HALL v. WELCH FOODS, INC., A COOPERATIVE et al
Filing
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OPINION filed. Signed by Judge Anne E. Thompson on 10/4/2017. (mps)
REcE1vED
NOT FOR PUBLICATION
OCT 05 2017
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
AT 8:3 0
WtL~M
CLERK LSH
LAUREN HALL,
Civ. No. 17-3997
Plaintiff,
v.
WELCH FOODS, INC., A COOPERATIVE,
THE PROMOTION IN MOTION
COMPANIES, INC.
OPINION
Defendants.
THOMPSON, U.S.D.J.
INTRODUCTION
This matter comes before the Court on two motions: a Motion to Transfer brought by
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Defendants Welch Foods, Inc. ("Defendant Welch") and The Promotion in Motion Companies,
Inc. ("Defendant PIM") (collectively "Defendants") (ECF No. 7), and a Motion to Remand
brought by Plaintiff Lauren Hall ("Plaintiff') (ECF No. 16). Plaintiff opposes Defendants'
Motion to Transfer. (ECF No. 12.) Defendants oppose Plaintiff's Motion to Remand. (ECF Nos.
18, 19.) The Court has decided the motions after considering the parties' written submissions
without oral argument pursuant to Local Civil Rule 78.1 (b). For the following reasons,
Defendants' motion is granted, and Plaintiff's motion is denied.
BACKGROUND
Plaintiff brings this putative class action on behalf of herself and all others similarly
situated against Defendants Welch and PIM. Plaintiff is a citizen of New Jersey. (Compl. if 11,
ECF No. 1-1; Am. Compl. if 14, ECF No. 11.) Defendant PIM is a New Jersey corporation with
its principal place of business in New Jersey. (Compl. if 14; Am. Compl. if 17.) Defendant Welch
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is a Mich_igan corporation with its principal executive office in Massachusetts. (Compl., 15;
Am. Compl., 18.) Plaintiffs Complaint includes seven counts: (1) breach of express warranty;
(2) breach of implied warranty of merchantability under N.J.S.A. 12A:2-212; (3) common law
fraud under New Jersey law; (4) unjust enrichment; (5) violation of the New Jersey Consumer
Fraud Act, N.J.S.A. 56:8-1 et seq.; (6) violation of the Truth in Consumer Contract, Warranty
and Notice Act, N.J.S.A. 56:12-14 et seq.; and (7) injunctive and declaratory reliefunder the
New Jersey Declaratory Judgments Act, N.J.S.A. 2A:16-51 et seq.
Plaintiffs allegations are as follows. For the last six years, Defendants have engaged in a
deceptive marketing campaign to convince consumers that Welch's Fruit Snacks contain
significant amounts of the actual fruits shown in the marketing and labeling of the products.
(Compl. if 2;_ Am. Compl. 12.) Defendants have also attempted to convince consumers that
Welch's Fruit Snacks are nutritious and healthful to consume and more healthful than similar
products. (Compl. if 2; Am. Compl., 2.) Defendant PIM produces the Fruit Snacks in question,
and licenses the product line using the trademarked Welch's brand. (Compl. ,, 24-29; Am.
Compl. ,, 27-32.) The marketing relies on healthful characterizations of the products, including
that the Fruit Snacks are "Made With REAL Fruit." (Compl. W32-34; Am. Compl. W35-37).
Plaintiff further alleges that, during the Class Period, Plaintiff purchased Welch's Fruit
Snacks for herself and her family, relying on Defendants' representations that the Fruit Snacks
contained a significant amount of the actual fruit emphasized in their marketing and labeling,
were nutritious and healthful, and were more healthful than similar products. (Compl., 12; Am.
Compl., 15.) However, Defendants' claims about the fruit content and nutritional qualities of
the Fruit Snacks are deceptive, as the fruit content in the product is overstated, different types of
fruit are used than the labeling depicts, and the Fruit Snacks contain significant amounts of added
sweeteners, artificial colors, and artificial flavors. (See generally Compl. ,, 38-54; Am. Compl.
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ifif 41-57.) Plaintiff emphasizes that, after a 2015 lawsuit alleging similar misrepresentations,
Defendants altered the composition and ingredient list of the Fruit Snacks, including "fruit
puree" as the first ingredient as opposed to juices from concentrate. {Compl. mf 40, 43-44; Am.
Compl. mf 43, 46-47.) Nevertheless, Plaintiff asserts the products remain misbranded and the
marketing and labeling remain misleading. (Compl. ,, 40, 43-44; Am. Compl. W43, 46-47.)
