Deaton v. Frito-Lay North American, Inc. et al

Filing 20

ORDER REMANDING CASE TO STATE COURT; Granting 5 MOTION to Remand filed by Stayce Deaton; Denying as Moot 7 MOTION to Transfer Case filed by Frito-Lay North American, Inc. and Pepsico, Inc; Case remanded to Ouachita County Circuit Court. Signed by Honorable Susan O. Hickey on September 11, 2012. (cnn)

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

STACYE DEATON, on behalf of
herself and all others similarly situated

VS.

PLAINTIFF

CASE NO. 1:12-CV-01029

FRITO-LAY NORTH AMERICA, INC.; and
PEPSICO, INC.

DEFENDANTS

ORDER
Before the Court is Plaintiff’s Motion to Remand. (ECF No. 5). Defendants have
responded. (ECF No. 17). The matter is ripe for the Court’s consideration. For the following
reasons, the motion will be granted.
BACKGROUND
Plaintiff filed this putative class-action suit in Ouachita County, Arkansas Circuit Court
on February 24, 2012. Like several class actions before hers, she contends that Frito-Lay, which
is owned by Pepsico, deceptively marketed several of its products, including Tostitos and
SunChips. The deception, according to Plaintiff, consists in labeling as “All Natural” products
containing genetically modified (GMO) corn and hexane-extracted soybean oil. Plaintiff argues
that Defendants’ marketing violates the Arkansas Deceptive Trade Practices Act and has unjustly
enriched Defendants at Plaintiff’s expense.
Defendants removed the case to this Court on April 4, 2012, relying on diversity
jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d) (2006).

Plaintiff now moves the Court to remand the case to Ouachita County Circuit Court because this
Court lacks jurisdiction over it.
DISCUSSION
For a case to be heard in federal court, CAFA requires, among other things, that the
case’s amount in controversy be greater than $5 million. That is the only CAFA requirement at
issue in this case. Plaintiff argues that she has put less than $5 million in controversy by
stipulating not to accept more. Defendants contend, on the other hand, that Plaintiff has failed to
sufficiently cap the amount in controversy.
A defendant invoking federal-court diversity jurisdiction through removal must prove the
required statutory amount in controversy by a preponderance of the evidence. Hargis v. Access
Capital Funding, LLC, 674 F.3d 783, 798 (8th Cir. 2012) (quoting Bell v. Hershey Co., 557 F.3d
953, 956 (8th Cir. 2009)). The defendant does not have to prove by a preponderance that the
amount in controversy is more than the statutory amount, but rather that a fact finder might
legally conclude that it is. Hartis v. Chicago Title Ins. Co., 656 F.3d 778, 781 (8th Cir. 2009)
(quoting Bell, 557 F.3d at 958)). If a defendant meets its burden, then a plaintiff seeking remand
must establish to a legal certainty that the amount in controversy is less than the statute requires.
Bell, 557 F.3d at 956.
In this case, the Court need not consider whether Defendants have shown by a
preponderance that the amount in controversy might exceed the statutory minimum; the
Plaintiff’s stipulations, if they are binding, are enough to establish to a legal certainty that the
statutory minimum is not met.

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Removal is defeated by adding to the complaint a binding stipulation promising not to
seek greater damages than the jurisdictional minimum. Id. at 958. The parties in this case agree
on that point. They disagree on whether Plaintiff’s stipulations are binding.
Defendants find four basic faults in Plaintiff’s stipulations: 1) Plaintiff has stipulated only
for herself, rather than for the class; 2) Plaintiff has not capped her potential restitution recovery;
3) Plaintiff’s stipulations are made in bad faith; and 4) Plaintiff may not stipulate on behalf of
absent class members. The Court finds none of these points persuasive.
I.

