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

Don’t Be a Namby Pamby! Negotiate Your Own Amount in Controversy for CAFA Removal

Posted in Case Summaries

Hauer v. Priceline.com, Inc., et al, 3:08-cv-02608-JSW (N.D. Cal. August 6, 2008).

PRICELINE NEGOTIATOR!! Problems with Priceline’s negotiator in California subjects the online peddler of cheap travel to California state court jurisdiction.

On August 6, 2008, United States District Judge Jeffrey S. White entered an Order granting the plaintiffs’ motion to remand a California class action removed by Priceline.com. The plaintiff, Glen Hauer, filed this class action against Priceline, Alamo Rent-a-Car, and Vanguard Car Rental in California state court. Priceline removed the action pursuant to CAFA and the plaintiffs sought remand on the ground that CAFA’s amount in controversy had not been satisfied. It is interesting to note that both Alamo and Vanguard filed statements of non-opposition to the plaintiffs’ motion to remand. I guess they like California state court. 

After outlining CAFA’s jurisdiction provisions, the Court cited Abrego for the proposition that the burden for establishing removal jurisdiction remains on the proponent of federal jurisdiction under CAFA. (Editors’ Note: See the CAFA Law Blog analysis of Abrego posted on May 25, 2006. You know exactly how we feel about this burden of proof issue. If not, see our law review article on the subject).

The plaintiffs’ motion to remand argued that the amount in controversy was under CAFA’s jurisdictional amount of five million dollars. The Court noted that the plaintiffs’ Complaint failed to plead specific amount of damages. Therefore, the Ninth Circuit opinion in Lowdermilk instructed the Court to look beyond the Complaint to determine whether the suit met the jurisdictional requirements of CAFA. (Editors’ Note: See the CAFA Law Blog analysis of the Lowdermilk case from the 9th Circuit posted on July 30, 2007).

To meet their burden, Priceline used the plaintiffs allegation that 40% of the reservations made through Priceline’s websites were improperly transferred to Priceline’s rental car partners. Priceline calculated that during the four year class period it received over $85 million in revenue from California rental car bookings through the “Name Your Own Price” service. This calculation came to $34 million, well above CAFA’s $5 million requirement. The Court noted, however, that there was evidence that the problems with the “Name Your Own Price” service were extremely rare and only occurred in 1% of reservations. The Court then calculated 1% of 85 million times equaling $85,000.00, which the Court stated was substantially below the $5 million threshold. 

Priceline also argued that the cost of implementing an injunction along with punitive damage should be considered in determining the amount in controversy. Priceline, however, failed to submit any evidence of what the costs of those damages would be. 

Accordingly, the Court found that Priceline failed to demonstrate by a proponderous of the evidence that the amount in controversy exceeded $5 million and granted the plaintiffs motion to remand.