Case Information
*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ANIMAL LEGAL DEFENSE FUND,
Plaintiff
v. Civil Action No. 16-1575 (CKK) HORMEL FOODS CORPORATION,
Defendant MEMORANDUM OPINION (April 5, 2017)
Plaintiff Animal Legal Defense Fund (“ALDF”) filed suit against Defendant meat producer Hormel Foods Corporation (“Hormel”) in the Superior Court of the District of Columbia, alleging that Defendant violated the District of Columbia Consumer Protection Procedures Act (“DCCPPA”) by misleading consumers with its “Natural Choice” advertising campaign. In short, Plaintiff’s Complaint claims that Hormel’s meat products are not “natural” in the way that its advertising campaign implies. Defendant removed the case to this Court, invoking the Court’s federal question, diversity and Class Action Fairness Act (“CAFA”) jurisdiction. Plaintiff has moved to remand the case back to Superior Court. Upon consideration of the pleadings, [1] the relevant legal authorities, and the record as a whole, the Court will GRANT Plaintiff’s [15] Motion to Remand.
Remand is required because the Court lacks subject matter jurisdiction. First, the Court lacks federal question jurisdiction because Plaintiff asserts only a single cause of action under *2 District of Columbia law, and the Court rejects Defendant’s argument that Plaintiff’s Complaint nonetheless “necessarily raises” federal issues. Second, the Court finds that it lacks diversity jurisdiction because Defendant has not demonstrated that $75,000 is in controversy in this case. The Court does not deem it appropriate to measure the amount in controversy as the total cost to the Defendant of complying with the requested injunctive relief and is also not convinced that speculation as to possible attorneys’ fees is sufficient to establish jurisdiction. Finally, the Court lacks class action jurisdiction under CAFA because this case is not a class action.
I. BACKGROUND
Plaintiff is a non-profit organization that focuses on animal protection issues. Compl., ECF No. 1-1, ¶¶ 28-30. Plaintiff brought this suit in the Superior Court of the District of Columbia, alleging that Defendant Hormel misleads consumers in Washington D.C. when it sells them meat products pursuant to a “Make the Natural Choice” marketing campaign that suggests that Defendant’s products are “natural” when in fact they are not. Id. ¶¶ 1-23. Based on these and other alleged misrepresentations Plaintiff asserts a cause of action under the DCCPPA. Id. ¶¶ 211-26. As relief, Plaintiff seeks a declaration that Hormel’s conduct is in violation of the DCCPPA, an order enjoining such conduct and requiring corrective advertising, and attorneys’ fees, costs and pre-judgment interest. Id. at 41-42.
After this Complaint was filed in the Superior Court of the District of Columbia, Defendant removed it to this Court, invoking the Court’s federal question, diversity and CAFA jurisdiction. Notice of Removal, ECF No. 1. Defendant then filed in this Court a Motion to Dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Def.’s Mot. to Dismiss Pl.’s Compl., ECF No. 11. Before it was required to respond to that Motion, Plaintiff filed the pending Motion to Remand for Lack of Subject Matter Jurisdiction. *3 ECF No. 15. The Court then stayed briefing on Defendant’s Motion to Dismiss pending the resolution of Plaintiff’s Motion to Remand. [2] Plaintiff’s Motion is now fully briefed and ripe for resolution.
II. LEGAL STANDARD
The Court of Appeals for the District of Columbia Circuit has explained that “[w]hen it
appears that a district court lacks subject matter jurisdiction over a case that has been removed
from a state court, the district court
must
remand the case.”
Republic of Venezuela v. Philip
Morris Inc.
,
III. DISCUSSION
Defendant presents three different theories by which it contends that this Court has subject matter jurisdiction over this case. First, Defendant invokes the Court’s federal question *4 jurisdiction because Defendant claims that despite the fact that this case arises under District of Columbia law, it necessarily raises federal issues. Second, Defendant asserts that the Court has diversity jurisdiction because the parties are of diverse citizenship and the cost of complying with the requested injunction, plus the attorneys’ fees at issue, exceeds $75,000. Finally, Defendant asserts that the Court has jurisdiction under CAFA. The Court is not convinced by any of these arguments, and accordingly it must remand this case back to Superior Court. A. Federal Question Jurisdiction
First, the Court rejects Defendant’s contention that federal question jurisdiction exists
over this action. Federal question jurisdiction grants district courts “original jurisdiction of all
civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §
1331. The scope of this jurisdiction is defined by the well-pleaded complaint rule, which states
that “federal jurisdiction exists only when a federal question is presented on the face of the
plaintiff’s properly pleaded complaint.”
