Spivey v. Vertrue, Inc., No. 07-CV-0779, United States District Court, S.D. Illinois, April 8, 2008.

Remember those “choose your own adventure books” from childhood?  If not, click here to remind yourself.   Here at the CAFA blog, we think of them with a fond wistfulness. Apparently, so does the defendant in this case. And who doesn’t, really? Wouldn’t it be nice if, when presented with a class you didn’t like, you could just choose another option? “If you want to go to federal court, turn to page 14. If you want to stay in state court, turn to page 4.” 

In an attempt to make this choice, the defendant Vertrue got creative and, in the court’s view, rewrote the definition of the plaintiff class. Alas, when we try to write our own endings, sometimes we don’t always get the end result we want. Here, attempting to change the course of this case by removing under CAFA to get to federal court ended in what would be the equivalent of when you made the choice you thought would get you to the “happy ending,” but unexpectedly sent you over a cliff. 

This putative class action centered around Vertrue, Inc.’s membership programs. These programs purport to provide its members with savings on a variety of goods and services. The plaintiff alleged, however, that there is no actual demand for these savings and that the company depends on a tactic of “cramming” consumers with membership charges debited against their credit cards, debit cards and bank accounts without their knowledge in order to make money. Sounds to us like Vertrue could easily fit in as the villain in a choose your own adventure. Greed, money, deceit…it’s all here. What’s our protagonist, the plaintiff Spivey, to do? Should he sue or should he send an angry letter? You decide.

OK, just kidding; you don’t actually get to choose, and you know how that choice ends anyway. Spivey sued in state court, asserting claims under the Illinois Consumer Fraud Act, Illinois Credit Card and Debit Card Act, and for unjust enrichment and conversion. The plaintiff class was defined as Illinois residents whose credit or debit cards, or bank accounts, were billed for one or more of Vertrue’s memberships from September 25, 2002, to the present without written authorization or recorded verbal authorization. 

Vertrue then removed the action to federal district court under CAFA.

The district court looked to Brill v. Countrywide Home Loans, Inc., 427 F.3d 466 (7th Cir. 2005) to determine the decision regarding whether Vertrue met its burden of proof for establishing that the amount in controversy exceeded $5 million. (Editors’ Note: See the CAFA Law Blog analysis of Brill posted on November 2, 2005). Vertrue argued that it had estimated the amount in controversy, thus shifting the burden to the plaintiff to show that, to a legal certainty, the amount was less than $5 million. However, under Brill, the court found that the jurisdictional burden remained with Vertrue.

Even with that burden, though, Vertrue faced more options. Citing the Seventh Circuit’s opinion in Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006), the court noted that Vertrue could establish amount in controversy in any number of ways: by relying on interrogatories or admissions in state court, calculating the amount from the complaint, referring to the plaintiff’s settlement demands or through affidavits from its employees or experts. Which would you choose?

In this adventure, Vertrue chose to go with an affidavit from an employee. Its Director of Business Analysis provided an affidavit attesting that the total revenue generated from Illinois customers during the proposed class period was $6,793,568. Unfortunately for Vertrue, the court found that this calculation redefined the potential class because it failed to distinguish between Illinois customers who were charged without authorization and those who actually had memberships with Vertrue. Accordingly, the court determined that, because Vertrue did not produce evidence demonstrating the actual stakes of the litigation, it could not exercise subject matter jurisdiction under CAFA. The plaintiff moved for attorney’s fees and costs, but the court denied that motion, finding the removal did not lack an objectively reasonable basis. However, it’s back to state court for this adventure.