In this case, the Southern District of New York retained subject matter jurisdiction under CAFA based on the rebuttable presumption that the face of the plaintiff’s complaint is a good-faith representation of the amount in controversy.
Here, the named plaintiff purchased a Hewlett Packard computer and a two-year protection plan from a Staples store in Scarsdale, New York. The plaintiff claimed that a Staples’ sales representative assured plaintiff that if he purchased the protection plan, Staples would handle all repairs and replacements during the next two years. In reality, however, the plan afforded no coverage during the first year, as the computer was under a manufacturer’s warranty during that time. According to plaintiff, Staples did not make these terms and conditions available before or after plaintiff purchased the computer. Further, plaintiff alleged that Staples provided only a short brochure summarizing the plan, which did not fully disclose the scope of coverage.
Based on these facts, plaintiff filed a putative class action against Staples in the Southern District of New York, alleging subject matter jurisdiction under CAFA. The class-action complaint asserted claims for breach of contract, breach of express and implied warranties, violations of New York General Business Law, and unjust enrichment. The complaint alleged that plaintiff and class members were damaged by paying for services that were worthless until the manufacturer’s warranty expired. The plaintiff sought actual and statutory damages, costs, attorneys’ fees, and an order enjoining Staples from selling the protection plan without fully disclosing its terms and conditions.
The court raised the issue of subject matter jurisdiction sua sponte and ordered the parties to brief whether CAFA’s $5 million amount-in-controversy requirement was satisfied.
The district court first noted that the party asserting subject matter jurisdiction under CAFA bears the burden of establishing jurisdiction. Blockbuster, Inc. v. Galeno, 472 F.3d 53, 57–58 (2d Cir. 2006). Because plaintiff filed this lawsuit in federal court, the court found that plaintiff had the initial burden of establishing a “reasonable probability” that the putative class members’ aggregate claims exceed $5 million. Id. To determine whether a plaintiff satisfies this threshold burden, the Second Circuit “recognize[s] a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy.” Colavito v. New York Organ Donor Network, 438 F.3d 214, 221 (2d Cir. 2006). Once the plaintiff establishes a “reasonable probability” that the aggregate class claims exceed $5 million, the burden shifts to the defendant to prove to a “legal certainty” that the amount in controversy is less than $5 million. See Tongkook Am. v. Shipton Sportswear Co., 14 F.3d 781, 785 (2d Cir. 1994).
Under these authorities, the district court found that plaintiff’s allegations that “the aggregate claims of Plaintiff and members of the Class exceeded the sum or value of $5,000,000” created a presumption that CAFA’s amount-in-controversy requirement was satisfied. For its part, Staples did not challenge, much less rebut, plaintiff’s jurisdictional allegations. Moreover, the parties’ briefs revealed that Staples sold approximately 1.2 million two-year and three-year protection plans in New York State during the class period, and the price of these plans ranged from $14.99 to $349.99. The amount and monetary value of these protection plans eliminated any doubt in the district court’s mind as to whether CAFA’s amount-in-controversy requirement was met. Thus, the district court found that plaintiff had established a reasonable probability that the amount of the class members’ aggregate claims exceeded $5 million and that CAFA’s other jurisdictional requirements were met. Accordingly, the court held that it had subject matter jurisdiction under CAFA.
No groundbreaking here, but the district court’s order is a friendly reminder that, unless rebutted by the defendant, the face of the complaint will likely control the court’s amount-in-controversy analysis under CAFA.