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When the Defendant Removes a Civil Action to Federal Court, Alleging the Amount in Controversy Exceeds the Threshold, But the Plaintiff Contests the Amount in Question, How Does the Court Decide?

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The United States Court of Appeals for the Eighth Circuit tackled that question in Waters v. Ferrara Candy Co., No. 17-2812, 873 F.3d 633 (2017). Plaintiff Jaclyn Waters (“Waters”) filed this putative class action in the Circuit Court for the City of St. Louis, Missouri, alleging Ferrara Candy Co. (“Ferrara”) had engaged in false, deceptive, and misleading conduct by selling under-filled cardboard boxes of Red Hots. Waters claimed that Ferrara’s conduct violated the Missouri Merchandising Practices Act (“MMPA”), and that Ferrara has been unjustly enriched by its deception of Waters and other similarly situated Red Hots consumers in Missouri. Ferrara removed the action to federal court, seeking to invoke the district court’s jurisdiction under the Class Action Fairness Act (“CAFA”)

Waters moved to return the case back to state court, arguing that the amount in controversy in this matter falls below the $5 million threshold necessary for federal jurisdiction under CAFA. The district court entered an order granting the motion and remanding this case to the state court. Ferrara appeals.

Ferrara submitted two affidavits in support of its contention that the amount in controversy in this case exceeds $5 million. In the first affidavit, a vice president stated that Ferrara’s sales of Red Hots totaled $464,903 from sales in the City of St. Louis and the Kansas City area. In its second affidavit, A Ferrara executive said the costs of changes to Ferrara’s equipment, which could result from an injunction requiring a material increase in the percentage fill of Red Hots candy, would exceed $6,000,000.

The Court says the party seeking to remove a case to federal court bears the burden of establishing federal jurisdiction. Ferrara did not meet its burden under either rule. If the plaintiffs prevail in this case, they will be entitled to monetary relief and attorney’s fees well below $5 million, regardless of whether the monetary relief comes in the form of compensatory damages, restitution, or disgorgement. And, Ferrara’s affidavits are insufficient to quantify, beyond mere speculation, the costs it would incur in complying with an award of injunctive relief in this case. Ferrara did not establish by a preponderance of the evidence that the amount of controversy in this matter exceeds $5 million. Therefore, this Court affirms the lower court’s remand of the case to state court.

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