CENTER FOR SCIENCE IN THE PUBLIC INTEREST v. BURGER KING CORPORATION

Filing 17

Memorandum in opposition to re 8 MOTION to Remand and Statement of Points and Authorities filed by BURGER KING CORPORATION. (Attachments: # 1 Affidavit of Jonathan Muhtar# 2 Affidavit /Declaration of Roger E. Podesta, Esq.# 3 Exhibit (A) To Declaration of Roger E.Podesta, Esq.)(Podesta, Roger)

CENTER FOR SCIENCE IN THE PUBLIC INTEREST v. BURGER KING CORPORATION

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) ) ) ) Civil Action No. 1:07-cv-01092 ) (RJL) ) ) ) Judge Richard J. Leon ) ) ) ) )

Center for Science in the Public Interest Plaintiff, v. Burger King Corporation Defendant.

OPPOSITION TO PLAINTIFF'S MOTION TO REMAND In its remand brief, the Center for Science in the Public Interest ("CSPI") makes the remarkable concession that it has not alleged any injury-in-fact sufficient to confer constitutional standing under Article III. See Statement of Points and Authorities in Support of Plaintiff's Motion to Remand ("Plaintiff's Brief"), at 4. Recognizing as it must that this case cannot proceed in federal court, it contends that the proper disposition is not an outright dismissal, but rather remand to D.C. Superior Court. In so arguing, CSPI describes itself as possessing so-called "representational standing," which CSPI claims is insufficient in federal court, but nonetheless satisfies D.C. standing requirements. This argument fails for two reasons. First, the District of Columbia courts, although Article I courts, apply the same standing requirements as federal Article III

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courts. Second, representational standing is nothing new - - both federal and D.C. courts have long recognized associational standing and have permitted associations to bring suit on behalf of their members in certain situations if those members have sustained the requisite injury-in-fact. In this case, because neither CSPI nor its members are alleged to have sustained any actionable injury-in-fact, CSPI lacks standing in both federal and D.C. courts. Since this case will undoubtedly suffer the same fate of dismissal for want of standing in the event of remand to D.C. Superior Court, this court should follow the approach of Judge Robertson in Hoyte v. KFC Corporation and Judge Collyer in Williams v. Purdue Pharma Company, both discussed below, and dismiss this lawsuit outright. CSPI's proposed course of remand followed by an inevitable dismissal in D.C. Superior Court would result only in a waste of judicial resources, as convincingly demonstrated by the subsequent history of the Randolph v. ING case upon which CSPI principally relies in support of its motion to remand. ARGUMENT A. CSPI's Lack of Standing, On Behalf of Itself and Its Members, Should Be Met with Dismissal, Not Remand. CSPI's desperate attempt to avoid federal jurisdiction has led it to make an argument not usually made by a plaintiff ­ that it does not have standing to bring suit. In doing so, CSPI has attempted to create a new breed of standing, which it refers to as "representational standing." According to CSPI, representational standing does not

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satisfy "traditional Article III standing" for federal jurisdiction, but it is somehow sufficient to satisfy jurisdiction under D.C. law. 1 (Plaintiff's Brief, at 4). There is nothing new about CSPI's form of representational standing ­ it is a repackaged version of associational standing, which has long been recognized by federal and D.C. courts. An association may bring a lawsuit on behalf of its members "only if (1) at least one of its members would have standing to sue in his own right, (2) the interests the association seeks to protect are germane to its purpose, and (3) neither the claim asserted nor the relief requested requires that an individual member of the association participate in the lawsuit." Grassroots Recycling Network v. U.S. Envtl. Prot. Agency, 429 F. 3d 1109, 1111 (D.C. Cir. 2005) (internal citations omitted); Friends of Tilden Park v. District of Columbia, 806 A.2d 1201, 1207 (D.C. 2002) (quoting Hunt v. Washington Apple Adver. Comm'n, 432 U.S. 333, 343 (1977)). A member would have standing to sue in its own right only if it suffered "injury-in-fact ­ an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) actual or imminent, not conjectural or hypothetical." Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).

