Tuberville v. New Balance Athletic Shoe, Inc. et al

Filing 19

ORDER granting 13 Motion to Remand; ORDER REMANDING CASE TO STATE COURT; request for attorney fees and costs in pursuit of this motion are denied. Signed by Honorable Robert T. Dawson on April 21, 2011. (cnn)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
EL DORADO DIVISION

ELIZABETH L. TUBERVILLE
v.

PLAINTIFF
No. 1:11-cv-01016

NEW BALANCE ATHLETIC SHOE, INC.
and NEW BALANCE, INC.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
Currently before the Court are Plaintiff’s Motion to Remand
and

supporting

Memorandum

of

Law

(Docs.

13-14),

Defendants’

Response and Brief in Support (Docs. 16-17), and Plaintiff’s Reply
(Doc. 18), as well as supporting exhibits.

Plaintiff disputes the

existence of diversity jurisdiction in this case, as she contends
that the amount in controversy does not exceed the sum or value of
$5,000,000, pursuant to the jurisdictional requirements described
in the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332
(d).

For the reasons reflected herein, Plaintiff’s Motion to

Remand (Doc. 13) is GRANTED, and this case is remanded to the
Circuit Court of Ouachita County, Arkansas.
I.

Background
On February 23, 2011, Plaintiff filed a putative class action

complaint in the Circuit Court of Ouachita County, Arkansas, naming
New

Balance

Athletic

Shoe,

Inc.,

and

New

Balance,

Inc.,

as

defendants and alleging violations of the Arkansas Deceptive Trade
Practices Act (ADTPA) and a claim for unjust enrichment. Plaintiff

contends that Defendants unfairly and misleadingly represented to
consumers

that

their

athletic

shoe’s

unique

design

conferred

certain health benefits, though such benefits were not supported by
scientific evidence. (Doc. 2).

Plaintiff argues that she and

others similarly situated purchased Defendants’ athletic shoes
because

the

product

was

purported

to

“activate

muscles”

and

“increas[e] calorie burn” in a way that standard athletic shoes did
not (Doc. 2, ¶ 2).

In reliance on Defendants’ marketing and

advertising of its athletic shoes, Plaintiff alleges that she and
a proposed class of “thousands” of Arkansas consumers purchased the
shoes and incurred actual damage, while Defendants were unjustly
enriched “as a result of the deceptive, unfair and misleading
business practices.”

(See Doc. 2, ¶¶ 30, 31, and 37).

Defendants responded to Plaintiff’s complaint by removing this
case to federal court on February 23, 2011.

In Defendants’ Notice

of Removal (Doc. 1), they contest that the amount in controversy
would be limited to $74,000 per class member and/or $5,000,000 for
the entire class.

Instead, Defendants argue that the aggregate of

Plaintiff’s claims as pled would or could exceed state court
jurisdictional limits. Defendants ask this Court to consider three
arguments

militating

against

remand,

all

calculating the amount in controversy:

of

which

relate

to

1) Plaintiff and her

counsel do not have the authority to stipulate to a limit on
recovery that would bind the other class members; 2) Plaintiff’s
claims,

on

their

face,

actually

amount

to

more

than

the

jurisdictional maximum allowed in state court, and 3) Plaintiff’s
claims for equitable relief and for “such other relief as this
Court deems just and proper” translate to a potential for recovery
in excess of state court jurisdictional limits.
Plaintiff moved to remand the case back to state court on
March 16, 2011, citing in support of her motion her “binding
stipulation” in the form of two affidavits, one from Plaintiff and
one from her attorney, swearing that Plaintiff would not seek
damages greater than the federal jurisdictional limits imposed by
CAFA.
As a preliminary matter, each party suggests the other is
seeking to thwart CAFA’s legislative intent.

Plaintiff is accused

of inserting stipulations in the complaint so as to avoid removal;
Defendants are accused of ignoring Plaintiff’s stipulations and
exaggerating the potential of Plaintiff’s aggregate damages in an
attempt to force removal.

In light of the fact that Plaintiff has

taken the extreme measure of attaching affidavits to her complaint
that explicitly limit her potential recovery, this Court will
resolve the jurisdictional dispute by scrutinizing the evidentiary
and legal burdens each party must bear in CAFA cases.
II.

Discussion
A.

