Lisk v. Lumber One Wood Preserving LLC
MEMORANDUM OPINION AND ORDER For the reasons stated within, Lisk's express warranty claim is due to be DISMISSED because it is insufficiently pleaded, and his ADTPA class claim is DISMISSED because the ADTPA, by its own terms, does not allow ind ividuals to mount class actions for its violation. Furthermore, the court ORDERS Lisk to show cause by January 30, 2014 that his claim meets 28 U.S.C. § 1332s minimum amount in controversy, or it will be dismissed without prejudice for want of jurisdiction. Signed by Judge Abdul K Kallon on 1/8/2014. (PSM)
2014 Jan-08 AM 09:39
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
ROBERT C. LISK,
INDIVIDUALLY AND ON
BEHALF OF A CLASS OF
LUMBER ONE WOOD
Civil Action Number
MEMORANDUM OPINION AND ORDER
Robert C. Lisk (Lisk) brings this action, individually and on behalf of a
class of similarly situated persons, against Lumber One Wood Preserving, LLC
(Lumber One) for alleged breach of express warranty and violation of the Alabama
Deceptive Trade Practices Act (ADTPA), Ala. Code §§ 8-19-1 et seq. Doc. 1. Lisk
alleges that Lumber One falsely represented that it manufactured and distributed
lumber that it purportedly treated to resist decay. Lumber One moves to dismiss
the complaint, doc. 11, and the motion is fully briefed, docs. 12, 18, and 20, and
ripe for review. For the reasons stated more fully below, as related to the breach of
express warranty and ADTPA class claims, the motion is GRANTED.
I. STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a
short and plain statement of the claim showing that the pleader is entitled to
relief.” “[T]he pleading standard Rule 8 announces does not require ‘detailed
factual allegations,’ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Mere “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action” are
insufficient. Iqbal, 556 U.S. at 678 (citations and internal quotation marks
omitted). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Id. (citing Bell Atl. Corp., 550 U.S. at 557).
Federal Rule of Civil Procedure 12(b)(6) permits dismissal when a
complaint fails to state a claim upon which relief can be granted. “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678
(citations omitted) (internal quotation marks omitted). A complaint states a
facially plausible claim for relief “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Id. (citation omitted). The complaint must establish
“more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also
Bell Atl. Corp., 550 U.S. at 555 (“Factual allegations must be enough to raise a
right to relief above the speculative level.”). Ultimately, this inquiry is a “contextspecific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
II. FACTUAL BACKGROUND
In July 2010, Lisk entered into a contract for $3,248.16 with Clean Cut
Fence Company (Clean Cut), for the purchase and installation of a fence at his
home. Doc. 1 at 2. The contract called for Clean Cut to use 300 feet of Micronized
Copper Azole (MCA) pressure-treated lumber, and stated that “[a]ll fencing
materials shall be warranted only through their respective manufacturers.” Id.
Clean Cut purchased the necessary lumber from Capitol Wholesale Fence
Company (Capitol Wholesale), id., which had purchased it wholesale from
Lumber One, id. at 6, and installed the fence on Lisk’s property, id. at 2.
At the time relevant to this lawsuit, Lumber One’s website, advertising, and
product labeling stated that Lumber One treated its lumber with MCA technology
licensed by Osmose, Inc. (Osmose). Id. at 3. According to Osmose, lumber treated
with its MCA pressure treatment technology is approved for end-consumer uses
that include fence posts, docks, decking, joists, beams, sills, building poles, and
permanent wood foundations. Id. Osmose also claims that lumber treated with its
MCA pressure treatment technology is designed to remain free from rot, fungal
decay, and termite attacks for a minimum of fifteen to thirty years following
Three years after he had the fence installed, Lisk hired an electrician to wire
it for electricity. Id. During his inspection of the fence, the electrician observed
that the fence posts were rotten and failing. Id. Lisk contacted Clean Cut, which
made the same determination and informed Lisk that his only recourse was to
replace the fence. Id. Clean Cut also informed Lisk that many other consumers had
experienced problems caused by Lumber One’s wood rotting prematurely, but that
Lumber One refused to take responsibility for the defective lumber. Id.
