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

The Operative Complaint at the Time of Removal Governs CAFA Jurisdiction

Posted in Case Summaries

Lauren_Hall_v__Welch_Foods__Inc__et_al., 2017 WL 4422418 (D.N.J. Oct. 5, 2017).

In this action, while denying Plaintiff Lauren Hall’s (“Plaintiff”) motion to remand, the United States District Court, District of New Jersey (the “District Court”), found post-removal amendments to a complaint which changes the nature or scope of the class have no bearing on the jurisdictional question.

Plaintiff brought a putative class action in New Jersey Superior Court alleging the defendants Welch Foods, Inc. (“Welch”) and The Promotion in Motion Companies, Inc. (“PIM”) (“Welch” and “PIM” shall hereinafter be collectively referred to as “Defendants”), had engaged in a deceptive marketing campaign to convince consumers that Welch’s Fruit Snacks contained significant amounts of the actual fruits shown in the marketing and labelling of the products.

Plaintiff alleged she purchased Welch’s Fruit Snacks relying on Defendants’ representations the Fruit Snacks contained a significant amount of the actual fruit emphasized in their marketing and labelling, were nutritious and healthful, and were more healthful than similar products. Plaintiff, however, alleged Defendants’ claims about the fruit content and nutritional qualities of the Fruit Snacks were deceptive, as the fruit content in the product was overstated, different types of fruit were used other than what was depicted in the labelling depicted, and the Fruit Snacks contained significant amounts of added sweeteners, artificial colors, and artificial flavors.

Defendants removed the action to the District Court pursuant to the Class Action Fairness Act (“CAFA”) and Plaintiff moved to remand. The District Court denied Plaintiff’s motion.

The parties disputed whether either of the mandatory exceptions delineated in CAFA or the discretionary balancing permitted under the totality of the circumstances assessment warranted remand.

At the outset, the District Court noted the question of who was in the class must be answered before conducting the substantive inquiry of their citizenship required by the mandatory home state exception.

Plaintiff argued the class members’ citizenship should be based on her amended complaint, filed post-removal, which altered the makeup of the class from “persons in New Jersey” to “citizens of New Jersey.” Defendants argued a complaint amended after removal which changed the nature or scope of the class should have no bearing on the jurisdictional question, and the operative complaint at the time of removal governed.

The District Court found Plaintiff’s argument depended on a broad reading of the Third Circuit’s decision in Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 153 (3d Cir. 2009), which applied the CAFA local controversy exception based on “defendants presently in the action,” not those sued in the original complaint.  (Editors’ Note: See the CAFA Law Blog analysis of Kaufman posted on October 14, 2009).  The District Court, however, found Kaufman did not speak directly to the issue of whether a district court may consider a complaint amended post-removal which alters the definition or makeup of the class itself.

The District Court noted that in a more recent opinion, the Third Circuit considered whether a district court erred in remanding a mass action removed under CAFA, seeming to reaffirm the time-of-removal rule, and explained that a plaintiffs’ conduct undertaken after filing the complaint is certainly relevant, as long as that conduct occurred prior to removal. The District Court further noted that other circuits increasingly trended toward the traditional time-of-filing rule in the CAFA context.  The District Court thus ruled that the operative complaint at the time of removal defined the class as “persons in New Jersey,” and that definition governed the applicability of the home state exception.

Defendants did not dispute their citizenship, or that only PIM, a New Jersey citizen, was the primary defendant.  Defendants, however, disputed whether two-thirds of the members of the putative class were citizens of the same state as the primary defendants.  Plaintiff argued that it would be simply preposterous for more than one-third of New Jersey purchasers of Fruit Snacks products during the class period to live outside of New Jersey.  The District Court, however, found Plaintiff’s argument was based on supposition, not evidence.  The District Court thus ruled because Plaintiff provided no evidence to establish the citizenship of the putative class as defined in the complaint, remand was inappropriate under the mandatory home state exception to CAFA jurisdiction.

Next, Plaintiff argued the discretionary totality of the circumstances analysis permitted under CAFA warranted remand. The District Court, however, found the balance of factors suggested the dispute was not truly local, and Plaintiff failed to plead the original complaint in a manner that would avoid federal jurisdiction.  The District Court further found the claims in the instant case involved matters of national interest as the product line in question had national reach and distribution.

Additionally, the District Court found in the three years before the instant action was filed, the Plaintiff’s counsel filed another class action in the Eastern District of New York (“EDNY”) asserting almost identical claims on behalf of a putative nationwide class which encompassed the putative class here. The District Court thus applied the Third Circuit’s first-to-file rule and opined that the instant action should be transferred to the EDNY.

Accordingly, the District Court denied Plaintiff’s motion to remand.

Yaron Shaham