KAUFMAN et al v. LUMBER LIQUIDATORS, INC. et al
Filing
22
OPINION filed. Signed by Judge Anne E. Thompson on 12/19/2014. (mmh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JERROD KAUFMAN & RACHEL
KAUFMAN, on behalf of themselves and
others similarly situated,
Civ. No. 14-6434
OPINION
Plaintiffs,
v.
LUMBER LIQUIDATORS, INC., et al.,
Defendants.
THOMPSON, U.S.D.J.
This matter is before the Court upon the Motion of Plaintiffs Jarrod Kaufman and Rachel
Kaufman (collectively “Plaintiffs”) to Remand1 the case to the Superior Court of New Jersey,
Law Division, Middlesex County. (Doc. No. 6). Defendants Lumber Liquidators, Inc. (“LLI”)
and Robert M. Lynch (collectively “Defendants”) oppose. (Doc. No. 13). The Court has
decided this Motion based on the parties’ written submissions and without oral argument
pursuant to Federal Rule of Civil Procedure 78(b). For the reasons stated herein, Plaintiffs’
Motion for Remand will be granted.
BACKGROUND
Plaintiffs brought this action on behalf of themselves and the putative class against
Defendants in the Superior Court of New Jersey on September 4, 2014, alleging that documents
used by Defendants in the sale and delivery of wood flooring products violated New Jersey’s
1
Plaintiffs also seek costs and fees incurred as a result of the removal. (Doc. No. 6 at 22-24).
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Delivery of Household Furnishing Regulations (“Furniture Delivery Regulations”), N.J.A.C.
13:45A–5.1 and New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act
(“TCCWNA”), N.J.S.A. 56:12-14.
On August 29, 2012 and October 20, 2012, Plaintiffs purchased hardwood flooring for
home delivery from Defendants. (Doc. No. 1, Ex. A, at ¶¶ 18-23). According to Plaintiffs, the
invoices they received from Defendants failed to include language regarding delivery dates and
seller’s obligations in the case of delayed delivery as required by the Furniture Delivery
Regulations. (Id. at ¶¶ 24-30). Plaintiffs assert that Defendants use the same form invoice for
sales of household furniture or furnishings for delivery in New Jersey, that they received this
form invoice as part of their purchases, and that the form invoice failed to comply with the
Furniture Delivery Regulations. (Id. at ¶¶ 31-33).
Plaintiffs further assert that because Defendants violated the Furniture Delivery
Regulations, they also violated the TCCWNA. (Id. at ¶¶ 49-67). The TCCWNA imposes
liability on sellers who, in the course of their business, enter into a consumer contract that
“violates any clearly established legal right of a consumer . . . established by State or Federal law
. . . .” N.J.S.A. 56:12-15. Plaintiffs claim that Defendants violated the TCCWNA because the
Defendants’ invoices constituted consumer contracts and these contracts violated clearly
established consumer rights set forth in the Furniture Delivery Regulations. (Doc. No. 1, Ex. A,
at ¶¶ 49-67).
Plaintiffs bring this lawsuit on behalf of a putative class, defined as follows:
All persons who purchased household furniture or furnishings for future delivery from
any Lumber Liquidators location to be delivered to an address in New Jersey at any time
on or after the day six years prior to the date on which this complaint is filed [September
4, 2014] using an invoice the same or similar to the invoices used in the transactions with
Plaintiffs on August 29, 2012 and October 20, 2012.
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(Id. at ¶ 35). Therefore, the alleged class period is September 4, 2008 through September 4,
2014.
On October 17, 2014, Defendants removed the case to this Court under the Class Action
Fairness Act (“CAFA”), 28 U.S.C. § 1332. (Doc. No. 1). CAFA grants federal courts
jurisdiction over class actions in which (1) the amount in controversy exceeds $5,000,000 in the
aggregate, (2) any class member and any defendant are citizens of different states, and (3) there
are at least 100 members in the putative class. 28 U.S.C. § 1332(d)(2), (d)(5)(B). Plaintiffs are
citizens of New Jersey while Defendant LLI is incorporated in Delaware, with its principal place
of business in Virginia. (Doc. No. 1, Ex. A, at ¶¶ 16, 17). Defendant Lynch is a citizen of
Virginia. (Id. at ¶ 18). There seems to be no dispute that there are at least 100 members in the
putative class. Only the amount in controversy is contested by the parties.
