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

Defendant Cannot Be Asked To Confess Liability Under The Guise Of Calculating The Amount In Controversy

Posted in Case Summaries

Raskas v. Johnson & Johnson, 2013 WL 3198177 (8th Cir. June 26, 2013)

While reversing an order of remand, the Eighth Circuit held that when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are.  Further, the court held that defendants do not need to provide a formula or methodology for calculating the potential damages more accurately because that would require a defendant to confess liability for the entire jurisdictional amount.

Three customers brought three separate class actions in state court asserting violations of the Missouri Merchandising Practices Act and alleging that the defendants conspired with unknown third parties to deceive customers into discarding medications after their expiration dates, knowing that the medications were safe and effective beyond the expiration date.  Specifically, plaintiff Marjie Levy sued Pfizer for its use of expiration dates on its Advil products; plaintiff Leslie Yoffie sued Bayer for its use of expiration dates on Bayer Aspirin; and plaintiff Daniel Raskas sued Johnson & Johnson and McNeil-PPC for their use of expiration dates on Tylenol Cold Multi-Symptom.

The defendants removed these actions to the District Court under CAFA.  Each plaintiff filed a motion to remand claiming that the sales figures submitted by the defendants were insufficient to satisfy the amount in controversy requirement because the plaintiffs were only seeking to recover damages for medications discarded and replaced.

The District Court consolidated the motions for a single hearing and remanded the action holding that the defendants had not met their burden of establishing the amount in controversy requirement.  On appeal, the Eighth Circuit reversed the order of the District Court.

Here, to meet their burden of proving that the amount in controversy exceeded $5 million, each defendant relied on its own sales figures in Missouri during the relevant statutory time period.  The plaintiffs argued that these figures could not establish the amount in controversy because they were over-inclusive, as the plaintiffs were only attempting to recover damages for the medications wrongfully discarded and replaced due to the defendants’ practices.

The Eighth Circuit, however, opined that when determining the amount in controversy, the question is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are.  Here, defendant Pfizer Inc. produced an affidavit stating that sales from the relevant Advil products were over $14 million, and defendants Johnson & Johnson and McNeil-PPC Inc. produced an affidavit stating their total sales of Tylenol Cold Multi-Symptom were $3.3 million.  The Eighth Circuit stated that when considering the total sales in conjunction with the request for punitive damages, the amount in controversy requirement was met.

Further, defendant Bayer Healthcare, LLC provided an affidavit stating that its sales from certain Bayer Aspirin products were over $19 million.  The Eighth Circuit found all of these sales figures were sufficient to establish the amount in controversy requirement by a preponderance of evidence.

Further, the Eighth Circuit observed that once the proponent of federal jurisdiction explains plausibly how the stakes exceed $5 million, as the defendants did here, the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.  The Eight Circuit also opined that even if it was highly improbable that the plaintiffs would recover the amounts the defendants had put into controversy, this did not meet the legally impossible standard.

Additionally, the Eighth Circuit noted that the defendants did not need to provide a formula or methodology for calculating the potential damages more accurately because it would require them to confess liability for the entire jurisdictional amount.

Although the plaintiffs contended that the defendants’ affidavits contained inadmissible hearsay, the Eighth Circuit remarked that the removing party’s burden of describing how the controversy exceeds $5 million constitutes a pleading requirement, not a demand for proof.

Accordingly, the Eighth Circuit reversed the District Court’s remand order.