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Morgan v. Gay

December 15, 2006

SARAH MORGAN, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED
v.
DENNIS W. GAY; GINA GAY; BASIC RESEARCH, L.L.C.; BAN, L.L.C.; KLEIN-BECKER, USA L.L.C.; COVAXIL LABORATORIES, L.L.C.; CARTER-REED COMPANY, L.L.C., A/K/A THE CARTER-REED COMPANY; A.G. WATERHOUSE, L.L.C.; ALPHAGENBO TECH, L.L.C.; BODY FORUM, L.L.C.; BODY INNOVENTIONS, L.L.C.; COVARIX, L.L.C.; BYDEX MANAGEMENT, L.L.C.; NUTRASPORT, L.L.C; SOVAGE DERMALOGIC LABORATORIES, L.L.C.; WESTERN HOLDING, L.L.C.; GEORGE EVAN BYBEE; DANIEL B. MOWREY, PH.D; NATHALIE CHEVREAU, PH.D; MITCHELL K. FRIEDLANDER; MICHAEL MEADE, APPELLANTS



On Appeal from the United States District Court for the District of New Jersey District Court No. 06-cv-01371. District Judge: The Honorable Garrett E. Brown, Jr.

The opinion of the court was delivered by: Smith, Circuit Judge

PRECEDENTIAL

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) November 27, 2006

Before: BARRY, SMITH, and NYGAARD, Circuit Judges.

OPINION

I.

This appeal requires us for the first time to interpret certain provisions of the newly-enacted Class Action Fairness Act of 2005 (CAFA), Pub. L. No. 109-2, 119 Stat. 4 (2005) (codified in scattered sections of 28 U.S.C.). Specifically, after the defendants removed the case from state court to the District Court, the plaintiff moved to remand to state court.*fn1 That motion was granted. Because we agree that the District Court properly placed the burden of proof on the defendants to establish federal subject matter jurisdiction under CAFA, and appropriately determined that the defendants failed to prove that the plaintiff's claims exceeded CAFA's amount in controversy requirement of $5 million, we will affirm.

II.

We repeat verbatim the District Court's recitation of the facts of this case because of its brevity and accuracy:

This civil action is based upon false advertising claims by New Jersey purchasers of the skin cream StriVectin-SD. Plaintiff asserts violations of the New Jersey Consumer Fraud Act, N.J.C.A. 56:8-1, et seq., as well as claims under common law fraud, unjust enrichment and breach of express and implied warranties. Originally, the instant action was filed as a nationwide class with representatives in New York, Ohio, Indiana, Mississippi, Texas, New Jersey, Illinois and Vermont. Plaintiff's chosen forum for the original Complaint was the United States District Court, Southern District of New York. At that time, Defendants moved to transfer the action to the District of Utah, based upon a related case previously filed in that district and because all Defendants maintained residences and/or principal places of business in Utah. Defendants' venue motion was ultimately granted.

Thereafter, Plaintiff voluntarily dismissed the action and re-filed a modified, New Jersey law-based Complaint in the Superior Court of New Jersey, Law Division, Monmouth County on January 30, 2006. On March 22, 2006, Defendants removed this action pursuant to 28 U.S.C. §§ 1441 and 1453 based on federal diversity jurisdiction pursuant to 28 U.S.C. § 1332. On April 20, 2006, Plaintiff filed this Motion to Remand back to New Jersey Superior Court. On May 26, 2006, Defendants moved to transfer the case to the United States District Court, District of Utah (Central Division).

The present Complaint addresses the amount in controversy as follows: "this action ... seeks ... trebled compensatory damages; including but not limited to a refund of the purchase price that each member of the class paid for StriVectin-SD; ... punitive damages; ... injunction; interest; court costs; and attorneys fees; however, the total amount of such monetary relief for the class as a whole shall not exceed $5 million in sum or value."

Morgan v. Gay, Civ. No. 06-1371 (GEB), 2006 WL 2265302 at *1 (D.N.J. Aug. 7, 2006).

On August 7, 2006, the District Court granted the plaintiff's motion to remand to state court, concluding that the requisite amount in controversy of $5 million had not been demonstrated. The defendants then timely filed a Petition for Leave to Appeal on August 16, 2006, as well as a motion for a stay of the Remand Order pending appeal. The District Court granted the stay that same day. This Court then granted the defendants leave to appeal. See Morgan v. Gay, 466 F.3d 276 (3d Cir. 2006). Pursuant to § 1453(c)(2), we have 60 days from October 16, 2006 to decide the appeal. See, e.g., Miedema v. Maytag Corp., 450 F.3d 1322, 1326-27 (11th Cir. 2006); Braud v. Transp. Serv. Co. of Illinois, 445 F.3d 801, 803 n.2 (5th Cir. 2006). But see Patterson v. Dean ...


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