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CSPI may be relying upon the preamble language to the DCCPPA which provides that "[i]t shall be a violation of this chapter, whether or not any consumer is in fact misled, deceived or damaged thereby . . . ." D.C. Code § 28-3904 (2007). Whatever implications this language may have for administrative or criminal proceedings, it does not obviate the need for private party plaintiffs such as CSPI to meet standing requirements. Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171, 177 (D.D.C. 2003).

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Thus, in order for CSPI to have standing to bring suit on behalf of its members, the members must have suffered an actionable injury-in-fact, and they have not. CSPI does not allege that any of its members have sustained personal injuries or economic loss as a result of consuming Burger King food products. Instead, CSPI claims only that its members have a generalized right to receive information about the trans fat content of food and that Burger King violated that right ­ even though no harm was caused by its doing so. It is well established that such generalized grievances are insufficient to establish standing for claims under the District of Columbia Consumer Protection Procedures Act (the "DCCPPA") ­ the statute at issue in this case. See, e.g., Hoyte v. KFC Corporation, No. 06-1127, 2007 U.S. Dist. LEXIS 32162, at *7-10 (D.D.C. May 2, 2007); Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171, 177-78 (D.D.C. 2003); see also Statement of Points and Authorities in Support of Burger King Corporation's Motion to Dismiss, at 9-11. CSPI's failure to allege any injury-in-fact on behalf of itself or its members will lead to the same result in D.C. Superior Court as it should in this Court ­ outright dismissal. D.C. courts have long adopted as their own the federal constitutional requirements of case or controversy and the "prudential prerequisites of standing" which include injury-in-fact. Friends of Tilden Park, 806 A.2d at 1206-07. Just recently, a D.C. Superior Court held that D.C.'s local Article I courts "insist on the same prudential prerequisites of standing as Article III courts." Randolph v. ING Life Ins. & Annuity Co., No. 06 CA4932, Order dated June 13, 2007, at 7-8 (D.C. Sup. Ct. 2007) (emphasis added) (Order attached as Exhibit A to the Declaration of Roger E. Podesta). 4

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CSPI's argument that remand is appropriate to permit the D.C. Superior Court to make a determination of standing is unavailing since there can be no doubt that the D.C. Superior Court, bound by the same standing requirement as this Court, will come to the same conclusion. The one case cited by the CSPI to the contrary is inapposite. In Mortera v. North America Mortgage Company, the federal court found that the plaintiff did not have standing in federal court and remanded to state court. 172 F. Supp. 2d 1240, 1243-44 (N.D. Cal. 2001). However, California law at that time had different standing requirements than federal law. Id. at 1243 ("[A] plaintiff can sue in California courts under the [Unfair Competition Act] even though he or she has suffered no injury in fact and would not have standing to sue in federal court."] This is not the law in the District of Columbia. In fact, Mortera is no longer the law in California either. Since the passage of Proposition 64 in November 2004, a plaintiff must have sustained injury-in-fact in order to bring a claim under the California Unfair Competition Law in either federal or state court. Filiti v. USAA Casualty Ins. Co., No. 06-2694, 2007 U.S. Dist. LEXIS 44691, at *6 (E.D. Cal. June 20, 2007); Branick v. Downey Savings Loan Ass'n, 138 P.3d 214, 217 (Cal. 2006). Federal courts have long been bedeviled by situations where the failure to state a claim upon which relief may be granted under Rule 12(b)(6) leads to a lack of subject matter jurisdiction under Rule 12(b)(1). Some courts have resolved the situation exclusively under Rule 12(b)(1) and remanded the case to state court. Other courts have recognized the futility of remand and have granted dismissals where the same deficiencies that led to a lack of federal subject matter jurisdiction would also result in a 5

