Lokey v. CVS Pharmacy, Inc.
| Decision Date | 17 September 2020 |
| Docket Number | Case No. 20-cv-04782-LB |
| Court | U.S. District Court — Northern District of California |
| Parties | DANIELLE LOKEY, Plaintiff, v. CVS PHARMACY, INC., Defendant. |
Re: ECF No. 18
In this putative class action, plaintiff Danielle Lokey challenges defendant CVS Pharmacy's sale of its CVS-branded infant pain-and-fever medicine at a higher price than its CVS-branded child pain-and fever medicine, even though the ingredients in the two products are the same, in violation of California consumer-protection laws.1 CVS removed the case to federal court, asserting diversity jurisdiction under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d)(2), and as to the named plaintiff under 28 U.S.C. § 1441(b).2 The plaintiff moved to remand on the ground that CVS did not establish the jurisdictional amount in controversy underCAFA and for the individual plaintiff.3 The court denies the motion because CVS established the amount in controversy.
CVS is a Rhode Island corporation that conducts business in California.4 It markets and sells its CVS-branded products in its stores and online — including liquid-acetaminophen pain reliever and fever reducer — under the "CVS Health" label.5 Named plaintiff Danielle Lokey is an individual and resident of California.6 She "had reason to purchase Defendant's Infants' liquid acetaminophen products on several occasions between April 2016 and the present and has done so."7 She seeks to represent a class of California citizens "who purchased CVS-branded Infants' liquid acetaminophen for a non-commercial use" during the applicable time period.8 She alleges that CVS deceived class members by marketing and selling identical liquid acetaminophen product as two unique medicines — infants' acetaminophen and children's acetaminophen — and charging a higher price (as much as two and a half times as much) for the infants' product.9 She and other "parents, caregivers and other reasonable consumers have been misled into believing that they must purchase the far-more-expensive Infants' product for children under two," and CVS "counts on" the fact that "consumers shopping for products to be given to infants are very cautious about what products [they buy]"10 CVS allegedly was aware that a price differential itself would be viewed by consumers as conveying "important information regarding the relative quality andsafety of the two products."11 The plaintiff and members of the putative class "would not have purchased the Infants' acetaminophen if [they] had known that the advertising and representations [about it] were false and misleading."12
CVS's notice of removal alleged jurisdictional facts of a proposed class of at least 100 members, CAFA minimal diversity, and an amount in controversy of more than $5 million based on restitution (grounded on sales figures of more than $2 million, attorney's fees of more than $500,000 (based on 25 percent of the common fund), and the costs of the injunction).13
In support of its opposition to the plaintiff's motion to remand, CVS submitted a declaration from Hilary Molengraff, CVS's Director of Product Development — Store Brand Healthcare, about CVS's retail sales of the product.14 Total in-store California retail sales of CVS Infants' acetaminophen from 2016 through August 15, 2020 were $2,275,251, and total online sales shipped to California from 2017 to the "present" (the declaration is dated August 15, 2020) were $3,547.44, for total sales of $2,278,798.44.15 CVS does not sell any acetaminophen products with state-specific packaging, meaning that "any injunctive relief affecting the packaging of the Infants' product would have effects nationwide, and not just in California[.]"16 To comply with the plaintiff's suggested injunctive relief, CVS would "lose the value of non-compliant Infants' product that is currently in stock:17 18 19 20 The costs to recall the product on hand in stores and in distribution centers would be $1,175,731.21 The manufacturer of the product keeps a 90-day supply on hand, ready to ship, and a supply of finished labels and packaging.22 The value of that stock is $130,975, and the cost of destruction is $384,263.23 In total, "taking into account the fact that for CVS to comply with any potential injunctive relief affecting product packaging will affect merchandise nationwide, the cost of compliance totals at least $3,888,363.00."24
CVS also submitted the plaintiff's counsel's approved 2016 hourly rates in an earlier class action of $825 for Eric Grover and Scot Bernstein and $550 for Rachael Jung.25
On May 11, 2020, the plaintiff filed her complaint in state court.26 She claims violations of California's false-advertising law (Cal. & Prof. Code §§ 17500, et seq.), unfair-competition law(Cal. Bus. & Prof. Code §§ 17200 et seq.), and Consumer Legal Remedies Act (Cal. Civ. Code §§ 1750 et seq.).27 The remedies in the Prayer for Relief include the following: (1) "[a]n order enjoining Defendant from engaging in the acts and practice complained of in this complaint;" (2) "[d]isgorgement of profits and restitution and restoration of all costs incurred, sums of property unlawfully withheld, and losses caused by the acts and practices that violated [the] California Business & Professions Code;" (3) "[e]quitable relief arising from the acts and practices that violate California Civil Code § 1770;" (4) payment of costs of the suit; (5) payment of statutory attorney's fees and costs; (6) "an award of pre-and post-judgment interest to the extent allowed by the law;" and (7) "[s]uch other or further relief as the Court may deem proper."28 The complaint does not mention an amount in controversy.29
On July 16, 2020, CVS timely removed the lawsuit (within 30 days of service) to federal court, alleging diversity jurisdiction under CAFA because the amount in controversy exceeds $5 million and for the plaintiff individually because the amount in controversy exceeds $75,000.30 28 U.S.C. §§ 1332(d), 1446(b)(1). The plaintiff moved to remand on the ground that CVS did not establish the amount in controversy, either under CAFA or for the plaintiff individually.31 CVS opposed the motion and submitted declarations about the amount in controversy.32 The plaintiff replied but did not submit any additional jurisdictional facts.33 The court held a hearing on August 17, 2020.
Under 28 U.S.C. § 1441(a), a defendant may remove a case to federal court if the plaintiff could have filed the case here, meaning, if the court has federal question or diversity jurisdiction.Caterpillar v. Williams, 482 U.S. 386, 392 (1987). Because district courts are courts of limited jurisdiction, courts construe the removal statute strictly and reject federal jurisdiction if there is any doubt as to the right of removal. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The removing party has the burden of establishing the court's jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988).
For diversity jurisdiction generally, the amount in controversy must "exceed[] the sum or value of $75,000, exclusive of interest and costs," and there must be complete diversity of citizenship between opposing parties. 28 U.S.C. § 1332(a)(1). "The amount in controversy includes claims for general and special damages (excluding costs and interest), attorney[']s fees if recoverable by statute or contract, and punitive damages if recoverable as a matter of law." J. Marymount, Inc. v. Bayer Healthcare, LLC, No. C 09-03110 JSW, 2009 WL 4150126, at *4 (N.D. Cal. Nov. 30, 2009) (quotation omitted).
Where "it is unclear or ambiguous from the face of a state-court complaint whether the requisite amount in controversy is pled, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold." Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1121-22 (9th Cir. 2013) (cleaned up). The court resolves all ambiguities in favor of remand. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009).
Under CAFA, federal district courts have original jurisdiction over class actions where (1) the amount in controversy exceeds the sum or value of $5 million, exclusive of interest and costs, (2) the class contains 100 or more putative class members, and (3) there is at least minimal diversity between the parties. 28 U.S.C. § 1332(d). The $5-million jurisdictional minimum may be based on aggregation of the claims of all potential class members. Id.
A defendant's notice of removal under CAFA need include only "a plausible allegation that the amount in controversy exceeds the jurisdictional threshold," and not evidentiary submissions. Ibarra v. Manheim Inv., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (quoting Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014)). Evidentiary submissions are not required unless the plaintiff contests, or the court questions, the...
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