Michelle Gyorke-Takatri et al v. Nestle USA, Inc. et al, No. 3:2016cv03893 - Document 37 (N.D. Cal. 2016)

Court Description: ORDER GRANTING 24 MOTION TO REMAND - This action is REMANDED to the Superior Court of the State of California, City and County of San Francisco. Signed by Judge William H. Orrick on 09/30/2016. (jmdS, COURT STAFF) (Filed on 9/30/2016)
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Michelle Gyorke-Takatri et al v. Nestle USA, Inc. et al Doc. 37 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 9 10 United States District Court Northern District of California 11 12 13 MICHELLE GYORKE-TAKATRI, et al., Plaintiffs, v. NESTLE USA, INC., et al., Defendants. Case No. 16-cv-03893-WHO ORDER GRANTING MOTION TO REMAND Re: Dkt. No. 24 INTRODUCTION Plaintiffs brought a mislabeling case in Superior Court of the State of California, City and 14 County of San Francisco against Gerber Products Company (“Gerber”). After Gerber removed the 15 case to federal court arguing that the claims satisfied CAFA jurisdiction, the Hon. Yvonne 16 Gonzalez Rogers of this District remanded, finding that Gerber had failed to provide admissible 17 evidence that the amount in controversy met CAFA’s $5,000,000 requirement. After plaintiffs 18 moved for class certification in Superior Court, Gerber removed the case to federal court again, 19 arguing once more that the case meets CAFA’s jurisdictional requirements. Plaintiffs move to 20 remand a second time, arguing that Gerber’s second removal is procedurally improper and that 21 Gerber has failed to demonstrate any new facts or circumstances that would justify permitting a 22 successive removal. Because Gerber has failed to demonstrate a change in circumstances that 23 justifies its second removal, I GRANT plaintiffs’ motion to remand. 24 BACKGROUND 25 On July 14, 2015, plaintiffs filed a putative class action against Nestlé USA, Inc. 26 (“NUSA”) and Gerber in Superior Court, asserting seven state law claims related to allegations 27 that the images of fruits and vegetables on the front label of Gerber Puffs Cereal snack products 28 misled consumers into believing Puffs were “fruit-or-vegetable-packed” snacks. Complaint Dockets.Justia.com 1 (“Comp.”), Dkt. No. 1-2, Ex. 1 ¶¶ 2, 25-26. NUSA was voluntarily dismissed from the case on 2 August 10, 2015 and Gerber is the only remaining defendant. Dkt. No. 1-2, Ex. 5. Plaintiffs seek, 3 among other forms of relief, “[a]n award of restitution, including disgorgement pursuant to 4 California Business & Profession[s] Code §§ 17203, 17535.” Compl. at 22:7-16. 5 Gerber first removed this case to federal court on August 13, 2015, arguing that there was 6 federal jurisdiction under CAFA and that the amount in controversy, which Gerber presumed was 7 the retail price consumers paid, exceeded $5,000,000. Dkt. No. 1-3, Ex. 6. Judge Gonzalez 8 Rogers granted plaintiffs’ motion to remand, concluding that Gerber’s only evidence of the 9 amount in controversy was inadmissible hearsay and that Gerber had not met its burden of demonstrating CAFA jurisdiction. Remand Order, Dkt. No. 1-6, Ex. 47 at 4. Gerber moved for 11 United States District Court Northern District of California 10 reconsideration and for leave to file additional evidence to support its amount in controversy 12 argument. Dkt. No. 1-6, Ex. 50. The court denied Gerber’s motion, concluding that “Gerber does 13 not indicate that it intends to present facts that, in the exercise of reasonable diligence, it could not 14 have presented in its opposition to the remand motion” and has therefore failed to show grounds 15 for reconsideration. Dkt. No. 1-6, Ex. 53 at 1. 16 After the case was remanded to Superior Court, plaintiffs moved for class certification. 17 Dkt. No. 1-12, Ex. 108. In their motion for class certification, plaintiffs proposed to measure 18 damages by looking at data showing “the price paid for Gerber products” or alternatively by 19 looking at the price retailers paid to Gerber because “California consumers paid at least what 20 retailers paid Gerber.” Id. at 9. After plaintiffs filed their class certification motion, Gerber again 21 removed the case to federal court under CAFA. Dkt. No. 1. Gerber argues that this second 22 removal is proper (1) because there is no bar on successive removals in CAFA cases and (2) 23 because “plaintiffs’ new statement of restitution/damages” constitutes a “relevant change in 24 circumstances” to justify a second removal. Opposition to Remand (“Oppo.”), at 1, (Dkt. No. 26). 25 I heard argument on September 14, 2016. 26 LEGAL STANDARD 27 A defendant may remove a civil action filed in state court if the action could have been 28 filed originally in federal court. 28 U.S.C. § 1441. “[U]nder CAFA the burden of establishing 2 1 removal jurisdiction remains, as before, on the proponent of federal jurisdiction.” Abrego Abrego 2 v. The Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006). However, “no antiremoval 3 presumption attends cases invoking CAFA.” Dart Cherokee Basin Operating Co., LLC v. Owens, 4 135 S. Ct. 547, 554 (2014). 