Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-02133/USCOURTS-casd-3_07-cv-02133-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DAVID PAZ,

Plaintiff,

CASE NO. 07cv2133 JM(BLM)

ORDER GRANTING MOTION TO

vs. REMAND

PLAYTEX PRODUCTS, INC.,

Defendant.

Plaintiff David Paz, on behalf of himself and others similarly situated, moves to

remand this action to state court for lack of subject matter jurisdiction under the Class

Action Fairness Act of 2005 (“CAFA”). Defendant Playtex Products, Inc. opposes the

motion. Neither party requests oral argument and, pursuant to Local Rule 7.1(d)(1), the

court finds this matter appropriate for decision without oral argument. For the reasons

set forth below, the motion to remand is granted.

BACKGROUND

On September 28, 2007 Plaintiff filed the present class action consumer

complaint in San Diego Superior Court alleging that Defendant “manufactured,

marketed, advertised, and/or sold a variety of spill-proof cups to the general public with

the false designation and representation that Playtex’s spill-proof cups were ‘Made in

U.S.A.’” (Compl. ¶1). Plaintiff alleges that the “Made in U.S.A.”designation is false

and misleading because the cups “are entirely or substantially made, manufactured or

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produced outside of the Untied States and/or utilize foreign made components in

violation of California law.” Id. Based upon this generally described conduct, Plaintiff

alleges three state law claims for relief: (1) violation of Consumers Legal Remedies

Act (“CLRA”), (2) violation of Business & Professions Code §17200 et seq., and (3)

violation of Business & Professions §17533.7 (false “made in USA” claim). Plaintiff

alleges that the “amount in controversy as to all Class Members, inclusive of attorneys’

fees and costs, injunctive relief (to the extent it can be valued), prejudgment interest,

and punitive damages does not exceed $4,999,000.” (Compl. ¶16).

On November 7, 2007 Defendant filed a Notice of Removal (“Notice”) alleging,

among other things, that the amount in controversy exceeds $5,000,000, exclusive of

interest and costs. (Notice of removal at p.2:12-13). Defendant alleged in the Notice

that the amount in controversy exceeds $5,000,000; and that the proper measure of

damages on the restitution claim is about $9,087,000. (Notice ¶9). Defendant reaches

this estimated measure of damages by taking the average retail price of the spill-proof

cup, $6.99, as alleged by Plaintiffs, multiplied times the total amount of cups sold in

California in the previous 12 month period, about 1,300,000. Defendant also asserts

that if Plaintiff were to prevail on its injunctive relief claim then it would incur

substantial expense in removing all cups from the market place and to repackage and

re-distribute each cup with the allegedly “correct” labeling. (Notice ¶10). Defendant

asserts that these costs should also be considered in determining the amount in

controversy.

Plaintiff now moves to remand this action to state court on the ground that

Defendant has failed to establish that the amount in controversy exceeds the

jurisdictional minimum of $5,000,000.

DISCUSSION

The court addresses Plaintiff’s claim that the court lacks subject matter

jurisdiction because the amount in controversy falls below CAFA’s statutory minimum

requirement of $5,000,000. Federal courts are courts of limited jurisdiction. “Without

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1

 The parties do not dispute that CAFA’s minimal diversity and class numerosity requirements

are satisfied. The only disputed element concerns the $5,000,000 amount in controversy requirement

of 28 U.S.C. §1332(d).

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jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare

the law, and when it ceases to exist, the only function remaining to the court is that of

announcing the fact and dismissing the cause.” Steel Co. v. Citizens for a Better

Environment, 523 U.S. 83, 94 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.)

506, 514, 19 L.Ed. 264 (1868)). Accordingly, federal courts are under a continuing

duty to confirm their jurisdictional power and are “obliged to inquire sua sponte

whenever a doubt arises as to [its] existence...” Mt. Healthy City Sch. Dist. Bd. of

Educ. v. Doyle, 429 U.S. 274, 278 (1977) (citations omitted). 

A state court civil action may be removed to federal court if the district court had

“original jurisdiction” over the matter. 28 U.S.C. §1441(a). Defendant, as the party

who invokes federal removal jurisdiction, has the burden of demonstrating the existence

of federal jurisdiction. See Gaus v. Miles, Inc. 980 F.2d 564, 566 (9th Cir. 1992); B.,

Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. 1981). Any doubts regarding

removal jurisdiction are construed against Defendant and in favor of remanding the case

to state court. See Gaus, 980 F.2d at 566. Even after enactment of CAFA, the burden

of demonstrating subject matter jurisdiction at the time the Notice is filed remains with

Defendant. See Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 682-83 (9th

Cir. 2006) (under CAFA, defendant retains the burden of establishing federal

jurisdiction, including the amount in controversy).

Where subject matter jurisdiction is premised upon CAFA, and plaintiff has plead

an amount in controversy less than $5,000,000, “the party seeking removal must prove

with ‘legal certainty’ that the amount in controversy is satisfied.” Lowdermilk v. U.S.

