Iglesias v. Welch Foods Inc.

Filing 25

ORDER Granting 19 Plaintiff's Motion to Remand. Signed by Judge Thelton E. Henderson on 4/4/17. (tehlc2, COURT STAFF) (Filed on 4/4/2017)

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1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3 4 THOMAS IGLESIAS, 5 Plaintiff, v. 6 7 WELCH FOODS INC., et al., Case No. 17-cv-00219-TEH ORDER GRANTING PLAINTIFF'S MOTION TO REMAND Defendants. 8 9 On February 16, 2017, the Plaintiff filed a Motion to Remand. ECF No. 19 10 United States District Court Northern District of California 11 (“Mot.”). Defendants timely opposed Plaintiff’s motion, ECF No. 21 (“Opp’n”), and 12 Plaintiff timely replied, ECF No. 22 (“Reply”). The Court heard oral arguments on the 13 motion on April 3, 2017. After carefully considering the parties’ written and oral 14 arguments, the Court GRANTS Plaintiff’s motion for the reasons set forth below. 15 I. BACKGROUND This case is about a putative class action filed against Welch Foods and Promotion 16 17 In Motion (“PIM”).1 Plaintiff alleges that Defendants sell fruit snack products in 18 California with false and misleading labels. ECF No. 1-4 (“Compl.”) ¶ 1. This is because 19 the products state they contain “no preservatives” when, in fact, they contain three 20 ingredients which have been recognized by the Food and Drug Administration (“FDA”) as 21 chemical preservatives. Id. ¶¶ 3,13–14. And also because Defendants’ fruit snacks state 22 “Fruit is our 1st Ingredient!” when, in fact, the Defendants are unlawfully grouping 23 separate fruit puree ingredients to make fruit appear as a more predominant ingredient than 24 it really is. Id. ¶¶ 4, 15-21. 25 1 26 27 28 Defendant Welch Foods is an operating subsidiary of the National Grape Cooperative Association, Inc. Welch Foods supplies fresh grapes and other products to be sold under the “Welch’s” name. Compl. ¶ 11. PIM is a Delaware corporation with its principal place of business in Allendale, New Jersey. PIM manufactures and markets popular brand name fruit snacks. Id. Welch Foods has entered into a partnership with PIM allowing PIM to sell fruit snack products with the “Welch’s” name. Id. 1 The Plaintiff seeks only declaratory and injunctive relief based on two claims for 2 relief: (1) A violation of the Consumer Legal Remedies Act (“CLRA”); and (2) a violation 3 of the Unfair Competition Law (“UCL”). Id. ¶¶ 32–46. In particular, Plaintiff seeks an 4 injunction preventing Defendants from continuing to sell the allegedly mislabeled 5 products. Id. at 14:22–25. 6 In November 2017, Plaintiff originally filed this suit in the Superior Court of 7 California for the County of San Francisco. See ECF No. 1. In January 2017, the 8 Defendants removed the case to federal court, alleging that the Class Action Fairness Act 9 provided this Court with original jurisdiction. Id. On February 16, 2017, the Plaintiff filed a Motion to Remand. Plaintiff argues removal is proper because the $ 5 million amount- 11 United States District Court Northern District of California 10 in-controversy requirement has not been met, and also because the judicial estoppel 12 doctrine requires the Court to remand the case. Mot. at 3:3–16. Because the Court finds 13 the judicial estoppel doctrine applies here, the Court need not, and does not, address the 14 amount-in-controversy dispute. 15 II. LEGAL STANDARD 16 A defendant may remove a civil action filed in state court to federal court so long as 17 the district court could have exercised original jurisdiction over the matter. 28 U.S.C. § 18 1441(a). “The ‘strong presumption against removal jurisdiction means that the defendant 19 always has the burden of establishing that removal is proper . . . .’” Hunter v. Philip Morris 20 USA, 583 F.3d 1039, 1042 (9th Circ. 2009) (quoting Gaus v. Miles, 980 F.2d 564, 566 (9th 21 Cir. 1992)). A plaintiff, however, may seek to have a case remanded to the state court 22 from which it was removed if the district court lacks jurisdiction or if there is a defect in 23 the removal procedure. 28 U.S.C. § 1447(c). “Federal jurisdiction must be rejected if 24 there is any doubt as to the right of removal in the first instance.” Gaus, 980 F.2d at 566. 25 III. DISCUSSION 26 At issue between the parties is whether the doctrine of judicial estoppel requires the 27 Court to remand the case back to state court. “Judicial estoppel ‘is an equitable doctrine 28 invoked by a court at its discretion.’” United States v. Ibrahim, 522 F.3d 1003, 1009 (9th 2 1 Cir. 2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 750 (2001). The purpose of 2 judicial estoppel is to “protect the integrity of the judicial process by prohibiting parties 3 from deliberately changing positions according to the exigencies of the moment.” New 4 Hampshire, 532 U.S. at 749–50 (citations and internal quotation marks omitted). In 5 determining whether to apply this doctrine, the Parties agree the Court must consider (1) 6 whether a party’s later position is “clearly inconsistent” with its earlier position; (2) 7 whether the party successfully persuaded a court to accept its earlier positon; and (3) 8 whether allowing the party’s inconsistent position allow the party to “derive an unfair 9 advantage or impose an unfair detriment on the opposing party.” Ibrahim, 522 F.3d at 10 1009. Here, the Court finds that all three factors are met and weigh in favor of remanding United States District Court Northern District of California 11 12 the case to state court. First, the Defendants’ position in Atik v. Welch Foods, Inc., Case 13 No. 15-CV-5405, 2016 WL 5678474 (E.D.N.Y. Sept. 30, 2016), is “clearly inconsistent” 14 with removing the present case to federal court. In Atik, the plaintiffs filed a putative class 15 action against the very same Defendants in this case, Welch Foods and PIM, seeking 16 monetary damages, restitution, and injunctive relief. Id. at *1. The plaintiffs in Atik, like 17 the Plaintiff here, alleged that Defendants violated the CLRA and the UCL because 18 Defendants’ product labeling of Welch’s Fruit Snacks misrepresented the fruit content and 19 nutritional and health qualities of the snacks. 