DISCUSSION
A. Legal Standard
If at any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case must be remanded to state court. 28 U.S.C. § 1447(c). The parties agree
that if the Court has subject matter jurisdiction over this case, it is pursuant to CAFA. The party
asserting jurisdiction bears the burden of showing that the case is properly before the federal
court. Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007). If the facts forming the
basis for jurisdiction are disputed by the parties, the party alleging federal jurisdiction has the
burden to justify his allegations by a preponderance of the evidence. See id. at 194–97; Judon v.
Travelers Prop. Cas. Co. of America, – F.3d –, 2014 WL 6997485, at *6 (3d Cir. Dec. 12, 2014);
Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. – , slip op., at 6 (Dec. 15, 2014)
(requiring both parties to submit proof where jurisdiction is contested, and the court decides, by a
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preponderance of the evidence, whether the amount-in-controversy requirement has been
satisfied). Where the underlying jurisdictional facts are not contested and plaintiffs’ complaint
does not expressly limit the amount in controversy below CAFA’s $5 million threshold, the case
must be remanded to state court if it appears to a “legal certainty” that plaintiffs cannot meet
CAFA’s amount in controversy requirement. See Frederico, 507 F.3d at 197; Judon, 2014 WL
6997485, at *3–6; Hoffman v. Nutraceutical Corp., 563 Fed. App’x 183, 185 (3d Cir. 2014).
The district court may rely on defendant’s notice of removal in assessing whether the minimum
jurisdictional amount has been met in a CAFA case removed to a district court. See Frederico,
507 F.3d at 197–98. The amount in controversy is determined from a “reasonable reading of the
value of the rights being litigated” based on the pleadings on the date of removal. Angus v.
Shiley Inc., 989 F.2d 142, 145 (3d Cir. 1993); see Werwinski v. Ford Motor Co., 286 F.3d 661,
666 (3d Cir. 2002) (“A district court’s determination as to the amount in controversy must be
based on the plaintiff’s complaint at the time the petition for removal was filed.”); SamuelBassett v. KIA Motors America, Inc., 357 F.3d 392, 397 (3d Cir. 2004). Unlike other removal
statutes, CAFA carries no antiremoval presumption. See Dart Cherokee, 574 F.3d at slip op. 7.
B. Analysis
Here, Plaintiff’s Complaint demands injunctive relief, statutory civil penalties, actual
damages, attorneys’ fees, and other relief from Defendants. (Doc. No. 1, Ex. A, at ¶ 67). It does
not include any estimates useful for calculating the amount in controversy. Defendants, in their
notice of removal, assert that CAFA’s $5 million threshold is easily satisfied based on their
assessment of the number of deliveries and average sale prices during a portion of the class
period. (Doc. No. 1 at 10-12). Defendants track their deliveries in three categories: (1) small
parcels weighing 149 pounds or less; (2) less than a truckload (“LTL”) deliveries weighing 150
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to 20,000 pounds; and (3) specialized home deliveries. (Id. at ¶ 22). Defendants’ business
records show that from August 2012 through August 2014, there were 3,500 small parcel
deliveries to New Jersey addresses. (Id. at ¶ 23). From January 2011 through August 2014,
there were 300 LTL deliveries to New Jersey addresses, and from January 2013 through
September 4, 2014 there were 4,500 specialized home deliveries. (Id. at ¶¶ 24, 25). Adding
these deliveries together yields 8,300 deliveries between 2011 and 2014, or roughly half the class
period. (Id. at ¶ 26).
Plaintiffs seek TCCWNA statutory civil penalties of $100 per violation, and Defendants
have identified 8,300 deliveries to New Jersey addresses. Thus, statutory civil penalties could
plausibly amount to at least $830,000. (Id. at ¶ 43). In addition, the Furniture Delivery
Regulations require sellers of household furniture for delivery to offer consumers the option of
canceling the order and receiving a full refund in the case of delivery delays. See N.J.A.C.
13:45A–5.1. Thus, to estimate actual damages,2 Defendants calculated an average sale price of
$1,621.67 for sales between 2011 and 2013 based on their Form 10-K’s and multiplied this price
against the 4,800 LTL and specialized home deliveries3 identified from 2011 to 2014, yielding
damages of about $7,784,016 for only a portion of the six year class period. (Id. at ¶¶ 39-41).
