A California district court dismissed a class action complaint for lack of subject matter jurisdiction. The court determined that the complaint contained insufficient factual allegations to establish not only the plaintiff’s citizenship, but also that the amount in controversy exceeded CAFA’s jurisdictional minimum.
Stephanie Hirmez (“Hirmez”), a California resident, purchased a health food product from GNC Holdings, Inc. (“GNC”). According to Hirmez, GNC made false, fraudulent, misleading, unfair, and deceptive claims about the effects of the product on human health. She brought a putative class action against GNC, among others, on behalf of all individuals who purchased the product. In response, GNC moved to dismiss the action on the ground that Hirmez lacked standing and failed to state a claim upon which relief could be granted.
Rather than dismissing the action on the basis that Hirmez lacked standing or failed to state a claim upon which relief could be granted, the court dismissed the complaint for lack of subject matter jurisdiction. The court analyzed the sufficiency of the jurisdictional allegations in Hirmez’s complaint. Since Hirmez was the party invoking federal jurisdiction, she had the burden of establishing the jurisdictional elements under CAFA.
In reviewing Hirmez’s complaint, the court concluded that it was deficient in two respects. First, the complaint failed to allege Hirmez’s citizenship. Instead, it alleged only that she was a resident of California. To establish citizenship, a complaint must establish a party’s domicile (i.e., where they reside with the intention to remain or to which they intend to return). There were insufficient allegations in Hirmez’s complaint to establish her intentions with respect to her stated residence.
Second, and more critically, the court explained that the complaint failed to establish the requisite amount in controversy by a preponderance of the evidence. The court observed that, to establish subject matter jurisdiction under CAFA, plaintiffs may rely on calculations to satisfy their burden as long their calculations are good faith, reliable estimates based on the pleadings and other evidence in the record. Applying this principle to Hirmez’s complaint, the court concluded that the allegations were insufficient to support a calculation of damages in excess of CAFA’s jurisdictional minimum. The court remarked that the only suggestion of the amount in controversy was an exhibit to the complaint that detailed the price of the product at issue. While Hirmez alleged that there were more than 100 putative class members, she only generally asserted that the total number of members was in the “thousands.” Thus, it was impossible for the court to accurately extrapolate the amount in controversy from the pricing exhibit. Stated differently, the multiplier for Hirmez’s calculation of damages was unknown. As a result of the foregoing deficiencies, the court concluded that it lacked jurisdiction over Hirmez’s complaint. Hirmez was given leave to amend.