Plaintiff originally brought this action in New Jersey Superior Court. (See Compl.)
Defendants Welch and PIM removed the case to this Court pursuant to jurisdiction under the
Class Action Fairness Act of2005 ("CAFA"), 28 U.S.C. § 1332. (Defs.' Notice of Removal,
ECF No. 1.) Shortly thereafter, Defendants filed a Motion to Transfer the action to federal
district court in the Eastern District ofNew York ("EDNY"), arguing that Plaintiff's action was
essentially the same litigation as a nationwide class action filed in the EDNY in 2015, evidenced
by substantially similar complaints and overlapping plaintiff's counsel. (Defs.' Mot. Transfer,
ECF No. 7.) In response, Plaintiff notified the Court of her intent to amend her complaint to
clarify the nature of the class and move to remand the action back to New Jersey State Court.·
(ECF No. 9.) Plaintiff then filed an amended complaint. (Am. Compl., ECF No. 11.) In an effort
to divest this Court of jurisdiction under CAFA, the amended complaint altered the definition of
the putative class from "all persons in New Jersey who purchased Defendants' Products during
the Class Period" (Compl. , 59) to "all citizens of New Jersey who purchased Defendants'
Products in New Jersey durins the Class Period" (Am. Compl. if 62). Plaintiff then filed a motion
to remand to New Jersey State Court. (ECF No. 16.)
LEGAL STANDARDS
I.
Motion to Remand
A defendant may remove a civil action filed in state court to the federal court where the
action might originally have been brought. 28 U.S.C. § 1441(a), (b). The federal court must have
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subject matter jurisdiction over the action. 28 U.S.C. § 144l{b). Federal district courts have
subject matter jurisdiction over civil actions that involve a federal question or diversity of
citizenship. 28 U.S.C. §§ 1331, 1332. Federal question jurisdiction exists when the action arises
''under the Constitution, laws, or treaties of the United States." Id. § 1331. Diversity jurisdiction
exists when the action arises between citizens of different states and the amount in controversy
exceeds $75,000. Id. § 1332. Under CAFA, federal district courts have "'original jurisdiction of
any civil action' in which three requirements are met: (1) an amount in controversy that exceeds
$5,000,000, as aggregated across all individual claims; (2) minimally diverse parties; and (3) that
the class consist of at least 100 or more members ('numerosity requirement')." Judon v.
Travelers Prop. Cas. Co. ofAm., 773 F.3d 495, 500 (3d Cir. 2014) (citing 28 U.S.C.
§ 1332(d)(2), (5)(B), (6); Standard Fire Ins. Co. v. Knowles, 568 U.S. 588 (2013)).
If at any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case must be remanded to state court. 28 U.S.C. § 1447(c). The party that
removed the case bears the burden of establishing federal jurisdiction. Frederico v. Home Depot,
507 F.3d 188, 193 (3d Cir. 2007); Morgan v. Gay, 471F.3d469, 473 (3d Cir. 2006). To
determine whether jurisdiction is met under CAFA, "a court evaluates allegations in the
complaint and a defendant's notice ofremoval." Judon, 773 F.3d at 500. Under CAFA, "class
member citizenship may be determined even after the time-of-filing," including "'as of the date
of the filing of the complaint or amended complaint .... "' Kaufman v. Allstate N.J. Ins. Co., 561
F.3d 144, 153 (3d Cir. 2009) (quoting 28 U.S.C. § 1332(d)(7)).
"[O]nce jurisdiction has been established, the burden shifts to the party seeking remand to
show that an exception requiring remand ... applies." Gallagher v. Johnson & Johnson
Consumer Cos., Inc., 169 F. Supp. 3d 598, 602 (D.N.J. 2016) (citingKaufinan, 561 F.3d at 153).
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CAFA includes two mandatory exceptions from federal jurisdiction which require remand. 28
U.S.C. § 1332(d)(4)(A), (B).
Subsection (A), the 'local controversy' exception, may apply when at least one
significant defendant and more than two-thirds of the members of the putative
classes are local. Subsection (B), the 'home-state' exception, may apply when the
primary defendants and at least two-thirds of the members of the putative classes
are local.
Kaufman, 561 F.3d at 149; see also Vodenichar v. Halcon Energy Props., Inc., 733 F.3d 497,
503-04 (3d Cir. 2013 ). CAFA also gives district courts discretion to decline jurisdiction under a
totality of the circwnstances balancing test, considering statutorily enumerated factors. See 28
U.S.C. § 1332(d)(3). "If the balance of factors suggests that the dispute is local, the court may
exercise its discretion to remand." Dicuio v. Brother Int'/ Corp., 2011WL5557528, at *2
(D.N.J. Nov. 15, 2011).
