California District Court Finds CAFA’s Amount-in-Controversy Requirement Satisfied and No Local Controversy Alleged; Denies Motion to Remand

Carlton Fields

The Southern District of California denied a plaintiff’s motion to remand a putative class action removed pursuant to the Class Action Fairness Act (CAFA), where the plaintiff had alleged that the primary defendant’s product, Chobani yogurt, had become “the best-selling brand of Greek yogurt in the United States;” had annual revenues estimated at $1 billion in 2012; and had “collected tens of millions of dollars” in California alone (as the result of allegedly deceptive sales practices). Notwithstanding those allegations, the plaintiff contested CAFA jurisdiction, primarily by contending that the $5 million aggregate amount-in-controversy requirement was not satisfied.

The court recounted the United States Supreme Court’s decision in Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547 (2014), in which the Supreme Court held that a defendant removing under CAFA need only include “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.”  Id. at 554. The district court also reiterated Dart Cherokee’s rule that when a plaintiff challenges a defendant’s amount-in-controversy allegations, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at 553-54.

In this case, the court determined that CAFA’s $5 million aggregate amount-in-controversy requirement had been satisfied for three primary reasons:

  • because the plaintiff’s complaint itself contained the requisite allegations to plausibly contend that CAFA’s $5 million aggregate amount-in-controversy requirement had been satisfied;
  • Chobani had submitted two declarations from its pertinent executive officer, explaining that Chobani’s revenues for sales of the challenged yogurt products in California for the four-year proposed class period far exceeded $5 million and, indeed, exceeded $5 million for even a single year’s worth of revenues in California; and
  • plaintiff failed to provide competent evidence to oppose these points.

In addition, the court rejected the plaintiff’s attempt to invoke CAFA’s “local controversy” exception, explaining that the exception is intended to preclude CAFA jurisdiction when the putative class raises only a “local controversy,” rather than an interstate case of potential national importance. The court also noted that Ninth Circuit precedent indicated that the “local controversy” exception does not apply “when an allegedly defective product is sold in all fifty states, but a class action is only brought on behalf of an in-state class against an out-of-state manufacturer and a few in-state retailers.” In rejecting the plaintiff’s attempt to invoke the “local controversy” exception, the district court reasoned:

  • Chobani was the leading Greek yogurt producer in the country—selling its product in all 50 states;
  • plaintiff had sought to restrict her putative class to California claimants; and
  • plaintiff had tacked on two nominal local retailers (Safeway and Vons grocery stores) in addition to the primary, national defendant—Chobani.

The court also concluded that reliance on CAFA’s “local controversy” exception would be improper for another reason. That is, an identical class action against Chobani had already been filed and was still pending in New York federal court and it included a California subclass alleging the same claims.  The court therefore determined the matter is not a true local controversy under CAFA and that the claims against Chobani are of substantial national interest.

Clay v. Chobani LLC, No. 14CV2258 BEN DBH, 2015 WL 4743891 (S.D. Cal. Aug. 10, 2015)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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