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MCGOWAN v. CADBURY SCHWEPPES

September 9, 1996

MICHAEL D. MCGOWAN, Plaintiff, against CADBURY SCHWEPPES, PLC, AND CADBURY SCHWEPPES, INC., Defendants.


The opinion of the court was delivered by: BAER

 Hon. Harold Baer, Jr., District Judge.

 Plaintiff brought this class action against defendant in state court seeking damages and injunctive relief for defendant's alleged false advertising of Holland House Red Cooking Wine. Defendant removed this action to federal court asserting diversity jurisdiction over plaintiff's claims pursuant to 28 U.S.C. § 1332. Plaintiff now moves to remand. For the reasons set forth below, plaintiff's motion is granted.

 I.Background

 Plaintiff filed this class action in the Supreme Court of the State of New York on behalf of himself and all other persons in the United States who purchased Holland House Red Cooking Wine during the applicable class period. Plaintiff alleges that defendants made misrepresentations in the advertising, promotion and labelling of Holland House Red Cooking Wine. Plaintiff seeks an unspecified amount of compensatory damages, punitive damages and attorney's fees. Plaintiff also seeks equitable relief and asks that the Court enjoin defendants from further misrepresentations and to require defendants to issue a corrective advertising and promotional campaign as well as corrected product labelling. Defendant removed the case to the Federal District Court for the Southern District of New York pursuant to 28 U.S.C. § 1332. Plaintiff seeks to remand the case to state court.

 II. Discussion

 Pursuant to 28 U.S.C. § 1332, this Court may exercise diversity jurisdiction only where the parties are of diverse citizenship and the amount in controversy exceeds $ 50,000, exclusive of interests and costs. 28 U.S.C. § 1332(a). There is no dispute that the parties are diverse here. *fn1" Thus, the only question for the Court to resolve is whether the amount in controversy requirement is satisfied.

 Defendants bear the burden of proving that the jurisdictional requirements of 28 U.S.C. § 1332 are satisfied. Chase Manhattan Bank, N.A. v. American Nat'l Bank and Trust Co. of Chicago, 1996 U.S. App. LEXIS 22016, 93 F.3d 1064, 1996 WL 482698, *4 (2d Cir. Aug. 27, 1996) (citations omitted) (quoting Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781, 784 (2d Cir. 1994) ("[a] party invoking the jurisdiction of the federal court has the burden of proving that it appears to a 'reasonable probability' that the claim is in excess of the statutory jurisdictional amount."); see also McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 80 L. Ed. 1135, 56 S. Ct. 780 (1936) (the party seeking federal court jurisdiction bears the burden of establishing that the requirements of 28 U.S.C. § 1332 are satisfied). Defendants advance three arguments in support of their argument that jurisdiction is proper here; (1) this Court can look to the cost of injunctive relief to defendant to satisfy the amount in controversy requirement; (2) plaintiff's request for punitive damages constitutes a "common and undivided interest" of the class; or (3) if plaintiff is successful, all attorney's fees will be awarded to the class representative, thus this Court can exercise supplemental jurisdiction over the unnamed plaintiffs under 28 U.S.C. § 1367.

 Removal is granted here as it is in Bernard v. Gerber Food Products Co., 95 Civ. 1903 (HB), also decided today. Since the defendants in both actions make the same legal arguments, familiarity with that opinion is assumed and the analysis here is somewhat abbreviated.

  a. Defendant's equitable relief argument is rejected.

 Defendant contends that plaintiff seeks equitable relief in the form of a court order that requires defendants to retract existing labelling, promotional materials and advertising for Holland House Red Cooking Wine which contains alleged misstatements and issue corrective labelling, promotional and advertising campaigns. Defendants contend that the cost of equitable relief, if awarded, to defendants would exceed $ 50,000. Further, defendants contend that the Court should view this cost from the perspective of defendants and thus, it satisfies the jurisdictional requirements of 28 U.S.C. § 1332.

 Although it is likely that equitable relief in the form of a corrective advertising campaign would likely cost defendants at least $ 50,000, if not much more, the Second Circuit has rejected the contention that the Court can consider the relief sought from the perspective of either party or the party seeking jurisdiction when determining whether the amount in controversy requirement has been satisfied. In fact, the Second Circuit follows the majority of courts and looks to the relief sought from the plaintiff's viewpoint. Law Audit Services Inc. v. Studebaker Technology, Inc., 1996 U.S. Dist. LEXIS 3621, 1996 WL 137492, at *4 (S.D.N.Y. Mar. 27, 1996) (citing Kheel v. Port of New York Authority, 457 F.2d 46 (2d Cir.), cert. denied, 409 U.S. 983, 34 L. Ed. 2d 248, 93 S. Ct. 324 (1972)); Leslie v. Banctec Service Corp., 928 F. Supp. 341, 348 n.11 (S.D.N.Y. 1996) ("When necessary, the Court will use the "plaintiff's viewpoint" test.") (citing Law Audit Servs., Inc. v. Studebaker Tech., Inc., 1996 U.S. Dist. LEXIS 3621, 96 Civ. 0926, 1996 WL 137492, *3 (S.D.N.Y. Mar. 27, 1996). At least one case, Cowan v. Windeyer, 795 F. Supp. 535, 537 (N.D.N.Y. 1992), suggests that this is clearly the law; there is "ample case authority from this circuit holding that the amount in controversy for jurisdictional purposes should be measured strictly from the plaintiff's perspective, without regard to the damage caused to any other party." Id. (citations omitted).

 Further, there are strong policy considerations which favor maintaining the plaintiff's viewpoint rule. Congress' intent to restrict federal court jurisdiction would be diluted if courts measured the costs of relief from the defendant's viewpoint in a removal action and such a rule would only broaden, rather than restrict, federal court jurisdiction. *fn2" Additionally, jurisdictional requirements are based generally upon the rights asserted by the plaintiff without regard to the defendant's pleading. Cowan, 795 F. Supp. at 538. Consequently, defendant's argument that ...


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