Hoffman v Country Life, 2013 WL 6095471 (D.N.J. Nov. 20, 2013).
In this consumer fraud action, the District Court thwarted the plaintiff’s attempt to circumvent the CAFA’s class members’ definition by arguing that the amount-in-controversy should be limited to his solo purchase of a product, and retained subject matter jurisdiction.
The plaintiff brought this putative consumer fraud class action lawsuit in the New Jersey State court against the defendant Country Life, LLC, for allegedly making “false and misrepresented claims of product efficacy” about a dietary supplement known as the “Omega 3 Mood.” The plaintiff alleged that the defendant promoted, marketed, and sold Omega 3 Mood nationwide by making unsubstantiated representations that the product was scientifically formulated to support brain health, emotional health, and mood. The plaintiff, a New Jersey citizen, alleged that he purchased Omega 3 Mood based on his exposure to the defendant’s allegedly false marketing claims regarding the product, but it did not deliver the benefits as promised by the defendants. According to the defendant, he and other purchasers of Omega 3 Mood, have sustained ascertainable loss in the amount of the difference between the price paid for the product and the represented value of the product.
The defendant removed the action on the basis of the diversity jurisdiction under CAFA. The plaintiff moved to remand the action to the state court.
In this case, the plaintiff neither contested the class size or the minimal diversity requirement. The plaintiff, however, maintained that the action lacked the requisite amount-in-controversy because, according to him, the action could not be certified as a class action in the District Court of New Jersey and therefore, only his individual damages, based on the purchase of a $32 product, was in controversy. In short, the plaintiff argued that rather than a potential class action, the District Court had before it a case that involved an individual purchase of a single $32 product, which provided no basis for diversity jurisdiction under § 1332.
The District Court remarked that the plaintiff’s argument was perplexing because, his case concerned the fraudulent marketing and distribution of significant quantities of Omega 3 Mood to consumers throughout the nation, including the state of New Jersey. The District Court observed that according to the complaint, at least, this was exactly the type of case that CAFA intended to address. However, the plaintiff’s motion papers characterized this case as no more than an individual consumer fraud action based on the plaintiff’s single $32 purchase and thus, no more than $100 at stake (assuming a treble damages award).
The District Court explained that the confusion arose from the fallacy in the plaintiff’s argument. In the plaintiff’s view, the nature of a putative class action lawsuit somehow changes the moment the suit is removed from the state court to the federal court. According to the plaintiff, the class action could not certified under Rule 23 in the light of his dual role as class counsel and class representative, which the Third Circuit held created a conflict of interest in Kramer v. Scientific Control Corp., 534 F.2d 1085 (3d Cir. 1976). The District Court rejected the plaintiff’s argument finding that neither the act of removing the lawsuit to the federal court, nor the plaintiff’s argument that the class could not be certified had any bearing on the question of whether the federal court had subject matter jurisdiction.
Next, the District Court found that the plaintiff’s argument also failed because, CAFA itself expressly defines “class members” for the purposes of the jurisdictional calculation to include those persons, who fell within the definition of the proposed or certified class. Under the circumstances, the District Court found that the plaintiff ability to satisfy the class certification requirements were not before the court. Therefore, all that the defendant was required to do was establish to a legal certainty that the individual claims of all proposed class members aggregated to more than $5 million.
Here, the plaintiff brought a suit requesting treble damages under the New Jersey Consumer Fraud Act. The plaintiff proposed a class that consisted of all nationwide purchasers of Omega 3 Mood for the four-year period preceding the filing of the suit. The defendant produced declarations showing that they sold product at prices of $31.99 and $59.99. The defendant had shipped 165,000 units of the product. Based on the plaintiff’s allegation that the customers received little to no value for the product purchased, the District Court found that the defendant rightly calculated the amount-in-controversy by multiplying the total units sold by the actual selling price. According to this, the value was $5,860,665, which did not include taxes of shipping costs.
Accordingly, the District Court concluded that the defendant established with a legal certainty that the amount-in-controversy exceeded the jurisdictional threshold, and refused to remand the case to the New Jersey state court.