Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D.N.J.: Alleged inability to certify class does not affect CAFA “amount in controversy”, (Oct 25, 2013)

By Tobias J. Gillett, J.D., LL.M.

In a lawsuit seeking treble damages under the New Jersey Consumer Fraud Act over the allegedly deceptive marketing of a nutritional supplement, the amount in controversy exceeded $5 million, the Class Action Fairness Act (CAFA) jurisdictional threshold, the federal district court in Newark has ruled (Hoffman v. Lumina Health Products, Inc., October 24, 2013, Chesler, S.). Therefore, the court denied remand to New Jersey state court, despite the class representative’s contention that the court could only consider his own damages for jurisdictional purposes because the class action could not be certified in the federal court due to his additional role as class counsel.

Lumina Health Products, Inc. produces a dietary supplement called Cell Food. Harold M. Hoffman, an attorney, filed suit against Lumina, alleging that Lumina had deceived him and nationwide purchasers of Cell Food into buying the product through false claims that it was “effective in delivering improved energy, endurance and health.” His complaint expressly limited the amount in controversy to less than $5 million. Lumina removed the case to federal court under CAFA, and Hoffman filed a motion to remand the case to the Superior Court of New Jersey.

Hoffman contended that his dual role as class counsel and class plaintiff would render the class “non-class certifiable” in the Third Circuit, and hence that the amount in controversy for CAFA purposes would be his own $29.95 claim. The court found his argument “perplexing,” noting that Hoffman’s complaint described the fraudulent marketing of Cell Food to “thousands of consumers throughout the United States.”

The court rejected the argument, observing that the CAFA jurisdictional inquiry focused on the time the case was filed in state court, and that “[t]he act of removing the lawsuit to this Court is of no moment to the Court’s jurisdictional analysis.” Moreover, CAFA defined “class members” for jurisdictional purposes as all persons “who fall within the definition of the proposed or certified class.” Since CAFA included “proposed” class members, a court would “aggregate proposed class members’ claims,” and the potential results of a motion for class certification was “another question for another day.”

Here, Lumina could prove “to a legal certainty” that the amount in controversy in the case was greater than the $5 million threshold, according to the court. Hoffman proposed a class of “all nationwide purchasers of Cell Food for the two-year period preceding” the filing of his lawsuit, and alleged damages in the amount of the difference between the amount the consumers paid for Cell Food and the amount it was worth, an amount he alleged was negligible. He also sought treble damages under the New Jersey Consumer Fraud Act. Since affidavit evidence from Lumina revealed that it had sold at least $5 million of Cell Food during the two-year period, and since Hoffman requested treble damages, the amount in controversy would exceed $5 million, according to the court.

The case is Civil Action No. 13-04936.

Attorneys: Michael R. McDonald (Gibbons, PC) for Lumina Health Products, Inc.

Companies: Lumina Health Products, Inc.

Cases: StateUnfairTradePractices NewJerseyNews