Case 2:22-cv-02453-ODW-RAO Document 24 Filed 08/09/22 Page 1 of 7 Page ID #:136

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6 7 United States District Court 8 Central District of California 9 10 Case № 2:22-cv-02453-ODW (RAOx) 11 CLIVE LEWIS, on behalf of himself and others similarly situated, 12 Plaintiff, ORDER DISMISSING ACTION SUA 13 SPONTE FOR LACK OF SUBJECT v. MATTER JURISDICTION (CAFA 14

ALBERTONS COMPANIES, INC., AMOUNT IN CONTROVERSY)

15 Defendant. 16 17 I. INTRODUCTION 18 Plaintiff Clive Lewis filed this putative class action against Defendant 19 Albertsons Companies, Inc., alleging that Albertsons understated the sodium content 20 in its Signature Select brand of club soda (the “Product”). (Compl. ¶ 1, ECF No. 1.) 21 On April 15, 2022, the Court announced a facial and factual inquiry into subject 22 matter jurisdiction and ordered Lewis to show cause why the case should not be 23 dismissed for lack of subject matter jurisdiction. (Order to Show Cause (“OSC”), 24 ECF No. 12.) The Court directed Lewis to submit evidence demonstrating that the 25 amount in controversy in this case exceeds $5 million as is required for jurisdiction 26 under the Class Action Fairness Act (“CAFA”). (Id.) The Court received and 27 reviewed Lewis’s Response to the OSC. (Pl.’s Resp. (“Response”), ECF No. 13.) For 28 Case 2:22-cv-02453-ODW-RAO Document 24 Filed 08/09/22 Page 2 of 7 Page ID #:137

1 the reasons that follow, the Court finds that Lewis fails to demonstrate that the amount 2 in controversy exceeds $5 million and accordingly DISMISSES the case. 3 II. BACKGROUND 4 Lewis alleges that Albertsons’s twelve-pack of the Product has fraudulent and 5 misleading outer packaging because the packaging states that the Product has 0 mg of 6 sodium while the individual cans state the Product contains 40 mg of sodium per can. 7 (Compl. ¶¶ 1, 2.) Lewis asserts Albertsons is misleading consumers because they 8 cannot see the true sodium content until after they purchase the Product and remove 9 the outer packaging. (Id. ¶ 2.) Accordingly, Lewis contends, the misleading 10 packaging induced consumers to purchase the Product over competitor products 11 because they “believed they were getting a product without sodium, which millions of 12 American consumers, either on the advice of their physicians or otherwise, need to 13 limit or omit from their diet.” (Id. ¶ 3.) Lewis alleges that the Product was sold with 14 this misleading packaging “[d]uring most of 2021” until it was discontinued in 15 September 2021. (Id. ¶¶ 3, 7.) 16 Lewis asserts five counts against Albertsons, under California law: (1) violation 17 of the Consumer Legal Remedies Act; (2) violation of state false advertising law 18 (“FAL”); (3) violation of state unfair competition law (“UCL”); (4) negligent 19 misrepresentation; and (5) fraud and deceit. (See generally Id.) Lewis seeks relief on 20 behalf of himself and a nationwide class. 21 III. LEGAL STANDARD 22 Federal courts have subject matter jurisdiction only as authorized by the 23 Constitution and Congress, U.S. Const. art. III, § 2, cl. 1; Kokkonen v. Guardian Life 24 Ins. Co. of Am., 511 U.S. 375, 377 (1994), and have an independent obligation to 25 determine whether subject matter jurisdiction exists, even when no party challenges it, 26 Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010). CAFA vests original jurisdiction in 27 district courts to hear civil actions “in which the matter in controversy exceeds the 28 sum or value of $5,000,000, exclusive of interest and costs, and is a class action in

