Defendant's Attorney: Troy A. Bozarth, Robert B. Hawk, Charles N. Insler, Matthew H. Noce, David J. Robbins
Description: With this court’s permission, Ferrara Candy Co. (Ferrara) appeals the district
court’s1 order remanding this putative class action back to the state court from which
it was removed. Neither party having waived the time limit in 28 U.S.C. § 1453(c)(2),
we resolve this appeal on the parties’ briefs. We affirm.
Plaintiff Jaclyn Waters filed this putative class action in the Circuit Court for
the City of St. Louis, Missouri, alleging that Ferrara had engaged in “false, deceptive,
and misleading conduct” by selling substantially under-filled or “slack-filled”
cardboard boxes of Red Hot candies. In her petition, Waters claimed that Ferrara’s
conduct violated the Missouri Merchandising Practices Act (MMPA), see Mo. Rev.
Stat. § 407.010, et seq., and that Ferrara has been unjustly enriched by its deception
of Waters and other similarly situated Red Hots consumers in Missouri. She sought
compensatory damages, disgorgement, restitution, and unspecified injunctive relief
on behalf of herself and others who had purchased slack-filled boxes of Red Hots in
Missouri within the five-year period preceding the lawsuit.
Ferrara removed the action to federal court, seeking to invoke the district
court’s jurisdiction under the Class Action Fairness Act (CAFA), see 28 U.S.C.
§ 1332(d). Waters thereafter moved to remand the case back to state court, arguing
that the amount in controversy in this matter falls below the $5 million threshold
necessary for federal jurisdiction under CAFA. The district court entered an order
granting the motion and remanding this case to the state court. More specifically, the
district court applied the so-called plaintiffs’ viewpoint rule, determined that remand
was necessary because the amount in controversy did not exceed $5 million from the
putative class’s perspective, and held alternatively that Ferrara had failed to show that
1The Honorable Noelle C. Collins, United States Magistrate Judge for the
Eastern District of Missouri, to whom the case was referred for final disposition by
consent of the parties pursuant to 28 U.S.C. § 636(c).
the amount in controversy exceeded $5 million under the either viewpoint rule Ferrara
had urged the court to apply. We granted Ferrara permission to appeal the remand
order, pursuant to 28 U.S.C. § 1453(c). The issue now before us is whether the
amount in controversy in this putative class action exceeds $5 million, exclusive of
interest and costs, as is required to invoke the district court’s jurisdiction under
CAFA. See 28 U.S.C. § 1332(d)(2).
Ferrara argues that the district court erred by applying the plaintiffs’ viewpoint
rule when it calculated the amount in controversy. According to Ferrara, in enacting
CAFA, Congress authorized federal courts to apply the either viewpoint rule. Under
the either viewpoint rule, courts may determine the amount in controversy either from
the plaintiffs’ perspective, i.e., the aggregate value of the claims to the class members,
or from the defendant’s perspective, i.e., the total potential cost to the defendant
should the plaintiffs prevail, including all damages, attorney’s fees, and costs the
defendant would incur in complying with an award of injunctive relief. In support,
Ferrara points to CAFA’s text, which—unlike the anti-aggregation rule applicable to
federal diversity jurisdiction under 28 U.S.C. § 1332(a)—mandates aggregation of the
value of the plaintiffs’ claims. See 28 U.S.C. § 1332(d)(6). Ferrara also relies heavily
on a Senate Judiciary Committee Report endorsing the either viewpoint rule. See S.
Comm. on the Judiciary, Class Action Fairness Act of 2005, S. Rep. No. 109-14, at
41 (Feb. 28, 2005), reprinted in 2005 U.S.C.C.A.N. 3, 41, 2005 WL 627977.
