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

Without Meeting Procedural Requirements, Non-Profit Organizations’ Action on Behalf of the General Public Is Not Necessarily a Class Action Removable Under CAFA

Posted in Case Summaries

Animal Legal Defense Fund v. Hormel Foods Corporation, — F. Supp. 3d —-, 2017 WL 1283411 (D.D.C. Apr. 5, 2017).

In this action, in granting the plaintiff’s motion to remand, the U.S. District Court for the District Columbia found that because the plaintiff did not bring the case under Federal Rule of Civil Procedure 23—but instead under a D.C. Code section that permits a non-profit organization to sue on behalf of general public challenging any trade practice, which is a “separate and distinct procedural vehicle from a class action”—CAFA does not apply.

The plaintiff, a non-profit organization that focuses on animal protection issues, brought an action in the Superior Court of the District of Columbia alleging that the defendant, a meat producer, violated the District of Columbia Consumer Protection Procedures Act (“DCCPPA”) by misleading consumers with its “Natural Choice” advertising campaign. The plaintiff claimed that the defendant’s meat products were not “natural” in the way that its advertising campaign implied. The plaintiff sought a declaration that the defendant’s conduct was in violation of the DCCPPA, an order enjoining such conduct and requiring corrective advertising, and attorneys’ fees.

The defendant removed the case to the federal court invoking, inter alia, CAFA jurisdiction. The plaintiff moved to remand, which the District Court granted.

The defendant contended that the District Court should consider the instant lawsuit a “class action” over which it has jurisdiction pursuant to CAFA. The plaintiff argued that the defendant had not carried its burden of demonstrating that $5 million was in controversy. The parties disputed whether the aggregate amount the defendant would need to spend to comply with the injunctive relief requested in this action, which would exceed $5 million, should be considered for CAFA analysis.

The District Court, however, held that it need not resolve the parties’ dispute because class-action jurisdiction under CAFA was absent because the plaintiff had not brought the case as a class action. The Court noted that CAFA defines a class action as “any civil action filed under Rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.” 28 U.S.C. § 1332(d)(1)(B). The Court found that because the plaintiff did not bring the instant case under District of Columbia Superior Court Rule of Civil Procedure 23 [an analogue to the Federal Rule], but instead under D.C. Code § 28-3905(k)(1)(C)—which states that “[a] non-profit organization may, on behalf of itself or any of its members, or on any such behalf and on behalf of the general public, bring an action seeking relief from the use of a trade practice in violation of a law of the District”—the matter should not be considered a class action. In so doing the Court, citing Breakman v. AOL, noted that the D.C. Code section did not require class proceedings and was a “separate and distinct procedural vehicle from a class action,” to which CAFA did not apply. See 545 F. Supp. 2d 96, 101 (D.D.C. 2008).  (Editor’s Note: See the CAFA Law Blog discussion of Breakman here).

The defendant argued that the line of authority supporting that conclusion was “surely limited, if not outright invalidated” by the D.C. Circuit Court of Appeals’ recent opinion in Rotunda v. Marriott International, Inc., 123 A.3d 980 (D.C. 2015). The Rotunda court determined that an action for damages under the DCCPPA on behalf of the general public must comply with Superior Court Rule of Civil Procedure 23 and be certified as a class action. 123 A.3d at 982. That court concluded that due to “the unique challenges to procedural fairness and administration posed by a representative suit for damages,” the “necessary vehicle for suits seeking class-wide damages remains Rule 23.” Id.

Here, the District Court held that the concerns raised in Rotunda related to suits for damages, not for the type of injunctive relief sought in the instant case, and that the Rotunda court repeatedly described its holding as limited to such suits. The Court here further noted that the Rotunda decision said nothing about DCCPPA lawsuits that did not seek damages on behalf of the general public, unlike the one before it.

The defendant argued that the concerns that motivated the Court of Appeals were similarly applicable to suits for injunctive relief, and thus the Court should extend the Rotunda decision to such suits on that basis. But the Court here stated that whether or not it would deem it prudent for D.C. law to require DCCPPA suits for injunctive relief be considered class actions that must comply with Rule 23 was irrelevant, because the Rotunda opinion did not require that.

Finally, the Court noted that finding that this case is not a class action for the purposes of CAFA is not in conflict with the Court’s conclusion that the non-aggregation principle makes it inappropriate for the Court to consider the total cost to the defendant of complying with the requested injunction when calculating the amount in controversy for the purposes of diversity jurisdiction. Defendant argued that these two conclusions “cannot be squared” and allow Plaintiff to “have it both ways.” The Court noted that although defendant’s position may have some intuitive appeal, it conflates what are in fact two distinct inquiries. That is, considering the total cost of complying with the requested injunction is inappropriate because doing so effectively aggregates separate and distinct claims that each member of the general public has against defendant regarding the challenged conduct. The Court held that finding that CAFA jurisdiction does not apply is “simply a matter of determining that Plaintiff has not brought this case as a class action,” so “these two determinations are not inherently in conflict.”

Accordingly, the District Court held that because the plaintiff did not bring its case as a class action— and the defendant had not shown that any D.C. law or court opinion would require the plaintiff’s case be treated as such—it saw no reason to conclude that the plaintiff had brought a class action for the purposes of CAFA. Because there was no other basis for retaining jurisdiction (e.g. federal question or diversity), the District Court thus granted the plaintiff’s motion to remand for lack of subject matter jurisdiction.

–Barry A. McCain