Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Pa.: Amount in controversy may include potential statutory awards of the putative class in future litigation, (Aug 29, 2024)

By Rebecca Mayo, J.D.

The motion to remand turned on the issue of whether a representative plaintiff in a class action could limit the amount in controversy by listing a monetary demand only for himself while bringing the rest of his claim as an issue class.

An issue class finding as to whether there was a violation of the Pennsylvania Unfair Trade Practices and consumer Protection Law (UTPCPL) is tantamount to a declaratory judgment, thus the court should consider the value of the rights which the class seeks to protect in seeking an issue class ruling in a proper assessment of the amount in controversy. The federal district court in Pennsylvania found that a representative consumer could not limit damages to only his own in order to avoid meeting the amount in controversy requirement under the Class Action Fairness Act (Fitchett v. PetMed Express, Inc., No. 2:24-cv-00710-RJC (W.D. Pa. Aug. 26, 2024)).

A consumer filed a complaint alleging that he sought to purchase dog heartworm, flea, and tick prevention products on the PetMed website at what he thought was a “sale price” as opposed to the “regular price.” However, the consumer discovered that PetMed never offered the products at issue for the “regular price,” thus making the regular prices advertised “false reference prices,” utilized as part of Pet Med’s “false discount scheme.”

The consumer filed a class action lawsuit seeking redress for violations of the UTPCPL and sought only damages on his own behalf for the loss equal to the discounts that PetMed offered but that he never received. After the case was removed to federal court, the consumer filed a motion for remand arguing that the suit did not meet the amount in controversy required for removal.

Amount in controversy. The court held that the value of the litigation was not limited to the damages requested by the consumer and was instead impacted by the issue class claim because both putative class members and PetMed would either benefit from or be hindered by a finding of a UTPCPL violation, or lack thereof. Thus, the court’s calculation of the amount in controversy had to involve consideration of the implications should the consumer prove successful on his issue class claim.

There are three main tests used to determine the amount in controversy. “The McNutt/Samuel-Bassett test applies where a defendant raises factual arguments in their notice of removal against the plaintiff’s purported amount in controversy.” The court found this test did not apply as the consumer did not contest the factual assertions advanced by PetMed in support of removal. “The Morgan test applies where a plaintiff’s complaint expressly limits the amount in controversy below the threshold to avoid federal jurisdiction.” The court found that this test also did not apply because the decision to limit the requested monetary relief alone did not necessarily indicate an intent to avoid federal jurisdiction. Finally, the Red Cab/Samuel-Bassett test applies where the alleged facts are uncontested for purposes of calculating the amount in controversy and the calculation is determined by applicable law. The court held that this was the appropriate test to apply as determining whether to include claims made by putative class members in future litigation was squarely within the purview of applicable law and interpretation. Therefore, the burden shifted to the consumer, as challenger to jurisdiction, to prove to a legal certainty that the amount in controversy could not exceed five million dollars.

The court noted that should an issue class ruling be made in the consumer’s favor, the class members would be able to utilize the ruling to satisfy a key element of their future claim, with the remaining work for the individual plaintiffs becoming, according to the consumer, minimal. Alternatively, the class members would face the preclusive effect of an adverse ruling and would be unable to successfully allege a claim for the conduct described. Therefore, the court found that damages that may be owed to putative class members in future litigation were not so collateral or speculative such that they could not be considered in determining the value of the object of the litigation.

“In a class action, the class representative’s claims must be typical of the claims of the class.” Therefore, the court found it would not be unreasonable to multiply the number of plaintiffs by the damages sought by the consumer. According to PetMed, hundreds of thousands of orders were placed by customers with Pennsylvania addresses. The court found that if even 100,000 orders were placed, multiplying that by the amount by the most conservative estimates involved resulted in a $10 million amount in controversy. Since the consumer did not meet his burden of proving to a legal certainty that the amount in controversy could not exceed five million dollars after aggregating the potential statutory awards of the putative class in future litigation, the court found that the amount in controversy had been satisfied.

The Case is No. 2:24-cv-00710-RJC.

Judge: Colville, R.

Attorneys: Helen Chandler Steiger (East End Trial Group LLC) for Timothy Fitchett. Leah R. Imbrogno (Foley & Lardner LLP) for PetMed Express, Inc.

Companies: PetMed Express, Inc.

Cases: Advertising StateUnfairTradePractices PennsylvaniaNews