CAFA Jurisdiction and Legal Burdens

For class actions, the removing party has the burden of
showing that jurisdiction in the federal courts is proper and the
requisite amount in controversy has been met.

Hatridge v. Aetna

Cas. & Sur. Co., 415 F.2d 809, 814 (8th Cir. 1969).

Federal courts

must strictly construe the federal removal statute and resolve any
ambiguities about federal jurisdiction in favor of remand. Transit
Casualty Co. v. Certain Underwriters at Lloyd’s of London, 119 F.3d
619, 625 (8th Cir. 1997).
In this case, CAFA operates to grant federal district courts
original jurisdiction over class actions where there is diversity
of citizenship between the plaintiff and defendants and when “the
matter in controversy exceeds the sum or value of $5,000,000,
exclusive of interest and costs.”
claims of

the

potential

class

28 U.S. C. § 1332 (d)(2).
members

must

be

The

aggregated to

determine whether the jurisdictional minimum has been met.

28

U.S.C. § 1332 (d)(6).
As the complaint does not specify the total amount at issue in
this litigation, the Court must determine whether the amount in
controversy is either over or under the $5,000,000 threshold.

The

analysis of the burden of proof for removal starts with the party
seeking removal, the Defendants. They must show by a preponderance
of the evidence that the amount in controversy exceeds the federal
court’s minimum threshold for jurisdiction.

In re Minn. Mut. Life

Ins. Co. Sales Practices Litig., 346 F.3d 830, 834 (8th Cir. 2003).
Though Defendants bear the initial burden of proof in a removal
action, Plaintiff correctly identifies this case as falling under
the purview of the Eighth Circuit’s holding in Bell v. Hershey, 557
F.3d

953

(8th

Cir.

2009),

in

which

the

Court

described

the

preponderance of the evidence standard that Defendants must meet as
“lenient,” in that the test is “not whether the damages are greater
than the requisite amount, but whether a fact finder might legally
conclude that they are...” Id., citing Kopp v. Kopp, 280 F.3d 883,
885 (8th Cir. 2002).
The Bell case involved a purported class action in Iowa court
against several chocolate manufacturers.

The plaintiff in that

case alleged violations of state antitrust laws.

The defendants

filed a notice of removal to the federal court pursuant to CAFA,
and the plaintiff in turn moved to remand to state court.
557 F.3d at 954.
remanded

the

case

Bell,

Though the Eighth Circuit in Bell ultimately
to

the

district

court

to

determine

the

appropriate amount in controversy, the case is helpful for it
clarifies the burdens each party must meet in a CAFA removal
action, and it provides a roadmap for a CAFA plaintiff to follow to
avoid removal to federal court.

Id. at 959.

Despite the fact that relatively little is required in the way
of detail to meet the preponderance standard, the Bell court still
described it as a “fact intensive” inquiry. Id.

Other federal

courts have stated that mere speculation or conjecture on the part
of the defendant as to the amount in controversy will not be
sufficient to meet the preponderance standard.

See, e.g., Thomas

v. Southern Pioneer Life Ins. Co., 2009 WL 4894695 at *2 (E.D. Ark.
Dec. 11, 2009); Nowak v. Innovative Aftermarket Sys., 2007 WL
2454118

(E.D.

Mo.

Aug.

23,

2007)

(defendant

did

not

meet

preponderance burden because it did not offer evidence as to the
potential number of class members or damage total for each member).
If the preponderance standard was met and Defendants could
establish enough detail to meet the jurisdictional requirement for
the amount in controversy, this Court would then turn its attention
to

the

Plaintiff,

who

would

have

to

establish

“to

a

legal

certainty” that her claim is under the $5,000,000 jurisdictional
minimum. Bell, 557 F.3d at 956 (citing St. Paul Mercury Indem. Co.
v. Red Cab Co., 303 U.S. 283, 290 (1938)).
in a removal case is unique:

The analysis of burdens

the party opposing removal may not

present new evidence to meet her burden during removal proceedings.
Instead, the Court may only look to the initial pleadings contained
in the record “as of the instant of removal” to determine whether
the Plaintiff has met her legal certainty burden.

In re Shell Oil

Co., 970 F.2d 355, 356 (7th Cir. 1992), cited with approval by
Bell, 557 F.3d at 958.
The question in the instant case, one which no other court has
definitively answered, is whether a plaintiff may meet her legal
certainty burden by stipulating at the time the complaint is filed
that she will not seek more than the federal jurisdictional minimum
for herself and the putative class.

