Ortiz v. Menu Foods, Inc.

• Decision Date: 13 November 2007
• Docket Number: CV. No. 07-00323 DAE/LEK.
• Citation: 525 F.Supp.2d 1220
• Parties: Yvonne ORTIZ, Individually and on behalf of all other similarly situated persons, Plaintiff, v. MENU FOODS, INC., a New Jersey corporation; Menu Foods Holdings, Inc., a Delaware corporation; Menu Foods Income Fund, an unincorporated Canadian Business; Doe Entities and Individuals 1-100; Defendants.
• Court: U.S. District Court — District of Hawaii

525 F.Supp.2d 1220

Yvonne ORTIZ, Individually and on behalf of all other similarly situated persons, Plaintiff, v. MENU FOODS, INC., a New Jersey corporation; Menu Foods Holdings, Inc., a Delaware corporation; Menu Foods Income Fund, an unincorporated Canadian Business; Doe Entities and Individuals 1-100; Defendants.

CV. No. 07-00323 DAE/LEK.

United States District Court, D. Hawai`i.

November 13, 2007.

Emily A. Gardner, Emily A. Gardner, Attorney at Law LLLC, Thomas. R. Grande, Davis Levin Livingston Grande, Honolulu, HI, for Plaintiff.

Barbara J. Kirschenbaum, Chad P. Love, Love & Kirschenbaum, LLLC, Honolulu, HI, for Defendants.

ORDER ADOPTING FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION FOR REMAND AND ORDER DENYING DEFENDANTS' MOTION TO STAY AS MOOT

DAVID ALAN EZRA, District Judge.

Pursuant to Local Rule 7.2(d), the Court finds this matter suitable for disposition without a hearing. After reviewing Defendants' objections (Doc. # 24) and the response and reply thereto, the. Court ADOPTS the Magistrate Judge's Findings and Recommendation Granting in Part and Denying in Part Plaintiff's Motion for Remand and Order Denying Defendants' Motion to Stay as Moot (Doc. # 23). This Court hereby remands this case to State court.

BACKGROUND

Plaintiffs¹ filed the instant class action lawsuit in State court based upon Defendants' manufacturing of allegedly contaminated and adulterated dog and cat food between approximately November 2006 and March 2007. Defendants' product was sold in stores throughout Hawaii. The food allegedly caused illness, injury, and/or death to cats and dogs. Defendants recalled approximately 220 different products. Plaintiffs seek relief for Hawaii consumers who purchased the contaminated food for their dogs and cats. Plaintiffs estimate that the class includes several thousand potential members.

Plaintiffs seek to recover the cost of the food purchased, the cost of veterinary screening to determine if pets were injured, treble damages pursuant to Hawaii Revised Statutes Chapter 480, statutory damages of $5,000 per elder plaintiff, punitive damages in the event treble and elder damages are not awarded, attorneys' fees, and injunctive relief. Plaintiffs state in their Complaint that the total amount in controversy does not exceed $5 million.

Defendants removed the case to this Court. Plaintiffs filed a motion for remand and Defendants filed a motion to stay proceedings pending a transfer decision by the Judicial Panel on Multidistrict Litigation. Defendants assert that there are over 100 federal actions involving the allegedly contaminated pet food. On August 21, 2007, the Magistrate Judge issued a Findings and Recommendation to Grant in Part and Deny in Part Plaintiff's Motion for Remand and Order Denying Defendants' Motion to Stay as Moot ("F & R") (Doc. # 23). The Magistrate Judge found that Defendants failed to prove by a legal certainty that they have met the $5 million amount in controversy requirement for this Court to have jurisdiction over this action pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"),

On September 4, 2007, Defendants filed objections to the F & R (Doc. # 24). Defendants argue that the Magistrate Judge improperly considered the likelihood that Plaintiffs would not prevail in recovering damages for elders, and that the Magistrate Judge imposed a greater burden on Defendants than required by expecting them to provide data that they do not maintain as part of their own records. Plaintiffs filed a response on September 14, 2007. Defendants requested permission to file a reply, which this Court granted. After stipulating to a stay of the case for several weeks, the stay was automatically lifted and on October 30, 2007, Defendants filed a reply.

STANDARD OF REVIEW

Defendants assert that this court should apply a de novo standard of review applicable to objections of findings and recommendations of a magistrate judge. Plaintiff argues that this Court should apply the clearly erroneous standard of review applicable to non-dispositive orders and appeals thereof.

Pursuant to Local Rule 74.2, when a party objects to a magistrate judge's dispositive order, findings, or recommendations, the district court must make a de novo determination. Under a de novo standard, this court reviews "the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered." Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir.2006). "The court may `accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.' The court also may receive further evidence or recommit the matter to the magistrate with instructions." McDonnell Douglas Corp. v. Commodore Bus. Machs., Inc., 656 F.2d 1309, 1313 (9th Cir.1981) (citation omitted); LR 74.2.

