No. 20-1355 ___________________________

John Penrod; Gus Erpenbach; Juan Welsh, all individually and on behalf of themselves and all others similarly situated

lllllllllllllllllllllPlaintiffs - Appellants

v.

K&N Engineering, Inc.

lllllllllllllllllllllDefendant - Appellee ____________

Appeal from United States District Court for the District of Minnesota ____________

Submitted: March 17, 2021 Filed: September 15, 2021 ____________ Before SHEPHERD, ERICKSON, and KOBES, Circuit Judges. ____________ ERICKSON, Circuit Judge.

Plaintiffs are three individuals who purchased oil filters designed by defendant K&N Engineering, Inc. (“K&N”). They seek to represent a nationwide class of all purchasers of three styles of K&N oil filters that they allege share a common defect, although most proposed class members had oil filters that never exhibited the alleged defect. The district court1 found that plaintiffs failed to plausibly allege the amount in controversy exceeded $5 million and on that basis concluded that it lacked jurisdiction under the Class Action Fairness Act (“CAFA”). See 28 U.S.C. § 1332(d)(6). Plaintiffs appeal, and we affirm. I. BACKGROUND

John Penrod, Gus Erpenbach, and Juan Welsh are the named plaintiffs in this case. Each of them purchased a K&N designed KN-204 oil filter that failed, causing varying levels of damage to their motorcycles. Specifically, in the cases of Penrod and Erpenbach, the failure caused oil to leak onto the rear tire of their motorcycles. In Welsh’s case, the failure caused catastrophic damage requiring him to replace his motorcycle’s engine at a cost of about $10,000.

Plaintiffs filed suit in the District of Minnesota and sought to represent a broad class of purchasers of three different styles of oil filters designed by K&N and sold throughout the United States. Plaintiffs allege that K&N failed to disclose a structural and manufacturing defect that can cause these oil filters to suddenly separate or fracture. According to plaintiffs, the defect made the oil filters susceptible to failure and increased the risk of catastrophic failure such that, had K&N disclosed the defect, purchasers would have found the risk unacceptable. Because of the defect, plaintiffs claim they either paid too much for their filters or would not have purchased them at all. While the named plaintiffs purchased oil filters that failed, their proposed class includes purchasers whose oil filters never failed.

Plaintiffs assert a number of different tort claims, including breach of warranty, fraud, negligence, and strict liability. Each claim is dependant upon CAFA as the

1 The Honorable Eric C. Tostrud, United States District Judge for the District of Minnesota.

-2- source of federal jurisdiction. The district court found that plaintiffs’ reliance on CAFA was ineffectual because they failed to plausibly plead an aggregate amount in controversy exceeding $5 million. In particular, the court accepted as plausible plaintiffs’ estimation of 2.5 million oil filters sold during the class period. Plaintiffs estimate that only 3/100ths of 1% of the oil filters at issue failed. With approximately 750 alleged defective oil filters, the damages must exceed $6,666.66 per oil filter failure to meet the jurisdictional threshold. The court found plaintiffs’ assumption that each defective filter caused $10,000 in damages was not plausible and neither was $6,666.66 per failure. Plaintiffs appeal, arguing they plausibly pleaded an amount