Lisk alleges claims of breach of an express warranty and a violation of the
ADTPA on behalf of himself and others similarly situated.
A. Lisk’s Express Warranty Claim
Lumber One challenges Lisk’s express warranty claim on three separate
grounds, which the court will consider in turn.
1. No written express warranty statement.
Lumber One first challenges Lisk’s express warranty claim by arguing that
“Lisk’s complaint does not adequately allege (and Lisk cannot prove) the
existence of a specific written warranty statement from Lumber One to Lisk.” Doc.
12 at 6. By looking for a direct agreement between Lisk and itself, Lumber One
misconstrues Alabama law and Lisk’s express warranty claim. Lisk does not argue
that he made an agreement with Lumber One. Rather, he argues that Lumber One
made an express warranty to Capitol Wholesale, and that he was an intended thirdparty beneficiary of the warranty. Doc. 1 at 6–7. More to the point, Alabama law
does not require a “specific written warranty statement” in order for a seller to be
bound by an express warranty. See Ala. Code. 7-2-313(1)(a) (“Any affirmation of
fact or promise made by the seller to the buyer which relates to the goods and
becomes part of the basis of the bargain creates an express warranty that the goods
shall conform to the affirmation or promise.”). In his complaint, Lisk alleges that
“Lumber One’s website, advertising, and product labeling represented that its
treated lumber was pressure treated using MCA technology licensed by Osmose
Inc.” Doc. 1 at 3. That allegation is sufficient, at least at the pleading stage, to
support a claim that Lumber One made an “affirmation of fact” that it was selling
Osmose MCA pressure-treated lumber, or, alternatively, described its lumber as
such,1 and that affirmation of fact or description became part of the basis of the
bargain between Lumber One and Capitol Wholesale, namely that it led Capitol
Wholesale to believe the lumber it purchased was Osmose MCA pressure-treated
lumber. Such a conclusion is consistent with Alabama law. See Gable v. Boles,
718 So. 2d 68, 71 (Ala Civ. App. 1998) (finding that a seller’s “statement that [a]
boat had been winterized” was a statement of fact giving rise to an express
2. No privity.
Next, Lumber One argues that Lisk’s express warranty claim fails because
“Lisk, a remote buyer, does not allege and cannot demonstrate privity with
Lumber One.” Doc. 12 at 7. This argument also misses the mark. “In Alabama, a
vertical nonprivity purchaser2 who has suffered only direct or consequential
economic loss cannot recover from a remote manufacturer under an implied
warranty theory. However, privity rules have been applied less restrictively to
express as opposed to implied warranties.” Harris Moran Seed Co., Inc. v.
See Ala. Code 7-2-313(1)(b) (“Any description of the goods which is made part of the
basis of the bargain creates an express warranty that the goods shall conform to the
A vertical nonprivity purchaser “is a buyer within the distributive chain who did not buy
directly from the defendant.” Harris Moran, 949 So. 2d at 922 n. 3 (quoting Gary L. Monserud,
Blending the Law of Sales with the Common Law of Third Party Beneficiaries, 39 Duq. L. Rev.
111, 113 n. 8 (2000).
Phillips, 949 So. 2d 916, 922 (Ala. Civ. App. 2006) (emphasis in original)
(citations omitted) (internal quotation marks omitted). The drafters of the Alabama
Code’s provisions governing express warranties explicitly contemplated the
possibility of an express warranty creating liability to a third party:
Although this section is limited in its scope and direct purpose to
warranties made by the seller to the buyer as part of a contract for sale, the
warranty sections of this Article are not designed in any way to disturb
those lines of case law growth which have recognized that warranties need
not be confined . . . to the direct parties to such a contract. . . . The
provisions of Section 7-2-3183 on third party beneficiaries expressly
recognize this case law development within one particular area. Beyond
that, the matter is left to the case law . . . .