Caterpillar Inc. v. Williams
,
Defendant seeks to avoid this result by invoking a narrow doctrine whereby cases
brought under state law may be heard in federal court if they “necessarily raise” certain federal
issues. In
Gunn v. Minton
, the Supreme Court explained that “even where a claim finds its
origins in state rather than federal law,” there exists “a ‘special and small category’ of cases in
which arising under jurisdiction still lies.”
Defendant attempts to bring this case under the doctrine discussed in Gunn by claiming that “Plaintiff’s CPPA claims necessarily challenge” a “federal scheme.” Def.’s Opp’n at 41. Defendant asserts that “[a] comprehensive national regulatory system governs nearly every aspect of meat and poultry production, including the various practices directly challenged in Plaintiff’s lawsuit” and that the United States Department of Agriculture “has issued specific guidance on use of ‘natural’ and ‘no preservative’ claims, and [the Food Safety and Inspection Service] has specifically approved Hormel Foods’ use of those claims to describe the Natural Choice products at issue.” Id. at 40. According to Defendant, “[t]he Complaint thus calls into question the scope and validity of federal law governing meat and poultry products.” Id. at 41.
This argument fails at the first step of the Gunn analysis because it does not demonstrate that a federal issue is “necessarily raised” by Plaintiff’s claims. First, despite Defendant’s rather extreme statement that Plaintiff’s claims are an “attempt to subvert the federal system of regulation,” id. at 42, it is not at all clear that there is any real conflict between the false advertising claims in this case and the federal laws Defendant cites. Defendant has directed the Court to certain federal laws and regulations related to meat labelling and packaging . But this case is not about the labels or packages on particular meat products produced by Defendant. It is about a national advertising campaign including, among other things, magazine advertisements, newspaper inserts and webpages. The federal laws and regulations cited by Defendant may grant Defendant the right to use various terms on its meat labels—when accompanied by certain disclaimers—but they do not appear to have given Defendant any sort of approval to produce the *6 advertisements challenged in this case. Nor has Defendant pointed to any federal law that would permit advertisements for meat products simply because those advertisements contain pictures of federally-approved meat labels or contain phrases similar to those found on such labels, as Defendant argues is the case here. Moreover, the Court is not convinced that the fact that Defendant’s treatment of animals is, allegedly, in compliance with certain federal laws means that the challenged advertisements could not be misleading with respect to how such treatment is portrayed. As Plaintiff persuasively argues in its Reply, the Complaint in this case does not allege that Defendant’s treatment of animals is necessarily illegal . Pl.’s Reply at 24. It merely alleges that such treatment is misleadingly portrayed. For all of these reasons, the Court does not agree that Plaintiff’s advertising claims are inherently in conflict with the federal laws relied on by Defendant.
Second, even if some degree of conflict did exist between Plaintiff’s claims and the
federal laws cited, jurisdiction under
Gunn
would still not be appropriate because this is not a
case where the resolution of Plaintiff’s claims would “necessarily require application of [federal]
law to the facts of [Plaintiff’s] case.”
Gunn
,
In fact, Defendant has raised precisely such a defense, based on federal preemption and
its compliance with these federal laws, in its pending Motion to Dismiss Plaintiff’s Complaint.
But such a defense by its very nature is not “necessarily raised” by Plaintiff’s Complaint, and
indeed it is black letter law that “a case may
not
be removed to federal court on the basis of a
federal defense, including the defense of pre-emption.”
Caterpillar Inc.
,
With regard to this latter point, the Court notes that Plaintiff has filed a Notice of
Supplemental Authority—to which Defendant has responded—bringing to the Court’s attention a
recent opinion issued by Judge Ellen Segal Huvelle that deals with a very similar argument. In
Organic Consumers Ass’n v. Gen. Mills, Inc.
