Earlier this month, the Eighth Circuit weighed in on the issue of jurisdiction under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332 (d)(2), in Daniel Raskas v. Johnson & Johnson et al., Marjie Levy v. Pfizer Inc. and Leslie Yoffie v. Bayer Healthcare LLC (“Raskas”)The Court held that the Defendants needed only explain “plausibly” how the amount in controversy may exceed $5 million, which Defendants did sufficiently through tendered affidavits.

Factual Background

Raskas arose out of three separate lawsuits in Missouri state court in October 2012. The Plaintiffs in the case accused Pfizer, Johnson & Johnson and Bayer Healthcare LLC of misleading customers into thinking their products, which include medicines such as Tylenol and aspirin, are ineffective or unsafe if taken after their expiration dates. The Plaintiffs in the three cases argued that the medicines at issue “remain chemically stable and safe if properly stored long after the expiration dates printed on the packaging.” The drug companies allegedly told consumers that they should discard the medicine promptly on the expiration date, and did so for the purpose of raising profits.  Plaintiffs filed a class action on behalf of Missouri customers, alleging “violations of the Missouri Merchandising Practices Act and civil conspiracy, and seeking “orders requiring the drugmakers to accurately disclose the meaning of expiration dates printed on their medications, as well as damages and costs.”

The Defendant drug companies removed the case to the federal district court. In their removal papers, Defendants included affidavits listing their total sales for a five year period in order to establish the amount in controversy required under CAFA.  The Plaintiffs opposed arguing that they only sought damages pertaining to medication that was discarded and replaced, and thus, only a portion of Defendants’ sales were at issue. The district court found the total figures provided by the Defendants were too speculative to establish the required amount in controversy.  As such, the court remanded the case back to state Court.

The Court’s Decision

The Defendants appealed the district court’s decision.  The Eighth Circuit reversed and found in favor of the Defendants. According to the appellate court, Defendants did not need to prove the amount in controversy “beyond all doubt.” Rather, it was acceptable to provide an estimated total. Here, each Defendant’s affidavit detailing the total sales of their respective medications in Missouri met the amount in controversy requirement, and thus, was sufficient to establish the required amount in controversy by a preponderance of the evidence. According to the Court, once the “proponent of federal jurisdiction has explained plausibly how the stakes exceed $5 million, as Defendants have in this case, then the case belongs in federal court unless it is legally impossible for the Plaintiff to recover that much.” Furthermore, the Defendants did not have to provide a formula for calculating damages. According to the Court, “we have specifically rejected the need for this kind of formula or methodology, as it would require a Defendants to ‘confess liability’ for the entire jurisdictional amount.”  

Implications

Companies defending against class actions should take a note of the Eighth Circuit’s ruling in Raskas, as it provides support and instruction for removing a class action to federal court through CAFA. This decision confirms that Corporate Defendants have a limited evidentiary burden at the removal stage, and reduces the ability of class action Plaintiffs to challenge CAFA jurisdiction.