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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Defendant Lacked Energy To Maintain Jurisdiction Under CAFA

Posted in Case Summaries

Zuckman v. Monster Beverage Corp., No. 12-1978, 2013 WL 3992932 (D.D.C. Aug. 6, 2013).

The District Court for the District of Columbia held that an action brought under the private attorney general provision of the District of Columbia’s Consumer Protection Procedures Act was not a removable class action under CAFA.

The plaintiff, acting on behalf of himself and the general public, brought a state court action alleging that Monster Beverage violated the District of Columbia’s Consumer Protection Procedures Act (“DCCPPA”) by concealing and misrepresenting the adverse health effects of its energy drinks.  Monster then removed, arguing that the district court had diversity jurisdiction, or alternatively that the court had jurisdiction under CAFA.  In response, the plaintiff filed a motion to remand, which the district court granted.

The district court held that it lacked jurisdiction under CAFA because the plaintiff’s private attorney general action under the DCCPPA was not a class action. See 28 U.S.C. § 1332(d)(1)(B).  While the DCCPPA authorizes private attorney general suits, it does not contain any class action procedures.  Moreover, the plaintiff did not seek class certification under Rule 23 of the D.C. Superior Court Rules of Civil Procedure, and the complaint specifically stated that the suit was a representative action under the DCCPPA.  Based on these factors, the district court found that the action was a “separate and distinct procedural vehicle from a class action” and thus did not fall within the scope of CAFA. See 28 U.S.C. § 1332(d)(1)(B).

Monster, however, cited a D.C. Superior Court case, Margolis v. U-Haul Int’l Inc., 2009 WL 5788369 (D.C. Super. Ct. Dec. 17, 2009), to argue that the plaintiff’s suit was a putative class action.  The Margolis court held that a DCCPPA claim for damages on behalf of the general public had to invoke and comply with the class action procedures outlined in Rule 23 of the D.C. Superior Court Rules of Civil Procedure.  Because the complaint in Margolis was not framed as a class action and did not include any class allegations, the D.C. Superior Court dismissed the plaintiff’s claim for damages on behalf of third parties but allowed the plaintiff to pursue his individual claims for damages and injunctive relief.  Relying on Margolis, Monster argued that the plaintiff’s representative action must be litigated as a class action pursuant to Rule 23.

The district court disagreed, stating that whether this case must be litigated as a class action “is a merits question to be assessed on a motion to dismiss.”  In contrast, the dispositive issue for purposes of jurisdiction under CAFA is whether the plaintiff’s action was filed under Rule 23 of the Federal Rules of Civil Procedure or a similar state statute. 28 U.S.C. § 1332(d)(1)(B).  Here, the plaintiff did not seek class certification under Rule 23 of the Federal Rules of Civil Procedure or the D.C. Superior Court Rules of Civil Procedure.  Likewise, the DCCPPA itself is not a statute similar to Rule 23, as it contains none of the procedural safeguards, such as adequacy and typicality, that are the hallmarks of class action litigation.

The district court, therefore, declined Monster’s invitation to convert the plaintiff’s complaint into a class action on the assumption that, faced with possible dismissal of the damages claim on behalf of the general public, the plaintiff would file his case under Rule 23 or a state analogue.  This is because “class actions are permissive, not mandatory,” Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269, 291 (2008), and it was the plaintiff’s strategic choice, in light of Margolis, to proceed without invoking Rule 23 –  a choice that the district court would not question or disturb.

Ultimately, the court concluded that the plaintiff did not file a class action, and thus his DCCPPA claim fell outside the scope of CAFA.  Accordingly, the court remanded the case to the D.C. Superior Court.