232 F. Supp. 3d 163
D.D.C.2017Background
- Breathe DC, a D.C. nonprofit, sued Santa Fe Natural Tobacco Co., RJRT, and RAI in D.C. Superior Court under the D.C. Consumer Protection Procedures Act (DCCPPA), seeking declaratory and injunctive relief on behalf of the general public for allegedly deceptive marketing of Natural American Spirit cigarettes as "Natural"/"Additive-Free."
- Defendants removed to federal court asserting diversity jurisdiction; plaintiff moved to remand for lack of subject-matter jurisdiction and sought fees.
- Defendants submitted a marketing director’s declaration estimating the cost to comply with the requested injunction at about $900,000 (≈ $700,000 packaging redesign + $200,000 corrective advertising) and asserted much larger speculative brand-value losses.
- The sole federal-jurisdiction question was whether the amount in controversy exceeded $75,000; complete diversity was undisputed.
- The court considered (1) whether the cost-to-defendant measure of injunctive relief may be used and (2) whether defendants’ total compliance cost may be aggregated or must be allocated among the beneficiaries of the injunction.
- The court remanded the action to D.C. Superior Court but denied plaintiff’s request for attorneys’ fees for improper removal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether cost-to-defendant may measure amount in controversy for injunctive relief | Cost-to-defendant test is not used in this Circuit and inappropriate for DCCPPA injunctions | D.C. Circuit allows either-viewpoint (value to plaintiff or cost to defendant); court may consider defendant’s compliance costs | Court follows D.C. Circuit precedent (Tatum) and permits consideration of defendant’s compliance costs |
| Whether brand-value loss may be counted as cost of compliance | Brand-value loss is speculative and not a direct cost of complying with injunction | Brand-value diminution is a legitimate component of defendant’s cost of compliance | Court rejected brand-value loss as a reliable measure: incidental, speculative, and unsupported by evidence |
| Whether the direct compliance costs meet the $75,000 threshold | Even if total costs count, they must be divided among beneficiaries; single-plaintiff representative suit doesn’t let defendants aggregate total cost | Total defendant compliance cost (> $900,000) satisfies amount in controversy for diversity jurisdiction | Court held the $900,000 must be apportioned across beneficiaries; per-beneficiary share falls below $75,000, so amount-in-controversy not met |
| Whether fees should be awarded under 28 U.S.C. § 1447(c) | Removal was improper; fees requested | Removal was objectively reasonable given unsettled law in D.C. Circuit and factual novelty | Court denied fees: removal was objectively reasonable despite remand |
Key Cases Cited
- Tatum v. Laird, 444 F.2d 947 (D.C. Cir. 1971) (endorses measuring amount in controversy by value to either party: plaintiff’s right or defendant’s compliance cost)
- Smith v. Washington, 593 F.2d 1097 (D.C. Cir. 1978) (reaffirms either-viewpoint test for amount in controversy)
- Comm. for GI Rights v. Callaway, 518 F.2d 466 (D.C. Cir. 1975) (same principle: measure by plaintiff’s right or cost to defendant)
- Snyder v. Harris, 394 U.S. 332 (1969) (non-aggregation principle: separate plaintiffs’ claims cannot be aggregated to meet jurisdictional amount)
- Zahn v. Int’l Paper Co., 414 U.S. 291 (1973) (distinguishes collective/common-undivided interests from separate claims for aggregation purposes)
- Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547 (2014) (burden on removing party to establish amount in controversy by preponderance of the evidence)
- Zuckman v. Monster Beverage Corp., 958 F. Supp. 2d 293 (D.D.C. 2013) (declines to treat speculative future revenue loss as proper cost-of-compliance measure)
- Breakman v. AOL LLC, 545 F. Supp. 2d 96 (D.D.C. 2008) (when compliance costs are used in representative actions, costs must be allocated to each beneficiary)