Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. N.J.: Proposed class action claims of deceptive nutritional supplement labeling exceeded CAFA amount in controversy, (Nov 22, 2013)

By Linda O’Brien, J.D., LL.M.

In an action seeking treble damages under the New Jersey Consumer Fraud Act (CFA) alleging deceptive marketing of a nutritional supplement, the amount in controversy exceeded the Class Action Fairness Act (CAFA) jurisdictional threshold of $5 million, the federal district court in Newark has ruled (Hoffman v. Country Life, LLC, November 20, 2013, Chesler, S.). Thus, the court denied the plaintiff’s motion to remand the action to the New Jersey state court.

Country Life, LLC, manufactured and marketed a nutritional supplement called Omega 3 Mood. Harold Hoffman, an attorney, filed suit against Country Life, alleging that the company made unsubstantiated representations to him and nationwide users of Omega 3 Mood that the product was scientifically formulated to support brain health, emotional health and mood. Hoffman alleged that he purchased the product based on the false marketing claims and sustained loss in the amount of the difference in the product purchase price and its represented value. His complaint expressly limited the amount in controversy to less than $5 million. Country Life removed the case to federal court under CAFA and subsequently Hoffman filed a motion to remand to state court.

The plaintiff contended that his suit could not be certified as a class action in state court due to his dual role as class counsel and class representative. Therefore only his individual damages based on the purchase price of the product were in controversy. The court rejected the argument observing that the nature of his putative class action suit did not change when it was removed from state to federal court.

To determine whether the matter in controversy exceeds the $5 million CAFA jurisdiction threshold, the court must aggregate the claims of the individual class members. Class members for purposes of the jurisdictional calculation include those persons who fall within the definition of the proposed or certified class. In the context of a case removed under CAFA, the jurisdictional inquiry is limited to examining the case at the time it was filed in state court, according to the court.

Hoffman’s complaint claimed the fraudulent marketing and distribution of significant quantities of Omega 3 Mood to consumers throughout the nation. The court noted that estimating the actual aggregate losses of the individuals in the proposed class was a “relatively straightforward” process. The plaintiff proposed a class that consists of all nationwide purchasers of Omega 3 Mood for a four year period preceding the filing of the suit. The defendant presented evidence of the product’s retail price and number of units shipped during the four-year period.

Given the plaintiff’s definition of the class, the court found that the defendant’s calculation of the amount in controversy (multiplying all Omega 3 Mood products shipped nationwide during the class period by the retail value of the product) resulting in an aggregate retail value of over $5,860,000 was proper. The court also explained that the calculation did not include the proposed class’ entitlement to treble damages on a successful CFA claim. The court concluded that the defendant’s evidence established with a legal certainty that the claims of the proposed class exceeded the jurisdiction threshold of $5 million in the aggregate. Thus, it had subject matter jurisdiction over the action.

The case is No. 13-5565.

Attorneys: Harold M. Hoffman (Cooley LLP), pro se. Joseph F. Falgiani (Sedgwick LLP) for Country Life, LLC.

Companies: Country Life, LLC.

Cases: StateUnfairTradePractices NewJerseyNews