Crystal Waters et al v. Kohls Department Stores, Inc.

Filing 23

ORDER GRANTING PLAINTIFFS MOTION TO REMAND 16 AND DENYING AS MOOT DEFENDANTS MOTION TO DISMISS 15 . Case Remanded to Los Angeles Superior Court, BC 650906 by Judge Otis D. Wright, II ( MD JS-6. Case Terminated ) (lc) Modified on 6/28/2017 (lc).

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United States District Court
Central District of California

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CRYSTAL WATERS and TONY
Case № 2:17-cv-02325-ODW (AFMx)
VALENTI, on behalf of themselves and all
others similarly situated,
ORDER GRANTING PLAINTIFFS’
MOTION TO REMAND [16] AND
Plaintiffs,
DENYING AS MOOT
DEFENDANT’S MOTION TO
v.
DISMISS [15]
KOHL’S DEPARTMENT STORES,
INC.; and DOES 1–100, inclusive,
Defendants.

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I.

INTRODUCTION

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This is a putative class action lawsuit brought by Plaintiffs Crystal Waters and

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Tony Valenti against Defendant Kohl’s Department Stores, Inc. Before the Court are

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Plaintiffs’ Motion to Remand and Kohl’s Motion to Dismiss. (ECF Nos. 15, 16.) For

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the reasons discussed below, the Court GRANTS Plaintiffs’ Motion and DENIES AS

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MOOT Defendant’s Motion.1

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II.

BACKGROUND

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Kohl’s is a national department store chain with 116 locations in California.

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(Compl. ¶ 12, ECF No. 1-1.) Kohl’s offers its customers the option to participate in a

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After considering the papers submitted by the parties, the Court deemed the matter appropriate
for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.

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reward program called “Kohl’s Cash.” (Id. ¶ 15.) Under this program, customers

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earn Kohl’s Cash when they spend a certain amount of money at a Kohl’s store. (Id.)

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Kohl’s Cash can be used to purchase products at Kohl’s, and, according to Plaintiffs,

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is advertised by Kohl’s as equivalent to real currency when so used (i.e., $1 in Kohl’s

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Cash = $1 in U.S. currency). (See id. ¶¶ 17–18.) Plaintiffs allege that, despite this

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advertising, Kohl’s customers do not receive the full value of their Kohl’s Cash when

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used in conjunction with percent-off discounts, because Kohl’s deducts a customer’s

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Kohl’s Cash from the purchase price prior to applying the percent-off discount. (Id.

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¶ 18.)

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For example, suppose a customer purchases a $100 toaster marked at a 20%

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discount. (Id. ¶ 20.) Suppose further that this customer has $60 in Kohl’s Cash. (Id.)

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If the customer uses his Kohl’s Cash for this purchase, Kohl’s will first subtract the

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Kohl’s Cash from the full, non-discounted price ($100 – $60 = $40), and will apply

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the 20% discount thereafter. (Id.) This results in the customer paying $32 out-of-

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pocket for the toaster (80% x $40 = $32). (Id.) Plaintiffs contend that Kohl’s should

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apply the Kohl’s Cash after the discount, which in this example would result in the

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customer paying only $20 out-of-pocket for the toaster ([$100 x 80% = $80] – $60 =

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$20). Plaintiffs characterize this $12 difference as “unredeemed Kohl’s Cash,”2 and

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have filed this lawsuit to recover any unredeemed Kohl’s Cash owed to California

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residents who have made such purchases in the past four years.
In February 2017, Plaintiffs filed this action in the Los Angeles Superior Court.

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(ECF No. 1-1.)

In March 2017, Kohl’s removed the action to this Court and

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subsequently moved to dismiss the complaint. (ECF Nos. 1, 15.) Five days later,

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Plaintiffs moved to remand the case to state court. (ECF No. 16.) Each party opposed

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the other’s Motion. (ECF Nos. 17, 19.) Those Motions are now before the Court for

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decision.

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Plaintiffs also refer to it as “Overpayment Charges” in their Complaint. (Compl. ¶ 21.) The
Court will use the term “unredeemed Kohl’s Cash” for ease of reference.

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III.

LEGAL STANDARD

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Federal courts have subject matter jurisdiction only as authorized by the

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Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v.

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Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit filed in state court

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may be removed to federal court only if the federal court would have had original

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jurisdiction over the suit. 28 U.S.C. § 1441(a). Under the Class Action Fairness Act,

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federal courts have jurisdiction over a class action where the citizenship of at least one

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plaintiff class member is diverse from the citizenship of any defendant, and the

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amount in controversy exceeds $5 million. See 28 U.S.C. § 1332(d)(2). Where, as

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here, the amount in controversy is not facially evident from the complaint and the

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plaintiff challenges federal jurisdiction, “the defendant seeking removal bears the

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burden to show by a preponderance of the evidence that the aggregate amount in

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controversy exceeds $5 million.” Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197

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(9th Cir. 2015). “The parties may submit evidence outside the complaint, including

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affidavits or declarations, or other ‘summary-judgment-type evidence relevant to the

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amount in controversy at the time of removal.’” Id. (quoting Singer v. State Farm

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Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). “Under this system, a

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defendant cannot establish removal jurisdiction by mere speculation and conjecture,

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with unreasonable assumptions.” Id. However, unlike with other bases of removal,

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there is no presumption against jurisdiction when the removal is based on CAFA.

