the amount in controversy is a two-step process. First, the court determines whether the amount in controversy is facially apparent from the complaint. If it is not, the court may consider the facts in the removal petition and evidence submitted by the parties. Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). Where the complaint does not allege a specific amount in controversy, the party seeking removal must demonstrate that the $5 million threshold is met by a preponderance of the evidence. Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010).
IV. DISCUSSION
The sole jurisdictional issue is whether the amount in controversy in this case exceeds $5 million. Plaintiff's complaint alleges that Popcorn Indiana is incorporated in Delaware with its principal place of business in New Jersey. Compl. ¶ 7. Popcorn Indiana is therefore a citizen of Delaware and New Jersey. Ms. Arens is a citizen of California. Id. ¶ 6. Consequently at least one plaintiff and one defendant are from different states, and the simple diversity required by CAFA is satisfied. The Complaint also alleges that members of the proposed class number in the thousands. Id. ¶ 70. Plaintiff does not contest that the diversity and numerosity requirements are met, but asserts that the amount in controversy is less than $5 million. Mot. at 1. There is no estimate of the amount in controversy in the complaint, as the amount in controversy depends on the number of plaintiffs, the number of products sold, and the prices at which they were purchased. Thus the amount in controversy is not facially apparent from the complaint, and, pursuant to Singer, the Court will consider the facts submitted with the removal petition and the evidence submitted by the parties.
The parties disagree on the scope of the complaint and the remedies sought. Specifically, the parties differ as to whether Plaintiff seeks restitution only for sales of Defendant's FIT brand products or for other products as well. Compare Opp'n at 2-3 with Reply at 5-6. This disagreement complicates the process of determining the amount in controversy. But as a starting point, Popcorn Indiana estimates that the cost of correcting the labeling of its FIT products will be approximately $600,000. Popcorn Indiana also anticipates that the cost of refunding the purchase price of FIT products sold to putative class members during the last four years will be $2.8 million. ECF No. 2 ("Schenfeld Decl. I") ¶¶ 3-4. Plaintiff never contests these estimates, and, in fact, uses them to support her own arguments. Mot. at 1. Thus the parties appear to agree that the amount in controversy is no less than $3.4 million.
Plaintiff asserts that she seeks restitution only for the sale of FIT products. There is support for this in the complaint, which states that Plaintiff "seeks compensatory damages and restitution, with interest, for the amounts paid by consumers for FIT Popcorn products." Compl. ¶ 5. The plaintiff is the "master of the complaint," Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002), and "the amount in controversy is determined from the face of the pleadings." Crum v. Circus Circus Enterprises, 231 F.3d 1129, 1131 (9th Cir. 2000). Despite the inconsistencies and imprecise writing, the complaint does seem to indicate that Plaintiff seeks restitution only for purchases of the FIT product line. However, that does not end the enquiry, as Plaintiff also seeks injunctive relief.
Determining the amount in controversy in a CAFA case requires application of the either-viewpoint rule. See Otay Hydraulics, Inc. v. Safety-Kleen Sys., Inc., 2:12-CV-07357-ODW, 2013 WL 1898573 at *2 (C.D. Cal. May 6, 2013); Rippee v. Boston Mkt. Corp., 408 F. Supp. 2d 982, 984 (S.D. Cal. 2005). "Under the 'either viewpoint' rule, the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce." In re Ford Motor Co./Citibank (S. Dakota), N.A., 2 64 F.3d 952, 958 (9th Cir. 2001). In cases where injunctive relief is sought, if "the potential cost to the defendant of complying with the injunction exceeds that amount, it is the latter that represents the amount in controversy for jurisdictional purposes." Id.
While Plaintiff has made clear that she seeks monetary damages only with respect to the FIT line of products, the complaint specifies that the proposed injunction covers additional products: "Plaintiff also seeks an order enjoining Defendants from further unlawful or deceptive conduct, as to FIT and other snack food products . . . ." Compl. ¶ 5 (emphasis added). Popcorn Indiana estimates that "[r]evising non-FIT Products' labeling, pulling Non-FIT Products from California shelves, and destroying old packaging and corrugate as demanded in Plaintiff's Complaint" will cost $3.8 million. Thus the total cost to Popcorn Indiana of paying restitution for sales of FIT Popcorn products and complying with the injunction Plaintiff seeks would be $7.2 million. Based on the estimates of damages and compliance with the injunction, the Court finds that Popcorn Indiana has met its burden of showing by a preponderance of the evidence that the amount in controversy exceeds $5 million. It is therefore unnecessary to evaluate the parties' arguments regarding inclusion of attorney's fees and punitive damages in the amount in controversy.
V. CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiff's motion and retains jurisdiction over this case.
IT IS SO ORDERED.
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UNITED STATES DISTRICT JUDGE