Karhu v. Vital Pharmaceuticals, Inc.

Filing 139

ORDER DISMISSING CASE. Signed by Judge James I. Cohn on 3/27/2014. (ns)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13-60768-CIV-COHN/SELTZER
ADAM KARHU, on behalf of himself and all
others similarly situated,
Plaintiff,
v.
VITAL PHARMACEUTICALS, INC. d/b/a VPX
SPORTS,
Defendant.
/
ORDER DISMISSING CASE
THIS CAUSE is before the Court sua sponte. On March 18, 2014, the Court
ordered Plaintiff Adam Karhu to show cause why this action should not be dismissed for
lack of subject-matter jurisdiction. DE 130. The Court has considered Karhu's Response
to Order to Show Cause [DE 132] and Defendant's Response to Plaintiff's Response to
Order to Show Cause [DE 138], and is otherwise advised in the premises. The Court
determines that it lacks subject-matter jurisdiction over Karhu's claims in light of its
recent denial of class certification, and accordingly will dismiss this action without
prejudice.
I.

BACKGROUND
Defendant Vital Pharmaceuticals, Inc. ("VPX") is a Florida corporation that

manufactures and markets a dietary supplement called VPX Meltdown Fat Incinerator
("Meltdown"). DE 114 ¶¶ 1, 7. VPX advertises that consumers can use Meltdown to
"burn fat" and achieve rapid fat loss. Id. ¶ 1. Karhu, a New York resident who purchased
Meltdown, claims that the product is ineffective for its advertised purpose. Id. ¶¶ 1, 5–6.

On April 3, 2013, Karhu filed this lawsuit to recover damages based upon VPX's alleged
false advertisements, and to enjoin any further misrepresentations. See generally DE 1.
In the operative pleading, Karhu asserts the following claims: (1) breach of express
warranty under the Magnuson-Moss Warranty Act ("MMWA"), 15 U.S.C. § 2301, et
seq.; (2) breach of express warranty; (3) unjust enrichment; (4) violation of the Florida
Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201, et seq.; and (5) violation
of New York General Business Law § 349. DE 114 ¶¶ 34–109.
Karhu styled his case as a class action, purporting to sue on behalf of all persons
in the United States who purchased Meltdown for purposes other than resale since
April 4, 2008. DE 70 at 2; DE 114 ¶ 28. On March 3, 2014, however, the Court denied
Karhu's Motion for Class Certification. DE 125. Karhu now maintains this suit only in his
individual capacity, asserting his various claims to recover amounts he overpaid when
he purchased a bottle of Meltdown for $23.34, DE 114 ¶ 25, and still seeking the
attendant injunctive relief.
On March 18, 2014, the Court issued its Order to Show Cause, directing Karhu to
explain why this action should not be dismissed for lack of subject-matter jurisdiction.
DE 130. The Court noted that, upon denial of Karhu's Motion for Class Certification,
Karhu's remaining individual claims did not appear to satisfy the criteria for subjectmatter jurisdiction under the Class Action Fairness Act ("CAFA"). See 28 U.S.C.
§ 1332(d). Karhu also failed to satisfy the jurisdictional prerequisites for his MMWA
claim or the requirements traditional diversity jurisdiction pursuant to 28 U.S.C.
§ 1332(a). Accordingly, it seemed that any basis for subject-matter jurisdiction over
Karhu's suit had evaporated. Karhu responded to the Order to Show Cause by arguing

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that CAFA jurisdiction, once invoked, endures in perpetuity, notwithstanding the
rejection of a plaintiff's proposed class. See DE 132.
II.