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1 which . . . any member of a class of plaintiffs is a citizen of a State different from any 2 defendant.” 28 U.S.C. § 1332(d)(2)(A); Adams v. W. Marine Prods., Inc., 958 F.3d 3 1216, 1220 (9th Cir. 2020). 4 A complaint filed in federal court must contain only “a plausible allegation that 5 the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin 6 Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014). But when a party contests, or 7 the court questions, another party’s allegations concerning the amount in controversy, 8 the party claiming jurisdiction submit proof and the court decides whether it has 9 proven the amount in controversy is met by a preponderance of the evidence. Id. 10 at 88–89. These procedures apply to the amount in controversy requirement in CAFA 11 cases to the same extent they apply to ordinary diversity cases.1 Ibarra v. Manheim 12 Invs., 775 F.3d 1193, 1197 (9th Cir. 2015). 13 IV. DISCUSSION 14 This jurisdictional inquiry is about whether the amount in controversy exceeds 15 $5,000,000, as required by CAFA. 28 U.S.C. § 1332(d)(2)(A). The amount in 16 controversy is simply “the amount at stake in the underlying litigation.” Jauregui, 17 2022 WL 804148, at *4 (quoting Theis Rsch., Inc. v. Brown & Bain, 400 F.3d 659, 18 662 (9th Cir. 2005)). It “does not mean likely or probable liability; rather, it refers to 19 possible liability.” Greene v. Harley-Davidson, Inc., 965 F.3d 767, 772 (9th Cir. 20 2020); see also Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010) 21 (noting that the amount in controversy is “an estimate of the amount that will be put at 22 issue in the course of the litigation” (citing McPhail v. Deere & Co., 529 F.3d 947, 23 956 (10th Cir. 2008))). 24 25

26 1 However, the presumption against jurisdiction that attaches in cases removed on diversity does not apply in CAFA cases. Jauregui v. Roadrunner Transp. Servs., Inc., --- F.4th ---, 2022 WL 804148, 27 at *3 (9th Cir. Mar. 17, 2022). Instead, “CAFA’s provisions should be read broadly, with a strong 28 preference that interstate class actions should be heard in a federal court if properly removed . . . .” Id. (quoting Dart Cherokee, 574 U.S. at 89).

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1 Here, Lewis fails to make a sufficient factual showing of the amount in 2 controversy. Lewis incorrectly bases his estimated damages on the total purchase 3 price of the Product rather than the fraction of the purchase price that consumers 4 overpaid when buying soda that contained 40 mg of sodium rather than 0 mg of 5 sodium. Moreover, Lewis’s conclusory reference to attorneys’ fees and punitive 6 damages is vague and unsubstantiated and wholly fails to fill the gap between the 7 actual damages Lewis does place in controversy, on the one hand, and the requisite 8 $5 million amount in controversy, on the other. 9 In his Response to the Court’s OSC, Lewis asserts that the amount in 10 controversy is met in restitution alone. (Response 3–4.) Without any substantiation 11 whatsoever, Lewis contends that the Product “retails in California for $3.79 per unit,” 12 and therefore, “the amount in controversy would exceed $5 million if each of the 13 2,200 stores, on average, sold 600 units of club soda over the course of, say, nine 14 months.” (Id. at 3.) When multiplying this amount of units sold by the number of 15 stores and by the price per unit, Lewis’s total amount in controversy is $5,002,800. 16 Even if Lewis did provide support for the aforementioned values and the Court 17 accepts them as true, Lewis’s calculations are problematic in two principal ways. 18 First, Lewis cites to the purchase price of the Product in California but relies on 19 purchases made in thirty-five different states. (See id. (“Plaintiff believes that the 20 Signature Select Club Soda brand is available at most, if not all, of over 2,200 stores 21 across 34 states and the District of Columbia.”).) The Product’s purchase price was 22 likely lower in at least some of the thirty-four states outside of California. This 23 observation is material given that Lewis’s calculated restitution damages exceed 24 $5 million by only a very small amount. For example, if the true average purchase 25 price of a twelve-pack of the Product is just 2.7%, or ten cents less than the price of 26 the product in California, then the amount in controversy does not, in fact, exceed 27 $5 million. This circumstance is highly likely given the high cost of living in 28 California. And this is the less egregious of the two errors.