, No. 1:16-CV-1921-ESH,
Having determined that no federal issue is necessarily raised by Plaintiff’s Complaint, the Court need not consider the additional requirements for invoking federal question jurisdiction under Gunn . Because no federal issue appears on the face of Plaintiff’s Complaint and Plaintiff’s claims do not necessarily raise any federal issues, the Court does not have federal question jurisdiction over this action.
B. Diversity Jurisdiction
Defendant also contends that this Court has diversity jurisdiction over this action because the parties are of diverse citizenship and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1). Plaintiff does not dispute that the parties are diverse, but contends that Defendant has not demonstrated an amount in controversy exceeding $75,000. The Court agrees.
Defendant argues that the amount in controversy requirement is satisfied based on (1) the cost to Defendant of complying with the requested injunctive relief and (2) the attorneys’ fees Plaintiff requests in its Complaint. For the reasons set forth below, neither are sufficient to demonstrate that $75,000 is in controversy.
1. The Cost of Complying with the Requested Injunction
The Court first finds that the purported cost of complying with the injunctive relief
Plaintiff requests is not sufficient to satisfy the amount in controversy requirement. The Court
begins by noting that it rejects Plaintiff’s argument that Defendant’s “alleged cost of compliance
. . . is no longer considered a proper measure of jurisdictional minimum in district courts in this
Circuit.” Pl.’s Mot. at 8. Under binding precedent, the cost-to-defendant test is in fact one
appropriate method of measuring the value of injunctive relief in this Circuit. In
Tatum v. Laird
*9
the Court of Appeals for the District of Columbia Circuit held that “the test for determining the
amount in controversy is the pecuniary result to either party which the judgment would directly
produce,” and determined that the amount in controversy requirement was satisfied in that case
because “the cost to the [defendant] of complying with such a [injunction] might well exceed
$10,000.”
However, although the cost to the defendant is one available measure of the amount in
controversy, the Court concludes that it would not be an appropriate measure to apply in this
particular case because to do so would not comport with the non-aggregation principle. That
principle states that “the separate and distinct claims of two or more plaintiffs cannot be
aggregated in order to satisfy the jurisdictional amount requirement.”
Snyder v. Harris
, 394 U.S.
332, 335 (1969);
see also Zahn v. Int’l Paper Co.
,
In the absence of binding precedent on this issue, the Court is persuaded by several
district court opinions from this Circuit that have considered this conflict in the context of cases
brought under the DCCPPA on behalf of the general public seeking injunctive relief and have
determined that considering the
total
cost to the Defendant of complying with that relief would
violate the non-aggregation principle. These courts have instead found that the cost of
compliance that a court should consider when determining the amount in controversy is the total
amount divided among the beneficiaries of the injunction.
Breathe DC
,
Having determined that Defendant’s total cost of complying with the requested injunction in this case is not a proper measure of the amount in controversy, Defendant’s showing necessarily fails. In support of removal, Defendant has provided the declaration of its Vice President of Meat Products Marketing, Steven J. Venenga, who avers that Defendant’s cost of compliance would involve three components: corrective advertisements, the production of new packaging and the production of new advertisements. Decl. of Steven J. Venenga, ECF No. 17-1, at ¶¶ 11-38. According to Mr. Venenga, these costs would add up to approximately $5,440,000. Id. at ¶ 10. Although this total estimated cost far exceeds the $75,000 minimum, Defendant has made no effort to demonstrate—nor could it credibly—that the cost of the injunction divided pro rata among the members of the general public of Washington, D.C. would exceed the jurisdictional threshold.
Instead of attempting to make such a showing, Defendant has argued that the non-
aggregation principle is inapplicable here for a number of reasons, none of which the Court finds
persuasive. First, Defendant argues that the non-aggregation principle can have no application in
a case with only a single Plaintiff. Def.’s Opp’n at 11-13, 16. The Court disagrees. ALDF is the
only Plaintiff named in this case, but it asserts that it brings this case on behalf of the general
public. In other words, Plaintiff is bringing this case on behalf of other individuals who would
*12
themselves have separate and distinct claims against Defendant, and who would themselves
benefit from the injunctive relief sought. The Court finds that although the non-aggregation
principle was originally established in cases involving multiple formal
plaintiffs
, “the rationale
[behind the principle] extends equally to actions,” like the one before the Court, “brought by
nonprofit groups where the beneficiaries need not be added as parties to the lawsuit.”
