Gabe Watkins v. Vital Pharmaceuticals, Inc. , 720 F.3d 1179 ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GABE WATKINS, on Behalf of No. 13-55755
Himself and All Other Persons
Similarly Situated, D.C. No.
Plaintiff-Appellee, 2:12-cv-09374-
SJO-JC
v.
VITAL PHARMACEUTICALS, INC., OPINION
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
S. James Otero, District Judge, Presiding
Submitted June 3, 2013*
Pasadena, California
Filed July 2, 2013
Before: Sidney R. Thomas, Barry G. Silverman,
and Raymond C. Fisher, Circuit Judges.
Per Curiam Opinion;
Partial Concurrence and Partial Dissent by Judge Fisher
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 WATKINS V . VITAL PHARMACEUTICALS
SUMMARY**
Class Action Fairness Act
Determining that it had jurisdiction to consider the district
court’s sua sponte order remanding this case to state court,
the panel reversed the district court’s order and remanded to
the district court with instructions to exercise jurisdiction
over this case because the undisputed declaration submitted
by defendant sufficiently established that the amount in
controversy was at least $5 million, as required by the Class
Action Fairness Act.
Concurring in part and dissenting in part, Judge Fisher
stated that because it was not clear that the district court
considered the declaration submitted by the defendant, and
because it was not clear that the declaration was sufficient as
a matter of law to establish the amount in controversy by a
preponderance of the evidence, he would vacate the district
court’s order and remand to the district court to determine in
the first instance, in light of the declaration, whether
defendant met its burden of proving that the amount in
controversy exceeded $5 million.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
WATKINS V . VITAL PHARMACEUTICALS 3
COUNSEL
Anthony G. Brazil, Richard H. Nakamura, Jr., and David J.
Vendler, Morris Polich & Purdy LLP, Los Angeles,
California, for Defendant-Appellant.
Lionel Z. Glancy, Marc L. Godino, and Casey E. Sadler,
Glancy Binkow & Goldberg LLP, Los Angeles, California,
for Plaintiff-Appellee.
OPINION
PER CURIAM:
Defendant-Appellant Vital Pharmaceuticals, Inc. appeals
the district court’s sua sponte order remanding this putative
class action to state court for failure to establish the Class
Action Fairness Act’s (CAFA) requirement that at least
$5 million is in controversy. We hold that we have appellate
jurisdiction under 28 U.S.C. § 1453(c)(1) to consider the
district court’s sua sponte remand order, reverse the order
remanding this case to state court, and remand to the district
court with instructions to exercise jurisdiction over the case.
I.
Plaintiff Gabe Watkins filed this class action in the
California Superior Court, County of Los Angeles, alleging
that defendant Vital Pharmaceuticals, Inc. distributed ZERO
IMPACT protein bars that were erroneously marketed and
labeled as having little to no impact on blood sugar. Watkins
asserts claims under California law on behalf of a nationwide
class of “thousands of consumers throughout the United
4 WATKINS V . VITAL PHARMACEUTICALS
States.” The complaint states that “the aggregate damages
sustained by the Class are likely in the millions of dollars”
and seeks damages, restitution, disgorgement and attorney’s
fees and costs.
Vital timely removed this action to federal court under
CAFA, 28 U.S.C. § 1332(d)(2). As evidentiary support for its
assertion that CAFA’s $5 million amount in controversy
requirement is met, Vital filed two declarations. First, Vital
submitted a declaration by trial counsel David J. Vendler that
states:
Plaintiff’s Complaint alleges that the
likely aggregate damages are in the
“millions.” (Complaint ¶ 15.) Plaintiff seeks
restitution, disgorgement of profits, and
attorneys’ fees, based upon sales of the ZERO
IMPACT® Protein Bars to “thousands” of
consumers throughout the United States.
Plaintiff also seeks attorneys’ fees in addition
to damages. There is thus a legal certainty
that the amount in controversy in this matter
consists of an aggregate in excess of $5
million.
Second, Vital submitted a declaration by Richard Cimino that
states: “Nation-wide sales of the ZERO IMPACT® bars for
the last four years exceed $5,000,000.