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dismissal of the lawsuit in state court in the event of a remand. See, e.g., Bell v. City of Kellogg, 922 F. 2d 1418, 1424-25 (9th Cir. 1991); Asarco, Inc. v. Glenara, Ltd., 912 F. 2d 784, 787 (5th Cir. 1990). The U.S. Supreme Court in dicta has recognized the potential availability of a futility exception in appropriate situations. Int'l Primate Protection League v. Adm'rs of Tulane Educ. Fund, 500 U.S. 72, 88-89 (1991) superseded on other grounds by statute. Diligent research reveals no decisions of the D.C. Circuit Court of Appeals either adopting or rejecting the futility exception. The Republic of Venezuela case cited by CSPI does not even mention the futility exception; it merely cites in passing to the statutory language of 28 U.S.C. 1447(c).2 Republic of Venezuela v. Phillip Morris, Inc., 287 F.3d 192, 196 (D.C. Cir. 2002). If ever there were a case to apply the futility exception, this is the one. Because the D.C. Superior Courts apply the same standing requirements as the D.C. federal courts, CSPI's concession that it has not alleged sufficient injury-in-fact to confer standing in federal court will inevitably lead to dismissal of any remanded lawsuit. The futility of such a remand is dramatically illustrated by the subsequent history of the Randolph case upon which CSPI so heavily relies. In Randolph, the D.C. district court remanded the

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Some cases cite to 28 U.S.C. 1447(c) for the principle that remand is required in all cases where the court determines it lacks subject matter jurisdiction. However, that statutory language does not address circumstances where the same defect that leads to a lack of federal subject matter jurisdiction will necessarily require a dismissal in state court. As the Ninth Circuit found in Bell, when there are no issues for the state court to resolve, it is an inefficient use of "valuable judicial time and resources" to remand. 922 F.2d at 1425. There is no reason to believe that Congress intended for the courts to ignore such considerations. Id. at 1424-25.

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case to D.C. Superior Court after finding that the plaintiffs lacked Article III standing and that the D.C. district court therefore did not have subject matter jurisdiction. 486 F. Supp. 2d 1, 25-28 (D.D.C. 2007). 3 On remand, defendant renewed its motion to dismiss; the D.C. Superior Court agreed with the D.C. district court's finding of no standing and dismissed the complaint. Randolph, Civil Action No. 06 CA4932 Order, dated June 13, 2007, at 8. In doing so, the D.C. Superior Court held that its requirements for standing are the "same" as those of Article III courts. Id. at 8 (quoting Friends of Tilden Park, 806 A.2d at 1206). The only effect of the remand was the unnecessary duplication of judicial proceedings. There is no reason to repeat the experience of Randolph in this case. It is undeniable that a court has jurisdiction to determine its own jurisdiction. Here, the question of whether this Court has subject matter jurisdiction is identical to the question of whether CSPI has standing to proceed with this lawsuit under D.C. law. In resolving the question of its own subject matter jurisdiction, this Court will necessarily be resolving the question of standing as a matter of D.C. law. Other judges in this District have deemed it appropriate to resolve the standing issue under the DCCPPA and dismiss the case. See, e.g., Hoyte, 2007 U.S. Dist. LEXIS 32162, at *7-10; Williams, 297 F. Supp. 2d at 177-78. This Court should reach the same result.

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In Randolph, it was the court that raised sua sponte the question of its own subject matter jurisdiction, while the plaintiff defended its standing to bring suit. Here, however, CSPI is so determined to avoid federal court jurisdiction that it has made concessions that fatally undermine its standing in D.C. Superior Court as well. CSPI's position appears analogous to that of a condemned prisoner who hangs himself in his cell the night before his scheduled execution.

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B.

