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

There Is No Anti-Removal Presumption In CAFA

Posted in Case Summaries

Rosenblatt v The Nuplexa Group Inc., Civ. No. 16-1064 (ES) (SCM), 2016 WL 3546579 (D.N.J. June 29, 2016).

In deciding to remand an action to the Superior Court of New Jersey, Law Division, Bergen County (the “State Court”), the United States District Court for the District of New Jersey (the “District Court”) found that although removal statutes must generally be strictly construed, with any doubt to be resolved in favor of remand, the presumption against removal does not apply to class actions invoking jurisdiction under the Class Action Fairness Act (“CAFA”).

Plaintiff Raphael Rosenblatt (“Plaintiff”) brought an action in the State Court alleging defendants Nuplexa Group, Inc. and Dennis Black (collectively, “Defendants”) made claims and promises about their nutrition supplement, Texas Superfood Select, that are simply untrue in violation of New Jersey state law, including New Jersey’s Consumer Fraud Act (“N.J.S.A.”).

Plaintiff claimed that for the six-year period before the filing of this action, Defendants marketed, advertised, promoted, offered and sold their Texas Superfood product to consumers as a dietary supplement designed to deliver the daily nutrition equal to the nutrition offered by twelve servings of raw fruits and vegetables. Based on the Defendants’ representations and marketing efforts, Plaintiff purchased the Texas Superfood product through the Defendants’ website for a purchase price of $78.60. As a result, of the Defendants’ misrepresentations, Plaintiff and thousands of class members throughout the State of New Jersey suffered ascertainable losses in the form of actual out-of-pocket payment and expenditure.

Defendants removed the action to the District Court under CAFA, and Plaintiff subsequently moved to remand. The Magistrate Judge recommended granting Plaintiff’s motion to remand. Defendants filed objections to the recommendation, and the District Court adopted the recommendation in relevant part and granted the Plaintiff’s motion to remand.

The sole issue in dispute before the District Court was whether CAFA’s five-million-dollar statutory threshold was met. Plaintiff argued Defendants, without any factual support, claimed the amount in controversy exceeded $5 million. Specifically, Plaintiff stated that if the $78.60 he paid to purchase the Texas Superfood product was considered to measure the damages for each individual class member, in order for the aggregate damages to exceed $5 million, the class would have to consist of a minimum of several tens of thousands of putative class members, even if damages were trebled, punitive damages were assessed, and attorney’s fees were awarded. Defendants, however, did not provide any information regarding the number of sales made within the State of New Jersey, nor did they explain why they have failed to provide this obviously relevant information.

Defendants argued Plaintiff’s complaint sought a large damages amount. More specifically, the damages were noneconomic losses that are recoverable as part of the ‘other appropriate legal’ relief N.J.S.A. 56:8-19 authorizes. Second, Defendants argued (i) the complaint could be read to permit the recovery for harm to class members’ physical body, (ii) thousands of transactions occurred over the 6 years alleged in the complaint; and (iii) punitive damages may be recoverable, which are in additional to treble damages, disgorgement of revenue, and counsel fees. Finally, Defendants contended Plaintiff plead a deficient complaint so that valuation would fail and class action would remain in the State Court. Thus, Defendants sought to have the Court to direct Plaintiff to amend the pleadings so that a more detailed valuation could be submitted to the District Court for its consideration.

The District Court stated that it was mindful “that no anti-removal presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.” Accordingly, the District Court did not adopt the reasoning in support of remand from the Recommendation of the Magistrate Judge to the extent it relied on an anti-removal presumption. The District Court explained that although removal statutes must generally be strictly construed, with any doubt to be resolved in favor of remand, the presumption against removal does not apply to class actions invoking jurisdiction under CAFA.

Rather, the District Court resolved this matter by focusing strictly on its task to determine whether the Defendants established, beyond a preponderance of the evidence, that the amount in controversy exceeded the sum or value of $5,000,000, exclusive of interest and costs pursuant to 28 U.S.C. § 1332(d)(6). Upon evaluation of the submitted pleadings, the District Court found Defendants failed to satisfy CAFA’s amount-in-controversy requirement by a preponderance of the evidence. Specifically, the District Court remarked Defendants failed to provide information about the number of Texas Superfood sales made in New Jersey, or at least a reason why they could not provide such information.

The District Court remarked that nothing from the pleadings, namely, Plaintiff’s complaint and Defendants’ notice of removal—made it reasonably apparent the jurisdictional amount was met. Defendants contended without factual support that both sides agreed that thousands of transactions occurred over the 6 years alleged in the complaint. The District Court explained that even speculating that there were 10,000 transactions, for example, involving Texas Superfood costing $78.60 per transaction, this would amount to $786,000.00. Trebling that figure would result in $2,358,000.00. It was only with further speculation involving punitive damages and counsel fees, which would have to more than double the $2,358,000.00 figure, that the District Court could arrive at CAFA’s required amount-in-controversy. Speculation, however, was not permissible as the District Court was required to consider proof and decide, by a preponderance of the evidence, whether the amount-in-controversy requirement had been satisfied.

Accordingly, the District Court adopted the Magistrate Judge’s recommendations in relevant part and remanded the action to the State Court.

Yaron Shaham