Official Comment, Ala. Code § 7-2-313 (emphasis added). Consequently, the
court must look to Alabama case law to determine whether Lisk’s lack of privity
with Lumber One bars him from making an express warranty claim.
The delineation of third parties’ rights as they relate to express warranties is
Ala. Code § 7-2-318 states that “[a] sellers’ warranty, whether express or implied,
extends to any natural person if it is reasonable to expect that such person may use, consume or
be affected by the goods and who is injured in person by breach of the warranty.” Lumber One
cites § 7-2-318, doc. 12 at 7 n. 1, as support for its argument that privity requirements are only
relaxed when a plaintiff alleges a products liability or personal injury claim, and not when, as in
this case, a plaintiff alleges only economic loss. This argument is refuted by the Official
Comment to Ala. Code § 7-2-313, which states that case law governs whether a third party may
recover for the breach of an express warranty, and explains that § 7-2-318 is merely a recognition
of case law that abolishes privity requirements when a plaintiff alleges personal injury; it does
not exclude third-party express warranty actions in other contexts. Moreover, as explained infra,
Alabama case law does allow for a third party beneficiary who alleges solely economic loss to
recover for the breach of an express warranty. The theory is not, as Lumber One argues, limited
to personal injury and products liability actions.
a thinly developed area in Alabama jurisprudence. The Alabama Supreme Court
has indicated that a vertical nonprivity purchaser who suffered purely economic
harm might be able to recover from a manufacturer under a breach-of-expresswarranty theory, but has not directly addressed the issue. See Bay Lines, Inc. v.
Stoughton Trailers, Inc., 838 So. 2d 1013, 1018–19 (Ala. 2002) (refusing to allow
a third party buyer to sue an original seller for breach of an express warranty
because “a party claiming to be a third-party beneficiary of a contract must
establish that the contracting parties intended, upon execution of the contract, to
bestow a direct, as opposed to an incidental, benefit upon the third party,” and the
third party buyer failed to make such a showing). The Alabama Court of Civil
Appeals, however, squarely dealt with such a claim in Harris Moran. In that case,
farmers sued a seed manufacturer for selling seeds that it claimed grew “Mountain
Fresh” tomatoes, but actually grew another, inferior variety. Harris Moran, 949
So. 2d at 918. The plaintiffs did not purchase the seeds directly from the
defendant. Rather, the defendant sold the seeds to an independent dealer, who sold
them to a farm, that planted them and sold the resulting plants to the plaintiffs. Id.
at 918–19. The plaintiff claimed that the contract between the defendant and the
independent dealer contained a “true to type” express warranty, that it was an
intended third party beneficiary to that contract, and that the defendant breached
the contract by selling seeds that did not grow Mountain Fresh tomatoes. Id. at
920. The court noted that “to recover under a third-party beneficiary theory, the
complainant must show: 1) that the contracting parties intended, at the time the
contract was created, to bestow a direct benefit upon a third party; 2) that the
complainant was the intended beneficiary of the contract; and 3) that the contract
was breached.” Id. (quoting Sheetz, Aiken, & Aiken, Inc. v. Spann, Hall, Ritchie,
Inc., 512 So. 2d 99, 101–02 (Ala. 1987)). According to the court, the key inquiry
was whether the defendant “intend[ed] to protect future customers of [the
independent dealer] and other users when it warranted its products to [the
independent dealer].” Id. at 923. The court concluded that substantial evidence
indicated that the defendant intended to benefit end-users of its products, like the
plaintiffs, when it sold and warranted the seeds to the independent dealer, and
consequently, that the plaintiffs, as third party beneficiaries, could recover on a
breach of contract theory premised on the express warranty between the defendant
and the independent dealer. Id. at 925.
Harris Moran established that under Alabama law, a plaintiff need not
prove privity of contract to succeed on a breach of express warranty claim.
Instead, a plaintiff, as a third party beneficiary, can recover for the breach of an
express warranty by showing that the original contracting parties intended for the
warranty to benefit the third party beneficiary. Id. Consequently, Lumber One’s
argument that is premised on a lack of privity fails.
