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Coca Cola Class Action Defense Case-Oshana v. Coca Cola: Federal Court Jurisdiction Exists And District Court Properly Granted Defense Motion To Dismiss Class Action Under Cable Communications Policy Act Because Act Does Not Apply To Internet Services

Seventh Circuit Holds that Certification of Class Action Properly Denied Because Putative Class Included Members who Suffered no Damage and Because Plaintiff’s Claims were not Typical of the Class

Plaintiff filed a putative class action against Coca Cola in Illinois state court for violating the state’s Consumer Fraud and Deceptive Practices Act and for unjust enrichment on the theory that “Coke tricked consumers into believing that fountain Diet Coke and bottled Diet Coke have the same ingredients” when in fact the company used different sweeteners in the drinks. Oshana v. Coca-Cola Co., 472 F.3d 506, 509 (7th Cir. 2006). According to plaintiff, Coke used only aspartame in the bottled drinks, but combined aspartame with saccharin in its fountain drinks. Id. Defense attorneys removed the class action to federal court and defeated plaintiff’s motion for class certification. The defense then tendered a judgment of $650 to plaintiff, which plaintiff accepted with the provisos that she be permitted to challenge on appeal whether the action had been proper removed and whether her motion to certify a class action had been properly denied. Id. The Seventh Circuit affirmed both rulings of the district court.

Plaintiff purported to bring this action on behalf of “.All individuals who purchased for consumption and not resale fountain Diet Coke in . . . Illinois from March 12, 1999, through the date of entry of an order certifying the class.” Oshana, at 510. Her class action complaint hinged on the allegation that “Coke began advertising in 1984 that Diet Coke would be sweetened with 100% NutraSweet® brand aspartame, leading consumers to believe that all forms of Diet Coke would follow that formula, even though fountain Diet Coke continued to use saccharin.” Id., at 509. While plaintiff disclaimed any right to individual damages in excess of $75,000, she steadfastly refused defense requests that she “admit she would not individually seek an award of attorneys’ fees over $75,000; punitive damages over $75,000; a combined award of compensatory and punitive damages and attorneys’ fees over $75,000; or a combined award of disgorgement, attorneys’ fees, and punitive damages over $75,000.” Id. Accordingly, Coca Cola removed the putative class action to federal court asserting a good faith belief that the amount in controversy exceeded $75,000; the district court denied plaintiff’s motion to remand the action to state court concluding that plaintiff’s damages could exceed $75,000, particularly in light of her refusal to “admit otherwise.” Id., at 509-10.

With respect to the jurisdictional question, the Seventh Circuit recognized that it was the defense burden to “establish that at the time of removal [plaintiff] personally had placed over $75,000 in controversy.” Oshana, at 511. The Court concluded that plaintiff’s individual claim could exceed $75,000 because even though the disclaimer used by plaintiff was widely accepted as a means of “staying out of federal court,” this is only true if the disclaimer is enforceable and in Illinois it is not. Id. As the Circuit Court explained at page 511, “Illinois does not bind plaintiffs to such disclaimers in complaints – like in federal court, plaintiffs in Illinois are not limited to the amounts they’ve requested. So [plaintiff’s] disclaimer had no legal effect.” (Italics added, citations omitted.) To preclude removal, plaintiff should have stipulated that her damages would not exceed $75,000, and her refusal to do so played a significant part in the district court’s and Circuit Court’s analysis. Id., at 511-12. In light of the damages prayed for in the class action complaint, and plaintiff’s refusal to admit that her damages would not exceed $75,000, Coke had a “good-faith belief that the amount in controversy exceeded $75,000,” the class action was properly removed to federal court. Id., at 512. The Seventh Circuit’s gave a pointed explanation at pages 512 and 513:

This result is only fair. [Plaintiff] Oshana cannot benefit by playing a cat-and-mouse game, purporting to disclaim damages in excess of $75,000 but refusing to admit or stipulate that her damages will not exceed that amount. . . . A contrary result would be unjust. Oshana might have returned to state court and after the time had passed for removal . . ., amended her complaint to seek punitive damages and recovered more than $75,000. Coke wanted either to avail itself of federal jurisdiction (to which it was entitled if the amount in controversy was more than $75,000) or secure a binding commitment from Oshana that her claims did not exceed $75,000. Oshana cannot have it both ways – she cannot disclaim damages in excess of $75,000 in order to defeat federal jurisdiction but preserve her right to recover more than that amount by refusing to admit or stipulate to the jurisdictional limit. (Italics added.)

Turning to plaintiff’s motion to certify the lawsuit as a class action, the district court had denied the motion because plaintiff had failed to satisfy the requirements of either Rule 23(a) or 23(b). While plaintiff alleged that she had been deceived by Coke’s advertising, those ads “may have been only a minor factor in the purchasing decisions of other class members” and “some putative class members may have known about the presence of saccharin and bought fountain Diet Coke anyway.” Oshana, at 510. The district court also concluded that proposed class was not sufficiently ascertainable: “The class could potentially include millions of customers, some (if not many) of whom may not have been deceived by Coke’s marketing because at least some of Coke’s ads contained a disclaimer.” Id. The Seventh Circuit agreed. Id., at 513-14. In fact, “Some people may have bought fountain Diet Coke because it contained saccharin, and some people may have bought fountain Diet Coke even though it had saccharin.” Id. (italics in original). Accordingly, “Countless members of Oshana’s putative class could not show any damage, let alone damage proximately caused by Coke’s alleged deception.” Id. Therefore, the class was not sufficiently ascertainable, and plaintiff’s claims were not typical of the class. Id., at 514-15.

Finally, the Seventh Circuit agreed with defense attorneys that plaintiff failed to state a claim for unjust enrichment on behalf of a class. Oshana, at 515. As the Circuit Court explained, the unjust enrichment claim requires that plaintiff “show[] that Coke benefitted to her detriment, and that Coke’s retention of the profits would violate the fundamental principles of justice, equity, and good conscience.” Id. (citation omitted). The Court further held that “in this case Coke cannot have been unjustly enriched without proof of deception.” Because “the proposed class is not sufficiently identifiable or definite” and because plaintiff’s claim is not “sufficiently typical,” the lawsuit did not warrant class action treatment.

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