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

No Extra Toppings Of Punitive Damages In CAFA’s Amount In Controversy Calculation Without Sufficient Evidence

Posted in Case Summaries

Rosenbloom v. Jets America Inc., No 4:17-cv-01930 (E.D. Mo. Sept. 29, 2017).

In this action, while granting a plaintiff’s motion to remand, a district court in Missouri found that while punitive damages are included in the amount in controversy, the existence of the required amount must be supported by competent proof, and mere speculation and unsupported allegations are insufficient.

The plaintiff brought a putative class action in Twenty–First Judicial Circuit, St. Louis County, Missouri, under the Missouri Merchandising Practices Act (“MMPA”) because she was charged an extra $2.56 for premium toppings on a pizza deal advertised by the defendant. The plaintiff alleged that the defendant failed to disclose that she would be charged extra for premium toppings.

The defendant removed the action to the federal court pursuant to diversity jurisdiction and CAFA. The plaintiff moved to remand, which the District Court granted.

The plaintiff argued that the amount in controversy did not exceed the jurisdictional threshold of $5,000,000 necessary to establish CAFA jurisdiction. Although the plaintiff’s state court petition did not seek a specific dollar amount in damages, she alleged that the defendant engaged in a deceptive practice under the MMPA by charging her an extra $2.56 for premium pizza toppings.  The defendant relied on the plaintiff’s request for punitive damages and fees and pointed to the plaintiff’s allegation that there were hundreds or thousands of persons in the proposed class to support its assertion that the amount in controversy exceeded the jurisdictional threshold.

The District Court, however, found that the defendant offered nothing but speculation and unsupported allegations that because the MMPA provided for punitive damages and attorney’s fees to the prevailing party, the total amount of damages would exceed $5,000,000. The District Court opined that such speculation was insufficient to meet the defendant’s burden of proof under the preponderance of the evidence standard.  The District Court further opined that the defendant had offered no evidence that attorney’s fees incurred by the plaintiff would exceed the jurisdictional threshold, and such speculation would be unreasonable in light of the procedural posture of the case and the nature of the plaintiff’s allegations.

Additionally, the District Court noted that while punitive damages are included in the amount in controversy, the existence of the required amount must be supported by competent proof. The District Court found that it had no way to determine whether a reasonable fact finder might conclude that punitive damages were applicable because the plaintiff had made only conclusory allegations concerning the defendant’s conduct for punitive damages.  The District Court further found that given the nature of the allegations, it was more likely to conclude that a reasonable fact finder would not award punitive damages for charging extra for premium toppings in an advertised pizza special.  The District Court also found that even if a jury were to determine that punitive damages were appropriate, it would have to award them in a ratio grossly in excess of the plaintiff’s actual damages to even come close to meeting the jurisdictional threshold.

Next, the District Court found that the other false advertising cases the defendant cited where punitive damages were awarded in MMPA cases were easily distinguishable from the instant case because they involved the sale of vehicles and the actual damages far exceeded those at issue in this case. The District Court noted that in those cases the plaintiffs discovered that they purchased an inferior and/or defective vehicle based on the defendant’s false statements, whereas no such allegations were made in this case.  The District Court thus ruled that the defendant offered no rough estimates of the number of transactions at issue or the class members’ actual damages, and instead simply pointed to the plaintiff’s request for attorney’s fees and punitive damages to support its assertion that the amount in controversy exceeded $5,000,000.  The District Court held that with no evidence of attorney’s fees and only speculation regarding punitive damages, the defendant had failed to establish by a preponderance of the evidence that the amount in controversy met the jurisdictional requirement.

Accordingly, the District Court granted the plaintiff’s motion to remand.

-Melissa M. Grand