II.
Motion to Transfer
A court may transfer an action "to any other district where it might have been brought"
"[f]or the convenience of parties and witnesses, [and] in the interest of justice." 28 U.S.C. §
1404(a). Courts may consider any number of relevant factors that affect the "private and public
interests protected by the language of§ 1404(a)," including those not specifically enumerated in
the statute. Jumara v. State Farm Ins. Co., SS F.3d 873, 879-80 (3d Cir. 199S) (listing private
interests such as the plaintiff's choice of forum, defendant's forum preference, where the claim
arose, convenience of the parties, convenience of the witnesses, and location of books and
records and public interests such as enforceability of a resulting judgment, practical
considerations for judicial efficiency, administrative difficulties, public policies of the fora, and
the trial judge's familiarity with state law in diversity actions). The burden of "establishing the
need for transfer ... rests with the movant ... ."Id. at 879.
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The Third Circuit applies the first-to-file (or "first-filed") rule: "in all cases of federal
concurrent jurisdiction, the court which first has possession of the subject must decide it."EEOC
v. Univ. ofPa., 850 F.2d 969, 971 (3d Cir. 1988) (quoting Crosley Corp. v. Hazeltine Corp., 122
F.2d 925, 929 (3d Cir. 1941)). This rule allows federal district courts to "enjoin the subsequent
prosecution of proceedings involving the same parties and the same issues already before another
district court." Id. The rule promotes comity, encourages judicial efficiency, avoids burdening
the federal judiciary with duplicative litigation, and prevents "the judicial embarrassment from
conflicting judgements." Catanese v. Unilever, 774 F. Supp. 2d 684, 687 (D.N.J. 2011) (internal
quotations and citations omitted). The rule is "grounded on equitable principles," EEOC, 850
F .2d at 977, and a court in its discretion may decline to apply it for a number of reasons,
including when the litigation presents "extraordinary circumstances, inequitable conduct, bad
faith, and forum shopping ...." Catanese, 774 F. Supp. 2d at 687 (citing EEOC, 850 F.2d at
976); see also Chavez v. Dole Food Co., Inc., 836 F.3d 205, 210 (3d Cir. 2016).
ANALYSIS
Although Defendants' Motion to Transfer was filed prior to Plaintiff's Motion to
Remand, the Court will first consider the Motion to Remand because it requires determining
whether the Court has federal subject matter jurisdiction in the first instance and, thus, granting
the Motion to Remand would render the Motion to Transfer moot.
I.
Motion to Remand
A. Removal Was Proper Under CAFA
The parties do not dispute that all three of CAFA's threshold jurisdictional requirements
are satisfied here. Minimal diversity of citizenship exists between the parties, as Plaintiff is a
citizen ofNew Jersey and Defendant Welch is incorporated in the state of Michigan and has its
principal place of business in Massachusetts. (Compl.
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W 11, 15; Am. Compl. ifif 14, 18.) The
Court is persuaded that a fair reading of the Complaint and Defendants' briefing papers
sufficiently establish that the amount in controversy exceeds $5,000,000 based on the definition
of the class under either the Complaint or Amended Complaint and the gross sales of the
products in question in New Jersey during the period specified. See Dicuio v. Brother Int'/ Corp.,
2011WL5557528, at *3 (D.N.J. Nov. 15, 2011) ("[T]he Third Circuit has held that an
uncabined damage request coupled with a statement in the Notice of Removal that the
aggregated damages exceed $5 million, like that found here, is sufficient to establish the amount
in controversy for CAFA purposes." (citingKaufinan, 561 F.3d at 151)). Finally, the putative
class, defined according to either the Complaint or Amended Complaint, satisfies CAFA's
requirement of at least 100 members, again based on sales figures and the undisputed assertions
of the parties. (See Compl. ~ 60; Am. Compl. ~ 63; Defs.' Notice of Removal~ 21.) The question
remains whether either of the mandatory exceptions delineated in CAFA or the discretionary
balancing permitted under the totality of the circumstances assessment warrants remand.