DISCUSSION
The Court's denial of class certification raised the possibility that CAFA subject-

matter jurisdiction over Karhu's action had expired. "Federal courts have limited
jurisdiction and are obligated to inquire into subject matter jurisdiction sua sponte
whenever it may be lacking." Gilmore v. Dir., U.S.D.O.L., 455 F. App'x 934, 935–36
(11th Cir. 2012) (per curiam) (internal quotation marks omitted). Upon a determination
that a district court lacks subject-matter jurisdiction over an action, dismissal is the
appropriate remedy. Fed. R. Civ. P. 12(h)(3).
Having reviewed the relevant authorities and the responses of the parties, the
Court concludes that it indeed lacks a basis for further CAFA subject-matter jurisdiction
over this action. The Court rejects Karhu's arguments that CAFA, once invoked, vests a
court with subject-matter jurisdiction ad infinitum. Because the Court finds no alternative
basis for original subject-matter jurisdiction, and declines to exercise supplemental
jurisdiction over Karhu's state-law claims, it will dismiss this action.
A. No Basis for CAFA Jurisdiction Remains
In his pleadings, Karhu has asserted that CAFA, as expressed in 28 U.S.C.
§ 1332(d), vests the Court with subject-matter jurisdiction over this action. DE 114 ¶ 9.
Section 1332(d) provides that a district court will have subject-matter jurisdiction over an
action filed pursuant to Rule 23 of the Federal Rules of Civil Procedure, if it satisfies
CAFA's other jurisdictional requirements, "before or after the entry of a class
certification order by the court." 28 U.S.C. § 1332(d)(1)(B), (d)(2), (d)(5)(B), (d)(8). A
"class certification order" is an order "approving the treatment of some or all aspects of
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a civil action as a class action." Id. § 1332(d)(1)(C). In other words, a district court may
exercise CAFA jurisdiction over a putative class action prior to making a class
certification ruling—presuming the plaintiff has satisfied CAFA's other jurisdictional
prerequisites—or after granting certification in a class certification order.
Here, however, the Court has denied class certification, finding that Karhu cannot
maintain this action on behalf of his proposed class. See generally DE 125. In contrast
to the provisions of section 1332(d)(8), through which CAFA confers subject-matter
jurisdiction "before or after" the entry of an order granting class certification, the Court
has determined that there will be no class certification order. See DE 125 at 12–22;
28 U.S.C. § 1332(d)(1)(C). Accordingly, Karhu's claims fall outside the circumstances in
which subject-matter jurisdiction adheres under section 1332(d)(8), and CAFA subjectmatter jurisdiction no longer applies to Karhu's action.
B. Karhu's Inclusion of Class Allegations Does Not Irrevocably
Vest the Court with Subject-Matter Jurisdiction Under CAFA
In its Order to Show Cause, the Court directed Karhu to demonstrate why the
denial of class certification in this action should not result in a dismissal for lack of
subject-matter jurisdiction. Karhu responded that a denial of class certification does not
impact CAFA subject-matter jurisdiction. Having considered Karhu's response and the
authorities cited therein, the Court maintains its determination that its denial of class
certification resulted in an end to CAFA subject-matter jurisdiction in this case.
The federal courts are divided regarding the effect of a denial of class
certification on CAFA subject-matter jurisdiction. Some courts have held that a midlitigation denial of class certification does not destroy the CAFA jurisdiction that put the
suit in federal court at the outset. See, e.g., Cunningham Charter Corp. v. Learjet, Inc.,

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592 F.3d 805, 806–07 (7th Cir. 2010). Others have held that a denial of class
certification brings an end to CAFA subject-matter jurisdiction. See, e.g., Walewski v.
Zenimax Media, Inc., 502 F. App'x 857, 862 (11th Cir. 2012) (per curiam); Avritt v.
Reliastar Life Ins. Co., No. 07-1817, 2009 U.S. Dist. LEXIS 51524, at *3–8 (D. Minn.
June 18, 2009). Describing this area of the law as "in flux" would not capture the extent
of discordant outcomes presented by the relevant authorities. See Avritt, 2009 U.S. Dist.
LEXIS 51524, at *3–7 (collecting cases).
Karhu contends that, within the Eleventh Circuit, "federal jurisdiction under
[CAFA] does not depend on certification." DE 132 at 1. Karhu relies primarily on the
Eleventh Circuit's decision in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir.
2009). In Vega, the Eleventh Circuit addressed an appeal from a district court's
certification of a class action. The appellate court determined that the district court's
class-certification analysis contained "numerous flaws," and further that the proposed
class was "not amenable to Rule 23 certification." Id. at 1260. With regard to the
numerosity requirement of Rule 23, the Eleventh Circuit held that the district court
abused its discretion by making a finding that numerosity was satisfied based upon little
more than speculation. Id. at 1267–68. In a footnote to its discussion of numerosity, the
appellate court noted that "[e]ven if it were later found that the narrowed . . . class
numbers fewer than 100, . . . post-removal events (including non-certification . . . ) do
not deprive federal courts of subject matter jurisdiction." Id. at 1268 n.12.
The issue before the Eleventh Circuit in Vega, however, was the propriety of the
district court's grant of class certification. Id. at 1260. The Eleventh Circuit's footnoted
discussion of the jurisdictional impact of a plaintiff's failure to satisfy the numerosity