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Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1184 (9th Cir. 2015).

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IV.

DISCUSSION

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Plaintiffs contend that Kohl’s has not established that the amount in controversy

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exceeds $5 million. In its Notice of Removal, Kohl’s alleged that this requirement

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was satisfied because “[t]he purchases made at stores in the State of California in the

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past four years from Kohl’s . . . using, in whole or part, Kohl’s Cash® in conjunction

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with percent-off discount, or where the consumer subsequently returned the

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previously-purchased items, well exceeds $5,000,000.” (Not. of Removal ¶ 16, ECF

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No. 1.) Kohl’s also submitted an employee declaration to this effect. (Stemper Decl.

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¶ 5, ECF No. 3.) The declaration further stated that Kohl’s customers “have redeemed

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more than $6.7 million of Kohl’s Cash” at its store in Valencia, California, and that

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there are over 100 stores in California where customers have redeemed Kohl’s Cash.

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(Id. ¶ 4.) In their Motion to Remand, Plaintiffs point out that they seek to recover

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only unredeemed Kohl’s Cash, and thus Kohl’s allegations and evidence concerning

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the amount of redeemed Kohl’s Cash do not establish that the amount in controversy

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exceeds $5 million.
In its Opposition, Kohl’s submits a supplemental declaration from the same

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employee.

In that declaration, the employee attests that Kohl’s “prefers not to

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disclose the exact amount of Kohl’s Cash redeemed in California in conjunction with

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a second coupon entitling the customer to a percentage-off discount,” but that Kohl’s

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“ha[s] calculated that amount . . . [and] can assure the Court that consumers in

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California, over the past four years, have redeemed more than $25 million in Kohl’s

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Cash while also using a percentage-off coupon.” (Stemper Suppl. Decl. ¶ 7, ECF No.

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19-1.) Kohl’s then argues that because Plaintiffs “are seeking only 20% of the value

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of Kohl’s Cash redeemed in California in conjunction with another coupon providing

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for a percentage off the item(s) purchased, that would mean they are seeking more

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than $5 million in damages.” (Id. ¶ 9.)

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The Court agrees with Plaintiffs that neither the original affidavit nor the

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supplemental affidavit that Kohl’s submits establishes the amount in controversy.

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One cannot calculate the total amount of unredeemed Kohl’s Cash simply by

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referencing the total amount of redeemed Kohl’s Cash. For instance, in the toaster

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example above, the amount of redeemed Kohl’s Cash was $60,3 but the amount of

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unredeemed Kohl’s Cash—which is what Plaintiffs seek to recover—is $12. One

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cannot determine solely from the $60 in redeemed Kohl’s Cash that the unredeemed

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Plaintiffs would likely characterize the “redeemed” amount as only $48, because one should
subtract the $12 in unredeemed Kohl’s Cash. Either way, this does not change the principal that one
cannot calculate the unredeemed cash from the redeemed cash alone.

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amount is $12; rather, one requires the total price of the purchased product and the

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percentage-discount offered for that specific product. Kohl’s has provided neither.

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Instead, Kohl’s appears to assume that the unredeemed Kohl’s Cash is always

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equivalent to 20% of the redeemed Kohl’s Cash. While that happened to be the case

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in the toaster example that Plaintiffs provided, it is obviously extremely unlikely to be

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the case for every single purchase. Kohl’s thus has not demonstrated that the amount

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in controversy exceeds $5 million.4

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V.

CONCLUSION

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For the reasons discussed above, the Court GRANTS Plaintiffs’ Motion to

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Remand and DENIES AS MOOT Defendant’s Motion to Dismiss. (ECF Nos. 15,

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16.) The Court REMANDS this case to the Los Angeles Superior Court, Case No.

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BC 650906. The Clerk of the Court shall close the case.

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IT IS SO ORDERED.

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June 27, 2017

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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Kohl’s argues that the Court should deny this Motion based on Plaintiffs’ counsel’s failure to
timely meet and confer prior to moving to remand. See C.D. Cal. L.R. 7-3. While the Court may
have done so if the Motion did not concern a jurisdictional issue, see, e.g., Singer v. Live Nation
Worldwide, Inc., No. SACV 11-0427 DOC, 2012 WL 123146, at *2 (C.D. Cal. Jan. 13, 2012),
Plaintiffs’ failure to meet and confer cannot justify the Court adjudicating a case over which it lacks
subject matter jurisdiction.

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