Calagno v. Rite Aid Corporation

Background

Nicole Calagno filed a putative class action against Rite Aid Corporation and Does 1 to 50 in Alameda County Superior Court. She alleged that Rite Aid marketed and sold its brand of liquid acetaminophen as two different products—infant’s acetaminophen and children’s acetaminophen—even though the products were allegedly identical. She asserted claims under California’s False and Misleading Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. She sought restitution, disgorgement of profits, restoration of amounts allegedly withheld, and an injunction.

Rite Aid removed the case to federal court under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d). The parties did not dispute that the proposed class met CAFA’s requirement of at least 100 members or that the parties were diverse. The dispute concerned whether the amount in controversy exceeded $5 million.

Analysis

The court explained that Rite Aid, as the party seeking removal, had to prove by a preponderance of the evidence that the amount in controversy was more than $5 million. The court evaluated the allegations and possible relief available under the complaint as it existed when Rite Aid removed the case.

The court rejected Rite Aid’s attempt to include potential statutory fines under the False and Misleading Advertising Law. It held that a private plaintiff could seek only equitable relief under that law, while specified public officers could recover civil penalties.

The court also rejected Rite Aid’s proposed restitution and disgorgement calculations. The relevant class period reached back to April 2016, not 2011. The damages calculation also had to use the price difference between the children’s and infant’s products, rather than the full purchase price, because the alleged class members received some benefit from using the products. The court calculated restitution at approximately $810,000.

The court did not include punitive damages because Calagno’s complaint did not seek them. Even if punitive damages were included, the court stated that the possible amount would be approximately $810,000 and would not bring the total near $5 million.

The parties agreed to use a 25-percent benchmark for attorneys’ fees. Based on the court’s calculations, attorneys’ fees would be $202,500 without punitive damages or $405,000 with punitive damages. The resulting totals were $1,012,500 without punitive damages and $2,025,000 with punitive damages. Both totals fell below CAFA’s $5 million requirement. The court noted that even Rite Aid’s higher calculations based on the full purchase price would total only $3,375,000.

Disposition

Judge Yvonne Gonzalez Rogers granted Calagno’s motion to remand for lack of subject matter jurisdiction. The court denied as moot the stipulation seeking to reschedule the motion hearing, vacated the case management conference, directed the Clerk to close the federal case, and remanded the action to the Alameda County Superior Court. The order addressed federal jurisdiction and did not decide the underlying California claims.