Federal Court Returns “CVS Honey” Class Action to State Court

Determining that it lacks jurisdiction under the Class Action Fairness Act
(CAFA) to hear state-law claims alleging consumer fraud in the sale of honey,
a federal court in California has remanded to state court a putative class
action filed against CVS Caremark Corp. Overton v. CVS Caremark Corp., No.
12-0121 (C.D. Cal., decided April 24, 2012). While the case is
one of several that may be transferred to a multidistrict litigation panel (MDL
No. 2374) under a motion pending before the Judicial Panel on Multidistrict
Litigation, the court retained the authority to decide the jurisdiction issue.

To meet its burden of showing that the lawsuit satisfied CAFA’s amount-in-controversy requirement, that is, “the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs,” the defendant apparently relied on the declaration of a vice president who calculated that the company sold $508,995 worth of the product every two years. Noting that the plaintiff’s request for injunction would permanently bar it from selling CVS honey, the defendant argued that “the costs it will incur for complying with the injunction will satisfy the $5,000,000 threshold within fifteen years.” Rejecting this argument, the court stated, “[b]ecause it is equally plausible that Defendant will and will not make a profit of $508,995 from CVS Honey sales every two years, Defendant has not met its burden by a preponderance of the evidence. The Court cannot base jurisdiction on Defendant’s speculation.”