Ferrara submitted two affidavits in support of its contention that the amount in
controversy in this case exceeds $5 million. In the first affidavit, a Ferrara vice
president attested, inter alia, that from 2012 to 2016, Ferrara’s sales of Red Hots
packaged in cardboard boxes totaled $27,592,167, of which $464,903 was from sales
in the City of St. Louis and the Kansas City metropolitan area. In its second affidavit,
a Ferrara executive averred that, based on his knowledge of Ferrara’s packing
processes and his investigation into the costs of upgrading its packaging equipment,
“necessary changes to Ferrara’s production capital equipment, which could result from
an injunction requiring a material increase in the percentage fill of Red Hots candy [in
the cardboard boxes], would exceed $6,000,000.” In Ferrara’s view, these affidavits
establish that the amount in controversy in this case exceeds $5 million.
We review a district court’s remand for lack of CAFA jurisdiction de novo. See
Reyes v. Dollar Tree Stores, Inc., 781 F.3d 1185, 1188 (9th Cir. 2015) (citation
omitted); cf. Westerfield v. Ind. Processing, LLC, 621 F.3d 819, 822 (8th Cir. 2010)
(citation omitted) (de novo review of a district court’s interpretation of CAFA). When
a defendant removes a civil action to federal court and its notice of removal includes
a good faith, plausible allegation that the amount in controversy exceeds CAFA’s
jurisdictional threshold, the “allegation should be accepted when not contested by the
plaintiff or questioned by the court.” Dart Cherokee Basin Operating Co. v. Owens,
135 S. Ct. 547, 553 (2014). However, where the plaintiff contests the defendant’s
amount-in-controversy allegation, “‘[r]emoval . . . is proper on the basis of an amount
in controversy asserted’ by the defendant ‘if the district court finds, by the
preponderance of the evidence, that the amount in controversy exceeds’ the
jurisdictional threshold.” Id. at 553–54 & 554 n.1 (ellipsis in original) (quoting 28
U.S.C. § 1446(c)(2)(B)). “In such a case, 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 554; Bell v. Hershey Co., 557 F.3d 953, 958
(8th Cir. 2009). “The party seeking to remove a case to federal court [under CAFA]
bears the burden of establishing federal jurisdiction.” Westerfield, 621 F.3d at 822.
We need not resolve the issue of whether courts should apply the plaintiffs’
viewpoint rule or the either viewpoint rule when determining the amount in
controversy under CAFA because Ferrara did not meet its burden under either rule.
If the plaintiffs prevail in this case, they will be entitled to monetary relief and
attorney’s fees well below $5 million, regardless of whether the monetary relief comes
in the form of compensatory damages, restitution, or disgorgement. Punitive damages
are not in controversy because the petition does not seek them. See Mo. Rev. Stat.
§ 509.200 (requiring that petitions explicitly state the amount of punitive damages
sought to be recovered).
Moreover, Ferrara’s affidavits are insufficient to quantify, beyond mere
speculation, the costs it would incur in complying with an award of injunctive relief
in this case. A removing defendant can establish federal jurisdiction with “specific
factual allegations . . . combined with reasonable deductions, reasonable inferences,
or other reasonable extrapolations.” Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744,
753–54 (11th Cir. 2010); cf. Raskas v. Johnson & Johnson, 719 F.3d 884, 886–87 (8th
Cir. 2013). However, the amount in controversy is not established by a preponderance
of the evidence if a court must resort “to conjecture, speculation, or star gazing.” Id.
at 754; cf. Northup Props., Inc. v. Chesapeake Appalachia, L.L.C., 567 F.3d 767, 771
(6th Cir. 2009) (defendant’s affidavits were specific enough to establish amount-incontroversy
threshold by a preponderance of the evidence where they did not require
“judicial star-gazing” to quantify the value of a mineral interest). As the district court
aptly observed, Ferrara’s executive did not specify “whether the assumed injunction
would require additional filling of the existing package sizes or shrinking the package
size to more closely fit the current weight of actual candy,” and he also did not specify
“whether the supposed injunction would require modification of every Red Hots
candy production line or only a few lines.” Thus, even if we were to apply the either
viewpoint rule, Ferrara did not establish by a preponderance of the evidence that the
amount of controversy in this matter exceeds $5 million. See Dart Cherokee, 135 S.
Ct. at 554.