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Steven Robinson On Behalf of Himself and All Others v. Hornell Brewing Co.

December 12, 2012


The opinion of the court was delivered by: Simandle, Chief Judge:



Before the Court is Plaintiff Robinson's motion to dismiss for lack of subject matter jurisdiction [Docket Item 79] and Defendants' cross-motion for partial summary judgment. [Docket Item 85.] Plaintiff filed this lawsuit as a putative class action under Fed. R. Civ. P. 23(b)(2), alleging that he, and other citizens of New Jersey, were induced to buy Defendants' Arizona Brand beverages because of misleading labels touting "All Natural" ingredients, when the beverages contained High Fructose Corn Syrup ("HFCS"), which Plaintiff asserts is not a natural ingredient. The Court denied Plaintiff's motion to certify because Plaintiff lacked standing [Docket Items 70 & 71], and the Third Circuit denied Plaintiff's petition for permission to appeal pursuant to Rule 23(f). [Docket Item 76.]

Plaintiff now seeks a dismissal without prejudice, arguing that the Court lacks subject matter jurisdiction over the action after denying the certification of the class. Defendants oppose the motion and also file a cross-motion for partial summary judgment on Plaintiff's claims for injunctive relief. The key threshold inquiry for the Court is whether the Court retains jurisdiction after denying class certification for lack of standing under the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. 109-02, 119 Stat. 4, codified in relevant part at 28 U.S.C. § 1332(d). For the reasons explained below, the Court will grant the motion to dismiss for lack of subject matter jurisdiction, and thus must deny the cross-motion for partial summary judgment.

II. Background

The facts of this case were described in Robinson v. Hornell Brewing Co., No. 11-2183, 2012 WL 1232188 at *1-*2 (D.N.J. Apr. 11, 2012), and will be recounted here only in relevant part.

A. Facts

Plaintiff asserts that for more than a decade, he was induced to buy bottles of Arizona beverages that contained HFCS because of labeling that misleadingly described the ingredients as "All Natural." [Pl. Mot. at 2-3.] In his Second Amended Complaint ("Complaint"), Plaintiff describes four occasions on which he purchased Defendants' beverages, at prices ranging from $1.39 to $2.25 per 20 oz. bottle, and asserts that he did so "[o]n numerous other occasions over the course of the years preceding the filing . . . ." [Compl. ¶¶ 51-52, 58.] Plaintiff claims that but for the labeling he would not have purchased the products. Robinson, 2012 WL 1232188, at *2. When Plaintiff discovered that the products contained HFCS, he became disillusioned with Defendants, and stated that he would not purchase Arizona beverages again, regardless of whether Defendants change the labels. Id. (quoting Plaintiff's Response to Interrogatory No. 36 ("Plaintiff states that due to his current lack of trust regarding Defendants and their products, there are no changes [to Arizona product labeling] that would be sufficient for Plaintiff to purchase Arizona Products in the future.")).

B. Procedural History

Plaintiff brought this suit in federal court as a putative class action, seeking certification under Rule 23(b)(2) ("A class action may be maintained if Rule 23(a) is satisfied and if . . . (2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole . . . ."). [Docket Items 1 & 41; Fed. R. Civ. P. 23(b)(2).] In his Complaint, Plaintiff alleged violations of the New Jersey Consumer Fraud Act ("NJCFA"), N.J. Stat. Ann. § 56:8-2 (2006), ("Count I"), and brought claims for unjust enrichment and common law restitution ("Count II"), breach of express warranty ("Count III"), and breach of implied warranty of merchantability ("Count IV"). [Second Am. Compl. ¶¶ 62-84.] Plaintiff requested various injunctive and declaratory remedies. Id. ¶ 85(a)-(g). He also requested "compensatory damages to Plaintiff," reimbursement to "Plaintiff in an amount equal to his ascertainable loss," treble damages "to Plaintiff" under the NJCFA, and attorneys' fees and costs "associated with this litigation." Id. ¶ 85(h)-(k). The Complaint premised jurisdiction on 28 U.S.C. § 1332(d), alleging diversity of citizenship and an aggregate amount in controversy exceeding $5 million. [Id. ¶¶ 13-15.]

