Clean Label Project Found. v. Now Health Grp., Inc.
| Decision Date | 06 July 2021 |
| Docket Number | Civil Action No. 21-11 (JDB) |
| Parties | CLEAN LABEL PROJECT FOUNDATION, Plaintiff, v. NOW HEALTH GROUP, Inc., Defendant. |
| Court | U.S. District Court — District of Columbia |
Plaintiff Clean Label Project Foundation ("CLP"), on behalf of itself and the general public of the District of Columbia, filed this action in D.C. Superior Court alleging that NOW Health Group, Inc. ("NOW") engaged in unlawful trade practices in violation of the District of Columbia Consumer Protection Procedures Act ("DCCPPA"), D.C. Code §§ 28-3901-28-3913 (2021). NOW removed the case to federal court, asserting that this Court has both diversity and federal question jurisdiction over CLP's claims, and moved to dismiss on multiple grounds. CLP moved to remand the action to D.C. Superior Court, challenging both jurisdictional bases. Because this Court concludes that it lacks subject-matter jurisdiction, it will grant CLP's motion to remand and deny NOW's motion to dismiss as moot.
NOW is a dietary supplement company that produces, markets, and sells prenatal vitamins including the Super Nutrition SimplyOne Prenatal (30 count), the Super Nutrition SimplyOne Prenatal (90 count), and the Super Nutrition SimplyOne Prenatal Blend (180 count). Mem. in Supp. of Def.'s Mot. to Dismiss First Am. Compl. ("Def.'s Mot. to Dismiss") [ECF No. 8-1] at 3. NOW promotes these products as "Triple Power Multivitamins," and its packing and marketing for these products include claims such as "Better birth weight," "Reduced Fatigue," "Supports Full-Term Birth, Stronger Baby's Bones & Energy All Day," and "better nutrition." Pl.'s First Am. Compl. ("Am. Compl.") [ECF No. 1-3] ¶¶ 3-4.
In 2018, CLP—a non-profit public interest organization whose mission is to educate the public and enable consumers to make informed shopping choices—caused the purchase of three of NOW's prenatal vitamin products for the purpose of testing and evaluation.1 Id. ¶ 21-26. CLP alleges that its testing revealed that the products were under-formulated for folic acid—increasing the risk of miscarriage, stillbirth, and unhealthy prenatal development—and that the products contained lead, cadmium, and mercury—heavy metal compounds known to cause harm in fetuses and infants. Id. ¶¶ 77, 87, 96.
The DCCPPA allows a nonprofit organization to bring an action "on behalf of itself or any of its members, or on any such behalf and on behalf of the general public," and allows a "public interest organization" to bring an action "on behalf of the interests of a consumer or a class of consumers." Id. § 28-3905(k)(1)(C), (D). Suing under these provisions, CLP filed a complaint against NOW in D.C. Superior Court on September 15, 2020, Compl. [ECF No. 1-1], which it amended on December 18, 2020, see Am. Compl. at 30. Specifically, CLP alleges that NOW engaged in an unlawful trade practice under the DCCPPA when it packaged, marketed, and sold prenatal vitamin products in a manner that misled consumers into believing that the products wereproperly formulated, free of contaminants, and superior to competing products, when in fact they were under-formulated for folic acid and contaminated with lead, cadmium, and mercury. Am. Compl. ¶¶ 137-59. Further, CLP alleges that the under-formulation of folic acid and the presence of heavy metals render NOW's prenatal vitamins "adulterated" in violation of D.C. Code § 48-103. Id. ¶ 150. That provision defines as adulterated food products such as vitamins and dietary supplements that "contain[] any poisonous or deleterious substance which may render [a product] injurious to health," or from which "[a]ny valuable constituent has been omitted or abstracted." D.C. Code § 48-103(2)(A), (J). CLP's amended complaint seeks: (1) a declaration that NOW's conduct violates the DCCPPA; (2) an order enjoining that conduct; (3) an order requiring NOW "to provide corrective advertising to the residents of the District of Columbia"; and (4) an order granting CLP's "costs and disbursements, including reasonable attorneys' fees and expert fees, and prejudgment interest at the maximum rate allowable by law." Am. Compl. at 30.
On January 4, 2021, NOW filed a timely notice of removal asserting that this Court has both diversity jurisdiction under 28 U.S.C. § 1332(a) and federal question jurisdiction under 28 U.S.C. § 1331. Def.'s Notice of Removal ("Def.'s Notice") [ECF No. 1] at 1. Shortly thereafter, NOW filed a motion to dismiss in this Court arguing that CLP lacked standing and that its DCCPPA claims are preempted by federal law. Def.'s Mot. to Dismiss at 1. CLP responded to the motion to dismiss, Pl.'s Resp. in Opp'n to Def.'s Mot. to Dismiss [ECF No. 9], and moved to remand the action to D.C. Superior Court for lack of subject-matter jurisdiction, Pl.'s Mot. to Remand [ECF No. 11]. CLP's motion to remand insists that the amount in controversy is under $75,000 and thus insufficient to establish diversity jurisdiction, and asserts that its DCCPPA claim does not necessarily raise an issue of federal law. Id. at 4, 9.