Diversity jurisdiction is satisfied here since the amount in controversy

exceeds $75,000 exclusive of interests and costs. The amount in controversy requirement is met here since the cost to Burger King of complying with CSPI's demands will greatly exceed $75,000. In this district, "the value of injunctive relief for determining the amount in controversy can be calculated as the cost to the defendant." Wexler v. United Air Lines, Inc., No. 06-01917, 2007 U.S. Dist. LEXIS 55028, at * 7 (D.D.C. July 31, 2007). 4 Here CSPI has requested an injunction requiring Burger King to eliminate all sources of trans fat from its restaurant food. The only real question for purposes of jurisdiction is whether it can be said to a legal certainty that the cost to defendant Burger King of complying with the requested injunctive relief will not exceed $75,000. Smith v. Washington, 593 F.2d 1097, 1099 (D.C. Cir. 1978). As Wexler teaches, the cost of compliance is to be determined from the factual submissions of the parties. Here, CSPI offers only the bald conclusory assertions of Paragraph 11 of the Complaint that "[t]he cost to Burger King of all relief sought is
4

CSPI's reliance on National Organization of Woman v. Mutual Omaha Insurance Company, 612 F. Supp. 100 (D.D.C. 1985) with its citation to Snyder and Zahn is unavailing since those cases dealt with aggregating plaintiffs' claims in a class action - - the rules of which are inapplicable here and have been overturned by the Class Action Fairness Act of 2005, 28 U.S.C. § 1332 (d). See Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 571 (2005) ("[The Class Action Fairness Act] abrogates the rule against aggregating claims, a rule this Court recognized in BenHur and reaffirmed in Zahn"). Nor does this case present the concern that a plaintiff with a small monetary claim will attempt to manufacture federal court jurisdiction by tossing a claim for injunctive relief into the complaint. Here CSPI requests only injunctive relief and it is the defendant that is seeking to invoke federal court jurisdiction.

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less than $74,000"; under Wexler, such unsupported factual assertions are not entitled to any weight. In contrast, Burger King has submitted two detailed affidavits from Jonathan Muhtar, its Director of Product Marketing, who has personal familiarity with the facts pertaining to the likely costs of compliance. See Affidavit of Jonathan Muhtar dated June 13, 2007 ("Affidavit"); Supplemental Affidavit of Jonathan Muhtar dated August 17, 2007 ("Supplemental Affidavit") (collectively the "Muhtar Affidavits"). The Muhtar Affidavits set forth in detail the basis for his conclusion that the cost of compliance would substantially exceed $75,000. In the absence of any contrary factual allegations or submissions by CSPI, the Muhtar Affidavits should be dispositive. As explained in the Affidavit, there are two principal sources of trans fats in Burger King food products. (Affidavit, at ¶ 6, 7, 9). First, trans fats are present in partially hydrogenated cooking oil used to prepare certain food products. Eliminating partially hydrogenated cooking oil involves researching and testing alternative oils, entering into supply contracts, and modifying operations manuals. (Affidavit, at ¶ 8). CSPI does not appear to contest that the cost of taking these steps for Burger King's seven franchise restaurants in the District of Columbia would substantially exceed $75,000. Instead, CSPI notes that on July 6, 2007 (approximately seven weeks after commencement of this lawsuit), Burger King announced a nationwide rollout replacing partially hydrogenated cooking oils with trans fat free cooking oils. Thus, CSPI argues that Burger King must have already absorbed the costs of compliance and that these costs should be disregarded for purposes of

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computing the jurisdictional amount. 5 But this misses the jurisdictional point. The voluntary replacement of partially hydrogenated cooking oils was announced several weeks after the removal of this case to federal court and the amount in controversy is determined for jurisdictional purposes on the date of removal. See Kopff v. World Research Group, LLC, 298 F. Supp. 2d 50, 57 (D.D.C. 2003) ("It is established that the time for assessing jurisdiction amount is the time of removal."). Post-removal activities by the defendant cannot affect the jurisdictional amount in controversy. In any event, the conversion of partially hydrogenated oils to trans fat-free oils in Burger King D.C. restaurants is not expected to occur until the end of next year. In addition to the various research and development costs described in Paragraph 8 of the Affidavit, there are also incremental costs in transitioning the oil. The annual incremental costs to fully convert the seven D.C. restaurants to trans-free oil are between $3,000 - $6,000 per restaurant for a total cost of $21,000 - $42,000 per year. (Supplemental Affidavit, at ¶2). More importantly for present purposes, however, there is a second source of trans fats in foods sold in Burger King's restaurants that are not the subject of the nationwide rollout. Trans fats are a component of pre-prepared "par-fried" food products and baked goods that Burger King purchases from outside vendors, and then sells at its restaurants.