Bank National Assn’n, 479 F.3d 994, 996 (9th Cir. 2007).1 The Ninth Circuit noted that

“a plaintiff may sue for less than the amount she may be entitled to if she wishes to

avoid federal jurisdiction and remain in state court,” subject only “to a ‘good faith’

requirement in pleading.” Id. at 999. The court is to consider the complaint, Notice,

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2

 Plaintiff’s position would appear to constitute a judicial admission that the total amount in

controversy, inclusive of any recoverable attorney fees and costs, does not exceed $5,000,000 and that

such an admission (acting as a bar to recovery beyond $5,000,000) appears to be beneficial to

Defendant in that the defense avoids exposure beyond $5,000,000, even though Playtex represents that

total damages could theoretically exceed $42 million. (Oppo. at p.10:8).

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and “summary-judgment-type evidence relevant to the amount in controversy at the

time of removal,” Abrego, 443 F.3d at 682-83, in making this determination. 

Here, Plaintiff alleges that the “amount in controversy as to all Class Members,

inclusive of attorneys’ fees and costs, injunctive relief (to the extent it can be valued),

prejudgment interest, and punitive damages does not exceed $4,999,000.” (Compl.

¶16).2

 Therefore, looking to “the four corners of the complaint to determine whether

the jurisdictional amount is met” Lowdermilk, 499 F.3d at 998, and, absent a showing

of bad faith, not raised herein, this allegation is sufficient to place the burden on Playtex

to establish to a legal certainty that the amount in controversy exceeds $5,000,000.

Playtex contends there is no basis for the award of any damages but then argues

that the value of disgorged profits and restitution would exceed $5,000,000. Playtex

submits evidence to show that it sold about 1,300,000 spill-proof cups between

November 2006 and October 2007, and that based upon Plaintiff’s alleged average

retail price of $6.99, the total amount in controversy is about $9,087,000, (Notice ¶9),

and over a four year period of time total revenue exceeds $41,940,000. (Oppo at p.

10:8). Playtex also identifies other categories of damages - without specifying any

amount of damage - that should be included in determining the amount in controversy:

the cost of complying with any injunctive relief ordered by the court, punitive damages,

and attorneys’ fees. The court concludes that these allegations and evidentiary

submissions fail to establish to a legal certainty that the controversy amount exceeds

$5,000,000.

As a starting point in the analysis, Playtex fails to identify the applicable measure

of damages for Plaintiff’s state law claims. While Playtex asserts that total gross retail

sales for the cup will be about $9 million per year (about $42 million over four years),

there is no showing that this is an appropriate measure of damages for the alleged

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Consumers Legal Remedies Act and Business & Professions Code violations. Playtex

contends that the prayer for restitution somehow, without explanation, necessarily

results in the gross sales revenue as the appropriate measure of damages for mislabeling

a product “Made in USA.” 

Plaintiff articulates that Playtex’s gross sales revenue is not the proper measure

of damages on his claims. For a CLRA award of damages, Plaintiff is entitled to his

actual damages consisting of “the difference between the actual value of that with which

the defrauded person parted and the actual value of that which he received, together

with any additional damage arising from the particular transaction.” Civil Code

§3343(a). On the CLRA claim, there is no evidence before the court of the value of the

spill-proof cup with the “Made in U.S.A.” representation contrasted with the value of

the spill-proof cup without the “Made in U.S.A.” language. Absent further legal and

factual arguments, not raised by Playtex, the court cannot fully analyze the measure of

damages on the CLRA claim. The proper measure of damages on the Business &

Professions Code violations, Plaintiff asserts, is set forth in Colgan v. Leatherman Tool

Group, Inc., 135 Cal.App.4th 663 (2006). There, the court rejected the notion that the

measure of restitution damages for a false “Made in U.S.A.” designation case is the

retail cost of the goods or the gross profits earned as a result of the false designation.

Id. at 666. The trial court in Colgan established the measure of damages at “25 per cent

of the average wholesale unit price per tool per year times the number of units sold per

year in California.” Id. at 677. The trial court selected the 25% figure “as a reasonable

amount, representing the appropriate restitution for the failure of the Class members to

receive the full measure of the product the consumer believed he or she was receiving

at the time of purchase.” Id. The appellate court resoundingly rejected this measure of

restitution damages because it was not supported by “substantial evidence,” Id. at 700,

noting that restitution damages “must be of a measurable amount to restore to the

plaintiff what has been acquired by violations of the statutes, and that measurable

amount must be supported by evidence.” Id. at 698. The appellate court remanded the

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3

 The court notes that nothing in this order prevents Playtex from seeking to remove the action

at a later time upon a showing of changed circumstances (i.e. a showing of legal certainty that the

amount in controversy exceeds $5,000,000). See Lowermilk, 479 F.3d at 1002-03.

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action for a further evidentiary showing.

Here, Playtex, as the party who has the burden of establishing federal jurisdiction,

see Gaus, 980 F.2d at 566, falls short of establishing to a legal certainty that the amount

in controversy exceeds $5,000,000. In light of Playtex’s failure to identify legal

authorities and a factual record to support its damages assessment, the court resolves

all doubts in favor of remand. Id.

In sum, the motion to remand is granted.3 The Clerk of Court is instructed to

close the file.

IT IS SO ORDERED.

DATED: January 10, 2008

 Hon. Jeffrey T. Miller

 United States District Judge

cc: All parties

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