Lokey v. CVS Pharmacy, Inc.

Background

Danielle Lokey filed a proposed class action in state court against CVS Pharmacy, Inc. She alleged that CVS sold CVS-branded infant liquid acetaminophen at a higher price than its CVS-branded child liquid acetaminophen, although the products had the same ingredients. She asserted claims under California’s false-advertising law, unfair-competition law, and Consumer Legal Remedies Act.

The complaint sought, among other things, an injunction, restitution, disgorgement of profits, costs, attorney’s fees, and interest. CVS removed the case to federal court under the Class Action Fairness Act (CAFA), which allows federal jurisdiction over certain class actions, and under ordinary diversity jurisdiction for Lokey’s individual claim. The parties did not dispute that they were diverse. The dispute concerned the amount in controversy—the amount potentially at stake in the case.

Legal Standards

For CAFA jurisdiction, the proposed class must include at least 100 members, the parties must have at least minimal diversity, and the amount in controversy must exceed $5 million. When the amount is contested, the removing defendant must prove by a preponderance of the evidence that the jurisdictional threshold is met. For ordinary diversity jurisdiction over an individual claim, the amount in controversy must exceed $75,000, and recoverable attorney’s fees may be included.

Analysis

For CAFA, CVS submitted evidence of at least $2,278,798.44 in product sales, $569,699.61 in estimated attorney’s fees, and $3,888,363 in costs associated with possible injunctive relief. Those amounts totaled $6,679,506.05. Lokey challenged CVS’s calculations and argued that restitution should be limited to the alleged overcharge rather than all sales. The court held that the complaint plausibly sought a full refund and that CVS supported its sales figures with a declaration. The court also held that CVS’s evidence supported considering the cost of nationwide compliance with the requested injunction, including removing inventory, destroying existing products, developing new packaging, and replacing stock.

The court did not accept CVS’s full attorney’s-fee estimate as adequately supported by its evidence. But even without relying fully on that estimate, the court held that the amount in controversy exceeded $5 million when the costs of injunctive relief were considered. The court also found that the $75,000 threshold for Lokey’s individual claim was met because recoverable future attorney’s fees could exceed that amount. CVS submitted evidence about counsel’s billing rates and the number of hours the litigation would require, and Lokey did not meaningfully counter that assessment.

Disposition

The court denied Lokey’s motion to remand the case to state court. The order states that this disposed of ECF No. 18.