Paz v. Playtex Products, Inc., 07cv2133 JM(BLM) (S.D.Cal. January 10, 2008)
The plaintiff says Playtex’s spill proof cups were not made in the U.S.A, but Playtex tried to show its patriotism in federal court. Nice try, but it’ll have to fight this one on California state court.
On September 28, 2007, David Paz filed a class action complaint in San Diego Superior Court alleging that Playtex manufactured, marketed, advertised, and sold spill-proof cups with the false designation and representation that they were “Made in the U.S.A.” The Complaint alleged that the “Made in the USA” designation was false and misleading because the cups were entirely and substantially made, manufactured, or produced outside of the United States and utilized foreign made components. The Complaint alleged three California state law claims for (1) violation of Consumers Legal Remedies Act, (2) violation of Business and Professions Code 17200, and (3) violation of the Business and Professions Code 17533.7. The Complaint also alleged that the amount in controversy did not exceed $4,999,999.
On November 7, 2007, Playtex filed its Notice of Removal alleging that the amount in controversy did exceed five million dollars and that the proper measure of damages on the restitution claim was greater than $9 Million. Playtex estimated these damages by taking the average retail price of the cups at $6.99 multiplied times the total amount of cups sold in California in the previous 12 month period, which was about 1,300.000. Playtex also asserted in its Notice of Removal that, if the plaintiffs prevailed on their injunctive relief claim, they would incur substantial expense in removing all of the cups from the market, repackaging, and redistributing with the allegedly correct labeling.
The plaintiffs moved to remand the case to California state court on the ground Playtex had failed to establish that the amount in controversy exceeded the minimum of five million dollars under CAFA. Citing Abrego, the Court noted that the burden of demonstrating subject matter jurisdiction remained with the defendant even after the enactment of CAFA. (Editors’ Note: See the CAFA Law Blog analysis of Abrego posted on May 25, 2006). The Court also cited Lowdermilk for the proposition that when subject matter jurisdiction is premised in CAFA and the plaintiff has plead an amount in controversy less than five million dollars “the party seeking removal must prove with legal certainty that the amount in controversy is satisfied” (Editors’ Note: See the CAFA Law Blog analysis of the Lowdermilk case posted on July 30, 2007. You avid readers know our position on who bears the burden of proof, but if you have forgotten or if you are new, see our law review article on the subject.)
In this case, the plaintiffs alleged the amount in controversy did not exceed the $5 Million threshold. The Court stated that absent a showing of bad faith, the less than $5 Million allegation was sufficient to place the burden on Playtex to establish to a legal certainty that the amount exceeded $5 Million. Playtex submitted evidence that it sold 1,300,000 cups between November 2006 and October 2007. Based on the plaintiffs alleged average retail prices of $6.99, the total amount in controversy was over $9 Million. Over a four year period of time, the total revenue exceeds $41 Million. The Court, however, concluded that the allegations set forth by Playtex failed to establish to a legal certainty the requisite amount in controversy.
The Court held that Playtex failed to identify the applicable measure of damages for the plaintiffs’ state law claims. There was no showing that the $9 Million figure was an appropriate measure of damages for the three California state law causes of action. Looking to the California statutes, the Court held that the plaintiffs were entitled to “the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received.”
Playtex’s failure to identify legal authorities and a factual record to support this damage assessment caused the Court to resolve the issue in favor of remand. The Court did note, however, that nothing in its Order prevented Playtex from seeking to remove the action at a later time upon a showing of changed circumstances that would prove to a legal certainty that the amount in controversy exceeded $5 Million.
If, you too, are worried about what products are really made in the USA, then you can research American made products for yourself at www.madeinusa.org; or www.stillmadeinusa.com; or www.madeinusa.com.