Thompson et al v. Apple, Inc.
MEMORANDUM OPINION AND ORDER denying 33 Motion to Stay, and denying 38 the Motion to Dismiss Case and granting 12 Motion to Remand. Case remanded to the Circuit Court of Carroll County, AR. Signed by Honorable Paul K. Holmes, III on July 8, 2011. (sh) Modified on 7/8/2011 to add text. (sh).
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
LEAH THOMPSON and
Case No. 3:11-CV-03009-PKH
MEMORANDUM OPINION AND ORDER
Currently before the Court are Plaintiffs’ Motion for Remand
to State Court and supporting brief (Docs. 12-13) and Defendants’
Response (Doc. 17), Plaintiffs’ Reply Brief (Doc. 27), Defendant’s
Motion to Stay Proceeding Pending Resolution of Motion to Transfer
Pursuant to 28 U.S.C. § 1407 (Docs. 33-34), Plaintiffs’s Response
to Motion to Stay (Doc. 35), and Defendant’s Reply (Doc. 37). Also
pending is the Plaintiffs’ Motion to Dismiss. (Doc. 38). Plaintiffs
dispute the existence of diversity jurisdiction in this case
jurisdictional requirements described in the Class Action Fairness
Act (CAFA), 28 U.S.C. § 1332(d). Defendant seeks to have this case
transferred to the Northern District of California for coordinated
pretrial treatment pursuant to 28 U.S.C. $1407. Most recently,
Plaintiffs have sought to voluntarily dismiss their case under Fed.
R. Civ. P. 41(a)(2). For the reasons stated herein, Defendant’s
Motion to Stay Proceedings is DENIED, Plaintiff’s Motion to Dismiss
is DENIED, and Plaintiffs’ Motion to Remand to State Court is
Plaintiffs Leah Thompson and Patricia Harp commenced this
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action as a class action lawsuit in the Circuit Court of Carroll
County, Arkansas. Defendant Apple, Inc. (“Apple) removed the case
to federal district court asserting jurisdiction under CAFA, 28
U.S.C. § 1332(d)(2)(A). This requires proof that the amount in
controversy exceeds $5 million, exclusive of interest and costs.
Id. Apple filed a Declaration with its Response to the Motion to
Remand, stating that Apple has registered more than 250,000 iPhones
in Arkansas. With a retail cost per phone from $99 to more than
$599, Apple then makes a mathematical calculation that the amount
in controversy is in excess of $5 million based on this evidence.
Plaintiffs challenge Apple’s evidence, arguing that there is no
correlation between the relief sought in the complaint and the
total retail cost of the iPhones. Plaintiffs argue that their
claims are based on Apple’s wrongful access and alteration of
Plaintiffs’ iPhones, which has little to do with the retail cost of
Generally, “federal courts, as opposed to state trial courts
of general jurisdiction, are courts of limited jurisdiction marked
out by congress.” Aldinger v. Howard, 427 U.S. 1, 15, 96 S.Ct.
2413, 49 L.Ed.2d 276 (1976). 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). A defendant in state court may remove the case to
federal court if the defendant can demonstrate that the federal
court has original jurisdiction over the case. 28 U.S.C. § 1441(a).
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In removal cases, the party asserting federal jurisdiction has the
jurisdictional amount. Hatridge v. Aetna Cas. & Sur. Co., 415 F.
2d, 809, 814 (8th Cir. 1969). The standard by which the proof is
measured is proof by a preponderance of the evidence that the
amount in controversy requirement has been met. In re Minn. Mut.
Life Ins. Co. Sales Practices Litig., 346 F.3d 830, 834 (8th Cir.
2003). The enactment of CAFA did not change these general removal
standards. Bell v. Hershey Co., 557 F.3d, 953 (8th Cir. 2009). A
court must first look at the complaint to determine the amount in
controversy, and if the jurisdictional amount is not apparent from
the complaint, then the court should look to the notice of removal
at the time the case was removed. Miedema v. Maytag Corp., 450 F.3d
1322, 1330 (11th Cir. 2006)
The Plaintiffs’ complaint does not allege how the Plaintiffs’
damages would be calculated on their claim of wrongful access and
alteration of the iPhones. The Plaintiffs did, however, attach to
their complaint signed affidavits stating that their damages would
not exceed the jurisdictional amount under CAFA. Apple argues that
Plaintiffs’ complaint “provides no hint as to what actual injury or
damages Plaintiffs claim to have suffered.” Apple challenges the
affidavits by filing a Declaration stating that there are over
250,000 iPhones registered in Arkansas, then arguing that their
total retail cost exceeds $5 million.