An action originally filed in state court "may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending," when it falls within the federal court's original jurisdiction. 28 U.S.C. § 1441(a). Because of the significant federalism concerns involved, this Court strictly construes the scope of its removal jurisdiction. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 107-09 (1941); see also Bhagwanani v. Howard Univ., 355 F. Supp. 2d 294, 297 (D.D.C. 2005); Johnson-Brown v. 2200 M Street LLC, 257 F. Supp. 2d 175, 177 (D.D.C. 2003).
When removal is challenged in a motion to remand, the party seeking to remain in federal court bears the burden of establishing federal jurisdiction. See Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); Bhagwanani, 355 F. Supp. 2d at 297; In re Tobacco/Gov'tal Health Care Costs Litig., 100 F. Supp. 2d 31, 35 (D.D.C. 2000). "When it appears that a district court lacks subject matter jurisdiction over a case that has been removed from a state court, the district court must remand the case." Republic of Venez. v. Philip Morris Inc., 287 F.3d 192, 196 (D.C. Cir. 2002) (emphasis added); see also Bhagwanani, 355 F. Supp. 2d at 297. And "the court must resolve any ambiguities concerning the propriety of removal in favor of remand." Johnson-Brown, 257 F. Supp. 2d at 177.
A federal court has diversity jurisdiction over an action when the amount in controversy exceeds $75,000, exclusive of interest and costs, and the action is between "citizens of different states." 28 U.S.C. § 1332(a). CLP and NOW agree, and the Court finds, that the parties are completely diverse: CLP is a citizen of Colorado, and NOW is a citizen of Illinois. Def.'s Notice¶ 12; Pl.'s Mot. to Remand at 4. CLP, however, disputes NOW's assertion that the amount-in-controversy requirement has been met. Pl.'s Mot. to Remand at 4.
When a plaintiff contests a defendant's assertion regarding the amount in controversy, "both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied." 28 U.S.C. § 1446(c)(2)(B); Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014). Despite the clear language of Section 1446(c)(2)(B) and the Supreme Court's decision in Dart Cherokee, there is some disagreement among the parties as to the proper evidentiary standard for assessing the amount in controversy. CLP cites Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994 (9th Cir. 2007), a Ninth Circuit case predating Dart Cherokee, for the proposition that the defendant must establish "to a legal certainty" that the amount in controversy is met. Pl.'s Mot. to Remand at 4 (citing Lowdermilk, 479 F.3d at 999). But the Ninth Circuit has since recognized that Lowdermilk's legal-certainty standard is incompatible with Dart Cherokee. See Arias v. Residence Inn by Marriot, 936 F.3d 920, 922 (9th Cir. 2019). And courts in this District have specifically rejected the use of a legal-certainty standard. See, e.g., Breathe DC v. Santa Fe Nat. Tobacco Co., 232 F. Supp. 3d 163, 170 (D.D.C. 2017); M3 USA Corp. v. Haunert, No. 20-cv-3784 (DLF), 2021 WL 1894847, at *1 n.1 . Nevertheless, CLP's mistaken citation of the now-obsolete Lowdermilk standard does not doom its motion to remand; even applying the correct preponderance-of-the-evidence standard, NOW has not met its burden to establish that the amount in controversy is met.
NOW's theory of diversity jurisdiction erroneously relies on aggregating the total value of its costs to comply with all relief sought by CLP to meet the $75,000 amount-in-controversy requirement. NOW's position is inconsistent with the so-called "non-aggregation principle," grounded in the Supreme Court's holding that "the separate and distinct claims of two or moreplaintiffs cannot be aggregated in order to satisfy the jurisdictional amount requirement" except when "two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest." Snyder v. Harris, 394 U.S. 332, 335 (1969); Zahn v. Int'l Paper Co., 414 U.S. 291, 294 (1973). Courts in this District have applied this non-aggregation principle in DCCPPA cases, even "when separate and distinct claims are asserted on behalf of a number of individuals" in "a representative action." Breakman v. AOL LLC, 545 F. Supp. 2d 96, 103 (D.D.C. 2008) (internal citations omitted); see also Breathe DC, 232 F. Supp. 3d at 171; Nat'l Consumers League v. Flowers Bakeries, LLC, 36 F. Supp. 3d 26, 32 (D.D.C. 2014). In this case, then, only the relief to which CLP would be individually entitled—not whatever might accrue on behalf of the public CLP purports to represent in pressing its claims—counts toward...
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