The Court denied Plaintiff's motion to certify the class because Plaintiff lacked standing to seek injunctive relief. Robinson, 2012 WL 1232188 at *7. The Court reasoned that because Plaintiff testified and stated in his answers to interrogatories that he had no intention of purchasing Arizona products again, he failed to show a reasonable likelihood of future injury from the Defendants' conduct, as required under McNair v. Synapse Group Inc., 672 F.3d 213 (3d Cir. 2012) and City of Los Angeles v. Lyons, 461 U.S. 95 (1983). Id. at *4. The Court rejected Plaintiff's arguments that (1) merely seeing the label "All Natural" on products that Plaintiff did not purchase would harm him in some way and (2) Plaintiff yet may be misled by the "All Natural" label and induced into purchasing Arizona products again. Id. at *5. Those proposed future injuries were "too hypothetical or conjectural to create standing to pursue injunctive relief on behalf of the proposed class. . . . Plaintiff cannot plausibly demonstrate that he is likely to be fooled again into purchasing Defendants' products." Id. at *5-*6. The Court concluded Plaintiff lacked Article III standing to represent the class on claims seeking injunctive relief. Id. at *7. The Third Circuit denied Plaintiff's petition for permission to appeal the denial of certification. [Docket Item 76.]

III. Discussion

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Plaintiff filed the present motion to dismiss for lack of subject matter jurisdiction. [Docket Item 79 ("Pl. Mot. Br.").] He argues that because this Court determined he lacked Article III standing to pursue claims for injunctive relief, the Court must dismiss the action. [Id. at 5.] Plaintiff adds that the Court's original jurisdiction was premised solely upon CAFA, and his individual damages claim did not exceed $75,000 at the time his Complaint was filed, and therefore he cannot meet the diversity jurisdiction requirements of 28 U.S.C. § 1332(a). [Id.]

Plaintiff characterizes his damages claims as "merely supplemental to the class claims" and requests they be dismissed under 28 U.S.C. § 1367(c)(3), which permits district courts to decline to exercise supplemental jurisdiction over a state law claim if the court has dismissed all claims over which it had original jurisdiction. [Id. at 5-6.] Plaintiff urges the Court to exercise its discretion to dismiss the claims because, as the Court noted in Robinson, 2012 WL 1232188, at *7, McNair appears to preclude victims of consumer fraud from bringing class actions for injunctive relief under Rule 23(b)(2), and Plaintiff argues this result conflicts with the New Jersey statute, which permits equitable relief. [Pl. Mot. Br. at 6.] Finally, Plaintiff requests the dismissal to be without prejudice, because both a denial of class certification and dismissal for lack of subject matter jurisdiction are not adjudications on the merits. [Id. at 7.]

Defendants oppose the motion, arguing that the allegations of the Complaint control the question of jurisdiction, and Plaintiff's claim for treble damages, on behalf of himself and the class, exceed $5 million and therefore the Court has jurisdiction under CAFA. [Def. Opp'n at 13.] The damages claims represent a live controversy and jurisdiction exists, regardless of the denial of class certification and the inability of the Plaintiff to pursue injunctive relief as a class. [Id. at 19.] Defendants further argue that, although the Third Circuit has not ruled on the issue, federal courts have reached a consensus that CAFA jurisdiction continues after denial of class certification. [Id. at 14-15.] Defendants argue that the Court has original jurisdiction under CAFA for any "class action," which is defined as "any civil action filed under rule 23 of the Federal Rules of Civil Procedure . . . ." [Id. at 16] Therefore, because the action was filed under Rule 23, Defendants assert that the Court has jurisdiction over the action, and if the Court had jurisdiction at the time of filing, the denial of class certification should not divest the Court of jurisdiction. [Id. at 16-17.] Ruling otherwise would enable a game of litigation "ping-pong" and "trigger a whole new round of litigation in state court on the same issues . . . defeat[ing] the purpose of CAFA . . . ." [Id. at 18.]

Defendants present an alternative argument: that the Court has jurisdiction under § 1332(a), because there is complete diversity and, at the time of filing, the amount in controversy exceeded $75,000. [Id. at 21.] Defendants cite Shah v. Hyatt Corp., 425 Fed. Appx. 121 (3d Cir. 2011) for the proposition that the Court should consider diversity jurisdiction in addition to CAFA jurisdiction before dismissing the claims. [Id. at 21-22.] Defendants argue that the court should take into account (1) treble damages claimed under the NJCFA, (2) attorneys' fees and costs, and (3) "the value of the object of the litigation" for declaratory or injunctive relief, when determining amount in controversy. [Id. at 23-24.] Defendants assert that Plaintiff has the burden to prove, to a legal certainty, that the amount in controversy cannot exceed $75,000, and that Plaintiff has not offered any proof that he cannot recover the jurisdictional amount.*fn1 [Id. at 24-25.]

Because the Court has jurisdiction, Defendants argue, dismissing claims under § 1367(c) is improper. [Id. at 27-28.]

Instead, Defendants request partial summary judgment on claims for injunctive relief. [Id. at 29-32.] The Court will address the cross-motion ...

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