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CSPI does not explain why it is continuing to seek injunctive relief requiring the defendant to take actions that Burger King is already taking of its own accord.

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(Affidavit, at ¶ 9). Thirteen Burger King menu items fall into this category, see Exhibit 1 to the Affidavit, and collectively these items account for approximately twenty-five percent of the total menu mix at Burger King restaurants. (Id. at ¶12). In order to replace these items, Burger King would need to complete the process of researching and testing alternatives, and renegotiating supply contracts. (Id. at ¶ 11). As Muhtar attests, the expense of research and development alone would substantially exceed $75,000. (Supplemental Affidavit, at ¶ 3). Even after completion of the research, testing and negotiation process, and assuming that satisfactory substitutes can be found, the estimated incremental costs would be at least $14,000 per year for the D.C. restaurants. (Id. at ¶ 3). Moreover, if suitable alternatives were not found within the period required by the court's putative injunction, Burger King would be forced to discontinue selling all the par-fried items. Muhtar estimates, based on his personal knowledge, that discontinuation of these thirteen items would result in lost revenue of $250,000 per year at each of Burger King's seven District of Columbia restaurants (or $1,750,000 per year in the aggregate). (Affidavit, at ¶12). Since the typical Burger King restaurant operates at a gross profit margin of 70%, the resulting profit loss is $175,000 per restaurant, per year (or $1,225,000 per year in the aggregate). (Supplemental Affidavit, at ¶ 4). In these circumstances, there is ample factual basis for concluding that the jurisdictional amount of $75,000 has been satisfied.

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For the foregoing reasons, Defendant Burger King Corporation respectfully requests that CSPI's motion to remand this lawsuit to District of Columbia Superior Court be denied.

Dated: New York, New York August 17, 2007

Respectfully submitted, DEBEVOISE & PLIMPTON LLP /s/ Roger E. Podesta By: Roger E. Podesta (admitted pro hac vice) Erich O. Grosz (admitted pro hac vice) 919 Third Avenue New York, N.Y. 10022 Tel: [phone] Fax: [phone] /s/ Ada Fernandez Johnson By: Ada Fernandez Johnson (Bar No. 463296) 555 12th St., N.W. Suite 1100E Washington, D.C. 20004 Tel: [phone] Fax: [phone] Attorneys for Defendant Burger King Corporation

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) ) ) ) Civil Action No. 1:07-cv-01092 ) (RJL) ) ) ) Judge Richard J. Leon ) ) ) ) )

Center for Science in the Public Interest Plaintiff, v. Burger King Corporation Defendant.

DECLARATION OF ROGER E. PODESTA I, ROGER E. PODESTA, hereby declare as follows: 1. I am a member of the Bar of the State of New York and a partner with

Debevoise & Plimpton LLP, counsel for Burger King Corporation. I have been admitted to appear pro hac vice in this lawsuit. 2. I submit this declaration pursuant to 28 U.S.C. § 1746, in support of

Burger King Corporation's Opposition to Plaintiff's Motion to Remand. 3. In support of Burger King Corporation's Opposition, I attach a true and

correct copy of Judge Frederick H. Weisberg's Order dated June 13, 2007 in Randolph v. ING Life Insurance and Annuity Company (D.C. Superior Court, No. 06 CA 4932) as Exhibit A.

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I declare under penalty of perjury that the foregoing is true and correct. Dated: August 17, 2007 New York, New York /s/ Roger E. Podesta Roger E. Podesta

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