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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JS-6 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 11 12 13 14 15 16 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. 17 18 I. INTRODUCTION 19 This is a putative class action lawsuit brought by Plaintiffs Crystal Waters and 20 Tony Valenti against Defendant Kohl’s Department Stores, Inc. Before the Court are 21 Plaintiffs’ Motion to Remand and Kohl’s Motion to Dismiss. (ECF Nos. 15, 16.) For 22 the reasons discussed below, the Court GRANTS Plaintiffs’ Motion and DENIES AS 23 MOOT Defendant’s Motion.1 24 II. BACKGROUND 25 Kohl’s is a national department store chain with 116 locations in California. 26 (Compl. ¶ 12, ECF No. 1-1.) Kohl’s offers its customers the option to participate in a 27 28 1 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. 1 reward program called “Kohl’s Cash.” (Id. ¶ 15.) Under this program, customers 2 earn Kohl’s Cash when they spend a certain amount of money at a Kohl’s store. (Id.) 3 Kohl’s Cash can be used to purchase products at Kohl’s, and, according to Plaintiffs, 4 is advertised by Kohl’s as equivalent to real currency when so used (i.e., $1 in Kohl’s 5 Cash = $1 in U.S. currency). (See id. ¶¶ 17–18.) Plaintiffs allege that, despite this 6 advertising, Kohl’s customers do not receive the full value of their Kohl’s Cash when 7 used in conjunction with percent-off discounts, because Kohl’s deducts a customer’s 8 Kohl’s Cash from the purchase price prior to applying the percent-off discount. (Id. 9 ¶ 18.) 10 For example, suppose a customer purchases a $100 toaster marked at a 20% 11 discount. (Id. ¶ 20.) Suppose further that this customer has $60 in Kohl’s Cash. (Id.) 12 If the customer uses his Kohl’s Cash for this purchase, Kohl’s will first subtract the 13 Kohl’s Cash from the full, non-discounted price ($100 – $60 = $40), and will apply 14 the 20% discount thereafter. (Id.) This results in the customer paying $32 out-of- 15 pocket for the toaster (80% x $40 = $32). (Id.) Plaintiffs contend that Kohl’s should 16 apply the Kohl’s Cash after the discount, which in this example would result in the 17 customer paying only $20 out-of-pocket for the toaster ([$100 x 80% = $80] – $60 = 18 $20). Plaintiffs characterize this $12 difference as “unredeemed Kohl’s Cash,”2 and 19 have filed this lawsuit to recover any unredeemed Kohl’s Cash owed to California 20 residents who have made such purchases in the past four years. In February 2017, Plaintiffs filed this action in the Los Angeles Superior Court. 21 22 (ECF No. 1-1.) In March 2017, Kohl’s removed the action to this Court and 23 subsequently moved to dismiss the complaint. (ECF Nos. 1, 15.) Five days later, 24 Plaintiffs moved to remand the case to state court. (ECF No. 16.) Each party opposed 25 the other’s Motion. (ECF Nos. 17, 19.) Those Motions are now before the Court for 26 decision. 27 28 2 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. 2 1 III. LEGAL STANDARD 2 Federal courts have subject matter jurisdiction only as authorized by the 3 Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v. 4 Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit filed in state court 5 may be removed to federal court only if the federal court would have had original 6 jurisdiction over the suit. 28 U.S.C. § 1441(a). Under the Class Action Fairness Act, 7 federal courts have jurisdiction over a class action where the citizenship of at least one 8 plaintiff class member is diverse from the citizenship of any defendant, and the 9 amount in controversy exceeds $5 million. See 28 U.S.C. § 1332(d)(2). Where, as 10 here, the amount in controversy is not facially evident from the complaint and the 11 plaintiff challenges federal jurisdiction, “the defendant seeking removal bears the 12 burden to show by a preponderance of the evidence that the aggregate amount in 13 controversy exceeds $5 million.” Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 14 (9th Cir. 2015). “The parties may submit evidence outside the complaint, including 15 affidavits or declarations, or other ‘summary-judgment-type evidence relevant to the 16 amount in controversy at the time of removal.’” Id. (quoting Singer v. State Farm 17 Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). “Under this system, a 18 defendant cannot establish removal jurisdiction by mere speculation and conjecture, 19 with unreasonable assumptions.” Id. However, unlike with other bases of removal, 20 there is no presumption against jurisdiction when the removal is based on CAFA. 21 Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1184 (9th Cir. 2015). 22 IV. DISCUSSION 23 Plaintiffs contend that Kohl’s has not established that the amount in controversy 24 exceeds $5 million. In its Notice of Removal, Kohl’s alleged that this requirement 25 was satisfied because “[t]he purchases made at stores in the State of California in the 26 past four years from Kohl’s . . . using, in whole or part, Kohl’s Cash® in conjunction 27 with percent-off discount, or where the consumer subsequently returned the 28 previously-purchased items, well exceeds $5,000,000.” (Not. of Removal ¶ 16, ECF 3 1 No. 1.) Kohl’s also submitted an employee declaration to this effect. (Stemper Decl. 2 ¶ 5, ECF No. 3.) The declaration further stated that Kohl’s customers “have redeemed 3 more than $6.7 million of Kohl’s Cash” at its store in Valencia, California, and that 4 there are over 100 stores in California where customers have redeemed Kohl’s Cash. 5 (Id. ¶ 4.) In their Motion to Remand, Plaintiffs point out that they seek to recover 6 only unredeemed Kohl’s Cash, and thus Kohl’s allegations and evidence concerning 7 the amount of redeemed Kohl’s Cash do not establish that the amount in controversy 8 exceeds $5 million. In its Opposition, Kohl’s submits a supplemental declaration from the same 9 10 employee. In that declaration, the employee attests that Kohl’s “prefers not to 11 disclose the exact amount of Kohl’s Cash redeemed in California in conjunction with 12 a second coupon entitling the customer to a percentage-off discount,” but that Kohl’s 13 “ha[s] calculated that amount . . . [and] can assure the Court that consumers in 14 California, over the past four years, have redeemed more than $25 million in Kohl’s 15 Cash while also using a percentage-off coupon.” (Stemper Suppl. Decl. ¶ 7, ECF No. 16 19-1.) Kohl’s then argues that because Plaintiffs “are seeking only 20% of the value 17 of Kohl’s Cash redeemed in California in conjunction with another coupon providing 18 for a percentage off the item(s) purchased, that would mean they are seeking more 19 than $5 million in damages.” (Id. ¶ 9.) 20 The Court agrees with Plaintiffs that neither the original affidavit nor the 21 supplemental affidavit that Kohl’s submits establishes the amount in controversy. 22 One cannot calculate the total amount of unredeemed Kohl’s Cash simply by 23 referencing the total amount of redeemed Kohl’s Cash. For instance, in the toaster 24 example above, the amount of redeemed Kohl’s Cash was $60,3 but the amount of 25 unredeemed Kohl’s Cash—which is what Plaintiffs seek to recover—is $12. One 26 cannot determine solely from the $60 in redeemed Kohl’s Cash that the unredeemed 27 28 3 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. 4 1 amount is $12; rather, one requires the total price of the purchased product and the 2 percentage-discount offered for that specific product. Kohl’s has provided neither. 3 Instead, Kohl’s appears to assume that the unredeemed Kohl’s Cash is always 4 equivalent to 20% of the redeemed Kohl’s Cash. While that happened to be the case 5 in the toaster example that Plaintiffs provided, it is obviously extremely unlikely to be 6 the case for every single purchase. Kohl’s thus has not demonstrated that the amount 7 in controversy exceeds $5 million.4 8 V. CONCLUSION 9 For the reasons discussed above, the Court GRANTS Plaintiffs’ Motion to 10 Remand and DENIES AS MOOT Defendant’s Motion to Dismiss. (ECF Nos. 15, 11 16.) The Court REMANDS this case to the Los Angeles Superior Court, Case No. 12 BC 650906. The Clerk of the Court shall close the case. 13 14 IT IS SO ORDERED. 15 June 27, 2017 16 17 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 4 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. 5

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