Cunningham v. Pret A Manger, LTD.

Background

Skylar Cunningham sued Pret A Manger (USA) Limited over its alleged marketing and labeling of products as “natural.” The complaint alleged that many products contained soya, a genetically modified organism, and other synthetic ingredients. Cunningham asserted claims under New York General Business Law §§ 349 and 350, the consumer-protection laws of all 50 states, the Magnuson-Moss Warranty Act, warranty theories, and unjust enrichment. She sought monetary and punitive damages, injunctive relief, and certification of a New York subclass.

The opinion states that Cunningham is a New York citizen and that Pret is a citizen of the United Kingdom and New York. Pret operated 87 United States locations, including 57 in New York. Pret submitted evidence that at least 72% of its United States sales and transactions from 2013 through 2018 occurred in New York.

Motion and Jurisdictional Standards

Pret moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which concerns the court’s subject-matter jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. Pret argued that Cunningham lacked an adequate injury, could not establish class standing or standing to seek an injunction, could not establish jurisdiction under the Class Action Fairness Act, and could not establish jurisdiction under the Magnuson-Moss Warranty Act. Pret alternatively asked the court to stay the case while the Food and Drug Administration considered the meaning of the “natural” label on food.

The opinion addressed only whether federal jurisdiction existed under the Class Action Fairness Act. That statute generally permits federal jurisdiction over qualifying class actions involving at least 100 class members, more than $5 million in controversy, and minimal diversity—meaning at least one plaintiff and one defendant are citizens of different states.

Court’s Analysis

The court concluded that Cunningham had satisfied the basic Class Action Fairness Act requirements. The complaint alleged more than 100 class members, and the parties did not dispute that minimal diversity existed. The court also accepted Cunningham’s allegation that the amount in controversy exceeded $5 million, explaining that Pret had not shown to a legal certainty that the claims fell below that amount.

The court then considered the Class Action Fairness Act’s home-state, local-controversy, and discretionary exceptions. These exceptions can require or permit a federal court to decline jurisdiction when a large share of the class members and a primary defendant are citizens of the state where the case was filed.

Pret argued that the sales and transaction data reasonably showed that more than two-thirds of the proposed class members were New York citizens. The court rejected that inference as insufficient at that stage. It explained that sales occurring in New York did not establish that the purchasers were domiciled in New York, particularly because people from outside New York may commute to or visit the state and purchase food there.

Because the jurisdictional facts were disputed, the court found that limited jurisdictional discovery was appropriate. The discovery was to focus on whether two-thirds or more of the proposed class members were New York citizens and on Pret’s other dismissal arguments. Cunningham could serve appropriately tailored interrogatories and document requests, and Pret could examine Cunningham. The parties were directed to coordinate the process with Magistrate Judge Stewart D. Aaron.

Disposition

The court ordered the parties to engage in jurisdictional discovery before Magistrate Judge Aaron. It denied Pret’s motion to dismiss pending completion of that discovery, set March 6, 2020, as the deadline for completing it, and directed the clerk to remove the motion from the list of open motions. The opinion did not decide the merits of Cunningham’s deceptive-marketing claims or the other dismissal arguments that it did not address.