Toxin Free USA v. the J.M. Smucker Company ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
TOXIN FREE USA,
Plaintiff,
v. No. 20-cv-1013 (DLF)
THE J.M. SMUCKER COMPANY, et al.,
Defendants.
MEMORANDUM OPINION
Toxin Free USA (“Toxin Free”) initially brought this action against The J.M. Smucker
Company and Ainsworth Pet Nutrition, LLC (collectively, “the defendants”) in the Superior
Court of the District of Columbia, alleging violations of the District of Columbia Consumer
Protection Procedures Act (“DCCPPA”). The defendants removed the case to this Court. Before
the Court is Toxin Free’s Motion to Remand and request for fees and costs, Dkt. 14, and the
defendants’ Conditional Motion for Fees and Costs in the Event of a Remand, Dkt. 16. For the
reasons that follow, the Court will grant the motion to remand but will decline to award either
party fees and costs.
I. BACKGROUND
Toxin Free is a nonprofit organization that promotes “clean and healthy food and
ecological systems.” Compl. ¶ 14, Dkt. 1-2. It alleges that the defendants are misleading the
public by representing that their pet food products are “natural” and contain no artificial
preservatives. See id. ¶ 6. Invoking the DCCPPA’s private attorney general provisions, Toxin
Free contends that these alleged misrepresentations constitute a deceptive trade practice, and it
seeks injunctive relief on “behalf of itself and the general public of the District of Columbia.”
Id. ¶¶ 9, 25, 72; see also id. at 18.
On May 14, 2019, Toxin Free filed this action in the Superior Court for the District of
Columbia. Notice of Removal ¶ 2, Dkt. 1. Following the Superior Court’s November 6, 2019
decision denying the defendants’ motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of
the Superior Court Rules of Procedure, the parties conferred. See Notice of Removal ¶¶ 16–17.
Based on these discussions, and because the complaint did not contain any class allegations as
required by D.C. Superior Court Rule of Civil Procedure 23, the defendants understood that this
case was not a class action. Id. ¶ 17.
Months later, however, on March 18, 2020, Toxin Free served two discovery requests on
the defendants seeking “all documents” that the defendants intended to use “in connection with
its opposition to class certification.” Id. ¶ 18. Interpreting these requests to be statements of
Toxin Free’s “clear intent to move for class certification,” the defendants removed this case to
federal court. Id. ¶¶ 1, 19.
After receiving the defendants’ notice of removal, Toxin Free sent a letter to the
defendants explaining that the reference to class certification in its discovery requests was the
product of a clerical error. See Pl.’s Ex. C, Dkt. 14-5. It also attached a declaration from its
counsel attesting that Toxin Free “has not brought this lawsuit as a class action” and that it “will
not, at any time or under any circumstances seek Rule 23 class certification in this action.” Pl.’s
Ex. A ¶ 3, Dkt. 14-3; see also Richman Decl. ¶ 5, Dkt. 14-2. Toxin Free asked the defendants to
withdraw their notice of removal or consent to remand, see Pl.’s Ex. C, Dkt. 14-5, but the
defendants declined, Richman Decl. ¶ 8.
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Thereafter, on May 15, 2020, Toxin Free filed the instant motion to remand. Dkt. 14. On
June 5, 2020, the defendants filed a conditional motion for fees and costs in the event of a
remand. Dkt. 16.
II. LEGAL STANDARDS
“Ordinarily, the plaintiff is entitled to select the forum in which he wishes to proceed.”
Araya v. JPMorgan Chase Bank, N.A., 775 F.3d 409, 413 (D.C. Cir. 2014). But a defendant may
remove a civil action filed in state court to a federal district court that has original subject matter
jurisdiction. 28 U.S.C. § 1441(a). The removing party bears the burden of showing that removal
is proper. Walter E. Campbell Co. v. Hartford Fin. Servs. Grp., Inc., 48 F. Supp. 3d 53, 55
(D.D.C. 2014). If the removing party fails to make such a showing, the court must remand the
case. Animal Legal Def. Fund v. Hormel Foods Corp., 249 F. Supp. 3d 53, 56 (D.D.C. 2017).