Breathe
DC
,
Second, the Court also rejects Defendant’s alternative argument that Plaintiff has not, in
fact, brought this case on behalf of the general public. Defendant argues that the “text of the
Plaintiff’s Complaint” does not support the conclusion that Plaintiff seeks to represent the
“general public.” Def.’s Opp’n at 3. The Court has reviewed the entirety of Plaintiff’s
Complaint and concludes that there are sufficient allegations to demonstrate that Plaintiff
intended to bring this claim on behalf of the general public. In its Complaint, Plaintiff invokes
D.C. Code § 28-3905(k)(1)(C), which states that “[a] nonprofit organization may, on behalf of
itself or any of its members, or on any such behalf
and on behalf of the general public
, bring an
action . . . ,” and alleges that, through this D.C. Code section, the DCCPPA “allows for non-profit
organizational standing to the fullest extend recognized by the D.C. Court of Appeals.” Compl.
¶¶ 223-24 (emphasis added). The Complaint also contains numerous allegations that suggest it is
being brought on behalf of the general public.
Id.
¶ 2 (“consumers are increasingly factoring into
their purchasing decisions the origins of their food”); ¶ 22 (“Hormel [is] taking advantage of
consumers’ perceptions of what ‘natural’ means”); ¶ 210 (“The products do not have the
characteristics, ingredients, benefits, standards, qualities or grades that consumers expect and
rely upon, and Hormel never intended to sell them as advertised.”). At most there may be
ambiguity on this issue, but any such ambiguity must be resolved in favor of remand.
*13
Johnson-Brown
,
Finally, the Court is not convinced by Defendant’s argument that non-aggregation
concerns are irrelevant because the injunctive relief sought would cost Defendant the same
amount regardless of the number of beneficiaries. Def.’s Opp’n at 17-21. Even if the Court
accepted this premise as factually accurate, it would not inherently alleviate the aggregation
problem because it does not address the central aggregation concern. The key question courts
consider with respect to aggregation is not whether an injunction would cost Defendant more or
less depending on the number of beneficiaries, but instead whether Plaintiff and the members of
the general public have separate and distinct claims that could be brought independently against
Defendant with respect to the challenged conduct. Because this is the case here, the Court
concludes that considering the total cost to Defendant of complying with the requested injunction
would raise aggregation concerns.
Breathe DC
,
In sum, the Court will not calculate the amount in controversy as the total cost to the Defendant of complying with the requested injunction due to the non-aggregation principle, and *14 Defendant makes no effort to demonstrate that the pro rata portion of its compliance costs attributable to Plaintiff would nearly approach the jurisdictional threshold.
2. Attorneys’ Fees
The Court is also not convinced that any potential award of attorneys’ fees in this case is
sufficient to satisfy the amount in controversy requirement. “Attorney fees are part of the
amount in controversy if they are provided for by statute or contract,”
Zuckman v. Monster
Beverage Corp.
,
As an initial matter, Plaintiff argues that it would be inappropriate for the Court to
consider the
total
amount of potential attorneys’ fees for the same reason that it would be
inappropriate to consider the
total
cost of Defendant’s compliance with the requested injunction.
Plaintiff argues that considering the total amount of attorneys’ fees in a DCCPPA case brought on
behalf of the general public would not comport with the non-aggregation principle. Pl.’s Mot. at
9. This position finds considerable support in a number of district court opinions from this
Circuit.
Nat’l Consumers League v. Bimbo Bakeries USA
,
The Court does not, however, rest its conclusion that attorneys’ fees are an insufficient
basis on which to establish jurisdiction solely on aggregation concerns. Even if the Court were
to consider the
total
amount of possible attorneys’ fees, it would still find that Defendant had not
satisfied the amount in controversy requirement because Defendant’s showing regarding
attorneys’ fees is too speculative. Numerous courts have rejected similar attempts to create
federal jurisdiction through speculative assertions as to the potential for an award of attorneys’
fees.
