Often defendants in proposed class actions think of an individual's playing a dual role as lead plaintiff and class counsel as a useful fact to defeat class certification under the adequacy prong. Credit a plaintiff for "creative" -- although ultimately unsuccessful -- use of this situation in a proposed class action. See Hoffman v. DSE Healthcare Solutions, LLC, No. 2:13-cv-07582-JLL-JAD (D.N.J. 3/21/14)(unpublished).

Plaintiff Harold M. Hoffman filed a consumer fraud class action complaint in state court under New Jersey's consumer fraud act. Plaintiff’s Complaint alleged that defendant made “false and misrepresented claims of product efficacy” about a dietary supplement known as Lipo-Flavonoid Plus.  Defendant removed the lawsuit to federal court pursuant to the diversity jurisdiction conferred by the Class Action Fairness Act ("CAFA"), codified at 28 U.S.C. § 1332(d). According to defendant, the court had original jurisdiction over this action because (1) the suit is a “class action” as defined in 28 U.S.C. § 1332(d)(1)(B); (2) there is "minimal diversity"; and (3) the "aggregate value of the amount in controversy based on Plaintiff's allegations exceeds $5 million."

Plaintiff' filed a motion to remand the case to the Superior Court of New Jersey.Specifically, plaintiff argued that class certification is impossible in federal court because his dual role as class representative and class counsel, which, he said, is per se impermissible in the Third Circuit. Without class certification, plaintiff asserted, defendant cannot establish that the amount in controversy exceeds $5 million, as required by CAFA. Defendant responded that plaintiff cannot unilaterally divest the court of  jurisdiction simply because he represents himself. 

When a class action complaint expressly disclaims the ability to recover the $5 million jurisdictional amount, the Third Circuit instructs that the burden is on defendant to prove "to a legal certainty that plaintiff can recover" that amount. See Frederico v. Home Depot, 507 F.3d 188, 197 (3d Cir. 2007). The concept of legal certainty is not well defined, but falls somewhere below "absolute certainty" and above "preponderance of the evidence." See Nelson v. Keefer, 451 F.2d 289, 293 n.6 (3d Cir. 1971)). A court examines both the dollar figure offered by the plaintiff and plaintiff's actual legal claims to determine whether the amount in controversy exceeds the statutory threshold.

The court's analysis here turned on a reading of Knowles, where the Supreme Court interpreted CAFA to hold that a named plaintiff cannot unilaterally circumvent CAFA by his own non-binding actions. Specifically, the Supreme Court rejected a plaintiff’s attempt to evade the scope of CAFA jurisdiction by stipulating that the class he sought to represent would not seek damages that exceed the $5 million jurisdictional threshold.  Here, the court agreed with defendant that just as a class representative could not bind a class with a stipulation to limit the class’ damages in order to avoid federal jurisdiction, a class representative, such as Hoffman, cannot bind the class by unilaterally deciding to select himself as counsel.

The primary issue was whether defendant could show “to a legal certainty” that the individual claims of all proposed class members aggregated to more than $5 million. If defendant satisfied this burden, remand would be inappropriate.  And the court found that defendant had made the requisite showing. Estimating the actual aggregate losses of the individuals in the proposed class was a relatively straightforward process, said the court, where plaintiff brings suit requesting treble damages under the CFA.

Motion denied.