Opinion
Case No. 17-cv-00219-TEH
04-04-2017
THOMAS IGLESIAS, Plaintiff, v. WELCH FOODS INC., et al., Defendants.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND
On February 16, 2017, the Plaintiff filed a Motion to Remand. ECF No. 19 ("Mot."). Defendants timely opposed Plaintiff's motion, ECF No. 21 ("Opp'n"), and Plaintiff timely replied, ECF No. 22 ("Reply"). The Court heard oral arguments on the motion on April 3, 2017. After carefully considering the parties' written and oral arguments, the Court GRANTS Plaintiff's motion for the reasons set forth below.
I. BACKGROUND
This case is about a putative class action filed against Welch Foods and Promotion In Motion ("PIM"). Plaintiff alleges that Defendants sell fruit snack products in California with false and misleading labels. ECF No. 1-4 ("Compl.") ¶ 1. This is because the products state they contain "no preservatives" when, in fact, they contain three ingredients which have been recognized by the Food and Drug Administration ("FDA") as chemical preservatives. Id. ¶¶ 3,13-14. And also because Defendants' fruit snacks state " Fruit is our 1st Ingredient!" when, in fact, the Defendants are unlawfully grouping separate fruit puree ingredients to make fruit appear as a more predominant ingredient than it really is. Id. ¶¶ 4, 15-21.
Defendant Welch Foods is an operating subsidiary of the National Grape Cooperative Association, Inc. Welch Foods supplies fresh grapes and other products to be sold under the "Welch's" name. Compl. ¶ 11. PIM is a Delaware corporation with its principal place of business in Allendale, New Jersey. PIM manufactures and markets popular brand name fruit snacks. Id. Welch Foods has entered into a partnership with PIM allowing PIM to sell fruit snack products with the "Welch's" name. Id.
The Plaintiff seeks only declaratory and injunctive relief based on two claims for relief: (1) A violation of the Consumer Legal Remedies Act ("CLRA"); and (2) a violation of the Unfair Competition Law ("UCL"). Id. ¶¶ 32-46. In particular, Plaintiff seeks an injunction preventing Defendants from continuing to sell the allegedly mislabeled products. Id. at 14:22-25.
In November 2017, Plaintiff originally filed this suit in the Superior Court of California for the County of San Francisco. See ECF No. 1. In January 2017, the Defendants removed the case to federal court, alleging that the Class Action Fairness Act provided this Court with original jurisdiction. Id. On February 16, 2017, the Plaintiff filed a Motion to Remand. Plaintiff argues removal is proper because the $ 5 million amount-in-controversy requirement has not been met, and also because the judicial estoppel doctrine requires the Court to remand the case. Mot. at 3:3-16. Because the Court finds the judicial estoppel doctrine applies here, the Court need not, and does not, address the amount-in-controversy dispute.
II. LEGAL STANDARD
A defendant may remove a civil action filed in state court to federal court so long as the district court could have exercised original jurisdiction over the matter. 28 U.S.C. § 1441(a). "The 'strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper . . . .'" Hunter v. Philip Morris USA, 583 F.3d 1039, 1042 (9th Circ. 2009) (quoting Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992)). A plaintiff, however, may seek to have a case remanded to the state court from which it was removed if the district court lacks jurisdiction or if there is a defect in the removal procedure. 28 U.S.C. § 1447(c). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus, 980 F.2d at 566.
III. DISCUSSION
At issue between the parties is whether the doctrine of judicial estoppel requires the Court to remand the case back to state court. "Judicial estoppel 'is an equitable doctrine invoked by a court at its discretion.'" United States v. Ibrahim, 522 F.3d 1003, 1009 (9th Cir. 2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 750 (2001). The purpose of judicial estoppel is to "protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment." New Hampshire, 532 U.S. at 749-50 (citations and internal quotation marks omitted). In determining whether to apply this doctrine, the Parties agree the Court must consider (1) whether a party's later position is "clearly inconsistent" with its earlier position; (2) whether the party successfully persuaded a court to accept its earlier positon; and (3) whether allowing the party's inconsistent position allow the party to "derive an unfair advantage or impose an unfair detriment on the opposing party." Ibrahim, 522 F.3d at 1009.