Lastly, Defendants point out that attorneys’ fees are properly included as part of the amount in
controversy, and the Third Circuit has found attorneys’ fees to constitute roughly 30 percent of
the judgment in class actions. See Frederico, 507 F.3d at 199. Therefore, Defendants claim that
2
Since Plaintiffs’ primary objection to Defendants’ amount in controversy assessment is that
Plaintiffs are not seeking any actual damages, the Court declines to reach the issue of whether
Defendants’ method of calculating actual damages is appropriate.
3
The 3,500 small deliveries were omitted from this calculation because the average sale price
tracked by Defendants does not include transactions under $250. (Doc. No. 1 at 11, n. 5).
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the amount in controversy is well over CAFA’s $5 million threshold, and as a result, this court
has jurisdiction over the case.
In response, Plaintiffs assert that the single reference to “actual damages” in the
Complaint’s prayer for relief was a typographical error, as the rest of the Complaint does not
allege any facts or elements necessary to assert actual damages. (Doc. No. 6 at 4-6, 16-17).
Instead, Plaintiffs state that they are only seeking a $100 per violation TCCWNA statutory civil
penalty. (Id.). Thus, with 8,300 deliveries identified by Defendants, damages for the portion of
the class period analyzed by Defendants would only amount to $830,000, far short of CAFA’s $5
million threshold, and thus precluding federal jurisdiction. (Id. at 20).
After reviewing the Complaint as a whole, the most reasonable reading indicates that the
inclusion of actual damages in the prayer for relief was a typographical error since there is no
other reference to injuries or losses incurred by Plaintiffs in the rest of the Complaint. Instead,
the Complaint’s factual allegations assert only that Defendants’ invoices failed to contain the
statutorily required language regarding sellers’ delivery date and delayed delivery obligations
and does not identify any actual harm to Plaintiffs or even state any allegations of delayed
delivery by Defendants. The fact that the Complaint fails to properly plead a claim for actual
damages under Federal Rule of Civil Procedure 12(b)(6) further supports Plaintiffs’ claim that
the sole reference to actual damages in the Complaint is an error and should be disregarded. See
Jackson v. Prime Motors, Inc., No. 11-2360, 2011 WL 1883806, at *4 (E.D. Pa. May 18, 2011)
(granting plaintiff’s motion to remand after concluding that the amended complaint’s isolated
references to a federal statute were typographical errors and did not justify removal); Citigroup
Inc. v. Wachovia Corp., 613 F. Supp. 3d 485, 492–93 (S.D.N.Y. 2009) (“This Court will not base
subject matter jurisdiction on a typographical error.”).
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Defendants rely on Werwinski v. Ford Motor Company for the argument that courts
assessing the amount in controversy for jurisdictional purposes should give effect to the
complaint’s prayer for relief in its entirety. 286 F.3d 661 (2002); Doc. No. 13 at 14-16. In
Werwinski, plaintiffs brought a class action suit against Ford Motor Company, asserting various
consumer fraud claims stemming from allegedly defective car transmission components.
Werwinski, 286 F.3d at 663. Plaintiffs had initially filed the suit in state court; defendants
removed it to the district court; and plaintiffs subsequently filed a motion to remand. Id. at 664.
Even though plaintiffs argued that they were only seeking compensatory damages in the form of
repairing or replacing the defective transmissions, which would not meet the $75,000 amount in
controversy requirement for diversity jurisdiction, the district court denied plaintiffs’ motion and
accepted defendants’ amount in controversy calculations based on the sale and lease prices of the
cars. Id. at 666–67. The Third Circuit affirmed the district court’s ruling, stating that plaintiffs’
claims for only the repair or replacement cost of the transmissions was contradicted by the
complaint’s prayer for relief, which sought “compensatory damages” including “all or part of the
sums [plaintiffs] paid to purchase or lease [their] automobiles.” Id.