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requirement was unnecessary to its decision of the controversy before it, and is dicta.
See Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 764 (11th Cir. 2010). "And dicta is
not binding on anyone for any purpose." Edwards v. Prime Inc., 602 F.3d 1276, 1298
(11th Cir. 2010). The Eleventh Circuit's discussion in Vega regarding CAFA subjectmatter jurisdiction after denial of class certification therefore does not bind this Court.
The Court is further unpersuaded by Karhu's reliance upon Vega because the
Eleventh Circuit appears to have disclaimed its Vega dicta, at least as it relates to the
impact of a denial of class certification. Specifically, in Walewski v. Zenimax Media, Inc.,
502 F. App'x 857 (11th Cir. 2012) (per curiam), the Eleventh Circuit subsequently
addressed a situation in which a district court had dismissed an action upon denial of
class certification. The Eleventh Circuit wrote: "We affirm the dismissal on the grounds
that absent certification as a class action, the district court lacks subject matter
jurisdiction over Walewski's individual claim." Id. at 862.1 Other courts within this district
have reached similar conclusions. See Adelson v. U.S. Legal Support, Inc. (In re
Motions to Certify Classes Against Court Reporting Firms for Charges Relating to World
Indices), 715 F. Supp. 2d 1265, 1284–85 (S.D. Fla. 2010) (dismissing case for lack of
subject-matter jurisdiction upon denial of class certification), aff'd, 439 F. App'x 849
(11th Cir. 2011); DWFII Corp. v. State Farm Mut. Auto. Ins. Co., No. 10-20116, DE 150
(S.D. Fla. Dec. 10, 2010) (same).
This Court is also of the opinion that the courts finding CAFA jurisdiction to
disappear upon a definitive denial of class certification are correct as a legal matter. As
1

The appellate court in Walewski further noted that, because the amount in
controversy fell below $75,000 with regard to the plaintiff's individual claim, the plaintiff
could not rely upon diversity jurisdiction as an alternative basis for subject-matter
jurisdiction. 502 F. App'x at 862.

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previously noted, CAFA provides that the courts shall have subject matter jurisdiction
"before or after the entry of a class certification order." 28 U.S.C. § 1332(d)(8). The plain
language of this section therefore vests a court with CAFA jurisdiction over the claims of
a putative class (before the entry of a class certification order) or after the class has
been certified. After a court has determined that there will be no class certification order,
however, the action falls outside the scope of the circumstances enumerated under
section 1332(d)(8) in which subject-matter jurisdiction exists.2
A number of courts holding that a denial of class certification does not impact
subject-matter jurisdiction have treated the denial as a change in jurisdictional facts,
such as a change in the citizenship of a party. See, e.g., Cunningham Charter Corp.,
592 F.3d at 806–07. Because changes in the facts underlying subject-matter jurisdiction
do not deprive a tribunal of jurisdiction once vested, those courts have determined that
a denial of class certification also does not impact subject-matter jurisdiction. See id.;
Mills v. Foremost Ins. Co., No. 06-00986, 2011 U.S. Dist. LEXIS 14385, at *6–12 (M.D.
Fla. Jan. 31, 2011). This Court, however, does not view its denial of class certification
as a shift in the jurisdictional facts underlying Karhu's suit. Instead, the denial is a legal
conclusion that Karhu's action was, from the beginning, inappropriate for class
2