2 Id. In that case, Defendants sought to 20 dismiss plaintiffs’ claim for injunctive relief arguing that plaintiffs lacked Article III 21 standing because the plaintiffs “failed to allege a likelihood of continuing or future injury.” 22 ECF No. 19-1 at 38. In contrast to their position in Atik, here, Defendants are seeking to 23 remove this case to federal court. But, as Defendants acknowledged in their Motion to 24 Dismiss in the Atik case, a plaintiff must have Article III standing for a federal court to 25 have jurisdiction over a case. Id. at 36–37; see also Whitmore v. Arkansas, 495 U.S. 149, 26 154–55 (1990) (“It is well established . . . that before a federal court can consider the 27 2 28 In Atik, the plaintiffs also sought relief based on common law doctrines and New York statutes. See Atik, 2016 WL 5678474, at *1. 3 1 merits of a legal claim, the person seeking to invoke the jurisdiction of the court must 2 establish the requisite [Article III] standing to sue.”). Defendants argue they have never taken a “clearly inconsistent” position because 4 the Plaintiff here was not a named party in the Atik action; thus, they have not taken any 5 position on whether this Plaintiff has standing in this case. ECF No. 21 at 12. Defendants 6 also argue that the application of judicial estoppel is inappropriate when the alleged 7 inconsistency stems from legal, non-factual inconsistencies. Id. But these arguments are 8 wide of the mark. The Ninth Circuit has explained that “all that’s needed to satisfy this 9 first factor” is that “the [party] pressed a claim in the earlier lawsuit[] that is inconsistent 10 with the position [the party] is taking in our case.” Baughman v. Walt Disney World Co., 11 United States District Court Northern District of California 3 685 F.3d 1131, 1133 (9th Cir. 2012). Thus, the case law does not require that the 12 inconsistency occur within the same case. Moreover, an inconsistent claim need not be 13 factual, as the doctrine has been applied to prevent a party from making a legal assertion 14 that contradicted its earlier legal assertion. Baughman, 685 F.3d at 1133 (citation omitted); 15 see also Helfand v. Gerson, 105 F.3d 530 (9th Cir. 1997) (“[J]udicial estoppel applies to a 16 party’s stated position, regardless of whether it is an expression of intention, a statement of 17 fact, or a legal assertion.”). Here, where Defendants have previously argued the Atik 18 plaintiffs had no Article III standing to pursue injunctive relief claims, it is clearly 19 inconsistent for Defendants to now seek removal of Plaintiff’s claims for injunctive relief. 20 Second, it is clear that the earlier court was successfully persuaded by Defendants’ 21 earlier position. Indeed, the Atik court dismissed the plaintiffs’ claims for injunctive relief 22 finding they had no Article III standing. Atik, 2016 WL 5678474 at *6. Defendants do not 23 contend this point. Thus, the second factor is met and weighs in favor of applying judicial 24 estoppel. 25 Third, the Court finds that allowing the Defendants to put forth their clearly 26 inconsistent position here would permit them to forum shop which constitutes an “unfair 27 advantage.” See Galitski v. Samsung Telecomms. Am., LLC, Case No. 8:CV-12-00903- 28 CJC(JPRx), 2012 WL 12830000, at *3 (C.D. Cal. Nov. 21, 2012) (finding forum shopping 4 1 to be unfair and an abuse of the judicial process). This Court finding, too, is clearly 2 supported by Ninth Circuit case law. In Baughman, the court found an unfair advantage 3 existed when a party’s inconsistent statement would make her claim “significantly 4 stronger.” Baughman, 685 F.3d at 1134. Here, in contrast to Baughman, allowing the 5 Defendants to remove the case to federal court would allow them to seek an outright 6 dismissal of the injunctive relief claim for lack of Article III standing or for the Court to 7 dismiss the case sua sponte for the same reason rather than litigating the claim on the 8 merits.3 Thus, it seems this case presents a much stronger case than Baughman for finding 9 an inconsistent position would create an unfair advantage. In sum, the Court finds that each of the Ibrahim factors supports applying judicial 11 United States District Court Northern District of California 10 estoppel here to prevent the Defendants from litigating the case in federal court. And in 12 light of the strong presumption against removal jurisdiction, the Court finds it appropriate 13 to remand the case to state court. 14 IV. CONCLUSION With good cause appearing, the Court exercises its discretion and GRANTS 15 16 Plaintiff’s motion to remand. This matter is hereby remanded to the Superior Court of 17 California for the County of San Francisco. Consequently, the parties’ joint stipulation to 18 continue the case management conference scheduled for April 17, 2017 is VACATED. 19 The Clerk shall close the file. 20 21 IT IS SO ORDERED. 22 23 Dated: 4/4/17 24 _____________________________________ THELTON E. HENDERSON United States District Judge 25 3 26 27 28 Although Defendants appeared to agree during oral arguments to not seek dismissal of Plaintiff’s claims based on a lack of Article III standing, “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus, 980 F.2d at 566. Here, where Defendants prior standing arguments in Atik leave doubt as to whether Plaintiff has Article III standing, Defendants cannot avoid the strong presumption against remand by agreeing to not seek dismissal for lack of standing. See id. 5

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