To answer that question, this

Court must look to the guidance in Bell:
“In order to ensure that any attempt to remove
would have been unsuccessful, Bell could have
included a binding stipulation with his petition
stating that he would not seek damages greater
than the jurisdictional minimum upon remand...”
Id. at 958, citing De Aguilar v. Boeing Co., 47

F.3d 1404, 1412 (5th Cir. 1995) (“[l]itigants
who want to prevent removal must file a binding
stipulation
or
affidavit
with
their
complaints...”).
Even though the Bell court did not specifically reference the legal
certainty burden, it did conclude that a clear stipulation, when
submitted in good faith along with the complaint, would meet the
Court’s

requirements

for

defeating

removal.

By

extension,

it

follows that if a stipulation can defeat removal, it can also
satisfy the plaintiff’s legal certainty burden.
B.

Due Process Concerns for the Class

Defendants think it inappropriate for Plaintiff to bind the
as-yet-unknown class members with her stipulation limiting the
total recovery. Defendants raise due process concerns on behalf of
the putative class and assert that allowing the Plaintiff to
“submit a stipulation waiving the rights of all the purported class
members she seeks to represent...would gut CAFA and contravene its
very purpose to eradicate class action abuses that were adversely
impacting

interstate

commerce.”

(Doc.

17

at

4-5)

Further,

Defendants take exception to “Plaintiff’s attempt here to carve out
an ‘Arkansas only’ class action,” calling such a move “class action
abuse.”

Id. at 5.

Though

the

Court

commends

Defendants

for

their

spirited

advocacy on behalf of the putative class, it is clear that,
contrary to Defendants’ assertions, the plaintiff is still “master
of the complaint” even in a class action subject to CAFA. Bell, 557
F.3d at 956; Brill v. Countrywide Home Loans, Inc., 427 F.3d 446,

449 (7th Cir. 2005) (The complication is that a removing defendant
can’t make the plaintiff’s claim for him...”).

Furthermore,

established U.S. Supreme Court precedent holds that a plaintiff may
structure her complaint so as to plead less than the jurisdictional
amount in order to avoid trying her case in federal court.
Paul Mercury, 303 U.S. 283 at 294.
certainly

within a

defendant’s

St.

By the same token, it is

rights

to assert

a

basis

for

removal, should the defendant wish to avoid state court.
As it is Plaintiff’s prerogative to define the class as she
chooses, she may limit the class to Arkansas consumers, and she may
also define the method and means through which relief is to be
obtained for the class.

It is of no moment that Plaintiff

currently qualifies for inclusion in other nationwide class actions
concerning the same product.

The Plaintiff may assert her own

claims, and she may set the terms for her class.
Defendants would prefer this Court to follow the Western
District of Missouri’s holding in Bass v. Carmax Auto Superstores,
Inc., 2008 WL 441962 (W.D. Mo., Feb. 14, 2008), for the proposition
that a class plaintiff has no right to limit recovery for a class
without court approval.

However, the Bass case was decided before

Bell, and the holding in Bass contradicts both the plain language
and the spirit of the Eighth Circuit’s holding in Bell.
This Court turns to a case from the federal court for the
Eastern District of Arkansas, which is discussed here because its
reasoning is more in line with Bell and is helpful in addressing

Defendants’ concerns about the amount in controversy.

See Harris

v. Sagamore Ins. Co., 2008 WL 4816471 (E.D. Ark., Nov. 3, 2008).
In the Harris case, Judge Holmes summarized a number of due process
protections available to defendants who are concerned about CAFA
plaintiffs manipulating the judicial process and achieving an award
in

state

court

in

protections include:

excess

of

$5,000,000.

These

due

process

1) allowing defendants to remove again later

if plaintiff files pleadings that assert an amount in damages
exceeding the jurisdictional maximum (Cf. Interstate Oil & Supply
Co. v. Troutman Oil Co., 972 S.W.2d 941, 943 (1998)); 2) prorating
the recoverable damages among the class members; and 3) utilizing
the doctrine of judicial estoppel, as recognized by the Supreme
Court of Arkansas in Dupwe v. Wallace, 140 S.W. 3d 464 (2004), to
bar a plaintiff who has stipulated to a cap on damages from
recovering more than the jurisdictional maximum.

