Michelle Gyorke-Takatri et al v. Nestle USA, Inc. et al

Filing 37

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)

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

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