3. Insufficiently pleaded third party beneficiary claim.
Finally, although it does not expressly concede its argument concerning
privity, Lumber One contends that the court should dismiss Lisk’s express
warranty claim because it is insufficiently pleaded. Citing Harris Moran, Lumber
One argues Lisk’s complaint fails to adequately allege that Lumber One intended
end users like Lisk to benefit from its warranty with Capitol Wholesale. Doc. 12 at
8. Lumber One notes that in Harris Moran, the plaintiffs supported their claims
with a written statement from the defendant to the independent dealer “containing
an express warranty referencing ‘buyer,’ ‘end-user,’ [and] ‘consumer.’” Id. In
contrast, Lumber One argues that the only fact Lisk asserts in support of his
express warranty claim is that Lumber One stated on its website that its lumber
was MCA pressure-treated lumber. Id.
Lisk counters by arguing Harris Moran did not establish a requirement that
a plaintiff pursuing a third party breach of warranty claim allege the specific terms
of that warranty at the pleading stage. Doc. 18 at 6. Lisk contends that such “an
impossible pleading standard . . . would eviscerate ‘third party beneficiary’ claims
because it would require a Plaintiff to allege the actual terms of a written
agreement to which he was not a party . . . prior to conducting discovery to obtain
that agreement.” Id. at 6 n. 3. Instead, Lisk maintains that the warranty terms
presented to the court in Harris Moran were simply part of the “substantial
evidence indicating that when [the seed manufacturer] sold and warranted the
seeds to [the independent dealer] it intended to benefit future customers of [the
dealer] and other end users.” Id. at 6 (quoting Harris Moran, 949 So. 2d at 925).
Additionally, Lisk argues that because Lumber One sold wood to distributors that
was “labeled for resale as treated lumber,” Lumber One and Capitol Wholesale
“had end users like [Lisk] in mind when they reached their agreement.” Id. at 7
(quoting Harris Moran, 949 So. 2d at 924).
In principle, Lisk is correct that the warranty terms relied on by the Harris
Moran plaintiffs were merely evidence supporting their assertion that the original
parties to the contract contemplated its express warranty provisions would benefit
end users such as themselves. Theoretically, at least, the Harris Moran plaintiffs
could have met their burden with some other sort of evidence. Lumber One’s
argument, however, points to a flaw in Lisk’s pleadings: he fails to allege a single
fact supporting a finding that Lumber One and Capitol Wholesale intended an
express warranty created by Lumber One’s description of its product to benefit
end users such as Lisk. Instead, the complaint merely recites the elements of a
third party beneficiary claim. See doc. 1 at 6–7; see also Harris Moran, 949 So. 2d
at 920 (listing required elements of a third party beneficiary claim). Such a
recitation is insufficient to survive a 12(b)(6) motion to dismiss. See Bell Atl.
Corp., 550 U.S. at 555 (noting that “a plaintiff’s obligation to provide the grounds
of his entitlement to relief requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do”) (internal
quotation marks omitted); see also Iqbal, 556 U.S. at 681 (finding pleadings “that
amount to nothing more than a formulaic recitation of the elements of a . . . claim .
. . are conclusory and not entitled to be assumed true”) (internal quotation marks
omitted); Franklin v. Curry, No. 13-10129, 2013 WL 6728101, at *3 (11th Cir.
