Readers are used to litigants using favorable law to their benefit; this case involves a plaintiff trying to use unfavorable law to his benefit. The court concluded that a proposed class of joint pain supplement purchasers could not escape the reach of the Class Action Fairness Act by asserting their case could never be certified in federal court. See Hoffman v. Nutraceutical Corp., No. 13-3482 (3rd Cir. unpublished decision 4/10/14).
Hoffman filed suit against Nutraceutical in the Superior Court of New Jersey, Bergen County. The action concerned a Nutraceutical supplement, which was marketed to help to stem the progression of osteoarthritis and reduce related joint pain. Hoffman, who bought a $20 bottle of the supplement, alleges that Nutraceutical falsely represented that the supplement was "of the highest quality," when in fact the "product was polluted and contaminated by significant concentrations of lead." Hoffman proposed a class consisting of all nationwide purchasers for the six year period preceding the filing of this suit.
The Complaint asserted violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-2, as well as claims for common-law fraud, breach of contract, and common-law breach of warranty. Neutraceutical removed the case to federal court under CAFA. The District of New Jersey denied Hoffman's motion for remand, and Hoffman appealed.
With certain exceptions not relevant here, CAFA grants federal courts original jurisdiction over actions in which: (1) the matter constitutes a "class action"; (2) "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs"; (3) CAFA's minimal diversity requirements are met; and (4) there are at least 100 members of the putative class. 28 U.S.C. § 1332(d)(2), (d)(5)(B). Hoffman's challenge to the District Court's jurisdiction was premised entirely on the proposition that the amount in controversy of his suit could not exceed $5 million.
Where, as here, the plaintiff does not specifically aver that the amount in controversy falls below CAFA's $5 million threshold, the case must be remanded to state court if it is "a legal certainty" that CAFA's amount in controversy requirement cannot be met. Frederico v. Home Depot, 507 F.3d 188, 197 (3d Cir. 2007). Hoffman argued, as both the sole class representative and the sole attorney for the class, that the purported class could not possibly be certified under established Third Circuit law. Thus, he reasoned, the amount in controversy of the action — as least while the case remained in federal court — was equivalent to the value of Hoffman's individual claim, rather than the aggregate value of the class members' claims, which would easily exceed $5 million. In other words, because it was supposedly a "legal certainty" that the class would not be certified, it follows that it was a "legal certainty" that the amount in controversy requirement cannot be met.
But CAFA mandates that federal courts calculate the amount in controversy of a putative class action before determining whether the class may be certified under Rule 23. A putative class action satisfies CAFA's amount in controversy requirement where (1) the action was filed under Rule 23 or a similar state statute or rule and (2) the aggregated claims of the proposed class members amount to more than $5 million. See Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1348 (2013). Thus, a putative class action's prospects for certification are irrelevant to whether federal courts have subject matter jurisdiction over that action in the first instance.
Hoffman could not demonstrate to a legal certainty that the claims of the purported class — i.e., the "nationwide purchasers" of the supplement "for the six year period preceding the filing of this suit," — were worth $5 million or less. Accordingly, this action satisfied CAFA's amount in controversy requirement, and the District Court properly concluded that it had subject matter jurisdiction over Hoffman's suit.