A federal judge from the Central District of California has denied Wilson Sporting Goods Co.’s motion to have a class action complaint removed to federal court, finding that the defendant used a formula that “inflated” the amount in controversy and that its arguments for diversity of the class members was “meritless.”
The underlying claim of the lawsuit, which was brought by plaintiff Joseph Urbanczyk in the Los Angeles County Superior Court, was that Wilson engages in unlawful, unfair, and deceptive practices with respect to the sale of cans of tennis balls marked “U.S. Open Official Ball,” which were not actually used at the U.S. Open tennis tournament. According to the plaintiff, “Wilson’s advertising, on these cans of tennis balls, and in print and on the internet, falsely conveys that these tennis balls are in fact the same tennis balls as the tennis balls that are used by professional players at the U.S. Open.”
The plaintiff sought to represent a class of California consumers that purchased such tennis balls in the four years prior to the filing of the complaint on November 6, 2015. It asserted claims for (1) declaratory relief; (2) violation of California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200, et seq.; (3) violation of California’s False Advertising Law (FAL), Cal. Bus. & Prof. Code §§ 17500 et seq.; and (4) violation of California’s Consumer Legal Remedies Act (CLRA), Cal. Civ. Code §§ 1750, et seq.
With respect to the UCL, FAL, and CLRA claims, the plaintiff is seeking injunctive relief and restitution, as well as attorney’s fees and costs.
On December 21, 2015, Wilson removed the action pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d). On January 5, 2016, the federal court issued an order to show cause (OSC), questioning “whether the claims of the individual class members exceed $5 million in the aggregate.” Both sides presented their arguments.
The federal judge noted at the outset that under CAFA, “district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5 million, exclusive of interest and costs, and is a class action in which . . . any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2).
Wilson submitted “the declaration of its Finance Director for the Racket Sports division, and contends that the amount in controversy is $5,113,295. Although Wilson notes that plaintiff seeks ‘restitution’ in connection with his UCL, FAL, and CLRA claims, Wilson fails to identify the applicable measure of damages for these claims. Instead, Wilson relies, without explanation, on its revenues and the profit margins of its retailers as the appropriate measure of ‘damages’ or the amount in controversy. More specifically, Wilson arrives at the $5.1 million figure based on an estimated percentage of sales to California retailers, Wilson’s wholesale price, and an estimated profit margin applied by its retailers (since Wilson does not sell directly to consumers). Under the circumstances, the court finds that Wilson has failed to meet its burden of showing by a preponderance of the evidence that the amount in controversy exceeds $5 million, as its calculations are faulty and unsupported by the record. See Paz v. Playtex Prods., Inc., 2008 U.S. Dist. LEXIS 1829, 2008 WL 111046, *3 (S.D. Cal. 2008) (rejecting removing defendant’s position that prayer for restitution ‘necessarily results in the gross sales revenue as the appropriate measure of damages’).
“As plaintiff notes, the tennis balls at issue, which were allegedly falsely advertised as those used at the U.S. Open, are ‘not completely worthless to the putative class members.’ Indeed, the balls are not alleged to be defective in any manner. The plaintiff is seeking only ‘the excess amount [paid by California consumers] attributable to the false representation’ that the tennis balls are the same ones used by players during the U.S. Open. In other words, plaintiff is seeking a return of the ‘premium’ paid for such balls. Wilson has made no attempt to show the premium paid by California consumers for tennis balls adorned with the U.S. Open label. Instead, it merely sets forth an amount based on its estimated wholesale revenues, along with the profit margins applied by third-party retailers. Wilson provides no authority or support for use of such an inflated figure. Nor, as noted above, has Wilson identified the proper measure of damages or restitution in this case. As such, Wilson has failed to meet its burden of showing, by a preponderance of the evidence, that the CAFA amount in controversy is met in this case.
“Wilson removed the action pursuant to CAFA, and included references to 28 U.S.C. § 1453. In its response, it goes farther and contends that removal pursuant to 28 U.S.C. § 1453 was proper based simply on the minimal diversity of the parties. According to Wilson, § 1453 permits removal of a class action, whether or not it complies with CAFA. Specifically, Wilson contends that the ‘best reading of §1453 is as a broad authorization of federal removal jurisdiction over class actions in which the parties are minimally diverse.’ The court finds Wilson’s position meritless.”
The court continued, noting that “in class action litigation, diversity jurisdiction is established where at least one class member is diverse from the defendant and no named plaintiff is non-diverse, see Snyder v. Harris, 394 U.S. 332, 340, 89 S.Ct. 1053, 1059, 22 L. Ed. 2d 319 (1969) (‘If one member of a class is of diverse citizenship from the class’ opponent, and no nondiverse members are named parties, the suit may be brought in federal court even though all other members of the class are citizens of the same State as the defendant.’); Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021 n. 4 (9th Cir. 2007), and at least one of the named plaintiffs meets the $75,000 amount in controversy requirement. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 549, 125 S.Ct. 2611, 2615, 162 L. Ed. 2d 502 (2005) Here, Wilson makes no mention of the amount in controversy with respect to the plaintiff’s individual claims, and no federal claims are asserted in the complaint.”
Thus, the claim was remanded to the Superior Court of the State of California for lack of subject matter jurisdiction, pursuant to 28 U.S.C. § 1447(c).
Joseph Urbanczyk v. Wilson Sporting Goods et al.; C.D. Cal.; Case No. CV 15-9796 FMO (GJSx), 2016 U.S. Dist. LEXIS 34871; 3/17/16
Attorneys of Record: (for plaintiff) David F Berry, LEAD ATTORNEY, Law Offices of David F Berry, Los Angeles, CA; Derrick John Rostagno, LEAD ATTORNEY, Rostago Law Offices, Los Angeles, CA. (for defendant) Eric R McDonough, LEAD ATTORNEY, Seyfarth Shaw LLP, Los Angeles, CA; Jeffery A Key, PRO HAC VICE, Key and Associates, Chicago, IL; Michael R Levinson, PRO HAC VICE, Seyfarth Shaw LLP, Chicago, IL.