The district court sua sponte remanded the action to the
state superior court. In its remand order, the district court
concluded that Vital did not meet its burden of proving by a
preponderance of the evidence that CAFA’s amount in
controversy requirement was met because Vital merely
WATKINS V . VITAL PHARMACEUTICALS 5
“aver[red in its Notice of Removal] that total sales of the
Subject Bars in the last four years exceeded $5 million,” and
because Vendler’s affidavit vaguely and conclusorily alleged
that the amount in controversy is met. Although the district
court’s order expressly referred to the Vendler declaration, it
made no mention of the Cimino declaration.
II.
As a threshold matter, we first address whether CAFA
permits an appeal from a district court’s sua sponte remand
order. District court remand orders generally are not
reviewable on appeal. See 28 U.S.C. § 1447(d). CAFA
creates an exception to this general rule, and provides that
“notwithstanding section 1447(d), a court of appeals may
accept an appeal from an order of a district court granting or
denying a motion to remand a class action to the State court
from which it was removed if application is made to the court
of appeals not more than 10 days after entry of the order.”
28 U.S.C. § 1453(c)(1). Although we have previously
exercised jurisdiction over sua sponte orders remanding cases
that were removed under CAFA, see, e.g., Abrego Abrego v.
Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006), we have never
expressly addressed the jurisdictional question of whether
§ 1453(c)(1) applies not just to district court remand orders
that are granted or denied in response to a “motion to
remand,” but also to remand orders issued sua sponte.
We do not read § 1453(c)(1)’s authorization of an appeal
as limited only to district court orders made in response to a
party’s “motion.”1 Sua sponte orders are, literally, orders
1
W e have jurisdiction to determine our own jurisdiction. See United
States v. Ruiz, 536 U.S. 622, 628 (2002).
6 WATKINS V . VITAL PHARMACEUTICALS
issued when the court acts “on its own motion.” See Black’s
Law Dictionary 1560 (9th ed. 2009). Moreover, it is well
established that district courts may address questions of
subject matter jurisdiction sua sponte. See Peterson v.
Islamic Republic of Iran, 627 F.3d 1117, 1133 (9th Cir.
2010). If CAFA permitted review of remand orders issued
only in response to a party’s motion to remand, district court
orders remanding class actions sua sponte would be insulated
from appellate review. Such a result would be inconsistent
with CAFA’s clearly expressed intention that class actions are
exempt from the general jurisdictional rule that district court
remand orders are not reviewable on appeal.
III.
On the merits, Vital argues that the Cimino declaration
was sufficient to establish that CAFA’s amount in
controversy requirement is met. We review de novo the
construction and applicability of CAFA. See United Steel v.
Shell Oil Co., 602 F.3d 1087, 1090 (9th Cir. 2010)). As with
all diversity cases – of which CAFA cases are a species, see
28 U.S.C. § 1332(d) – we review for clear error any factual
determinations necessary to establish jurisdiction. See
Co-Efficient Energy Sys. v. CSL Indus., Inc., 812 F.2d 556,
557 (9th Cir. 1987). Therefore, we review de novo the
district court’s ultimate legal conclusion that the underlying
factual allegations are insufficient to establish CAFA
jurisdiction, and we review for clear error the district court’s
determination that Vital did not meet its burden of proving by
a preponderance of the evidence that the amount in
controversy here exceeds $5 million.
We agree with Vital that the undisputed Cimino
declaration was sufficient to establish that CAFA’s $5 million
WATKINS V . VITAL PHARMACEUTICALS 7
amount in controversy requirement is met in this case.2 In its
order remanding the action, the district court noted that
“Defendant [had] aver[red] that total sales of the Subject Bars
in the last four years exceeded $5 million.” The court cited
to the specific paragraph in the Notice of Removal that
discussed the Cimino declaration’s statement that total sales
exceeded $5 million. Accordingly, we reverse the order
remanding this case to state court and remand to the district
court with instructions to exercise jurisdiction over the case.