The Court acknowledges that, in some circumstances, a denial of a motion for
class certification may not spell doom for the plaintiff's class allegations. For example, a
plaintiff may be able to salvage a deficient proposed class through re-definition or the
submission of additional evidence. See Davis v. Astrue, 250 F.R.D. 476, 492 (N.D. Cal.
2008) (denying motion for class certification with leave to renew upon submission of
additional evidence). In such situations, a case in which class certification has been
denied might still be considered to be in its pre-certification-order stage, and subjectmatter jurisdiction still appropriate. See 28 U.S.C. § 1332(d)(8). Here, however, Karhu's
claims and class definition are sufficiently problematic that his proposed class has no
realistic chance of certification, even were the Court to allow further reasonable
revisions to the pleadings or class definition. See generally DE 125 at 12–21.

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treatment. See Jones v. Jeld-Wen, Inc., No. 07-22328, 2008 U.S. Dist. LEXIS 85145,
at *9–11 (S.D. Fla. Oct. 1, 2008) (treating denial of class certification as legal
conclusion, and not change in jurisdictional facts). Much as the Court should dismiss an
action for lack of subject-matter jurisdiction upon a legal determination that the plaintiff
has from the outset failed to satisfy section 1332(a)'s amount-in-controversy
requirement, Goodin v. Fid. Nat'l Title Ins. Co., 491 F. App'x 139, 143 (11th Cir. 2012),
cert. denied, 133 S. Ct. 2810 (U.S. 2013), or its diversity requirement, Laurent v.
Herkert, 196 F. App'x 740, 743–44 (11th Cir. 2006), so too should the Court dismiss a
putative class action upon a legal determination that the plaintiff may not maintain his
suit on a class basis.
Karhu's claims also illustrate why prudential concerns call for dismissal when a
court has denied class certification. Had Karhu asserted his individual state-law claims
seeking to recover for overpayment on his $23.34 purchase in Florida's state courts, he
could not have satisfied the amount-in-controversy requirements for Florida's circuit
courts, the state's courts of general jurisdiction. See generally 12A Fla. Jur. 2d Courts
and Judges §§ 150, 158 (Westlaw 2014).3 Instead, Karhu's action likely would have
been relegated to the small-claims court, which is well-equipped to handle such
relatively minor disputes in an expedient, cost-effective manner. See Fla. Sm. Cl. R.
7.010(b).
As it stands, however, Karhu desires to move forward with a full-blown federal
jury trial, which he estimates will last seven to ten days. See DE 17 at 3. This trial
3

As discussed in more depth infra pp. 10–11, Karhu's sole federal claim, for
breach of warranty under the MMWA, is not viable independent of CAFA jurisdiction,
because Karhu cannot satisfy the MMWA's jurisdictional amount-in-controversy
requirement.

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regarding Karhu's alleged overpayment for a bottle of fat-burning pills would include
testimony from five expert witnesses, the CEO of the pills' manufacturer, VPX, and
Karhu himself, who would presumably travel from New York at an expense exceeding
any potential recovery. See DE 126 & 127. The trial would require the time and attention
of a panel of jurors for over a week, and would inflict substantial costs on the defense.
Finally, though the Court strives to provide an open and accessible forum for litigants to
resolve their disputes, it is not blind to considerations of judicial economy, and the
burdens imposed on the federal court system by unnecessary trials.
The circumstances of this case therefore make clear why the mere inclusion of
class allegations into a pleading cannot form a basis for perpetual subject-matter
jurisdiction over an action. Although a court may review and reject subject-matter
jurisdiction alleged under other theories, such as traditional diversity or federal question
jurisdiction, Karhu's proposed approach would provide an easily abused means of
sidestepping traditional jurisdictional requirements, as long as the plaintiff had the
forethought to include class allegations in his complaint. The result would be cases such
as this one, where claims of little value with no business being in federal court
nevertheless proceed to a jury trial, inflicting immense costs and expenditures of time
along the way.
In short, after it becomes clear that there will be no grant of class certification, the
exercise of subject-matter jurisdiction pursuant to 28 U.S.C. § 1332(d) is no longer
appropriate. This approach finds its basis in the plain language of section 1332(d), and
is also justified by prudential concerns and the need to avoid potential manipulation of
the judicial system. The Court accordingly determines that the continued exercise of