Bimbo Bakeries
,
Defendant has attempted to overcome the speculative nature of potential attorneys’ fees
in this case by cobbling together a “blended billing rate of Plaintiff’s lawyers” from filings it has
found in other cases, calculating how many hours of work at that average billing rate it would
take to reach $75,000, and then baldly asserting that “Plaintiff’s attorneys will assuredly spend at
least that much time on this case prior to judgment.” Def.’s Opp’n at 26. Defendant also claims
that it “strains credulity” to suggest Plaintiff would seek less than $75,000 in attorneys’ fees.
Id.
These statements are not helpful to the Court. Conclusory assertions and rhetoric are not
*16
sufficient to satisfy Defendant’s burden to establish the amount in controversy in this case.
Gen. Mills, Inc.
,
Having determined that the alleged cost to the Defendant of complying with the requested injunction and the potential attorneys’ fees in this case are not sufficient to satisfy Defendant’s burden to establish that $75,000 is in controversy, the Court must conclude that it does not have diversity jurisdiction over this matter.
C. CAFA Jurisdiction
Finally, Defendant alternatively contends that the Court should consider this lawsuit a
“class action” over which it has jurisdiction pursuant to CAFA. Def.’s Opp’n at 27-28. “CAFA
gives federal courts jurisdiction over certain class actions . . . if the class has more than 100
members, the parties are minimally diverse, and the amount in controversy exceeds $5 million.”
Dart
,
Plaintiff argues that CAFA jurisdiction is absent here for two reasons. First, Plaintiff argues that Defendant has not carried its burden of demonstrating that $5 million is in controversy. The amount in controversy requirement of CAFA is not affected by the non- aggregation principle discussed above because the CAFA statute expressly allows for aggregation. 28 U.S.C. § 1332(d)(6) (“the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs”). Accordingly, Plaintiff does not contend that it *17 would be inappropriate to consider the cost to Defendant of complying with the requested injunction when calculating the amount in controversy in this context. Pl.’s Reply at 20 n.12 (“arguments related to whether the Court can consider the cost-to-defendant of the injunctive relief requested do not apply”). That being said, the parties do dispute whether Defendant would need to spend $5 million to comply with the injunctive relief requested in this case. Pl.’s Mot. at 10-11; Def.’s Opp’n at 38-39; Pl.’s Reply. at 20. [3]
The Court need not resolve the parties’ dispute on this issue, however, because class
action jurisdiction under CAFA is absent here for a much more fundamental reason: Plaintiff has
not brought this case as a class action. CAFA defines a “class action” as “any civil action filed
under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial
procedure authorizing an action to be brought by 1 or more representative persons as a class
action.” 28 U.S.C. § 1332(d)(1)(B). The present case does not fit this definition. Plaintiff did
not bring this case under District of Columbia Superior Court Rule of Civil Procedure 23, but
instead under D.C. Code § 28-3905(k)(1)(C), which states that “[a] nonprofit organization may,
on behalf of itself or any of its members, or on any such behalf and on behalf of the general
public, bring an action seeking relief from the use of a trade practice in violation of a law of the
District . . . ” This D.C. Code section does not require class proceedings and is a “separate and
distinct procedural vehicle from a class action,” to which CAFA does not apply.
Breakman
, 545
F. Supp. 2d at 101;
see also Nat’l Consumers League v. Flowers Bakeries, LLC.
, 36 F. Supp. 3d
26, 36 (D.D.C. 2014) (“removal is not permitted under CAFA’s class action provision for actions
brought by a private attorney general under D.C. Code § 28–3905(k)(1) where plaintiff has not
*18
brought a ‘class action’ under D.C. Superior Court Rule 23.”);
Zuckman
,
Defendant resists this conclusion by arguing that the line of authority supporting it is
“surely limit[ed], if not outright invalidate[d]” by the District of Columbia Court of Appeals’
recent opinion
Rotunda v. Marriott Int’l, Inc.
