Summary
The United States District Court for the Central District of California denied Stephen Edlund’s motion to remand a putative class action against True Classic Tees, LLC. The court held that the defendant adequately established CAFA’s amount-in-controversy requirement through compensatory and punitive damages totaling more than $5 million, and that the plaintiff’s post-removal amendment removing punitive damages did not defeat jurisdiction.
Topics
Practice areas
Questions Presented
- Whether Defendant established that the amount in controversy exceeded CAFA's $5 million jurisdictional threshold.
- Whether potential punitive damages could be included in the amount in controversy based on a reasonably possible 1:1 ratio to compensatory damages.
- Whether Plaintiff's post-removal First Amended Complaint, which removed the request for punitive damages, destroyed federal diversity jurisdiction.
Holdings
- Defendant adequately demonstrated that $3,174,931 in compensatory damages was at stake and, together with an equal amount of potentially available punitive damages, established an amount in controversy exceeding $5 million under CAFA.
- A defendant relying on potential punitive damages to satisfy CAFA's amount-in-controversy requirement meets that requirement when it shows that the proposed punitive-to-compensatory-damages ratio is reasonably possible; Defendant made that showing here.
- A post-removal amendment reducing the alleged amount in controversy below the jurisdictional threshold does not destroy diversity jurisdiction.
Key quotations
“Generally, a removing party’s notice of removal need include only “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.”” (at 2)
“An amendment reducing the alleged amount in controversy to below the statutory threshold does not destroy diversity jurisdiction.” (at 3)
“Combined, these two categories of damages exceed CAFA’s $5 million amount in controversy requirement on their own.” (at 3)
Factual background
Plaintiff alleged that True Classic Tees advertised free shipping on qualifying orders but automatically added a $3.73 charge labeled a "Package Protection & Sustainability Fee." He alleged that he would not have purchased clothing from Defendant had he known the shipping was not free. He brought the action on behalf of himself and a putative class of consumers who paid the fee, seeking a refund, punitive damages, and other relief.
Procedural history
Plaintiff filed a putative class action in state court on November 15, 2024, asserting unjust enrichment and California and Florida consumer-protection claims. Defendant removed the action to federal court on January 17, 2025, invoking CAFA jurisdiction. Plaintiff challenged removal, principally arguing that the amount in controversy did not exceed $5 million. The court denied the motion to remand.