Dec. 23, 2013) (noting that “[m]ere ‘labels and conclusions or a formulaic
recitation of the elements of a cause of action will not do,’ and a plaintiff cannot
rely on ‘naked assertions devoid of further factual enhancement’”) (quoting Iqbal,
556 U.S. at 678).
The court agrees with Lisk that his allegations that Lumber One sold wood
labeled for resale could indicate that Lumber One and Capitol Wholesale
contemplated the existence of parties to that resale, such as Clean Cut and himself,
when they contracted. But Harris Moran requires more than contemplation of end
users. It requires that the original contracting parties “inten[d] to protect and
benefit the end users.” 949 So. 2d at 925. The mere fact that Lumber One’s wood
was labeled for resale does not give rise to any subsequent inferences about
Lumber One’s intentions toward future purchasers. Similarly, the court agrees
with Lisk that requiring a plaintiff to allege facts about an agreement to which it
was not a party sets a high bar for a putative third party beneficiary. But, as the
Supreme Court noted in Iqbal, “Rule 8 marks a notable and generous departure
from the hyper-technical, code-pleading regime of a prior era, but it does not
unlock the doors of discovery for a plaintiff armed with nothing more than
conclusions.” 556 U.S. at 678–79; see also Franklin, 2013 WL 672801, at *4 n. 6
(rejecting the argument that the plaintiff’s “lack of knowledge should relax the
pleading standard to which she is held” and noting that “‘[w]hile this may mean
that a civil plaintiff must do more detective work in advance, the reason is to
protect society from the costs of highly unpromising litigation’”) (quoting DM
Research, Inc. V. Coll. Of Am. Pathologists, 170 F.3d 53, 56 (1st Cir. 1999)).
For the reasons stated above, Lisk’s breach of express warranty claim is
insufficiently pleaded. Consequently, it is due to be and is DISMISSED.
B. Lisk’s Claim under the Alabama Deceptive Trade Practices Act
Lumber One argues that Lisk cannot bring a class action based on a claim
arising under the ADTPA.4 Doc. 12 at 9–10. Lisk disagrees and contends that,
pursuant to the Supreme Court’s decision in Shady Grove Orthopedic Associates,
P.A., v. Allstate Insurance Co., 559 U.S. 393 (2010), this provision of the ADPTA
is preempted by Federal Rules of Civil Procedure 23 (Rule 23). Doc. 18 at 14.
In Shady Grove, a majority of five justices found that a New York law
prohibiting class actions in suits seeking penalties or statutory minimum damages
conflicted with Rule 23. 559 U.S. at 399. Therefore, a federal court sitting in
diversity could only apply the New York law if Rule 23 was not authorized by the
Rules Enabling Act and was consequently ultra vires. Id. at 406. A plurality of
four justices found that Rule 23 always falls within the authorization of the Rules
Enabling Act. Id. at 408 (Scalia, J., plurality opinion). But, in a controlling
concurrence,5 Justice Stevens posited that, “[a] federal rule . . . cannot govern a
The ADTPA provides that:
[a] consumer or other person bringing an action under this chapter may not bring
an action on behalf of a class; provided, however, that the office of the Attorney General
or district attorney shall have the authority to bring action in a representative capacity on
behalf of any named person or persons.
Ala. Code § 8-19-10(f).
“When a fragmented Court decides a case and no single rationale explaining the result
enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken
by those Members who concurred in the judgments on the narrowest grounds.’” Marks v. United
States, 430 U.S. 188, 193 (1977) (quoting Gregg v. Georgia, 428 U.S. 153, 169 n. 15 (1976)).