Generally, when assessing a remand motion, “[c]ourts must strictly construe removal
statutes, resolving any ambiguities regarding the existence of removal jurisdiction in favor of
remand.” Smith v. Hendricks, 140 F. Supp. 3d 66, 70 (D.D.C. 2015) (citing Shamrock Oil & Gas
Corp. v. Sheets, 313 U.S. 100, 107–09 (1941)); see also Steward v. Goldman Sachs Mortg. Co.,
206 F. Supp. 3d 131, 134 (D.D.C. 2016) (“Any uncertainty about the existence of subject matter
jurisdiction should be resolved in favor of remand.”). But this “antiremoval presumption” does
not apply to cases invoking the Class Action Fairness Act (“CAFA”), Dart Cherokee Basin
Operating Co. v. Owens, 574 U.S. 81, 89 (2014), which was designed to “facilitate federal
consideration of certain class actions,” Doe v. Georgetown Synagogue-Kesher Israel
Congregation, 118 F. Supp. 3d 88, 92 (D.D.C. 2015) (internal quotation marks omitted).
Nevertheless, even in CAFA cases, the removing party “bears the burden of establishing the
Court’s jurisdiction.” Id. (internal quotation marks omitted).
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III. ANALYSIS
The defendants assert two separate bases for subject matter jurisdiction. First, the
defendants argue that the Court has jurisdiction under CAFA because this case qualifies as a
class action. Defs.’ Opp’n at 9, Dkt. 15. Alternatively, the defendants invoke the Court’s
diversity jurisdiction. Id. at 31.
A. Removability Under the Class Action Fairness Act
“CAFA gives federal courts jurisdiction over certain class actions,” Dart Cherokee Basin
Operating Co., 574 U.S. at 84, and defines a “class action” as “any civil action filed under rule
23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure
authorizing an action to be brought by 1 or more representative persons as a class action,” 28
U.S.C. § 1332(d)(1)(B). Whether an action falls within the class action definition of CAFA
depends on “how the action was actually filed.” Zuckman v. Monster Beverage Corp., 958 F.
Supp. 2d 293, 305 (D.D.C. 2013).
Toxin Free filed this action pursuant to two subsections of the DCCPPA’s private
attorney general provision, D.C. Code § 28-3905(k)(1). See Compl. ¶¶ 86–87, 90–93. The first,
§ 28-3905(k)(1)(C), permits a “nonprofit organization” to bring a DCCPPA action “on behalf of
itself or any of its members, or any such behalf and on behalf of the general public.” The
second, § 28-3905(k)(1)(D), permits a “public interest organization” to bring a DCCPPA action
“on behalf of the interests of a consumer or a class of consumers.”
“Absent the hallmarks of Rule 23 class actions; namely, adequacy of representation,
numerosity, commonality, typicality, or the requirement of class certification, courts have held
that private attorney general statutes lack the equivalency to Rule 23 that CAFA demands.”
Nat’l Consumers League v. Flowers Bakeries, LLC, 36 F. Supp. 3d 26, 36 (D.D.C. 2014)
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(internal quotation marks omitted). In other words, private attorney general statutes, standing
alone, do not typically qualify as a Rule 23 equivalent under CAFA. To be sure, § 28-
3905(k)(1)(D) of the DCCPPA authorizes class actions, but it does not require them. See Nat’l
Consumers League v. Bimbo Bakeries USA, 46 F. Supp. 3d 64, 76 n.5 (D.D.C. 2014). The
DCCPPA lacks the “requisite procedural safeguards” to qualify as a state statute sufficiently
equivalent to Rule 23 as required by CAFA, Zuckman, 958 F. Supp. 2d at 305, and as a result,
“removal is not permitted under CAFA’s class action provision for actions brought by a private
attorney general under D.C. Code § 28–3905(k)(1)” when the action is “not brought [as] a class
action under D.C. Superior Court Rule 23,” Flowers Bakeries, LLC, 36 F. Supp. 3d at 36.