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CAFA subject-matter jurisdiction over Karhu's claims is inappropriate in light of the
denial of class certification, notwithstanding Karhu's objections.
C. No Alternative Basis for Subject-Matter Jurisdiction Remains
Having dispensed with section 1332(d) CAFA jurisdiction, the Court turns to the
remaining potential bases for subject-matter jurisdiction over this action. In his operative
pleading, Karhu also alleges federal question jurisdiction pursuant to 28 U.S.C. § 1331,
presumably arising from his MMWA claim. DE 114 ¶ 8. Because Karhu cannot satisfy
the MMWA's amount-in-controversy requirement, however, this claim does not provide
a basis for subject-matter jurisdiction. Nor will the Court exercise supplemental
jurisdiction over Karhu's remaining state-law claims.
The MMWA has a jurisdictional amount-in-controversy requirement of $50,000.
15 U.S.C. § 2310(d)(3)(B). Here, Karhu's individual claims for damages arising from
overpayment when he purchased of a bottle of Meltdown for $23.34 fall far short of this
jurisdictional threshold. See DE 114 ¶¶ 25, 47, 58, 72, 90–93, 108. Nor does Karhu's
request for injunctive relief appreciably increase the amount in controversy. The value of
proposed injunctive relief is assessed from the plaintiff's perspective. Ericsson GE
Mobile Commc'ns, Inc. v. Motorola Commc'ns & Elecs., Inc., 120 F.3d 216, 218–19
(11th Cir. 1997). Moreover, where the value of injunctive relief is overly speculative or
immeasurable, it does not factor into the amount in controversy. Leonard v. Enter. Rent
a Car, 279 F.3d 967, 973 (11th Cir. 2002). Here, the future value to Karhu of an
injunction preventing VPX from advertising Meltdown—a product Karhu already
believes to be ineffective for fat loss—as a "fat burner" can be characterized as both de
minimis and immeasurable. Karhu therefore cannot premise subject-matter jurisdiction
upon his MMWA claim. See Carter v. Killingsworth, 477 F. App'x 647, 648 (11th Cir.
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2012) (per curiam) (affirming dismissal for lack of subject-matter jurisdiction where
plaintiff could not satisfy MMWA amount-in-controversy requirement).4
Further, the Court declines to exercise supplemental jurisdiction over Karhu's
remaining state-law claims. Where no federal claims persist prior to trial, and no
independent basis for original subject-matter jurisdiction exists over any state-law
claims, the Eleventh Circuit encourages dismissal of the remaining state-law claims
pursuant to 28 U.S.C. § 1367(c)(3). Raney v. Allstate Ins. Co., 370 F.3d 1086, 1089
(11th Cir. 2004) (per curiam). The Court believes that dismissal is the correct resolution
of Karhu's state-law claims for the additional reason that the claims, with an amount in
controversy approximating $23.34, do not warrant the substantial motion practice and
trial that remain outstanding in this action.
III. CONCLUSION
In sum, the Court determines that its denial of Karhu's motion for class
certification has resulted in the absence of CAFA subject-matter jurisdiction under
28 U.S.C. § 1332(d). The Court rejects Karhu's contention that, once a plaintiff has
invoked CAFA jurisdiction, such jurisdiction exists in perpetuity. Because no alternative
basis for this Court's original subject-matter jurisdiction exists, and because the Court
declines to exercise supplemental jurisdiction over Karhu's remaining state-law claims,
the Court will dismiss this action without prejudice for lack of subject-matter jurisdiction.
It is accordingly ORDERED AND ADJUDGED that this action is DISMISSED
without prejudice for lack of subject-matter jurisdiction. The Clerk of Court is directed
to CLOSE this case and DENY any pending motions as moot.
4

Karhu similarly would not be able to satisfy the $75,000 amount-in-controversy
requirement of traditional diversity jurisdiction. See 28 U.S.C. § 1332(a).

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DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, this 27th day of March, 2014.

Copies provided to:
Counsel of record via CM/ECF

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