“The ‘narrowest grounds’ is understood as the ‘less far-reaching common ground.’” United
States v. Robison, 505 F.3d 1208, 1221 (11th Cir. 2007) (quoting Johnson v. Bd. of Regents, 263
particular case in which the rule would displace a state law that is procedural in
the ordinary use of the term but is so intertwined with a state right or remedy that
it functions to define the scope of the state-created right.” Id. at 423 (Stevens, J.,
concurring). The application of a federal rule in such circumstances, Justice
Stevens reasons, would violate the Rules Enabling Act’s requirement “that federal
rules ‘not abridge, enlarge, or modify any substantive right.’” Id. at 422 (Stevens,
J., concurring) (emphasis in original) (quoting 28 U.S.C. § 2072(b)). Justice
Stevens went on to conclude that the New York law in question was purely
procedural, and therefore the application of Rule 23 would not alter a state-created
substantive right. Id. at 432 (Stevens J., concurring). In reaching his conclusion,
Justice Stevens noted that the New York law at issue “expressly and
unambiguously applies not only to claims based on New York law but also to
claims based on federal law or the law of any other State,” id. (Stevens, J.,
concurring), and that its legislative history did not clearly indicate it was enacted
F.3d 1234, 1247 (11th Cir. 2001). In Shady Grove, both the plurality and Justice Stevens
concluded that Rule 23 preempted the New York Law at issue. See Shady Grove, 559 U.S. at 408
(Scalia J., plurality opinion); id. at 436 (Stevens J., concurring). But, “[b]ecause Justice Stevens’
concurring opinion would permit some state law provisions addressing class actions—whereas
[the plurality opinion] would broadly prohibit any state law that conflicted with Rule 23—
Justice Stevens’ opinion is the narrowest and, thus, controlling opinion.” McKinney v. Bayer
Corp., 744 F. Supp. 2d 733, 747 (N.D. Ohio 2010). The majority of courts attempting to apply
Shady Grove likewise have concluded that Justice Stevens’ concurrence controls. See, e.g.,
Leonard v. Abbott Labs., No. 10-cv-4676 (ADS) (WDW), 2012 WL 764199, at *12 (E.D.N.Y.
Mar. 5, 2012) (collecting cases).
to limit access to New York’s statutory penalties, id. at 436 (Stevens, J.,
Since the Supreme Court decided Shady Grove, a number of district courts
have considered cases that roughly raised the same question this court now faces:
does Shady Grove require a federal court sitting in diversity to apply Rule 23
rather than a state law that either explicitly or effectively limits a plaintiff’s ability
to bring a class action? Generally, these courts have concluded that if the limiting
provision is found within the text of a state statute that confers a substantive right
and applies only to cases brought under the statute, it is so intertwined with a
state’s substantive remedies that applying Rule 23 in its stead would abridge,
enlarge, or modify a substantive state-created right, and consequently violate the
Rules Enabling Act. See In re Nexium (Esomeprazole) Antitrust Litig., Civil
Action No. 12-md-02409-WGY, 2013 WL 4832176, at *28, *30 (D. Mass. Sept.
11, 2013) (finding that a provision of the Illinois Antitrust Act (IAA) requiring
indirect purchaser suits to be brought by the Illinois Attorney General and a
provision of the Utah Antitrust Act requiring residency to sue under the Act were
not preempted by Rule 23); In re Frito-Lay N. Am., Inc. All Natural Litig., No.
12-MD-2413 (RRM) (RLM), 2013 WL 4647512, at *18 (E.D.N.Y. Aug. 29, 2013)
(finding a provision of New York’s General Business law limiting its application
to conduct occurring within New York not preempted by Rule 23); Phillips v.
Phillip Morris Cos., Inc., 290 F.R.D. 476, 481 (N.D. Ohio, 2013) (finding a
provision of the Ohio Consumer Sales Practice Act (OCSPA) prohibiting class
actions unless defendants were on constructive notice that their alleged behavior
was deceptive not preempted by Rule 23); Williams v. Chesapeake La., Inc., Civil
Action No. 10-1906, 2013 WL 951251, at *5 (W.D. La. Mar. 11, 2013) (finding a
notice provision of Louisiana’s Mineral Code Articles that effectively barred class