When Toxin Free filed this case in D.C. Superior Court, it did not label it as a class action
or reference Rule 23 of the D.C. Superior Court Rules of Civil Procedure or Rule 23 of the
Federal Rules of Civil Procedure. See Zuckman, 958 F. Supp. 2d at 305. Nor did it “allege that
Rule 23’s requirements, such as numerosity or typicality, ha[d] been met.” Id. To the contrary,
it unequivocally “disclaimed any intention to seek class certification” both before and after its
discovery requests. Hackman v. One Brands, LLC, 18-cv-2101, 2019 WL 1440202, at *3
(D.D.C. Apr. 1, 2019) (internal quotation marks omitted). The references to class certification in
the discovery requests by themselves did not convert this action into a class action; what matters
in assessing jurisdiction under CAFA is “how the action was actually filed.” Zuckman, 958 F.
Supp. 2d at 305.
In a final attempt to secure CAFA jurisdiction, the defendants point to the District of
Columbia Court of Appeals’ decision in Rotunda v. Marriott International, Inc., which held that
a plaintiff bringing a representative suit for damages under the DCCPPA must comply with Rule
23’s requirements. See 123 A.3d 980, 985–89 (D.C. 2015). The defendants argue that this
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decision requires Toxin Free to bring this case “within the Rule 23 framework,” and thus, it
qualifies as a class action under CAFA. See Defs.’ Opp’n at 12 (internal quotation marks
omitted). But this is an overly broad reading of Rotunda, which limited its holding to claims for
damages. See Rotunda, 123 A.3d at 989; see also Hackman, 2019 WL 1440202, at *4–5
(limiting Rotunda to suits for money damages); Smith v. Abbott Labs, Inc., No. 16-cv-501, 2017
WL 3670194, at *2 (D.D.C. Mar. 31, 2017) (same). And the Rotunda court’s concern—that not
requiring compliance with Rule 23 would preclude members of the public from asserting their
own claims for damages, see Rotunda, 123 A.3d at 986—does not apply here, see Animal Legal
Def. Fund, 249 F. Supp. 3d at 65 (D.D.C. 2017), because Toxin Free seeks injunctive relief and
not damages on behalf of the general public, see Compl. at 18. Regardless, whether “this case
must be litigated as a class action is a merits question to be assessed at the motion to dismiss
stage.” Hackman, 2019 WL 1440202, at *5 (alterations and internal quotation marks omitted).
Because Toxin Free did not bring this case as a class action under Rule 23, and the defendants
have not shown that D.C. law requires treating it as such, CAFA does not confer federal
jurisdiction.
B. Diversity Jurisdiction
Under 28 U.S.C. § 1332(a), district courts “have original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and
costs, and is between … citizens of different States.” Here, the parties do not dispute there is
complete diversity. Instead, they disagree about the amount-in-controversy requirement and
specifically, whether the defendants’ estimated compliance costs of close to $11 million must be
apportioned amongst the members of the general public of Washington, D.C. on whose behalf
Toxin Free brings this action for injunctive relief. See Defs.’ Opp’n at 30, 32–33.
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Courts in this district have consistently held that defendants removing DCCPPA actions
“cannot rely on the total cost of compliance with the plaintiff’s requested injunction to establish
the amount-in-controversy” requirement of § 1332(a). Organic Consumers Ass’n v. R.C.
Bigelow, Inc., 314 F. Supp. 3d 344, 350 (D.D.C. 2018) (internal quotation marks omitted).
Instead, “the cost of the injunction must be divided pro rata among District of Columbia
consumers.” Food & Water Watch, Inc. v. Tyson Foods, Inc., No. 19-cv-2811, 2020 WL
1065553, at *5 (D.D.C. Mar. 5, 2020)). As these cases explain, allowing defendants to rely on
the total cost of compliance would violate the nonaggregation principle. Organic Consumers
Ass’n, 314 F. Supp. 3d at 350; see also Animal Legal Def. Fund, 249 F. Supp. 3d at 60
(collecting cases). Under the nonaggregation principle, “the separate and distinct claims of two
or more plaintiffs cannot be aggregated in order to satisfy the jurisdictional amount
requirement.” Snyder v. Harris, 394 U.S. 332, 335 (1969). The Court sees no reason to depart
from the consensus of courts in this district.
