Hildreth v. Unilever U.S., Inc., No. CV 10-07936 MMM SSX, 2010 WL 5174385 (C.D. Cal. Dec. 15, 2010).
What a crock!! A crock of butter, that is. In this case, a District Court in California held that in order to sustain a state law class action in the federal court, the complaint must provide specific indication of the amount of economic injury sustained individually, or by the class.
The plaintiffs, consumers, brought a putative class action in the District Court asserting three state law causes of action alleging that the defendant, Unilever United States, Inc., falsely represented the fat reduction content on the product labels of I Can’t Believe It’s Not Butter! Light (“ICB”) and Country Crock Light (“Country”) in violation of the California Consumers Legal Remedies Act, the False Advertising Law, and the Unfair Competition Law.
Because the labeling did not follow FDA and California state requirements for identifying reduced-fat products, the plaintiffs alleged that the defendant wrongly deceived the class into purchasing the products, in violation of state law. The plaintiffs alleged that California law requires that ‘any product which derives 50% or more of its calories from fat be reduced in fat content by 50% or more’ before such a product may be labeled as ‘Light.’ The plaintiffs alleged that Unilever’s ICB and Country products did not meet this requirement. Specifically, the plaintiffs contended that the Country product contained five grams of fat and 50 calories from fat per serving, while the regular Country Crock spread contained seven grams of fat and 60 calories from fat per serving. Thus, the plaintiffs argued the reduction in fat would not meet the 50% reduction requirement.
As a result of these alleged labeling violations, the plaintiffs alleged that the defendant deceived the plaintiffs into purchasing a healthier margarine product relative to regular margarine products. The plaintiffs allegedly lost money by purchasing these products on several occasions, in reliance on the product labeling, and that defendant was unjustly enriched as a result. The plaintiffs also alleged that they were fat because they ate too much of the mislabeled fat. Okay, just kidding. The plaintiffs did not allege they were fat. They might be fat, but they did not allege they were because of the labeling issue.
The plaintiffs and the proposed class sought an injunction to prevent the defendant from branding the products as ‘Light,’ restitution and disgorgement (of the money, not of the fat), costs of suit, and attorneys’ fees.
The complaint asserted that the District Court had jurisdiction under CAFA, 28 U.S.C. §1332(d). The District Court, however, found the CAFA jurisdiction lacking.
First, because the plaintiffs were citizens of California and the defendant, Unilever, was a New Jersey-based consumer products company and the manufacturer and distributor of these products, the Court found that the parties were diverse.
Second, the Court, however, found that because the complaint alleged only that the ‘class is so numerous that the joinder of all members is impracticable,’ the complaint did not allege that the class exceeded 100 members. The Court pointed that it was also not possible to discern from the class definition how large it might be because the class definition merely stated that the class included all California consumers who purchased Country or ICB during the class period. Absent an allegation regarding the size of the class, the Court concluded that the plaintiffs had failed to demonstrate that the numerosity element of CAFA jurisdiction was met.
Third, the Court found that the plaintiffs also failed to allege facts showing that the amount in controversy exceeded $5 million. Concerning the alleged amount in controversy, the plaintiffs alleged only that ‘the aggregated claims exceeded the sum or value of $5 million,’ and that the plaintiffs purchased defendants’ products ‘on several occasions.’ The plaintiffs provided no specific indication of the amount of economic injury sustained individually, or by the class.
The Court remarked that from the facts alleged in the complaint, there was significant doubt as to whether the amount in controversy requirement was satisfied based on the plaintiffs’ purchases of ICB and Country Light during the past four years. The plaintiffs also did not allege whether their loss amount was typical of the losses incurred by all class members, nor the number of individuals in the class, or other facts that might support CAFA jurisdiction. Absent such facts, the Court found that the plaintiffs had not adequately pled that there was, in the aggregate, at least $5 million in controversy.
Further, the Court stated that while it is proper to consider the value of an injunction to defendant in calculating the amount in controversy under CAFA, here, the plaintiffs failed to state the value of the injunction they sought in this case.
The Court pointed that until the plaintiffs were able to more definitively ascertain the potential size of the class or the extent of the damages, it could not base its jurisdiction on speculation and conjecture. Accordingly, the ordered the plaintiffs to show-cause why this action should not be dismissed for lack of subject matter jurisdiction.