actions for the underpayment of mineral royalties not preempted by Rule 23);
Leonard v. Abbott Labs., Inc., No. 10-cv-4676 (ADS) (WDW), 2012 WL 764199,
at *13 (E.D.N.Y. Mar. 5, 2012) (finding OCSPA class action limitation not
preempted by Rule 23); In re Digital Music Antitrust Litig., 812 F. Supp. 2d 390,
416 (S.D.N.Y. 2011) (finding IAA indirect purchaser requirement not preempted
by Rule 23); Tait v. BSH Home Appliances Corp., No. SACV 10-711 DOC (ANx),
2011 WL 1832941, at *9 (C.D. Cal. May 12, 2011) (finding provision of the
Tennessee Consumer Protection Act (TCPA) barring plaintiffs from bringing class
actions under the act not preempted by Rule 23); Kline v. Mortg. Elec. Sec. Sys.,
No. 3:08cv408, 2010 WL 6298271 (S.D. Ohio, Dec. 30, 2010) (finding OCSPA
class action limitation not preempted by Rule 23); In re Wellbutrin XL Antitrust
Litig., 756 F. Supp. 2d 670, 678 (E.D. Pa. 2010) (finding IAA indirect purchaser
requirement not preempted by Rule 23); McKinney v. Bayer Corp. 744 F. Supp. 2d
733, 748–49 (N.D. Ohio, 2010) (finding OCSPA class action limitation not
preempted by Rule 23); Bearden v. Honeywell Intern., Inc., No. 3:09-1035, 2010
WL 3239285, at *8–*10 (M.D. Tenn. Aug. 16, 2010) (finding TCPA class action
limitations not preempted by Rule 23); In re Whirlpool Corp. Front-Loading
Washer Prods. Liab. Litig., No. 1:08-WP-65000, 2010 WL 2756947 (N.D. Ohio,
July 12, 2010)(finding OCSPA class action limitation not preempted by Rule 23)
(vacated on other grounds sub nom Whirlpool Corp. v. Glazer, 133 S. Ct. 1722
The ADTPA’s bar on private class actions is precisely the type of provision
described in the above cases. It is contained in the same section of the Alabama
Code that creates a private right of action under the ADPTA, see Ala. Code § 819-10, and its text limits its application to private rights of action brought under
the ADPTA, see § 8-19-10(f) (stating that “[a] consumer or other person bringing
an action under this chapter may not bring an action on behalf of a class”)
(emphasis added). Consequently, it defines the scope of a state-created right or
remedy. Applying Rule 23 in its stead would modify that remedy and therefore
violate the Rules Enabling Act.
In arguing to the contrary, Lisk relies heavily on the Alabama Supreme
Court’s decision in Ex parte Exxon Corp. In that case, the court decertified a
nationwide class action proceeding in Alabama courts under New Jersey’s
consumer protection laws. Ex parte Exxon Corp., 725 So. 2d 930, 930, 932 (Ala.
1998). Lisk ostensibly argues that the Exxon court applied the ADTPA’s bar on
private class actions to the plaintiffs’ class action brought under New Jersey law,
and that consequently, the “ADTPA’s bar on class actions is separate and distinct
from an individual’s rights or cause of action created by the ADTPA.” Doc. 18 at
14. However, the Exxon court did not apply the ADTPA’s bar on private class
actions to New Jersey law. Instead, the Exxon court recognized that Alabama
public policy, as embodied in the ADTPA’s bar on private class actions, “does not
allow consumers to bring class actions based on deceptive trade practices.” Exxon,
725 So. 2d at 933. As the Exxon court recognized, Alabama courts will not apply
the laws of another state if they are contrary to public policy. Id. (citing Cherry,
Bekaert & Holland v. Brown, 582 So. 2d 502, 507 (Ala. 1991) (stating that “where
application of [another] state’s laws would be contrary to Alabama policy, the
parties’ choice of law will not be given effect and Alabama law will govern”).
Consequently, the court did not decertify the class by applying the ADPTA’s bar
on private class actions to New Jersey law; it decertified the class because
applying New Jersey law to the claim would violate Alabama’s public policy, and
case law dictated that the proper course of action under the circumstances was to
apply Alabama law instead of New Jersey law. Therefore, contrary to Lisk’s
claims, Exxon does not stand for the notion that the ADTPA’s bar on private class
actions is separate and distinct from the substantive rights created by the statute.