Harris, 2008 WL

4816471 at *3.
Moreover, it is important to keep in mind that the Plaintiff
in the case at bar has not yet been named class representative, nor
has the class been certified by any court.

It also follows that

putative class members could simply opt out of the class and pursue
their own remedies or join a different ongoing class action if they
feel that the limitations placed on the class by the Plaintiff are
too restrictive.

Cf. Feldman v. The Standard Fire Ins. Co., Case

4:08CV000143 JMM (Doc. 24, May 15, 2008) (remanding case to state
court, noting CAFA plaintiff did not yet represent the class, as

the class had not yet been certified).
C.

Calculating the Amount in Controversy
1.

Face Value of Claims in the Complaint

Defendants argue that more than $5,000,000 is at stake, even
though

Plaintiff

and

her

attorney

insist

otherwise.

First,

Defendants point to the stipulations themselves (Exh. 1 and 2, Doc.
2), which state that Plaintiff does not seek individual damages
exceeding $75,000, and her attorneys do not seek fees and costs
exceeding $75,000 for each class member.

Defendants then make the

observation that since there are potentially thousands of class
members, this Court should take out a calculator and come to a
number of derivative conclusions.
Specifically, it appears that Defendants want this Court to
multiply $75,000 by 1000 class members to arrive at a $75,000,000
damage award.

Defendants fail to meet their preponderance of the

evidence burden by providing any real numbers on which to base
Plaintiff’s

recovery.

Significantly,

Defendants

do

not

even

specify the number of consumers of their product in Arkansas, a
number that is within Defendants’ knowledge and would certainly
assist in defining the size of the class.

As Judge Wilson

admonished in Thomas v. Southern Pioneer Life Ins. Co., 2009 WL
4894695 at *2 (E.D. Ark. Dec. 11, 2009), “[a]rgument . . . is not
evidence.”
2.
Next,

Equitable Relief and “Other Relief Just and Proper”

Defendants

assert

that

Plaintiff

could

potentially

obtain injunctive relief through her claim for unjust enrichment,
and this relief could amount to more than $5,000,000 in disgorged
profits (the cost of Defendants’ nationwide advertisement campaign
for its shoes).

The Eighth Circuit previously held in Usery v.

Anadarko Petroleum Corp., 606 F.3d 1017 (8th Cir. 2010), that it
does not endorse the rule followed by other circuits that the
amount in controversy can sometimes be measured by the defendant’s
costs, rather than the potential benefit the plaintiff stands to
gain in winning.

Id. at 1019.

Here, as in the Anadarko case, the

Defendants did not offer even a modicum of proof to counter
Plaintiff’s sworn statement that her damages would not exceed the
statutory maximum.
Similarly, though the ADTPA does entitle claimants to actual
damages resulting from an offense or violation of the Act, whether
that total would exceed $5,000,000 is pure speculation on the
Defendants’ part and is not supported by evidence sufficient to
meet the preponderance of the evidence standard.
Finally,

the

boilerplate

“catch-all”

included

in

most

complaints includes a plea for the court to award “such other
relief as is just and proper.”

In this case the Plaintiff included

such a catch-all in her plea for relief.
construe

this

plea

to

potentially

injunctive relief and punitive damage.

Defendants, however,

include

various

forms

of

Again, such relief is too

speculative to be given credence by this Court.

Moreover, this

Court is unaware of any precedent that dictates that punitive

damages are assumed pled unless specifically disclaimed.

Contrary

to Defendants’ assertions, the case of Price v. USAA Cas. Inc. Co.,
et. al., Case 2:10CV02152 PKH (Doc. 17, Jan. 10, 2011), does not
stand for this proposition.
III.

Conclusion
The Court finds that Defendants have failed to show by a

preponderance of the evidence that this case should remain in
federal court.

The Court also finds that Plaintiff has shown to a

legal certainty that the aggregate damages claimed on behalf of
the putative class shall in good faith not exceed the state
jurisdictional limitation of $5,000,000.

Accordingly, Plaintiff’s

Motion to Remand (Doc. 13) is hereby GRANTED.

Plaintiff’s request

for attorney fees and costs in pursuit of this motion are DENIED.
This case shall be remanded forthwith to the Circuit Court of
Ouachita County, Arkansas.
IT IS SO ORDERED this 21st day of April, 2011.

/s/ Robert T. Dawson
Robert T. Dawson
United States District

Judge