In This Remand Attack on Mattel and Fisher-Price, CAFA Law Blog Says, “Lead, Schmead!”

Harrington v. Mattel, Inc., No. C07-05110, 2007 WL 4556920 (N.D. Cal. Dec. 20, 2007).

What is the matter with Ann Harrington? You know she ate lead paint chips when she was a kid. Shoot, we all did, and nothing ever happened. It was the thing to eat when mom refused to open the cupboard and let us throw down a bag of Fritos. Heck, my brother lived on paint chips until he was five. We call him Mongo now. We keep him on a leash you know, one of those clothesline runners for the backyard. He’s got plenty of room out there to dig! Ever since we got that leash, the kid’s really blossomed. Now we can take him to ball games, movies–you know, happy stuff. Like I said, nothing ever happened.

Anyway, so now Harrington is taking on the great and revered toy companies, Mattel and its subsidiary, Fisher-Price (the “Toy Icons”) – the companies that made being a kid fun. And for what, because some Dora the Explorer doll she gave her kid MIGHT have some lead paint on it??? Sacrilege I say!!! People like this … why somebody ought to shove a Hot Wheel up their …

As I was saying, Harrington brought her putative class action — purporting to represent all persons in California that bought the recalled toys from January 1, 2003 to August 20, 2007 (about 29,900 toys) — in San Francisco Superior Court against the Toy Icons after they announced voluntary recalls of toys that were tainted with lead paint. As part of the recall, the Toy Icons offered vouchers for the purchase of future toys under their brands and recommended that children exposed to such toys be taken in for lead-testing. Harrington’s class action seeks all manner of damages and other relief related to the Toy Icons’ marketing, distribution, and sale of the recalled toys. Additionally, Harrington wanted the Toy Icons held responsible for future costs of medical monitoring. I think she also wanted a free Barbie corvette for her troubles, too.

The Toy Icons timely removed to the Federal District Court for the Northern District of California pursuant to CAFA, and Harrington moved to remand, contending the Toy Icons had not proven by a preponderance of the evidence that the amount in controversy exceeds $5M and that the case was subject to the home state controversy exception of 28 USC §1332(d)(4)(B).

Adhering to the position of most circuits, the court initially ruled that, where the complaint is not clear, the removing party must prove by a preponderance of the evidence that the amount in controversy exceeds $5M.

Next, the court turned to Harrington’s calculation of $2.755M in total possible damages. According to Harrington, economic damages consisted of the cost of defective toys to the plaintiffs and the cost of medical monitoring for lead poisoning. Assigning a $25 value to each of the 29,000 toys (she rounded down to that value from 29,900), Harrington contended the class would be entitled to $725,000.00 ($25 x 29,000) in restitution under Sec. 17200 of the California Business and Professions Code and another $725,000.00 for the cost of the defective toys as an independent measure of damages under California UCC Sec. 2714 for warranty claims. Harrington then contended that medical monitoring would cost $45 per child based on a 2002 report on the taxpayer costs of lead poisoning. So, including legal fees, which Harrington conceded would be about $344,000.00, Harrington contended that the amount in controversy, not including the aforementioned Barbie Corvette, would be about $3.099M.

The Toy Icons did not contest the damage calculations under Sec. 17200 of the California Business and Professions Code and California UCC Sec. 2714. They took issue, however, with Harrington’s estimate of medical monitoring costs, estimating instead that such costs would exceed $200 per person. This raised the total amount in controversy to well over $7M. To support this different figure on these costs, the Toy Icons argued that the cost of a single blood test for lead exceeded $60.00 based on a survey of 6 local facilities that conducted such tests. The Toy Icons also contended that the relief Harrington sought would require two such tests per child and one clinical evaluation (as suggested by a Centers for Disease Control report), which would together exceed $200.00 per child.

Weighing all of this, the court found that the Toy Icons had sufficiently produced underlying facts showing it was more likely than not that the amount in controversy exceeded $5M. According to the Court, Harrington’s estimate of medical costs was too low and was predicated on a study that conceded there may have been medical costs related to lead exposure not included in the study. The court then concluded that the Toy Icons estimate might be too high but that it was not unreasonable to require two $60 tests per child ($120) as part of this estimate. Therefore, the court found the estimated costs of medical monitoring to be $3.588M ($120 x 29,900). Added to the other figures not in dispute ($1.45M in restitution and warranty relief, and $344K), the court found the amount in controversy to be about $5.382M.

The court then turned to Harrington’s “Home State” argument, and recited the rule at 28 U.S.C. § 1332(d)(4)(B):

A district court shall decline to exercise jurisdiction … [where] (B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.

The court then reiterated the rule that the plaintiff bears the burden of showing that this exception applies. In attempting remand on this tack, Harrington argued that Mattel, headquartered in California, was the sole primary defendant because it directed the sales, marketing, and finance groups and senior management of its subsidiaries, such as Fisher-Price (which is based in New York). The Toy Icons countered that Harrington failed to carry her burden because all she proved was that Fisher-Price was a wholly-owned subsidiary of Mattel. The court agreed with the need to honor the separation accorded to a corporate parent and its subsidiary, and found that Harrington had failed to show that Fisher-Price was not a primary defendant. Therefore, the “Home State” exception did not apply and remand was denied.

In sum, Harrington’s suit against our Toy Icons stayed in federal court, she did not get the Barbie corvette she always dreamed of, and she will never get any love from Elmo, Cookie Monster, or any of our other friends at Mattel or Fisher-Price – except maybe Oscar the Grouch.

-L. Bowling