Resisting this authority, the defendants argue that their compliance costs should not be
apportioned because those costs are not affected by the number or identity of individuals in the
general public on whose behalf Toxin Free brings this action. See Defs.’ Opp’n at 33. “But
courts in this jurisdiction have repeatedly rejected this argument.” Food & Water Watch, Inc.,
2020 WL 1065553, at *4 (citing cases). As they have explained, the relevant question is
“whether [Toxin Free] and the members of the general public have separate and distinct claims
that could be brought independently against Defendant[s] with respect to the challenged
conduct.” Animal Legal Def. Fund, 249 F. Supp. 3d at 61. And here, each member of the
general public on whose behalf Toxin Free seeks injunctive relief could pursue a claim against
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the defendants under the DCCPA for the alleged conduct challenged in this action. See id. at 61–
62; Food & Water Watch, Inc., 2020 WL 1065553, at *4–5.
The sole exception to the nonaggregation principle is when “two or more plaintiffs unite
to enforce a single title or right in which they have a common and undivided interest.” Snyder,
394 U.S. at 335. But Toxin Free does not seek any integrated claim for relief—like
disgorgement of the defendants’ profits—that would hold defendants generally liable for a fixed
amount in which the members of the general public in Washington, D.C. would have a common
and undivided interest. Consequently, the defendants’ compliance costs cannot be aggregated to
satisfy the amount in controversy requirement. See id.; see also Food & Water Watch, Inc., 2020
WL 1065553, at *4.
The defendants have not demonstrated “that the cost of the injunction divided pro rata
among the members of the general public of Washington, D.C. would exceed the jurisdictional
threshold.” Animal Legal Def. Fund, 249 F. Supp. 3d at 60–61. Because they have not satisfied
the amount-in-controversy requirement, the Court lacks jurisdiction under 28 U.S.C. § 1332(a).
C. Attorney’s Fees
Pursuant to 28 U.S.C. § 1447(c), both parties seek “just costs and any actual expenses,
including attorney fees, incurred as a result of the removal.” See Pl.’s Mot. at 23; Defs.’
Conditional Mot. for Fees and Costs at 1. “Absent unusual circumstances,” such an award may
be made “only where the removing party lacked an objectively reasonable basis for seeking
removal,” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005), and a party lacks such a
basis “[w]here non-removability is obvious or contrary to well-settled law,” Nat’l Consumers
League v. Gen. Mills, Inc., 680 F. Supp. 2d 132, 141 (D.D.C. 2010). Neither party is entitled to
such an award.
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The defendants’ arguments regarding removability are not objectively unreasonable
because there is “no clear, controlling case law from the D.C. Circuit.” See Breakman v. AOL,
LLC, 545 F. Supp. 2d 96, 108 (D.D.C. 2008) (internal quotation marks omitted); see also
Breathe DC v. Santa Fe Nat. Tobacco Co., 232 F. Supp. 3d 163, 172 (D.D.C. 2017) (“Given the
lack of controlling precedent in this Circuit . . . and notwithstanding the thrust of the opinions of
the district courts in this Circuit, defendants did not lack an ‘objectively reasonable basis for
removal.’”). An award of fees to Toxin Free therefore is not warranted.
Nor does Toxin Free’s reference to class certification in its discovery requests justify an
award of fees to the defendants. While Toxin Free provided “incorrect information” which led
the defendants to believe that jurisdiction existed, see Defs.’ Opp’n at 35, this misstep occurred
months into this litigation, see Notice of Removal ¶¶ 1–2, and only after Toxin Free had
repeatedly and unequivocally disavowed that this case was a class action. This error does not
constitute the type of “unusual circumstances,” see, e.g., Dragacevac v. Fed. Title & Escrow Co.,
No. 13-cv-1374, 2013 WL 12191956, at *1–2 (D.D.C. Oct. 29, 2013), that justify awarding fees
and costs to the removing party under 28 U.S.C. § 1447(c).
CONCLUSION
For the foregoing reasons, the Court grants Toxin Free’s motion to remand, denies Toxin
Free’s request for fees and costs, and denies the defendants’ conditional motion for fees and
costs. A separate order consistent with this decision accompanies this memorandum opinion.
________________________
DABNEY L. FRIEDRICH
November 30, 2020 United States District Judge
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