The present case is distinguishable from Werwinski. In Werwinski, plaintiffs alleged
fraud based on defective car transmission parts, and although plaintiffs claimed that they were
only seeking transmission repair and replacement costs, these claims were undermined by
several facts. First, the complaint’s prayer for relief not only requested an order declaring Ford
financially responsible for all or part of the purchase or lease price of the cars but also demanded
that Ford disgorge any profits received from the sale or lease of the cars. Id. Second, the factual
allegations in the complaint asserted that plaintiffs were damaged simply by virtue of having
purchased the vehicles and that they would not have purchased or leased them had they known of
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the transmission defects. See Werwinski Defendant/Appellee Brief at *12; Plaintiff/Appellant
Reply Brief at *8. Thus, a reasonable reading of the Werwinski complaint would support the
conclusion that plaintiffs sought more than just transmission repair and replacement costs.
Here, however, Plaintiffs’ Complaint does not allege any facts regarding damages
sustained by Plaintiffs. They have not alleged any defects in the products purchased from
Defendants, nor have they claimed any delivery delays by Defendants. Instead, the factual
allegations in the Complaint only allege that Defendants’ sales invoices failed to contain
mandatory statutory language regarding sellers’ delivery obligations. (Doc. No. 1, Ex. A, at 25). And, the last sentence of the sole count of the Complaint states, “Defendants are liable to
Plaintiffs and putative class members for a statutory civil penalty of a minimum of $100 per
invoice and reasonable attorney’s fees and costs pursuant to N.J.S.A. 56:12-17” and does not
reference any other damages. (Id. at ¶ 67). Thus, unlike in Werwinski, the mention of actual
damages in the Complaint’s prayer for relief appears to be an isolated and erroneous reference
without any support from the rest of the Complaint.
Without the prospect of actual damages, it appears that Plaintiffs will be unable to meet
CAFA’s $5 million amount in controversy threshold. Given the $100 per violation statutory
penalty under the Household Furniture Regulations, there would have to be at least 50,000 New
Jersey home deliveries by Defendants during the six year class period in order to reach $5
million. Defendants, in their Notice of Removal, identified only 8,300 such sales between 2011
and 2014. (Doc. No. 1 at ¶ 26). Proportionally scaling Defendants’ estimates to cover the entire
class period4 yields a total of 24,600 deliveries, far short of the necessary 50,000. Multiplying
4
Defendants identified 3,500 small deliveries for roughly two out of the proposed six year class
period. Thus, multiplying 3,500 by three provides an estimate of 10,500 small deliveries over
the entire class period. Similarly, Defendants identified 300 LTL deliveries for roughly three out
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24,600 deliveries by $100 per delivery yields $2.46 million, which, even including a thirty
percent increase for attorneys’ fees, does not reach CAFA’s $5 million threshold. Therefore,
CAFA’s requirements are not satisfied, and this court lacks subject matter jurisdiction over the
suit. Pursuant to 28 U.S.C. § 1447(c), the case will be remanded to the state court.
Plaintiffs’ Motion for Remand also seeks attorneys’ fees and costs incurred as a result of
Defendants’ removal of the case. (Doc. No. 6 at 22-24). 28 U .S.C. § 1447(c) provides that an
order remanding the case may also include payment of attorneys’ fees and costs incurred from
the removal. The award of such fees is left to the district court’s discretion, but fees may be
awarded “only where the removing party lacked an objectively reasonable basis for seeking
removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). If an objectively
reasonable basis exists, fees should be denied. Id.
Here, there was an objectively reasonable basis for Defendants’ removal of the case.
Plaintiffs did not identify their drafting error until after the case had been removed. Even though
the Court ultimately concludes that the most reasonable reading of the Complaint indicates that
Plaintiffs seek only statutory civil penalties rather than actual damages, the inclusion of “actual
damages” in the Complaint’s prayer for relief, coupled with the fact that the TCCWNA imposes
a statutory civil penalty of at least $100, actual damages, or both, at the consumer’s election, do
provide some basis for Defendants’ interpretation of the Complaint. N.J.S.A. 56:12-17.
Therefore, Plaintiffs’ request for attorneys’ fees and costs incurred in removal will be denied.
of the six year class period and 4,500 specialized home deliveries for almost two of the six year
class period. Doubling and tripling these estimates, respectively, yields a total estimate of 600
LTL and 13,500 specialized home deliveries for the entire class period. The sum of 10,500 small
deliveries, 600 LTL, and 13,500 home deliveries produces a total of 24,600 deliveries during the
six year proposed class period.
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CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion for Remand will be granted, but
Plaintiffs’ request for attorneys’ fees and costs will be denied.
/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
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