National Consumers League v Flowers Bakeries LLC, 2014 WL 1372642 (D.D.C. April 8, 2014).

In an action brought by an organization on behalf of several consumers, the federal court remanded the action finding that a lawsuit brought as a private attorney does not meet the class action definition of CAFA.

The National Consumers League filed suit on behalf of the “general public” in D.C. Superior Court against Flowers Bakeries, LLC, alleging violations of the D.C. Consumer Protection Procedures Act (“DCCPPA”). The defendant removed the action to the federal court on the basis of diversity jurisdiction and under CAFA. The plaintiff moved to remand.

At the very outset, the defendant argued that the motion to remand should be denied on the grounds that it was not timely filed. Under the federal removal statute, a motion to remand on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal. However, the plaintiff filed its motion to remand 34 days after the case was removed, which according to defendant, did not raise a defect in the Court’s subject matter jurisdiction, but rather procedural defects in defendant’s Notice of Removal, and therefore should be denied.

However, the plaintiff’s motion to remand argued that based on the facts contained in the Notice of Removal, the defendant failed to establish that the amount-in-controversy exceeded the statutory minimum as a matter of law. The district court rejected the defendant’s timeliness argument because the plaintiff’s motion did not allege procedural defects in the Notice of Removal, but instead it presents a bona fide challenge to this Court’s subject matter jurisdiction.

The district court next noted that a complete diversity of citizenship existed as the plaintiff was a citizen of Washington, D.C., and the defendant a citizen of Georgia. The only contention was over the amount-in-controversy. The plaintiff argued that the defendant did establish that the amount-in-controversy exceeded $75,000.

The defendant identified three independent bases in support of its argument that it cleared the jurisdictional threshold. First, the defendant argued that because more than 300,000 loaves of the subject products were sold to consumers in D.C. and each violation carried with it a minimum statutory penalty of $1,500 per product under the DCCPPA, the total potential damages would easily eclipse $75,000. Second, the defendant argued that because there was at least one retailer who bought over fifty loaves, the amount-in-controversy requirement was met. Third, the defendant relied on the plaintiff’s settlement demand for an amount in excess of $75,000 to satisfy the amount-in-controversy requirement.

The court remarked that it was not persuaded by these arguments; as this type of case was often referred to as a private attorney general suit brought to enforce the rights of the general public. While the D.C. Circuit has yet to address the question of how to calculate the amount-in-controversy for purposes of determining diversity in such suits, this court was guided by the principal that the removal statute should be construed narrowly in favor of remand and that separate and distinct claims should not be aggregated. On these bases, the court concluded that the jurisdictional amount in controversy had not been satisfied.

As to jurisdiction under CAFA, the District Court remarked that this was not the first time that a court within this jurisdiction considered whether a DCCPPA private attorney general action was a “class action” under CAFA. For example, in Breakman v. AOL LLC, 545 F. Supp. 2d 96 (D.D.C. 2008), the court had concluded that because the plaintiff had not attempted to comply with Rule 23 of the D.C. Superior Court Rules of Civil Procedure, and he had not sought class certification, removal was not justified under CAFA’s class action provision. (Editor’s Note: See the CAFA Law Blog discussion of Breakman here). Similarly, in Zuckman v. Monster Beverage Corp., 958 F. Supp. 2d 293 (D.D.C. 2013), the court relied on similar factors when and concluded that because plaintiff brought his case as a representative action under the private attorney general provision of the DCCPPA, he did not refer to his claim as a class action, and did not seek to comply with any of the D.C. Superior Court’s class action rules; and accordingly, his case did not qualify as a class action under the CAFA. (Editor’s Note: See the CAFA Law Blog discussion of Zuckman here).

The defendant attempted to distinguish Breakman and Zuckman based on the fact that those cases were brought by individuals, whereas the present case was brought by a non-profit, public interest organization. The difference, defendant argues, was that under D.C. Code § 28–3905(k)(1)(D), a public interest organization is only permitted to bring a DCCPPA action on behalf of the interests of a consumer or a class of consumers. Because the plaintiff brought this suit on behalf of the General Public, the defendant contended that it must necessarily be bringing the suit on behalf of a class of consumers under CAFA.

The district court disagreed with this analysis for two reasons. First, the plaintiff’s complaint expressly relied on all four private attorney general standing provisions, not just subsection (D).  Second, even if the Court were to construe that the plaintiff’s complaint as one brought solely pursuant to subsection (D), it would not follow that the statute’s use of the term “class” would automatically permit removal under CAFA’s class action provision.

The district court explained that CAFA defines a “class action” as any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action. The issue, therefore, would be whether an action under D.C. Code 28–3905(k)(1)(D) constitutes a suit ‘filed under’ a state statute or rule of judicial procedure ‘similar’ to Rule 23 that authorizes a class action. The District Court observed that absent the hallmarks of Rule 23 class actions; namely, adequacy of representation, numerosity, commonality, typicality, or the requirement of class certification, courts have held that private attorney general statutes lack the equivalency to Rule 23 that CAFA demands.

The district court concluded that the same was true of D.C. Code § 28–3905(k)(1)(D). Accordingly, the district court remarked that it saw no reason to depart from the well-reasoned conclusions in Breakman and Zuckman that removal is not permitted under CAFA’s class action provision for actions brought by a private attorney general under D.C. Code § 28–3905(k)(1) where plaintiff has not brought a “class action” under D.C. Superior Court Rule 23. Accordingly, the district court granted the motion for remand. –JR