Lisk also contends “the ADTPA’s prohibition of private class actions is
merely a ‘procedural rule adopted for some policy reason’ of the exact kind that
Justice Stevens found must yield to Rule 23 in federal court.” Doc. 18 at 13. This
argument ignores both the Court’s reasoning in Shady Grove and the unambiguous
intent of the Alabama legislature. Justice Stevens referred to “procedural rules
adopted for some policy reason,” in the context of his observation that the
legislative intent behind the law at issue in Shady Grove was unclear. Shady
Grove, 559 U.S. at 433 (Stevens, J., concurring) (noting that “the legislative
history, moreover, does not clearly describe a judgment that [the law at issue]
would operate as a limitation on New York’s statutory damages”). Moreover,
Justice Stevens seems to indicate that were it clearer that the New York legislature
enacted the law at issue in Shady Grove to limit the state’s damages remedy, i.e. a
substantive right, applying Rule 23 would violate the Rules Enabling Act. Id. at
436. In the present case, the Alabama Code clearly states that the legislative intent
behind the ADTPA is to “protect the interest of both the consuming public and the
legitimate businessperson.” Ala. Code § 8-19-2. The ADTPA’s class action bar
effectuates this intent by protecting legitimate business owners from potentially
spurious class actions brought by consumers while still providing consumers with
recourse to a class action suit, as long as it is brought by the Alabama Attorney
General or a district attorney. In other words, the legislative intent is served
through the limitation the bar places on a state-created substantive right. It is
therefore not, as Lisk argues, “a procedural rule adopted for some policy reason.”
For the reasons stated above, the ADTPA’s bar on private class actions is
not preempted by Rule 23. Consequently, Lisk may not maintain a class action
based on his claim brought under the ADPTA. His class action claim is due to be,
and is, DISMISSED.
C. Subject Matter Jurisdiction
Lisk originally invoked this court’s jurisdiction under the Class Action
Fairness Act of 2005. Doc. 1 at 2. Now that his sole remaining claim is his
individual action under the ADPTA, however, Lisk can continue to pursue his
claim in federal court only if he meets the diversity jurisdiction requirements set
forth in 28 U.S.C. § 1332. There is diversity of citizenship between the parties, as
Lisk is a resident of Tennessee, and Lumber One is incorporated and has its
principal place of business in Alabama. Id. at 1. But, the court maintains serious
doubts as to whether Lisk can satisfy 28 U.S.C. §1332(a)’s $75,000 minimum
amount in controversy requirement, in part, because the ADPTA limits a
plaintiff’s recovery to up to three times any actual damages. Ala. Code § 8-1910(a). Moreover, a plaintiff may only recover attorney’s fees in a suit to enforce
liability under the Act or in a suit to obtain injunctive relief. Ala. Code § 8-1910(a)(3). In his complaint, Lisk alleges actual damages of $3,248.16–the cost of
“replac[ing] the fence at the same cost” he initially paid for it. See doc. 1 at 2–3.
Even if Lisk is entitled to three times this amount, to satisfy the amount in
controversy requirement and maintain his action in federal court, he must
demonstrate that he is entitled to more than $65,000 in attorney’s fees. See
Federated Mut. Ins. Co. v. McKinnon Motors, LLC., 329 F.3d 805, 807 (11th Cir.
2003) (stating that “where jurisdiction is based on a claim for indeterminate
damages, . . . the party seeking to invoke federal jurisdiction bears the burden of
proving by a preponderance of the evidence that the claim on which it is basing
jurisdiction meets the jurisdictional minimum”) (citations omitted) (internal
quotation marks omitted). Therefore, the court ORDERS Lisk to show cause by
January 30, 2014 that his claim meets 28 U.S.C. § 1332’s minimum amount in
controversy, or it will be dismissed without prejudice for want of jurisdiction.
For the reasons stated above, Lisk’s express warranty claim is due to be
DISMISSED because it is insufficiently pleaded, and his ADTPA class claim is
DISMISSED because the ADTPA, by its own terms, does not allow individuals to
mount class actions for its violation. Lisk may proceed in his individual ADTPA
claim, but only if he is able to demonstrate that his claim meets 28 U.S.C. § 1332’s
minimum amount in controversy requirement.
DONE this 8th day of January, 2014.
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
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