5 CAFA provides that district courts have original jurisdiction over any class action in 6 which: (1) the amount in controversy exceeds five million dollars, (2) any plaintiff class member 7 is a citizen of a state different from any defendant, (3) the primary defendants are not states, state 8 officials, or other government entities against whom the district court may be foreclosed from 9 ordering relief, and (4) the number of plaintiffs in the class is at least 100. 28 U.S.C. §§ 10 1332(d)(2), (d)(5). United States District Court Northern District of California 11 The “defendant in a jurisdictional dispute has the burden to put forward evidence showing 12 that the amount in controversy exceeds $5 million, to satisfy other requirements of CAFA, and to 13 persuade the court that the estimate of damages in controversy is a reasonable one.” Ibarra v. 14 Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). “When measuring the amount in 15 controversy, a court must assume that the allegations of the complaint are true and that a jury will 16 return a verdict for the plaintiff on all claims made in the complaint.” Gyorke-Takatri v. Nestle 17 USA, Inc., No. 15-cv-03702-YGR, 2015 WL 6828258, *2 (N.D. Cal. Nov. 6, 2015). 18 Generally, “[a] successive removal petition is permitted only upon a ‘relevant change of 19 circumstances’—that is, ‘when subsequent pleadings or events reveal a new and different ground 20 for removal.’ ” Reyes v. Dollar Tree Stores, Inc., 781 F.3d 1185, 1187 (9th Cir. 2015) (quoting 21 Kirkbride v. Cont’l Cas. Co., 933 F.2d 729, 732 (9th Cir. 1991). 22 DISCUSSION 23 I. SUCCESSIVE REMOVAL OF CAFA CASES 24 Gerber first argues that its successive removal is procedurally proper because CAFA cases 25 are not “subject to the ordinary rule that successive removal petitions must be made on different 26 grounds.” Oppo. 7. Gerber points to Rea v. Michael Stores, Inc., in which the Ninth Circuit 27 concluded that successive removals on the same grounds are not necessarily impermissible in a 28 CAFA case. 742 F.3d 1234, 1238 (9th Cir. 2014) (noting that the normal rule against successive 3 1 removals “does not dictate the result in this case because CAFA explicitly allows review of 2 remand orders.”). While the Rea court noted that a different standard might apply to CAFA cases, 3 it did not outline what that standard would be and instead applied the general rule that a relevant 4 change of circumstances is necessary as laid out by Kirkbride. Id. (“[T]he Supreme Court’s 5 decision in Standard Fire is a relevant change of circumstances justifying a reconsideration of a 6 successive, good faith petition for removal.”) (internal quotations omitted). 7 Gerber insists that under Rea, “the previous removal and remand of this action do not 8 prevent this Court from exercising jurisdiction at this juncture.” Oppo. 8. Gerber seems to 9 suggest that, in a CAFA case, a defendant can attempt removal as many times as it likes, on identical grounds. Such a rule is unworkable and would allow a defendant to indefinitely appeal 11 United States District Court Northern District of California 10 an unfavorable removal ruling. The Rea court did not come close to advocating the standard 12 Gerber asserts here. Because Gerber’s reading of Rea is unconvincing, and because Rea did not 13 outline a new standard for successive removals in CAFA cases, I conclude that the general 14 Kirkbride standard (which the Rea court itself applied) requiring a “relevant change in 15 circumstances” applies to Gerber’s second removal at issue here. 16 II. WHETHER THERE IS A RELEVANT CHANGE IN CIRCUMSTANCE 17 Gerber argues that under the Kirkbride standard, its second removal is proper because it is 18 based on “the damages/restitution Plaintiffs now seek that were not previously available.” Oppo. 19 8. Under Kirkbride, a defendant must show that “a relevant change of circumstances” justifies 20 reconsideration of a successive petition for removal. Kirkbride, 933 F.2d at 732. When a first 21 removal is remanded for failure to establish the amount in controversy requirement, a “second 22 removal, based on new evidence of damages exceeding the amount in controversy, [i]s proper.” 