REVERSED AND REMANDED.3
FISHER, Circuit Judge, concurring in part and dissenting in
part:
I join in the per curiam opinion with the exception of the
last paragraph, which reverses and remands to the district
court to exercise jurisdiction over this case. Because it is not
clear that the district court considered the Cimino declaration,
and because I do not believe that the declaration is sufficient
as a matter of law to establish that Vital met its burden of
proving the amount in controversy by a preponderance of the
evidence, I would vacate the district court’s order and remand
to the district court to determine in the first instance, in light
2
Not only was the Cimino declaration undisputed in the district court,
but in this court W atkins filed a document stating that he takes no position
on the appeal and declines to file a brief.
3
There being no objection, Vital’s Request for Judicial Notice is
GRANTED.
8 WATKINS V . VITAL PHARMACEUTICALS
of the Cimino declaration, whether Vital met its burden of
proving that the amount in controversy exceeds $5 million.
Vital asserted in its Notice of Removal that CAFA’s
$5 million amount-in-controversy threshold is met. Aside
from attempting to derive support from the allegations in
plaintiff’s complaint, the Notice alleged that “VITAL had
total sales of ZERO IMPACT® Protein Bars in the last four
years in excess of $5 Million,” citing a declaration by Vital’s
controller, Richard Cimino. The district court’s remand
order, which was quite thorough, expressly referred to Vital’s
amount-in-controversy allegation in its Notice of Removal as
a mere “aver[ment]” that was insufficient to establish that it
is “more likely than not” that more than $5 million is in
controversy. See Sanchez v. Monumental Life Ins. Co.,
102 F.3d 398, 404 (9th Cir. 1996) (establishing
“preponderance of the evidence” as the removing defendant’s
burden of proving the amount in controversy in cases where
a plaintiff’s state court complaint does not specify a particular
amount of damages). The district court faulted Vital for not
submitting “any documentation to support its claim that its
sales exceeded $5 million,” noting that a declaration by
Vital’s counsel, David Vendler, “only vaguely alleges that the
amount in controversy is met.” The court did not refer at all
to Cimino’s declaration, or explain why the controller’s
sworn statement was insufficient.
I have serious doubts that the court actually saw and
evaluated Cimino’s “documentary” evidence as support for
the Notice’s allegation, and whether it would have found the
WATKINS V . VITAL PHARMACEUTICALS 9
evidence insufficient had it done so.1 The district court is the
appropriate jurisdictional factfinder, and we should not usurp
that role, particularly on such an ambiguous record. We
should vacate the district court’s order remanding this case to
state court, and remand with instructions that the district court
reconsider its finding in light of the Cimino declaration, or
explain why it found the controller’s statement insufficient if
that was the case.
My deference to the district court is not formalistic.
Unlike my colleagues, I do not think Vital’s cursory showing
was sufficient as a matter of law. The Cimino declaration is
plainly conclusory and devoid of business record
documentation or other foundation. But he is the controller,
and purports to have personal knowledge of the facts. Had
the district court clearly confronted the shortcomings of
Cimino’s “evidence,” I would have no trouble concluding
that the court did not clearly err in rejecting it, and would
affirm the district court’s remand to the state court. Absent
that record, we should remand to the district court for further
consideration. I cannot endorse Vital’s paltry showing as the
new standard for meeting CAFA’s heretofore more
demanding requirements. Cf. Tanoh v. Dow Chem. Co.,
561 F.3d 945, 953 (9th Cir. 2009) (noting that the “well-
established presumption against federal removal jurisdiction”
is applicable in the CAFA context); Matheson v. Progressive
Specialty Ins.Co., 319 F.3d 1089, 1090–91 (9th Cir. 2003)
(order) (“Conclusory allegations as to the amount in
1
In addition to the district court’s failure to mention the Cimino
declaration much less discuss whatever deficiencies it found therein, the
district court’s reference to counsel’s declaration as “Defendant’s
affidavit” (singular) suggests that Vendler’s declaration was the only
declaration it reviewed.
10 WATKINS V . VITAL PHARMACEUTICALS
controversy are insufficient.”). To this extent, I respectfully
dissent.