Here, the Court finds that all three factors are met and weigh in favor of remanding the case to state court. First, the Defendants' position in Atik v. Welch Foods, Inc., Case No. 15-CV-5405, 2016 WL 5678474 (E.D.N.Y. Sept. 30, 2016), is "clearly inconsistent" with removing the present case to federal court. In Atik, the plaintiffs filed a putative class action against the very same Defendants in this case, Welch Foods and PIM, seeking monetary damages, restitution, and injunctive relief. Id. at *1. The plaintiffs in Atik, like the Plaintiff here, alleged that Defendants violated the CLRA and the UCL because Defendants' product labeling of Welch's Fruit Snacks misrepresented the fruit content and nutritional and health qualities of the snacks. Id. In that case, Defendants sought to dismiss plaintiffs' claim for injunctive relief arguing that plaintiffs lacked Article III standing because the plaintiffs "failed to allege a likelihood of continuing or future injury." ECF No. 19-1 at 38. In contrast to their position in Atik, here, Defendants are seeking to remove this case to federal court. But, as Defendants acknowledged in their Motion to Dismiss in the Atik case, a plaintiff must have Article III standing for a federal court to have jurisdiction over a case. Id. at 36-37; see also Whitmore v. Arkansas, 495 U.S. 149, 154-55 (1990) ("It is well established . . . that before a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite [Article III] standing to sue.").
In Atik, the plaintiffs also sought relief based on common law doctrines and New York statutes. See Atik, 2016 WL 5678474, at *1.
Defendants argue they have never taken a "clearly inconsistent" position because the Plaintiff here was not a named party in the Atik action; thus, they have not taken any position on whether this Plaintiff has standing in this case. ECF No. 21 at 12. Defendants also argue that the application of judicial estoppel is inappropriate when the alleged inconsistency stems from legal, non-factual inconsistencies. Id. But these arguments are wide of the mark. The Ninth Circuit has explained that "all that's needed to satisfy this first factor" is that "the [party] pressed a claim in the earlier lawsuit[] that is inconsistent with the position [the party] is taking in our case." Baughman v. Walt Disney World Co., 685 F.3d 1131, 1133 (9th Cir. 2012). Thus, the case law does not require that the inconsistency occur within the same case. Moreover, an inconsistent claim need not be factual, as the doctrine has been applied to prevent a party from making a legal assertion that contradicted its earlier legal assertion. Baughman, 685 F.3d at 1133 (citation omitted); see also Helfand v. Gerson, 105 F.3d 530 (9th Cir. 1997) ("[J]udicial estoppel applies to a party's stated position, regardless of whether it is an expression of intention, a statement of fact, or a legal assertion."). Here, where Defendants have previously argued the Atik plaintiffs had no Article III standing to pursue injunctive relief claims, it is clearly inconsistent for Defendants to now seek removal of Plaintiff's claims for injunctive relief.
Second, it is clear that the earlier court was successfully persuaded by Defendants' earlier position. Indeed, the Atik court dismissed the plaintiffs' claims for injunctive relief finding they had no Article III standing. Atik, 2016 WL 5678474 at *6. Defendants do not contend this point. Thus, the second factor is met and weighs in favor of applying judicial estoppel.
Third, the Court finds that allowing the Defendants to put forth their clearly inconsistent position here would permit them to forum shop which constitutes an "unfair advantage." See Galitski v. Samsung Telecomms. Am., LLC, Case No. 8:CV-12-00903-CJC(JPRx), 2012 WL 12830000, at *3 (C.D. Cal. Nov. 21, 2012) (finding forum shopping to be unfair and an abuse of the judicial process). This Court finding, too, is clearly supported by Ninth Circuit case law. In Baughman, the court found an unfair advantage existed when a party's inconsistent statement would make her claim "significantly stronger." Baughman, 685 F.3d at 1134. Here, in contrast to Baughman, allowing the Defendants to remove the case to federal court would allow them to seek an outright dismissal of the injunctive relief claim for lack of Article III standing or for the Court to dismiss the case sua sponte for the same reason rather than litigating the claim on the merits. Thus, it seems this case presents a much stronger case than Baughman for finding an inconsistent position would create an unfair advantage.
Although Defendants appeared to agree during oral arguments to not seek dismissal of Plaintiff's claims based on a lack of Article III standing, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus, 980 F.2d at 566. Here, where Defendants prior standing arguments in Atik leave doubt as to whether Plaintiff has Article III standing, Defendants cannot avoid the strong presumption against remand by agreeing to not seek dismissal for lack of standing. See id. --------
In sum, the Court finds that each of the Ibrahim factors supports applying judicial estoppel here to prevent the Defendants from litigating the case in federal court. And in light of the strong presumption against removal jurisdiction, the Court finds it appropriate to remand the case to state court.
IV. CONCLUSION
With good cause appearing, the Court exercises its discretion and GRANTS Plaintiff's motion to remand. This matter is hereby remanded to the Superior Court of California for the County of San Francisco. Consequently, the parties' joint stipulation to continue the case management conference scheduled for April 17, 2017 is VACATED. The Clerk shall close the file.
IT IS SO ORDERED.
Dated: 4/4/17
/s/_________
THELTON E. HENDERSON
United States District Judge