,
Rotunda does not alter the Court’s conclusion in this case. The concerns raised by the District of Columbia Court of Appeals in Rotunda related to suits for damages, not for the type of injunctive relief sought here, and that court repeatedly described its holding as limited to such suits. See, e.g. , id. at 985 (expressing concern that the DCCPPA amendments at issue “were virtually silent on how broadly-contoured actions for damages are to be regulated or managed.”) *19 (emphasis added); id. at 988 (finding that Rule 23 is “the time-tested framework [for] suits for damages by class-members ‘as representative parties’”) (emphasis added); id. at 989 (“the necessary vehicle for suits seeking class-wide damages remains Rule 23”) (emphasis added). The decision says nothing about DCCPPA lawsuits that do not seek damages on behalf of the general public, such as the one before the Court.
Apparently recognizing this, Defendant argues that the “concerns that motivated the Court of Appeals” are similarly applicable to suits for injunctive relief, and invites the Court to extend the Rotunda decision to such suits on that basis. Def.’s Opp’n at 31-34. But this argument misses the point. Whether or not this Court would deem it prudent for D.C. law to require DCCPPA suits for injunctive relief be considered class actions that must comply with Rule 23 is irrelevant. What is relevant is that the Rotunda opinion undeniably does not require that. Accordingly, because Plaintiff did not bring its case as a class action, and Defendant has not shown that any D.C. law or court opinion would require Plaintiff’s case be treated as such, the Court sees no reason why it would conclude that Plaintiff has brought a “class action” for the purposes of CAFA. Class action jurisdiction under CAFA accordingly does not apply in this case seeking injunctive relief.
Finally, the Court notes that finding that this case is not a class action for the purposes of CAFA is not in conflict with the Court’s conclusion that the non-aggregation principle makes it inappropriate for the Court to consider the total cost to the Defendant of complying with the requested injunction when calculating the amount in controversy for the purposes of diversity jurisdiction. Defendant suggests that these two conclusions “cannot be squared” and allow Plaintiff to “have it both ways.” Def.’s Opp’n at 29. Although Defendant’s position may have some intuitive appeal, it conflates what are in fact two distinct inquiries. Considering the total *20 cost of complying with the requested injunction is inappropriate because doing so effectively aggregates separate and distinct claims that each member of the general public has against Defendant regarding the challenged conduct. Finding that CAFA jurisdiction does not apply is simply a matter of determining that Plaintiff has not brought this case as a class action. These two determinations are not inherently in conflict. [4]
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff’s [15] Motion to Remand for lack of subject matter jurisdiction. Defendant has not demonstrated that the Court has federal question, diversity or CAFA jurisdiction.
An appropriate Order accompanies this Memorandum Opinion.
Dated: April 5, 2017
/s/ COLLEEN KOLLAR-KOTELLY
United States District Judge
Notes
[1] The Court’s consideration has focused on the following documents: • Pl.’s Mot. to Remand for Lack of Subject Matter Jurisdiction (“Pl.’s Mot.”), ECF No. 15; • Def.’s Opp’n to Pl.’s Mot. to Remand (“Def.’s Opp’n”), ECF No. 17; and • Pl.’s Reply in Support of Mot. to Remand (“Pl.’s Reply”), ECF No. 18. In an exercise of its discretion, the Court finds that holding oral argument in this action would not be of assistance in rendering a decision. LCvR 7(f).
[2] Defendant’s [11] Motion to Dismiss the Complaint and accompanying [12] Request for Judicial Notice will be HELD IN ABEYANCE for the Superior Court to resolve on remand.
[3] As was the case with respect to diversity jurisdiction, Plaintiff does not appear to dispute that the diversity of citizenship requirement of the CAFA statute is satisfied here.
[4] The Court does not base its conclusion that Defendant has failed to establish diversity or CAFA
jurisdiction on Defendant’s alleged failure to establish the amount in controversy required for
either type of jurisdiction in its Notice of Removal. The Supreme Court has held that “a
defendant’s notice of removal need include only a plausible allegation that the amount in
controversy exceeds the jurisdictional threshold,” and evidence establishing the amount in
controversy can be provided later “when the plaintiff contests, or the court questions, the
defendant’s allegation.”
Dart Cherokee Basin Operating Co., LLC v. Owens
,