Organic Consumers Ass'n v. Handsome Brook Farm Group 2, LLC

Citations: 222 F. Supp. 3d 74; 2016 U.S. Dist. LEXIS 174700; 2016 WL 8671909Docket: Case No. 16-cv-01906 (CRC)

Court: District Court, District of Columbia; November 18, 2016; Federal District Court

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Organic Consumers Association (OCA), a public-interest organization from Minnesota, filed a lawsuit against Handsome Brook, a New York farm that sells "pasture-raised" eggs, claiming misleading labeling regarding the hens' living conditions. OCA alleges violations of the D.C. Consumer Protection Procedures Act (DCCPPA) and seeks injunctive relief to stop Handsome Brook's alleged false marketing and to require a corrective advertising campaign. Handsome Brook removed the case to federal court, citing diversity jurisdiction under 28 U.S.C. § 1332(a), while OCA moved to remand the case, asserting that the amount in controversy does not exceed $75,000.

Although OCA acknowledged complete diversity of the parties, it contested the jurisdictional threshold. Handsome Brook argued, with supporting evidence, that the amount in controversy surpasses $75,000 when considering potential compliance costs with an injunction and attorney fees. The court emphasized that the burden of proving federal jurisdiction lies with the removing party and that removal must be construed narrowly, favoring state court jurisdiction. Ultimately, the court granted OCA's motion to remand, determining that Handsome Brook failed to sufficiently demonstrate that the amount in controversy exceeded the required threshold.

Handsome Brook asserts that the amount-in-controversy requirement is met, claiming that compliance costs associated with OCA’s requested injunction and statutory attorney fees would each exceed $75,000. Evidence presented includes a declaration from the farm's owner detailing compliance costs: $110,000 for destroying inventory, $36,000 for redesigning product labels, and a minimum of $113,000 for a corrective advertising campaign. OCA counters by arguing that the court should disregard Handsome Brook's compliance costs due to the "non-aggregation" principle, which prohibits combining claims of multiple plaintiffs to meet the jurisdictional threshold. OCA contends that the amount in controversy should be assessed solely from the plaintiffs' perspective, focusing on the value of the rights they seek to protect.

However, the D.C. Circuit employs an "either-viewpoint" approach for calculating amounts in controversy in cases seeking equitable relief, allowing consideration of both the plaintiffs' rights and the defendant's compliance costs. Previous rulings, including Tatum v. Laird, support that the amount in controversy may be based on the defendant’s costs when purely injunctive relief is sought, with this precedent cited in subsequent cases. Despite recognizing potential tension between the cost-to-defendant test and the non-aggregation principle, the D.C. Circuit has upheld the "either-viewpoint" rule, which has been followed by the majority of courts in the district.

General Mills and Breakman cases establish that a defendant's compliance costs cannot be included in the amount in controversy. OCA argues that since it represents the public, these costs should be distributed among affected consumers, a method supported by precedent in the district. The court emphasizes that for diversity jurisdiction, individual costs must exceed $75,000; Handsome Brook failed to demonstrate this threshold for each plaintiff, thus lacking diversity jurisdiction. 

Handsome Brook also claims that potential statutory attorneys’ fees could exceed $75,000, providing grounds for diversity jurisdiction. However, courts typically require that such fees be apportioned among consumers, and where plaintiffs recover no independent damages, as in this case, the applicable fees are effectively $0. Consequently, diversity jurisdiction is not satisfied.

The court acknowledges that these principles may limit DCCPPA suits from being removed to federal court but finds this acceptable given the weight of supporting authority and the importance of respecting a plaintiff's chosen forum. OCA seeks reimbursement for fees and costs related to remand litigation. The Supreme Court's standard for awarding fees hinges on the reasonableness of removal. The court concludes that Handsome Brook had an objectively reasonable basis for its removal attempt and denies OCA's request for fees and costs.

Plaintiffs' Motion to Remand is granted, while their request for attorneys’ fees is denied. The action is to be remanded to the Superior Court for the District of Columbia. The named defendants include Handsome Brook Farm, LLC; Handsome Brook Farm Group 2 LLC; and Doe Corporation Nos. 1-10, collectively referred to as "Handsome Brook," with citizenship in New York, Delaware, and Connecticut. The D.C. Circuit's analysis of federal question jurisdiction does not differentiate it from diversity jurisdiction under the “either-viewpoint” approach. There is a split among courts regarding the apportionment of attorneys’ fees, with some favoring a pro-rata distribution and others using a weighted-percentage method. However, the Court does not need to resolve this matter as the cases cited (Breakman and Zuckman) involved plaintiffs seeking statutory damages and injunctive relief, which is not the situation here.