Singular stipulation

Defendants first argue that Plaintiff has stipulated only on her own behalf, rather than on
the class’s behalf, as allegedly required. Indeed, Plaintiff’s stipulations are all in the first person,
e.g., “I do not seek and will not accept….” (ECF No. 3, at 20). Defendants contend that
Plaintiff’s stipulation is invalid unless she explicitly states that she is stipulating on behalf of the
class. Eighth Circuit case law, however, does not require Plaintiff to be that specific.
In Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009), the court noted that the classaction plaintiff could have defeated removal by stipulating that “he would not seek damages
greater than the jurisdictional minimum….” In other words, a stipulation solely on the plaintiff’s
own behalf would have sufficed. Likewise, in Zellner-Dion v. Wilmington Finance, Inc., No. 10CV-2587 (PJS/JSM), 2012 WL 2952251, at *3 (D. Minn. July 19, 2012), the district court stated
that the plaintiff could have relied on her claimed attorney-fee amount if “she had stipulated that
she would seek no more than that.” Again the required stipulation was singular. Finally, in
Tuberville v. New Balance Athletic Shoe, Inc., No. 1:11-CV-01016, 2011 WL 1527716 (W.D.
Ark. Apr. 21, 2011), the Court found that a stipulation identical to Plaintiff’s stipulation here was
binding.

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Plaintiff obviously intended her stipulation to bind the whole class, and the Court finds
the stipulation sufficient on that point.
II.

Restitution v. damages

Defendants next argue that Plaintiff has capped only her damages recovery, and
consequently has left her unjust-enrichment theory’s restitution recovery uncapped. The two
types of recovery are different. The focus of damages is the harm to the victim, while the focus
of restitution is the gain realized by the wrongdoer. See Howard W. Brill, Arkansas Law of
Damages § 1:2 (5th ed. 2004). Nevertheless, Plaintiff has capped not just her “damages,” but
also her “award.” In Arkansas, a restitution recovery for unjust enrichment is considered an
award. See Deutsche Bank Nat’l Trust v. Austin, 2011 Ark. App. 531, at 9, ___S.W.3d___,___
(“An unjust-enrichment award is generally based upon the value of the benefit conferred upon
the party unjustly enriched.”). Thus, by capping her award, Plaintiff has capped her restitution
recovery as well as her damages recovery.
III.

Bad faith

Defendants also argue that Plaintiff’s stipulations are invalid because they were the
product of Plaintiff’s bad faith. As evidence of Plaintiff’s bad faith, Defendants cite “the obvious
ambiguity” of Plaintiff’s stipulations and the fact that Plaintiff plainly desires to leave federal
court.
The Court has already noted that Plaintiff’s stipulations are not intentionally ambiguous.
Moreover, a “law-driven forum preference” is not bad faith. Murphy v. Reebok International,
Ltd., No. 4:11-CV-214-DPM, 2011 WL 1559234, at *2 (E.D. Ark. Apr. 22, 2011). In fact,
stipulating to damages to avoid removal is allowed in the Eighth Circuit. Rolwing v. Nestle

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Holdings, Inc., 666 F.3d 1069, 1072 (8th Cir. 2012). The Court thus does not find any bad faith
in Plaintiff’s stipulations.
IV.

Stipulating for absent class members

Finally, Defendants argue that Plaintiff may not stipulate for absent class members.
Defendants cite Back Doctors Ltd. v. Metropolitan Property & Cas. Ins. Co., 637 F.3d 827 (7th
Cir. 2011), and other out-of-circuit cases for that point. According to Back Doctors, however, a
plaintiff may “tie its own hands” by stipulating to damages to prevent removal. Id. at 831.
Moreover, the Eighth Circuit has found that a plaintiff could bind absent class members.
Rolwing, 666 F.3d at 1073. Thus, under both Back Doctors and Rolwing, Plaintiff may stipulate
for absent class members.
CONCLUSION
For the above reasons, the Court finds Plaintiff’s stipulations create a legal certainty that
her class members will not recover more than $5 million. The Court therefore lacks jurisdiction
over this case. Accordingly, Plaintiff’s Motion to Remand (ECF No. 5) should be and hereby is
GRANTED. This case is hereby remanded to Ouachita County Circuit Court for further
proceedings. Because the Court lacks jurisdiction over this case, Defendants’ pending motion to
transfer (ECF No. 7) is DENIED AS MOOT.
IT IS SO ORDERED, this 11th day of September, 2012.

/s/ Susan O. Hickey
Hon. Susan O. Hickey
United States District Judge

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