The Franchise Memorandum

A federal court in Nevada remanded a class action back to state court after Red Robbin was unable to show that the putative damages exceeded the amount in controversy requirement under the Class Action Fairness Act (CAFA). Bruun v. Red Robin Gourmet Burgers, Inc., 2021 WL 529784 (D. Nev. Feb. 12, 2021). A putative class of Red Robin customers alleged they had been denied 2 ounces of Stella Artois beer when they ordered 16-ounce beers that were actually served in challises that could only hold 14 ounces. Red Robin removed the case to federal court under CAFA. In response, plaintiffs argued the jurisdictional requirements under CAFA were not satisfied and requested the federal court remand the matter back to state court.

The court agreed to remand the matter, noting that CAFA gives federal courts jurisdiction over class actions if the putative class has at least 100 members, the parties have minimal diversity, and the amount in controversy exceeds $5 million. When a defendant removes a case to federal court under CAFA, the court presumes the amount in controversy is satisfied unless challenged, and then the defendant must prove the amount in controversy. Red Robin argued that from 2016 to May 2020, its taps poured more than $16 million in Stella Artois sales at their 454 corporate stores, and even more at their 102 franchised locations. In response, plaintiffs argued the amount in controversy should be limited to the amount of sales Red Robin received for the unrequited 2-ounces of beer, which was really only 12.5% of total sales or $449,500. The court further discounted the amount in controversy because it was not reasonable to assume that every drop of Stella Artois ordered was for 16-ounce beer. Red Robin tried to fill their glass with attorneys’ fees and treble damages, but even those frothy damages could not satisfy the amount in controversy requirement. Thus, the federal court remanded the matter back to the (state) bar.