Tuberville v. New Balance Athletic Shoe, Inc. et al
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
NEW BALANCE ATHLETIC SHOE, INC.
and NEW BALANCE, INC.
MEMORANDUM OPINION AND ORDER
Currently before the Court are Plaintiff’s Motion to Remand
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
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.
On February 23, 2011, Plaintiff filed a putative class action
complaint in the Circuit Court of Ouachita County, Arkansas, naming
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
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
“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
(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
calculating the amount in controversy:
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
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
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.
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).
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.”
28 U.S. C. § 1332 (d)(2).
determine whether the jurisdictional minimum has been met.
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.
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
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.
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.
Though the Eighth Circuit in Bell ultimately
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.
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
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
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
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
follows that if a stipulation can defeat removal, it can also
satisfy the plaintiff’s legal certainty burden.
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
Defendants take exception to “Plaintiff’s attempt here to carve out
an ‘Arkansas only’ class action,” calling such a move “class action
Id. at 5.
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...”).
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.
By the same token, it is
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.
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
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
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).
Calculating the Amount in Controversy
Face Value of Claims in the Complaint
Defendants argue that more than $5,000,000 is at stake, even
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
Defendants fail to meet their preponderance of the
evidence burden by providing any real numbers on which to base
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
Equitable Relief and “Other Relief Just and Proper”
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
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.
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.
injunctive relief and punitive damage.
Again, such relief is too
speculative to be given credence by this Court.
Court is unaware of any precedent that dictates that punitive
damages are assumed pled unless specifically disclaimed.
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.
The Court finds that Defendants have failed to show by a
preponderance of the evidence that this case should remain in
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.
Motion to Remand (Doc. 13) is hereby GRANTED.
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
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