Watkins v. Vital Pharmaceuticals

An undisputed declaration showing that the total amount of sales exceeds $5 million is sufficient to prove, by a preponderance of the evidence, that the Class Action Fairness Act’s amount in controversy requirement has been met.

Gabe Watkins brought a class action suit in the California Superior Court, County of Los Angeles, against Vital Pharmaceuticals, Inc. (“Vital”) for distributing protein bars that were erroneously labeled. Vital removed the action to federal court pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2). As evidentiary support for its Notice of Removal, Vital submitted two declarations: one from trial counsel stating that the alleged aggregate damages were “likely” in the millions, and one from Richard Cimino stating that “Nation-wide sales of [protein] bars for the last four years exceed[ed] $5,000,000.” Relying only on the statement made by Vital’s trial counsel, the district court for the Central District of California sua sponte remanded the suit back to the state court, concluding that Vital had failed to meet its burden of showing by a preponderance of the evidence the $5 million minimum amount in controversy as required by CAFA. Vital appealed, asserting that Cimino’s declaration was satisfactory to show that the amount in controversy was met as required by CAFA. The Ninth Circuit reviewed de novo the district court’s conclusion that the “factual allegations were insufficient to establish CAFA jurisdiction,” and for clear error the district court’s finding that Vital did not meet its burden that the amount in controversy exceeded $5 million. In its per curiam opinion, the panel agreed with Vital and held that that Cimino’s undisputed declaration was satisfactory in establishing the $5 million CAFA amount in controversy requirement. REVERSED and REMANDED.