Parham v. McDonald’s Corp., No. C 11-511 MMC, 2011 U.S. Dist. LEXIS 78778 (N.D. Cal. July 20, 2011).
The fear of spoiled super sized children with parents who have no parental control has allowed us to bring you a CAFA case involving the interplay of injunctive relief with the amount in controversy.
In this case, a District Court in California held that when injunctive relief is sought, the amount in controversy is the pecuniary result to either party which the judgment would directly produce.
The plaintiffs brought a class action alleging that McDonald’s engaged in the unfair, unlawful, deceptive and fraudulent practice of promoting and advertising McDonald’s Happy Meal products to very young California children, using the inducement of various toys.
The plaintiffs alleged that McDonald’s exploits very young children and harms their health by advertising unhealthy Happy Meals with toys directly to them. Children eight years old and younger do not have the cognitive skills and the developmental maturity to understand the persuasive intent of making and advertising. (Editors’ Note: We are not sure if there was any mention about the obligation of the parents of these children to just say “no” to their children and not buy the McDonald Happy Meals.)
Accordingly, the plaintiffs brought an action pursuant to California’s Unfair Competition Law, Business and Professions Code §§ 17200 et seq. and 17500 et seq., California’s False Advertising Law, and the Consumers Legal Remedies Act against McDonald’s. Additionally, the plaintiffs sought to enjoin McDonald’s from continuing to advertise Happy Meals to California children featuring toys.
McDonald’s removed the action to federal court pursuant to CAFA. McDonald’s argued that its total cost of compliance with the prayed injunction would be over $5 million. The plaintiff moved to remand, which the District Court granted.
The Court found that under either the “legal certainty” or the “preponderance of the evidence” standards, McDonald’s had failed to meet its burden of showing that the amount in controversy met CAFA’s jurisdictional threshold. In particular, although McDonald’s had made a sufficient evidentiary showing to support its calculation of costs associated with advertising Happy Meals “on a local and regional basis rather than a nationwide basis,” the Court found such costs were “incidental” to, rather than “directly produced” by, the requested injunction.
The Court pointed out that when injunctive relief is sought, the amount in controversy is the pecuniary result to either party which the judgment would directly produce. Contrary to McDonald’s argument, an alteration in a defendant’s business practice is not cognizable for purposes of removal unless such alteration is required by the requested relief. The Court pointed out that the amount in controversy would be present if the injunction sought by the plaintiffs would require some alteration in the defendant’s method of doing business that would cost the defendant at least the statutory minimum amount.
Accordingly, the Court granted the plaintiffs’ motion and remanded the action to the Superior Court of California, San Francisco County.