E-Alert Case Updates

Class Action Defendant’s Removal to Federal Court Fails to Satisfy Amount in Controversy Requirement in Consumer Protection Procedures Act Case

Melanie Sloan v. Soul Circus, Inc.
(January 2016) United States District Court for the District of Columbia
by Matthew J. McCloskey, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2015cv1389-23

In a recent case, the United States District Court for the District of Columbia held that the Defendant failed to establish that Plaintiff’s claims met the amount in controversy requirements set forth in 28 U.S.C. § 1332(a) and (d).

Plaintiff, Melanie Sloan, who described herself as committed to the proper care of animals and refused to patronize any businesses that displayed animals that could not be humanely kept in captivity, purchased a ticket to attend a circus operated by Defendant, Soul Circus, Inc. Plaintiff’s choice to attend the circus was based primarily on Defendant’s “Animal Rights Policy Statement,” which represented that Defendant did not tolerate any form of cruelty or mistreatment of animals, and that its animal vendors had never been cited for animal abuse. Prior to the performance, however, Plaintiff learned that Defendant contracted with outside vendors to display animals at its circus, and some of these vendors had, in fact, been cited for animal abuse while touring with Defendant. Consequently, Plaintiff sued Defendant, in the Superior Court for the District of Columbia, on behalf of herself and a class of all District of Columbia residents who had purchased tickets to attend Defendant’s circus within the preceding three (3) years. Plaintiff alleged six (6) separate violations of the District of Columbia Consumer Protection Procedures Act (“CPPA”) relating to the Animal Rights Policy Statement, which Plaintiff claimed contained false or misleading statements. Plaintiff sought the applicable CPPA remedies: statutory damages of $1,500 per violation; attorney’s fees; punitive damages; and an injunction against Defendant’s practices.

Defendant removed the suit to federal court pursuant to 28 U.S.C. § 1332(a), alleging that there was complete diversity amongst the parties and that the amount in controversy exceeded $75,000. As to the amount in controversy, Defendant asserted that, based on the allegations of the complaint, Plaintiff must have viewed the Animal Rights Policy Statement at least 51 times, and that each time constituted a separate violation of the CPPA. If each violation were to result in damages of $1,500, the amount in controversy would exceed $75,000.

In response to removal, Plaintiff filed a motion to remand arguing that the amount in controversy did not exceed $75,000. Defendant opposed that motion, and also added an argument that jurisdiction was proper pursuant to 28 U.S.C. § 1332(d). In support, it produced an affidavit estimating the size of the class at more than 100 members based on ticket sales in the District of Columbia for the relevant time period. In any event, Defendant argued that Plaintiff’s claims alone put more than $75,000 in controversy.

Plaintiff responded in two ways. First, she argued that Defendant’s estimate of the size of the class was ambiguous, speculative, and did not address whether all of the ticket-buyers from the District of Columbia viewed the allegedly offending statements in the Animal Rights Policy Statement. Second, she contended that there was no basis to assume that a consumer could recover separate damages for simultaneous CPPA violations occurring within a single business transaction.

Judge Rudolph Contreras, writing for the Court, agreed with Plaintiff and remanded the case to Superior Court. The Court first noted that, in considering whether the amount in controversy requirement of 28 U.S.C. § 1332(a) has been met, the claims of multiple plaintiffs cannot be aggregated unless plaintiffs seek to enforce a “right in which they have a common and undivided interest.” This rule applies for violations of the CPPA alleged by individual consumers and even in cases involving a class action. Thus, the only relevant issue in this dispute was whether the amount in controversy between Ms. Sloan and Defendant exceeded $75,000.

In that regard, the Court turned to the specific damages sought by Plaintiff. With regard to the statutory damages of $1,500, Defendant argued that each time Ms. Sloan viewed the Animal Rights Policy Statement, there was a separate violation of the CPPA. The Court disagreed. Relying on the language of the statute, it concluded that violations of the CPPA only occur when a consumer purchases an item in reliance on allegedly false or misleading statements. Consequently, the Court rejected Defendant’s contention that Plaintiff had alleged at least 51 separate violations of the CPPA. Because Plaintiff had only purchased four (4) tickets, the amount in controversy for those violations was only $6,000.

Although Defendant attempted to reach the remaining way to $75,000 through reference to other damages sought by Plaintiff, the Court rejected its arguments. Regarding attorney’s fees, although such fees do count towards the amount in controversy, Defendant’s arguments in this regard were entirely speculative. Defendant simply failed to point to any evidence demonstrating that it was a “legal certainty” that the attorney’s fees would exceed or even approach $75,000. Similarly, Defendant’s contention with respect to the amount of punitive damages was also overly speculative. Defendant’s argument rested primarily on the assertion that Plaintiff’s claims were broad and it was reasonable to assume that such broad claims would likely double the amount in controversy. Even accepting that such an argument could be sustained, the Court noted that doubling the $6,000 value of the CPPA claims did not establish the requisite amount in controversy. Finally, the Court rejected Defendant’s attempts to assign a value to the injunctive relief sought by Plaintiff. As a result, it held that Defendant had failed to establish jurisdiction under 28 U.S.C. § 1332(a).

The Court then addressed whether jurisdiction was proper pursuant to 28 U.S.C. § 1332(d), and thus was tasked with determining whether the total amount in controversy between all class members exceeded $5,000,000. In this regard, the Court agreed with Plaintiff that Defendant’s attempt to quantify the number of class members through reference solely to ticket sales was misguided, as that did not take into account whether each purchaser saw the allegedly false and misleading communications in the Animal Rights Policy Statement. Because Defendant therefore provided no reliable basis from which to estimate the amount in controversy, the Court concluded that Defendant had not met its burden to establish jurisdiction was proper. Consequently, it granted Plaintiff’s motion to remand.