B. The Operative Complaint at the Time of Removal Governs CAFA Jurisdiction
The threshold question on the Motion to Remand is the operative time for defining a
proposed class removed on the basis of CAFA jurisdiction. This question of who is in the class
must be answered before conducting the substantive inquiry-what is their citizenship-required
by the mandatory home state exception. Plaintiff argues the class members' citizenship should be
based on her Amended Complaint, filed post-removal, which altered the makeup of the class
from "persons in New Jersey" to "citizens of New Jersey." (Pl.'s Mot. Remand at 4-5, ECF No.
16.) Defendants counter that a complaint amended after removal which changes the nature or
scope of the class should have no bearing on the jurisdictional question. (Defs.' Mem. Opp 'n to
Pl.'s Mot. Remand at 10--16, ECF No. 18.) Defendants argue the operative complaint atthe time
of removal (the original Complaint) and Defendants' moving papers govern. (Id.)
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Plaintiffs argument depends on a broad reading of the Third Circuit's decision in
Kaufman, which applied the CAFA local controversy exception based on "defendants presently
in the action," not those sued in the original complaint. Kaufman, 561 F .3d at 153. Kaufman does
not speak directly to the issue before the Court: whether a district court may consider a complaint
amended post-removal which alters the definition or makeup of the class itself. In a more recent
opinion, the Third Circuit considered whether a district court erred in remanding a mass action
removed under CAFA, seeming to reaffirm the time-of-removal rule. The Court explained,
"Plaintiffs' conduct undertaken after filing the Complaint is certainly relevant, as long as that
conduct occurred prior to removal." Ramirez v. Vintage Pharm., UC, 852 F.3d 324, 331 (3d Cir.
2017); id. at 331 n.3 ("Of course, we ordinarily examine the case at the time the complaint was
filed ... unless subsequent developments are what triggered
removal ...." (citing Standard Fire Ins. Co., 566 U.S. at 593-94; 28 U.S.C. § 1446(b)(3))).
Other circuits increasingly trend toward the traditional time-of-filing rule in the CAFA
context. See, e.g., Broadway Grill, Inc. v. Visa Inc., 856 F.3d 1274, 1277-79 (9th Cir. 2017)
(collecting cases). Courts in the Third Circuit agree. See, e.g., Haley v. AMS Servicing, LLC,
2014 WL 2602044, at *6 (D.N.J. June 11, 2014) ("CAFAjurisdiction is determined at the time
ofremoval ... .");Schwartz v. Comcast Corp., 2005 WL 1799414, at *3 (E.D. Pa. July 28,
2005) ("I will determine whether federal subject matter jurisdiction exists in this case according
to the allegations set forth in Schwartz's original complaint. Schwartz's attempt to 'clarify' the
definition of the proposed class in his amended complaint and thus eliminate diversity
jurisdiction will not by itself defeat subject matter jurisdiction."). Accordingly, the Court will not
consider the Amended Complaint's proposed class definition. The operative complaint at the
time ofremoval defined the class as ''persons in New Jersey," and that definition governs the
applicability of the home state exception.
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C. Remand Is Not Warranted Under Any CAFA Exception
The home state exception to CAFA jurisdiction requires the party seeking remand to:
(1) establish that the citizenship of the members of two-thirds or more of the
putative class is the state in which the action was originally filed; (2) establish the
citizenship of the defendants; (3).identify the primary defendants; and (4)
demonstrate that two-thirds or more of the members of the putative class are
citizens of the same state as the primary defendants.
Vodenichar, 733 F.3d at 503-04. Defendants do not dispute the citizenship of the defendants or
that only PIM, a New Jersey citizen, is the primary defendant. (See Defs.' Mem. Opp'n to Pl. 's
Mot. Remand at 10-16.) They only dispute whether two-thirds of the members of the putative
class are citizens of the same state as the primary defendants-here, New Jersey. (Id. at 19-25.)
It is Plaintiff's burden to establish by a preponderance of the evidence that at least two-
thirds of the putative class members are New Jersey citizens, meaning domiciled in New Jersey.
See, e.g., Vodenichar, 733 F.3d at 503, 504 n.2 (citing Kaufinan, 561 F.3d at 153-54); Lee v.
Cent. Parking Corp., 2015 WL 4510128, at *16 (D.N.J. July 24, 2015) ("Having failed to define
the class as New Jersey citizens, Plaintiff bears the burden of supplying evidence that two-thirds
of the putative class members are New Jersey citizens in order for remand to be mandatory.");
Dicuio v. Brother Int'/ Corp., 2011WL5557528, at *3-4 (D.N.J. Nov. 15, 2011) (collecting
cases). Plaintiff has not met this burden. Plaintiff argues "it would be simply preposterous" for
more than one-third of New Jersey purchasers of Pruit Snacks products during the class period to
live outside of New Jersey. (Pl.'s Mot. Remand at 6.) This argument is based on supposition, not
evidence. Since.Plaintiffhas provided no evidence to establish the citizenship of the putative
class as defined in the Complaint, remand is inappropriate under the mandatory home state
exception to CAPA jurisdiction.
