Waters v. Advent Product Development, Inc., No. 07-2089 (S.D. CA June 26, 2008)
Where would we be without the “Duck Shield,” the “Cow Gas Detector,” the “Hand Near Mouth Alarm,” “Pogo Shoes,” “Insect Balls,” or the “Gerbil Shirt”? In state court, that’s where! Yes, these fine examples of human ingenuity are actual patented inventions brought to you by inventors; people with loads of work ethic and not a lick of common sense. And, like their inventions, their sales pitch in federal court supporting a remand to California state court sold about as well as the “Flatulence Deodorizer”.
Matthew Waters had a great idea. We aren’t sure what it was, but it was great. Now we’re not talking about the “Slap Chop” or “Sham Wow”, or anything Billy Mays ever put his golden touch upon (may he rest in peace), but Matt Waters was ready to go public. He not only wanted to get a patent for his invention, he wanted to market it to consumers; help people; change lives.
Responding to a radio ad, Matthew contacted the defendant, Advent Product Development, to get the ball rolling on making his idea a reality. Advent employed a system of “phases” when receiving and assisting inventors as new clients; Phase 1 cost $1,190 and consisted of an initial “Legal Protection Report” (read: cursory patent search), and Phase 2 cost $9,240 and consisted of further services, marketing, and patent applications (read: nothing). When Matthew grew annoyed at the lack of service he was getting from Advent, he did his own patent search, only to find out that his great idea had been about four other people’s great idea before it was his great idea.
Surely upset, Matthew probably saw this infomercial on TV:
Tired of being taken advantage of as an inventor? (Visual: a black and white clip of a kooky old dude with Einstein hair and glasses looking down and shaking his head). Did you have a great idea that you wanted to share with the world? Did you pay over one thousand dollars to a company you thought would give you an honest patent search only to find out that company hid existing patents from you so that you’d pay them another nine-thousand dollars for marketing and development? (Visual: a black and white clip of a sleazy-looking guy driving off in a convertible clutching wads of money while the old Einstein dude chases after him). What do you do? Chase after them with a broom? Bomb their headquarters? Plan a hostile takeover of their board of directors? (I’ll leave the visuals here to the imagination). Well now, there’s THE CLASS ACTION LAWSUIT! Yes! A class action lawsuit is a great way to get your friends involved and really stick it to the man. And it’s fun, too! Class action lawsuits are available in two flavors, state court strawberry and federal court fudge. So don’t delay, file your class action today, and get what’s coming to you! CALL NOW! (Last visual: full color clip of Einstein dude driving off in the convertible with two bikini-clad supermodels and wads of cash while the sleazy guy chases after them).
So Matthew called the number on the screen and ordered one class-action lawsuit for himself and about 800 of his friends in state court strawberry flavor.
Advent, however, put in a call to change Matthew’s order from state court strawberry to federal court fudge using a notice of removal. Advent argued that federal court fudge was more appropriate for Matthew’s order because: 1) the federal court had jurisdiction pursuant to 28 U.S.C. § 1332(d)(2); 2) the action is a class action, ; 3) diversity of citizenship was present under CAFA,; and 4) the total amount in controversy was more than $5 million.
Matthew and his clique were pretty annoyed that someone would mess with their order and change their flavor to federal court fudge. But, being the inventors they are, they prepped their sales pitch for a remand to state court strawberry flavor. The pitch went something like this:
1) Say, Judge, the defendants didn’t get the change order form right! They forgot to establish that each defendant was an out-of-state citizen and attach other important documents. They don’t have complete diversity, Judge! Because the change order form wasn’t right, we’ve got to go back to state court strawberry!
2) But if you don’t buy that, I’ve got something even better! The price isn’t right, Judge! The defendants are trying to say we want over $5 million, which means we have to buy federal court fudge if the defendants want us to. But, Judge, we want to offer this class action lawsuit for the low low price of… anything under $5 million! How about that?
But the Judge didn’t buy either argument. For the first pitch, he found that CAFA didn’t require complete diversity, only that at least one plaintiff is diverse from at least one defendant. Also, not establishing the citizenship of two of the defendants wasn’t necessary for a notice of removal as long as at least one plaintiff and one defendant are diverse.
For the second pitch, the Judge recommended some basic math classes. The Judge noted that, when Matthew and his friends placed the order for a class action lawsuit, they claimed each of Matthew’s friends had a claim similar to Matthew’s ($1,190 for Phase 1 + $9,240 for Phase 2 = $10,430). Add to that the treble damages allowed under California law ($10,430 x 3 = $31,290), and multiply that by the number of Matthew’s friends ($31,290 x 800), and you’re talking at least $25 million for this class action lawsuit. Sorry, Matthew, looks like you’ll have to learn to love that federal court fudge-flavored class action lawsuit.
In closing, even though inventors are creative, crafty, crazy people who bring us things like the “Jump, No Rope,” the “Alarm Fork,” the “Fish Bath,” and “Toilet Landing Lights,” they couldn’t create a credible reason to stay out of federal court, even when they preferred the tast of state court strawberry to federal court fudge.
By: Evan J. Bergeron