Pursuant to Local Rule 74.1, a party may appeal any pretrial, nondispositive matter determined by a Magistrate Judge. Fed.R.Civ.P. 72(a); LR 74.1. A district court "shall set aside any portion of the magistrate judge's order found to be clearly erroneous or contrary to law." LR 74.1. To find a magistrate judge's decision "clearly erroneous," the district court must have a "definite and firm conviction that a mistake has been committed." Burdick v. Comm'r Internal Revenue Serv., 979 F.2d 1369, 1370 (9th Cir.1992) ("A finding of fact is clearly erroneous if we have a definite and firm conviction that a mistake has been committed."). "The reviewing, court may not simply substitute its judgment for that of the deciding court." Grimes v. City and County of San Francisco, 951 F.2d 236, 241 (9th Cir.1991). "A decision is `contrary to law' if it applies an incorrect legal standard or fails to consider an element of the applicable standard." Conant v. McCaffrey, No. C 97-0139, 1998 WL 164946, at *2 (N.D.Cal. March 16, 1998).

"Although not considered by the Ninth Circuit, several circuits have held that a motion to remand is to be treated as a dispositive motion." McClelland v. Merck & Co., CIV. No. 06-00543, 2007 WL 178293, *1 (D.Haw. Jan. 19, 2007) (citing cases); see also Thorp v. Kepoo, 100 F.Supp.2d 1258, 1260 (D.Haw.2000) (applying de novo standard of review to objections of, a magistrate judge's findings and recommendation regarding remand).

Because a motion to remand effectively removes the case from this Court, because the Magistrate Judge determined that her decision should be a findings and recommendation rather than an order, and because a de novo review is more favorable to Defendants in this case, this Court will apply the de novo standard of review.

DISCUSSION

This Court has original jurisdiction "of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which — (A) any member of a class of plaintiffs is a citizen of a State different from any, defendant." 28 U.S.C. § 1332(d)(1). It is undisputed that the requirements of diversity and the, minimal number of class members have been met in the instant case. The issue in this case is whether the amount in controversy requirement has been met. Plaintiffs assert that they were careful to specifically allege in their Complaint that the amount in controversy does not exceed $5 million, inclusive of attorneys fees. Defendants argue that despite Plaintiffs' disclaimer, they are able to establish with a legal certainty that the amount in controversy exceeds $5 million.

There are several burdens of proof that this Court must adhere to in determining the instant objection, all of which work in favor of the Plaintiffs and against Defendants. First, it is well settled that removal pursuant to 28 U.S.C. § 1441 is "to be strictly construed, and any doubts as to the right of removal must be resolved in favor of remanding to state court." Durham v. Lockheed Martin Corp. 445 F.3d 1247, 1252 (9th Cir.2006); Opuna, LLC v. Sabbagh, Civil No. 05-00488, 2006 WL 2374750, at *1 (D.Haw, Aug.15, 2006) ("When a case is removed to federal court, there is a strong presumption against federal court jurisdiction," and any doubts regarding subject matter jurisdiction should be resolved in favor of remand).

Second, Defendants, as the removing party, bear the burden of establishing federal jurisdiction. Lowdermilk v. U.S. Bank National Ass'n, 479 F.3d 994, 997(9th Cir.2007); Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir.2007) ("the removing party bears the initial burden of establishing federal jurisdiction under § 1332(d)(2)"); see Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 682-83 (9th Cir.2006).

Third, Plaintiffs are the master of their complaint and may plead that the damages at issue are less than that required for diversity jurisdiction in federal court in order to avoid federal jurisdiction. Lowdermilk, 479 F.3d at 998-99. Where a plaintiff does so, the court "need not look beyond the four corners of the complaint to determine whether the CAFA jurisdictional amount is met[.]" Id. at 998. Furthermore, where "there is no evidence of bad faith, the defendant must not only contradict the plaintiff's own assessment of damages, but must overcome the presumption against federal jurisdiction" and show with a "legal certainty" that the amount in controversy exceeds $5 million. Id. at 999. Although not insurmountable, the legal certainty standard sets a high bar for Defendants. Id. at 1000.

Defendants assert that the $5 million minimum is met by adding together the categories of damages. Defendants estimate the veterinary costs sought by Plaintiffs by multiplying a cost of $217 per veterinary screening examination by the total number of cats and dogs potentially affected by the recalled food. Defendants calculate the total number of pets affected through extrapolations from statistics from the Census Bureau, the Humane Society and the American Veterinary Medical Association ("A...