Plaintiff does not argue that CAFA's mandatory local controversy exception applies to
this action. Plaintiff argues as a fallback that the discretionary totality of the circumstances
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analysis permitted under CAFA warrants remand. See 28 U.S.C. § 1332(d)(3). The Court
disagrees, as the balance of factors suggests this dispute is not truly local. Plaintiff failed to plead
the original Complaint in a manner that would avoid federal jurisdiction. The claims here involve
matters of national interest as the product line in question has national reach and distribution.
Finally, as discussed below, in the three years before this action was filed, Plaintiff's counsel
filed another class action asserting almost identical claims on behalf of a putative nationwide
class which encompasses the putative class here. Plaintiff's Motion to Remand is denied.
II. Motion to Transfer
Defendants argue this action should be transferred to the EDNY because existing
litigation there (Atik v. Welch Foods Inc. et al, Civ. No. 15-5405 (E.D.N.Y. 2015)) covers
Plaintiff's claims. As a preliminary matter, pursuant to 28 U.S.C. § 1404, this Court has
determined that the EDNY is a forum in which the action could have originally been brought
because that court has subject matter jurisdiction under CAFA, venue is proper there, and
Defendants are subject to personal jurisdiction there. (See Defs.' Mem. Mot. Transfer at 12.)
Plaintiff and Defendant dispute whether the private and public interest factors favor
transfer. A detailed analysis of these factors, however, is not required here. In light of the Third
Circuit's first-to-file rule and the pendency of substantially similar litigation in the EDNY, the
Court is persuaded that this action should be transferred: See, e.g., Catanese, 774 F. Supp. 2d at
690 ("This factor alone favors transfer." (citing Am. Inst.for History Educ., LLCv. E-Learning
Sys. Int'/ LLC, 2010 WL 4746233, at *3 (D.N.J. Nov. 16, 2010) ("Courts in this Circuit have
frequently held that the pendency of a related or similar case in another forum is a powerful
reason to grant a motion for a change of venue."))).
"For the first-to-file rule to apply, there must be a 'substantial overlap' between the two
actions, but the issues and parties involved need not be identical." Maximum Human
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Performance, Inc. v. Dymatize Enters., Inc., 2009 WL 2778104, at *3 (D.N.J. Aug. 27, 2009)
(collecting cases}, report and recommendation adopted, 2009 WL 2952034 (D.N.J. Sept. 14,
2009). Although the causes of action in the New York litigation arise under different state law
(there, New York and California; here, New Jersey}, the nature of the claims and issues, the
relief sought, the products in question, and the defendants all substantially overlap. 1 Moreover,
the putative nationwide class in the New York action encompasses the putative New Jersey class.
The New York action was filed first (in September 2015), and will continue regardless of what
this Court decides. See Catanese, 114 F. Supp. 2d at 690 ("To permit this case to continue in
New Jersey while an identical cause of action proceeds in California involving the same issues
and overlapping class members would be an inefficient use of judicial resources. Transfer will
promote judicial efficiency, economy and consistency ofresults."). Finally, Plaintiff's New
Jersey filing evidences exactly the kind of forum shopping and judicial inefficiencies that CAFA
was designed to prevent. Plaintiff cannot maintain essentially the same litigation in two separate
district courts, creating unnecessary burdens on the courts and risking the inefficiency and
embarrassment of conflicting judgments. This action shall be transferred to the EDNY.
CONCLUSION
For the reasons stated herein, Defendants' Motion to Transfer is granted. Furthermore,
Plaintiffs Motion to Remand is denied. An appropriate order will follow.
Date:
1
Plaintiff argues that some claims in the New Jersey action relate to a 2015 reformulation of the
products which happened after the New York action had already been filed; therefore, the issues
do not substantially overlap in the two lawsuits. (Pl.'s Mem. Opp'n to Defs.' Mot. Transfer at 11,
ECF No. 12.) Defendants dispute this timeline of events, suggesting that the reformulation
happened one month prior to the filing of the New York action. (Def.'s Reply Mem. Mot.
Transfer at 6-7, ECF No. 19.) Regardless, the Court finds the substantial overlap standard is met.
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