23 Munoz v. J.C. Penney Corp., Inc., No. 09-cv-0833, 2009 WL 975846, *3 (C.D. Cal. Apr. 9, 2009); 24 cf. Benson v. SI Handling Sys., Inc., 188 F.3d 780, 781 (7th Cir. 1999) (successive removal based 25 on diversity jurisdiction was permitted where “plaintiffs revealed in discovery that they suffered 26 more than $75,000 in damages”). Gerber asserts that, in their motion for class certification, 27 plaintiffs “revealed for the first time that they do not seek restitution of the retail price they paid 28 for Puffs, but rather seek disgorgement of Gerber’s wholesale price” and that this change 4 1 2 constitutes a new ground for removal. Oppo 5. I disagree. Plaintiffs’ proposed measure of damages is not “new evidence of damages exceeding the 3 amount in controversy” in part because it is equal to or less than the damages Gerber presumed 4 plaintiffs were seeking in its first removal. Although plaintiffs did not previously detail the 5 precise measure of damages they sought to recover, in its unsuccessful first removal Gerber 6 assumed that plaintiffs sought restitution of the retail price California consumers paid for Gerber’s 7 Puffs and attempted to provide evidence showing that this figure exceeded CAFA’s $5,000,000 8 requirement. Dkt. No. 1-3, Ex. 6. Plaintiffs now propose that damages should be measured as 9 “the price paid for Gerber products”—the exact same measure of damages Gerber presumed plaintiffs were seeking in its first removal. Although plaintiffs propose that an alternative measure 11 United States District Court Northern District of California 10 of damages would be what retailers paid Gerber, they offer this measure only because they reason 12 that “California consumers paid at least what retailers paid Gerber.” Id. Plaintiffs therefore 13 suggest this measure of damages as “the lower end of the disgorgement/restitution that Plaintiffs 14 had sought from the beginning of the case.” Dkt. No. 24 at 4 n.17. Plaintiffs’ proposed measure 15 of damages is therefore equal to or less than the amount Gerber previously presumed plaintiffs’ 16 were seeking and is not “new” evidence that the amount in controversy exceeds $5,000,000. 17 In addition to not being “new,” plaintiffs’ proposed measure of damages is not “evidence.” 18 “The estimated amount in controversy calculation must be based upon a reasonable reading of the 19 allegations of the complaint.” Gyorke-Takatri, 2015 WL 6828258, *2; Ibarra, 775 F.3d at 1197 20 (A reasonable “estimate of damages in controversy” must be based on the claims and facts 21 alleged). This estimate may change if plaintiffs disclose new evidence regarding the claims at 22 issue. Munoz, 2009 WL 975846 at *3; Benson, 188 F.3d at 781. However, plaintiffs’ proposed 23 method of measuring damages is not a claim, allegation, evidence, or fact dictating the amount in 24 controversy. Plaintiffs’ claims have not changed and they have not introduced any new evidence 25 or fact that would impact or increase the potential amount in controversy. They have only 26 proposed a specific method of calculating damages based on the same allegations and facts 27 included in their original complaint. This does not constitute a change in circumstances sufficient 28 to justify successive removal. 5 Gerber could have proposed this same method for calculating damages in its first removal 1 2 based on the same facts alleged in the complaint. It could have presented the evidence it offers 3 now.1 That it did not occur to Gerber to offer this evidence during its first removal does not 4 permit it to attempt a second removal now. In its first removal, under the same claims and 5 allegations, Gerber failed to offer admissible evidence demonstrating that this case satisfies 6 CAFA’s amount in controversy requirement. Remand Order at 4. It moved for reconsideration 7 and was denied. Dkt. No. 1-6, Ex. 53 at 1. It requested leave to provide additional evidence and 8 was denied. Id. Gerber’s attempt to offer additional evidence now is a belated effort to avoid and 9 ignore its first adverse removal decision. Because Gerber has failed to show a “relevant change in 10 circumstances” justifying a successive removal, its second removal attempt is improper. United States District Court Northern District of California 11 CONCLUSION 12 For the reasons outlined above plaintiffs’ motion to remand is GRANTED. This action is 13 REMANDED to the Superior Court of the State of California, City and County of San Francisco. 14 15 IT IS SO ORDERED. Dated: September 30, 2016 ______________________________________ WILLIAM H. ORRICK United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 1 If I were to consider Gerber’s evidence on the merits, I am not convinced that Gerber’s sales to wholesalers reasonably demonstrate the amount in controversy in this case. A defendant must show that its “estimate of damages in controversy is a reasonable one” based on the claims and facts alleged. Ibarra, 775 F.3d at 1197. As I and several of my colleagues have held, “The proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received, not the full purchase price or all profits.” Khasin v. R.C. Bigelow, Inc., 119 F. Supp. 3d 1153, 1154 (N.D. Cal. Aug. 12, 2015); Trazo v. Nestle USA, Inc., 12-cv-02272-PSG, 2015 WL 4196973, at *3 (N.D. Cal. July 10, 2015). While in considering the amount in controversy I must assume the allegations in the complaint are true, I need not presume that plaintiffs’ proposed method for measuring damages is reasonable or accurate. Because plaintiffs’ proposed method of measuring damages is not consistent with the proper method of measuring restitution in a mislabeling case, an estimate of the damages in controversy based on this method is not “a reasonable one.” 6