Forlenza v. Dynakor Pharmacal, LLC, CV09-03730 MMM (C.D. Cal. June 18, 2009).

If you are looking for a primer on CAFA jurisdiction, this is it. The Central District of California has done a great job of outlining CAFA jurisdiction and even the exceptions to CAFA jurisdiction just for you.

On May 26, 2009, the plaintiffs, Nicole Orlinz and Shaiden Monroe, commenced a putative class action against Dynakore Pharmacal, LLC, a Utah limited liability company, and other defendants. The plaintiffs defined the class as “all person located within California who purchased Akavar within the last three years.” Akavar, if you are not familiar, is a weight loss product that the plaintiffs alleged was marketed through deceptive advertising. Up until this case, we had never heard that on occasion weight loss products are marketed in a deceptive manner.

The plaintiffs’ complaint asserted five state law causes of action, including unjust enrichment, fraud, breach of warranty, and violation of two California code sections. 

The court in its opinion, quickly pointed out that the complaint did not contain a short and plain statement of the grounds upon which jurisdiction was based. The complaint asserted only that “this court has jurisdiction over all causes of action asserted herein.” It appeared that the plaintiffs intended to invoke the court’s diversity jurisdiction as expanded by CAFA.  The court outlined, very concisely, the jurisdictional provisions of CAFA along with its exceptions.

After outlining CAFA’s terms, the court asked whether the plaintiffs had shown the necessary diversity of citizenship for federal court jurisdiction. The complaint alleged that the purported class size was “at least in the tens of thousands of members.”   Thus, the court found the minimum class size requirement had been satisfied. 

Next, the court looked to the minimal diversity requirement. The complaint did not allege the citizenship of the named plaintiffs, but merely alleged that they were residents of California. The court presumed that based on the class definition, that the class was composed predominately of California citizens. “Jurisdiction, however, cannot be based on presumptions, but must be specifically alleged by the plaintiffs.” The court could not determine if the requisite diversity existed because the complaint did not contain sufficient allegations to establish the citizenships of any of the defendants. Moreover, it was likely that two-thirds of the potential class members were citizens of California, which would require the court to decline jurisdiction under CAFA pursuant to §1332(d)(4).

Next, the court found that the plaintiffs had not satisfied the five million dollar amount in controversy requirement. Although, the plaintiffs alleged that the defendants had made “tens of millions of dollars in profits” from sales of Akavar, the complaint did not specify the amount of monetary damages sought, nor the value of the requested injunctive relief. The court held that plaintiffs failed to plead the amount in controversy and, therefore, failed to meet their burden of establishing jurisdiction under CAFA.