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1 Second, the Product’s entire purchase price is an inaccurate measure of the 2 restitution that would be owed to the consumers because consumers would not be 3 entitled to the entire purchase price. Rather, they would be entitled only to the 4 fraction of the purchase price proportional to the reduction in the value of the Product 5 resulting from it containing 40 mg of sodium instead of 0 mg. See In re Vioxx Class 6 Cases, 180 Cal. App. 4th 116, 131 (2009) (noting, in the context of an FAL or UCL 7 action, that “[t]he difference between what the plaintiff paid and the value of what the 8 plaintiff received is a proper measure of restitution.”) Thus, unless Lewis can allege 9 and demonstrate that the Product with 40 mg of sodium has no value whatsoever— 10 which he does not and likely cannot—Lewis cannot rely on the full purchase price for 11 his restitution calculations. Thus, in order to estimate the total restitution, the Court 12 must calculate the amount by which the value of the Product is reduced from having a 13 higher sodium content than advertised. Lewis does not make any allegations in his 14 Complaint, or provide any information in his Response, that would allow the Court to 15 make such a calculation. 16 Nonetheless, even if the Court assumes that the 40 mg of sodium in each unit of 17 the Product diminished its value by half, the restitution per unit would still only be 18 $1.90. This value yields $2,376,000 in total restitution, less than half of the requisite 19 $5 million. Because the Product purchase price will likely be lower in states outside 20 of California and the restitution will only be the amount in value consumers lost by 21 purchasing soda with higher sodium content, based on the current allegations and 22 information, the Court estimates that the total restitution will likely be much lower 23 than even the $2,376,000 estimate. 24 Still, Lewis contends he can demonstrate this case passes the $5 million 25 threshold if the Court considers the 25% of the compensatory damages that Lewis 26 contends would be awarded in attorneys’ fees. (Response 4 (citing Molnar v. 1-800- 27 Flowers.com, Inc., No. CV08-0542CAS (JCX), 2009 WL 481618, at *5 (C.D. Cal. 28

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1 Feb. 23, 2009).) Even if the Court applies this 25% in attorneys’ fees to the generous 2 estimate of $2,376,000, the amount in controversy is still only $2,970,000. 3 Finally, Lewis argues that the Court will likely award punitive damages, which 4 can be considered in this amount in controversy analysis. However, Lewis fails to 5 provide any estimate of the amount of punitive damages or analogize to similar cases 6 where courts awarded punitive damages. Based on the foregoing analysis, for CAFA 7 jurisdiction to exist, the punitive damages would need to amount to almost the same as 8 the presumed actual damages. Yet, Lewis has not submitted any evidence, or even 9 asserted a plausible allegation, suggesting Albertsons had the type of willfulness or 10 other wrongful intent typically required to impose such a draconian remedy. And, as 11 mentioned, Lewis does not even provide analogous cases. Accordingly, Lewis has not 12 met his burden of establishing this Court’s subject matter jurisdiction under CAFA. 13 Finally, in Lewis’s Response, he asserts that, “Since Defendant has not yet 14 responded to the Complaint, and discovery has not begun, Plaintiff can only estimate 15 the amount of damages available under a punitive damages analysis.” (Resp. 6.) 16 However, Lewis does not request jurisdictional discovery or any opportunity to 17 substantiate his speculative damages request. Thus, Lewis essentially admits that his 18 contention that the amount in controversy exceeds $5 million is based on idle 19 speculation, not on evidence or a concrete plan to marshal evidence. The Court must 20 therefore dismiss the case for lack of CAFA jurisdiction.2 21 V. CONCLUSION 22 For these reasons, the Court finds that Lewis fails in his burden to demonstrate 23 that the amount in controversy exceeds $5 million. Thus, the Court lacks subject 24 matter jurisdiction under CAFA and DISMISSES this action without prejudice. 25 26 27 2 The Court notes that dismissing this case does not appear to result in Lewis’s loss of any 28 substantive rights, and does not appear to prevent him from bringing the action back before federal court if discovery in a state action ultimately reveals a substantial basis for CAFA jurisdiction.

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1 The Court VACATES all dates and deadlines in this matter and DENIES as 2 || MOOT the pending Motion to Dismiss, (ECF No. 18). The Clerk of the Court shall 3 || close the case. 5 IT IS SO ORDERED. 7 August 9, 2022 x, 8 ME

10 OTIS D. HT, II 1 NITED STATES DISTRICT JUDGE

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