The defendant suggests that
the alleged alteration could have made the iPhones “worthless,”
thereby the damages could exceed $5 million. As stated in Ongstad
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v. Piper Jaffray & Co., 407 F. Supp. 2d 1085, 1092 (D. N.D. 2006),
“...[n]either party has provided the Court with a
to determine, or even guestimate” the proper amount of damages.
Aside from the Plaintiffs’ affidavits, the pleadings in this case
are of little aid to the court in determining the amount in
Plaintiffs’ claims and Apple’s argument that the iPhones may be
rendered “worthless” if the Plaintiffs were to prevail. The burden
of proof lies with the defendant, and Apple has failed to show by
a preponderance of the evidence that the amount in controversy
exceeds the jurisdictional amount under CAFA. On these grounds
alone, the Motion to Remand should be granted.
Even if Apple had met its burden of proof as to the amount in
controversy, it would still not prevail based on the binding
jurisdiction, the burden shifts to the Plaintiffs to show to a
jurisdictional amount under CAFA. Westerfeld v. Indep. Processing,
LLC, 621 F.3d 819, 823 (8th Cir. 2010); Harris v. Sagamore Ins.
Co., 2008 WL 4816471 (E.D. Ark. 2008)(citing In re Minn. Mut. Life
Ins. Co. Sales Practices Litig., 346 F.3d 830, 834 (8th Cir. 1969).
The Eighth Circuit stated in Bell v. Hershey Co. that a party,
“[i]n order to ensure that any attempt to remove would have been
unsuccessful . . . could have included a binding stipulation with
his petition stating that he would not seek damages greater than
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the jurisdictional minimum upon remand.” 557 F.3d, 953, 958 (8th
Cir. 2009). The Plaintiffs in this case followed the Bell roadmap
by attaching signed affidavits from both the Plaintiffs and their
lawyers stating that damages will not exceed $5 million, inclusive
of costs and attorneys’ fees. (Doc. 2). While Apple challenges the
language regarding stipulations in Bell as nothing more than dicta,
compelling reasoning in ruling that stipulations following the
procedure outlined in Bell are sufficient to defeat diversity
jurisdiction under CAFA. See Murphy v. Reebok International, Ltd.,
2011 U.S. Dist. LEXIS 46983 (W.D. Ark. 2011); Turberville v. New
Balance Athletic Shoe, Inc, 2011 U.S. Dist. LEXIS 45894 (W.D. Ark.
2011); Harris v. Sagamore Ins. Co., 2008 WL 4816471 (E.D. Ark.
2008). Arkansas law allows plaintiffs to plead their damages with
specificity. Ark. R. Civ. P. 8(a)(2).
The Plaintiffs in this case
have done so, both in the body of their complaint and with
incorporated stipulations. And as stated by Judge Marshall in
Murphy, a class action in which similar affidavits were filed, “...
stipulations are strong medicine.” 2011 U.S. Dist. LEXIS 46983 at
Apple’s last argument in attempting to prove the jurisdictional
amount in controversy is that the Plaintiffs have not adequately
disclaimed punitive damages, and as such, there is the possibility
that damages could exceed the jurisdictional amount under CAFA.
Although subject to closer scrutiny, punitive damages are to be
considered by the court in determining the amount in controversy.
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Allison v. Security Ben. Life Ins. Co., 980 F.2d 1213, 1215 (8th
However, “the enactment of CAFA did not alter the
proposition that the plaintiff is the master of the complaint.”
Bell, 557 F.3d at 956. Plaintiffs’ complaint does not allege a
claim for punitive damages, and the attached affidavits state that
“damages” will not exceed the jurisdictional amount under CAFA.
Apple argues that the Plaintiffs’ claim for “all other relief” does
not adequately disclaim a claim for punitive damages, and that the
Court cannot rely on Plaintiffs’ argument in its brief that they
will not seek punitive damages if the case is remanded to State
Court. The attached affidavits state that “damages” will not exceed
$5 million. The term “damages” is inclusive of all recoverable
damages. While the Court believes that this stipulation alone is
judicially estopped from asserting a claim in state court for
punitive damages or in any other way attempting to recover more
than the amount contemplated in the stipulations.
