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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Statistical Assumptions, if Based in Reason, May be Used to Prove That CAFA’s Amount-In-Controversy Requirement Has Been Satisfied

Posted in Case Summaries

Allred v. Kellogg_Company, et al., 2018 WL 332904 (S.D. Cal. Jan. 9, 2018).

A California district court denied the plaintiff’s motion to remand, holding that the statistical assumptions used in the defendant’s amount-in-controversy calculation were permissible under the circumstances.

The plaintiff brought a putative class action in San Diego Superior Court on behalf of all California consumers that purchased Kellogg’s “Salt and Vinegar Flavored Potato Crisps” during a six year period, alleging that the defendant, Kellogg Company, violated various consumer protection laws relating to the product.

Kellogg removed the action to federal court pursuant to CAFA, and the plaintiff moved to remand, challenging only the amount-in-controversy requirement.

As the Court noted, once a plaintiff challenges the defendant’s amount-in-controversy allegation, the parties may submit evidence outside of the complaint to prove the amount in controversy. Kellogg submitted a declaration of a senior brand manager, who approximated sales based on population statistics and gross sales of the product. The declarant estimated potential sales in the relevant period to be approximately $13 million, a figure well above CAFA’s $5 million threshold.

First, the plaintiff argued that the plaintiff’s use of “estimations, speculation, and ‘statistical assumptions’” was improper. The Court disagreed with the plaintiff, citing Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1199 (9th Cir. 2015) in which the Ninth Circuit held that a defendant may rely on “‘a chain of reasoning that includes assumptions to satisfy its burden to prove by a preponderance of the evidence that the amount-in-controversy exceeds $5 million’ so long as ‘the chain of reasoning and its underlying assumptions’ are ‘reasonable.’”

The plaintiff then argued that Kellogg could not assume all class members would seek a full refund for their product resulting in a restitution award of 100% of all possible damages. Kellogg responded that their calculation also included attorney’s fees and punitive damages.  The Court found that Kellogg met its burden of establishing the minimum amount-in-controversy.

Finally, the plaintiff argued that Kellogg’s declaration did not rise to summary judgment level quality. The Court rejected that argument, repeating that it already found Kellog’s calculations to be “based in fact and reasonably deduced,” and, therefore, Kellogg’s declaration submitted in support of those calculations was appropriate.

The plaintiff also argued that Kellogg removed the case in bad faith because Kellogg asserted that the Court had subject matter jurisdiction over the case but also that the plaintiff lacked Article III standing to pursue public injunctive relief. The Court, however, found that Kellogg’s positions were “logically consistent” and were positions that parties had argued and won before.  Accordingly, the Court found that Kellogg did not remove in bad faith.

Ultimately, the Court denied the plaintiff’s motion to remand.

Posted by Amanda Laviage