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

Dog Treats Litigation Stays in Missouri State Court

Posted in Case Summaries

Curts v. Waggin’ Train, LLC, 2013 WL 2319358 (W.D. Mo. May 28, 2013).

Rejecting the defendants’ request to broaden the class definition in order to establish federal jurisdiction, a District Court for the Western District of Missouri held that it could not change the Plaintiffs’ choice of class definition.  The Court also examined and held that both the home state and the interest of justice exceptions were applicable.

The plaintiff brought an action in Circuit Court of Jackson County, Missouri, under the Missouri Merchandising Practice Act (“MMPA”), alleging that the defendants falsely labeled and marketed their Dog Treats as wholesome and healthy, when in fact the Dog Treats were allegedly made with substandard, non-wholesome, and unnatural ingredients that were contaminated with poisonous antibiotics and other potentially lethal substances.

The plaintiff’s proposed class comprised of all consumers who, at any time from January 2003 to the present purchased the defendants’ Dog Treats within the State of Missouri and were citizens of the State of Missouri at the time the Class Action Petition was filed.

The defendants removed the action to the Western District of Missouri under CAFA, and the plaintiffs moved for remand arguing that the defendants did not meet CAFA jurisdiction.  They also argued that Home State and Interest of Justice Exceptions applied.  The District Court granted the plaintiff’s motion and remanded the case to state court.

First, the defendants argued that despite alleging a 10-year class period based on sales of Jerky Treats in Missouri, the plaintiff artificially tried to limit the class to people who happened to be citizens of the State of Missouri on one particular day during that 10-year period, February 4, 2013, in a poly to avoid minimal diversity and, thus, federal jurisdiction.

Although the defendants asked the District Court to broaden the class definition to include all consumers who purchased the Dog Treats in Missouri during the relevant time period in order to establish federal jurisdiction, the District Court opined that it was not empowered to fix the definition even if it was convinced that repairs were inevitable and necessary and doing so would create federal jurisdiction.

Next, the defendants cited Standard Fire Insurance Co v. Knowles, 133 S. Ct. 1345 (2013), for the proposition that it was impermissible for the plaintiff to structure her class action in a manner designed to avoid federal court jurisdiction.  The District Court, however, observed that Standard Fire involved a class-action plaintiff who stipulated, prior to class certification, that he and the class he sought to represent would not seek damages exceeding $5 million.  The Supreme Court held that such a stipulation would not prevent removal of the case under CAFA, and stated that in order to defeat jurisdiction the stipulation must be binding, and a plaintiff bringing a proposed class action cannot bind members of the proposed class before the class is certified.  (Editor’s Note: see CAFA law blog analysis on Knowles posted on April 12, 2013.)

Although the defendants pointed other cases where courts had looked beyond the surface of a complaint in order to reject the plaintiffs’ engineering of their suits to avoid federal jurisdiction, the District Court noted that these cases did not address state-specific class definitions; instead these were cases where the plaintiffs included stipulations or divided up suits in order to defeat the amount in controversy or numerosity requirements.

Here, the plaintiff was a Missouri citizen, the putative class was comprised exclusively of Missouri citizens, and the defendants were also citizens of Missouri.  The Dog Treats were purchased in Missouri and the plaintiff only asserted claims under Missouri law.  The District Court remarked that the plaintiff was the master of her complaint, and she had defined the class to only include Missouri citizens, which she was entitled to do.  Accordingly, the District Court stated that the defendant failed to carry the burden of establishing the initial requirement for jurisdiction.

Second, the CAFA Home State Exception provides that a district court shall decline to exercise jurisdiction over a class in which two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.

The plaintiff defined the class as consumers who purchased the Dog Treats in Missouri and were Missouri citizens at the time the state-court Petition was filed, which necessarily required that all the class members were Missouri citizens and thus the two-thirds requirement was met.  The defendants argued the class definition should be expanded to include the approximately one million people who moved out of Missouri between 2004 and 2011 as well as the thousands of additional persons in 2003, 2012, and the first month of 2013.

Assuming the percentage of consumers purchasing the Dog Treats was consistent between current citizens and those who had left the state, well over 80% continued to reside in Missouri.  Even taking into consideration an influx of out-of-state purchasers hypothesized by the defendants, the District Court noted that there was no reasonable doubt that the vast majority of putative class members would still be Missouri citizens.  Accordingly, the District Court opined that the home state exception applied.

Finally, under 28 U.S.C. § 1332(d)(3), a court may, in the interest of justice, decline to exercise jurisdiction if more than one-third and less than two-thirds of the class and the primary defendants are citizens of the state where the suit was filed.

Here, the suit was filed in Missouri and the plaintiff only asserted claims under Missouri law which were not matters of national or interstate interest.  Both the defendants were citizens of Missouri, the alleged harms occurred in Missouri, and the acts giving rise to the plaintiff’s claims occurred in Missouri.  Even if the class included out-of-state consumers and then-Missouri consumers who had since moved out of the state, the District Court observed that far more class members would be citizens of Missouri than any other state.

Further, the District Court noted that although the defendants were facing other similar class actions that had been centralized in the United States District Court for the Northern District of Illinois, MDL consolidation had been denied for these cases, which mitigated this factor.  Accordingly the District Court opined that the Interest of Justice Exception also applied.

Note that the Plaintiffs also requested attorneys’ fees and costs for their motion to remand.   The court pointed out that, absent unusual circumstances, courts may award attorney’s fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal.  The court declined the request agreeing that the Defendants simply wanted to coordinate this litigation with litigation already pending in federal court in the Northern District of Illinois.

This opinion contains a good description of the application of the Home State Exception.  It also shows the Plaintiffs’ use of census bureau data regarding the population of Missouri.   Check out how the Plaintiffs’ used the data as evidence.     Enjoy.    — JR