The four elements of judicial estoppel under Arkansas law, as
stated in Dupwe v. Wallace, 140 S.W. 3d 464, 467 (Ark. 2004), are:
1) a party must assume a position clearly inconsistent with a
position taken in an earlier case; 2) a party must assume the
inconsistent position with the intent to manipulate the judicial
successfully maintained the position in the earlier proceeding such
that the court relied upon the position taken; and 4) the integrity
of the judicial process of at least one court must be impaired or
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injured by the inconsistent positions taken. The Court agrees with
the reasoning set forth in another Arkansas federal district court
estoppel in Arkansas in the context of CAFA. In Harris v. Sagamore
Ins. Co., Judge Leon Holmes found to a legal certainty “that the
Arkansas courts will not permit the plaintiff to recover damages
for the class as a whole in excess of” the damages plead in the
complaint. 2008 U.S. Dist. LEXIS 90288 at *8. Furthermore, “if the
aggregate claims of the class exceed [the amount plead], the
Arkansas courts will be able to prorate the recoverable damages
among the members of the class.” Id.
Similarly to the plaintiffs in Harris, in the present case,
any attempt by the Plaintiffs to change their position in state
court would be precluded because any request for damages in excess
of $5,000,000 would be clearly inconsistent with the position taken
before this Court; it would suggest an attempt to manipulate the
judicial process to gain an unfair advantage; the Plaintiffs would
have successfully maintained their position such that this Court
relied on their stipulations and pleadings; and the integrity of
inconsistent position. Thus, as all four elements of judicial
estoppel recognized under Arkansas law would be met, the Court is
satisfied that Plaintiffs would be estopped from seeking punitive
damages through their complaint and stipulations, Plaintiffs have
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shown to a legal certainty that damages would not exceed the
jurisdictional amount under CAFA. Therefore, even had Apple met its
threshold burden of proving the requisite amount of controversy
remand would be appropriate in this case. For all of the above
stated reasons, the Plaintiffs’ Motion to Remand is GRANTED.
Apple filed a Motion to Stay Proceedings Pending Resolution of
Motion to Transfer Pursuant to 28 U.S.C. § 1407. (Doc. 33). The
purpose of the Motion to Transfer is to consolidate pending actions
litigation (MDL). The Plaintiffs’ Motion to Remand which was filed
before the Motion to Stay goes to the subject matter jurisdiction
of the court. A putative transferor court need not automatically
postpone rulings on pending motions, or any way generally suspend
proceedings, merely on the grounds that an MDL transfer motion has
been filed. Tortola Restaurants, L.P. v. Kimberly-Clark Corp., 987
F. Supp. 1186, 1188 (N.D. Ca. 1997). Since the Court has ordered
remand of this case to state court for the reasons set forth
herein, the Defendant’s Motion to Stay is DENIED as having been
mooted by the order to remand.
The Court turns, finally, to the Plaintiffs’ Motion to Dismiss
(Doc. 38) pursuant to Fed. R. Civ. P. 41(a)(2). “It is axiomatic
that a court may not proceed at all in a case unless it has
jurisdiction.” Crawford v. F. Hoffman La Roche, 267 F.3d 760, 764
(8th Cir. 2001). Voluntary dismissal in a class action case is not
“one of those grounds for dismissal that the district court could
invoke without a finding of subject matter jurisdiction.” Id. In
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considering a Rule 41 motion for dismissal in the class action
context, the Court must consider the interests of absent plaintiffs
even if a class has yet to be certified. Id.; Fed. R. Civ. P.
23(e). Court approval under Rule 41(a)(2) in combination with Rule
23(e) can be a complicated process, which could raise unavoidable
questions of law and fact. Because of the Court’s finding that this
case should be remanded, the Court does not have jurisdiction to
consider such issues. Plaintiffs’ Motion to Dismiss is, therefore,
IT IS THEREFORE ORDERED that the Plaintiffs’ Motion to Remand
(Doc. 12) is GRANTED; the Defendant’s Motion to Stay (Doc. 33) is
DENIED; and Plaintiffs’ Motion to Dismiss (Doc. 38) is DENIED. This
case shall be remanded forthwith to the Circuit Court of Carroll
IT IS SO ORDERED this 8th day of July, 2011.
/s/Paul K. Holmes, III
PAUL K. HOLMES, III
UNITED STATES DISTRICT JUDGE
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