McMahon et al v. Advance Stores Company Incorporated et al

Filing 19

MEMORANDUM OPINION AND ORDER Granting Plas' 9 Motion to Remand. Clerk is DIRECTED to enter judgment. Signed by Senior Judge Frederick P. Stamp, Jr on 5/24/11. (c to Circuit Court of Ohio Co with certified copy of d.s.)(mji)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
SCOTT McMAHON and KAREN JOHN,
individually and on behalf of
all others similarly situated,
Plaintiffs,
v.

Civil Action No. 5:11CV34
(STAMP)

ADVANCE STORES COMPANY INCORPORATED
d/b/a ADVANCE AUTO PARTS
and DONN FREE,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND
I.

Background

Currently before this Court is a second motion to remand by
the plaintiffs, Scott McMahon (“McMahon”) and Karen John (“John”).
The issues are similar to those addressed by this Court in the
first motion to remand, and include: (1) whether the notice of
removal was timely filed by the defendants, Advance Store Company,
Inc., d/b/a Advance Auto Parts (“AAP”) and Donn Free (“Free”); and
(2) whether this Court has subject matter jurisdiction pursuant to
the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d).
The controversy concerns a warranty on a battery which McMahon
purchased from AAP in Wheeling, West Virginia, and which he
subsequently sold to John.

The plaintiffs allege that within the

warranty period, the battery failed.

According to the plaintiffs,

when John invoked the warranty and attempted to obtain a refund or

replacement thereunder, Free, acting as AAP’s agent, refused to
honor it because AAP policy was to limit warranties to original
purchasers. Free claimed that John, as a subsequent purchaser, was
not eligible to benefit from the warranty.
On August 30, 2006, McMahon filed a complaint in the Circuit
Court of Ohio County, West Virginia.

The original complaint

included claims for breach of express and implied warranties,
violations of West Virginia consumer protection laws, fraud, and
unjust enrichment.

After the plaintiffs amended the complaint to

include a class action claim, the defendants removed the action,
invoking this Court’s jurisdiction under CAFA.
The plaintiffs then filed a motion to remand, which this Court
granted on January 28, 2008 after concluding that the defendants
had failed to carry their burden of showing by a preponderance of
the evidence that the jurisdictional amount in controversy had been
met.

After this Court issued its memorandum opinion and order

granting the plaintiffs’ motion for remand, the case proceeded in
the Circuit Court of Ohio County.

On January 31, 2011, the

plaintiffs sought, and were granted, leave to amend their complaint
again in order to add a claim under the Magnusson Moss Warranty Act
(“MMWA”), 15 U.S.C. § 2301, et seq.

After the defendants were

served with the third amended complaint, they once again filed a
notice of removal.

2

On March 22, 2011, the plaintiffs filed a second motion to
remand, arguing that the defendants’ removal is untimely and that
this Court lacks subject matter jurisdiction because the amount in
controversy
plaintiffs

does
also

not

meet

CAFA’s

argue

that

§

minimum.1

statutory

2310(d)

of

the

MMWA

The

disallows

jurisdiction of this case in federal court because the number of
named plaintiffs is less than one hundred.

Again, the plaintiffs

argue that even if this civil action does meet the threshold
jurisdictional requirements under CAFA, this Court must decline to
exercise jurisdiction because the case satisfies the CAFA’s “local
controversy” exception pursuant to 28 U.S.C. § 1332(d)(4).

The

defendants

was

responded

in

opposition,

arguing

that

removal

timely; that the jurisdictional requirements are met; and that
CAFA’s “local controversy” exception does not apply to the facts of
this case.

The plaintiffs filed a timely reply.

The plaintiffs’ second motion to remand is now ripe for
review.

After considering the parties’ briefs and the applicable

law, this Court finds that the plaintiffs’ second motion to remand
this action must be granted for the reasons stated below.

1

The plaintiffs are citizens of West Virginia. Defendant AAP
is a Virginia business corporation with its principal place of
business in Roanoke, Virginia. Defendant Free is a citizen of West
Virginia.
3

II.
A.

Applicable Law

Procedural Requirements
The procedure for removal is governed by 28 U.S.C. § 1446.

Section 1446 provides, in relevant part:
(a) A defendant . . . desiring to remove any civil
action . . . from a State court shall file in the
district court . . . a notice of removal signed pursuant
to Rule 11 of the Federal Rules of Civil Procedure and
containing a short and plain statement of the grounds for
removal, together with a copy of all process, pleadings,
and orders served upon such defendant . . . in such
action.
(b) . . . If the case stated by the initial pleading is
not removable, a notice of removal may be filed within
thirty days after receipt by the defendant, through
service or otherwise, of a copy of an amended pleading,
motion, order or other paper from which it may first be
ascertained that the case is one which is or has become
removable . . . .
28 U.S.C. § 1446 (a),(b).

In cases where a plaintiff files a

motion for leave to file an amended complaint, and the proposed
amended complaint enables a defendant to ascertain that the case
has become removable, the thirty-day period does not begin until
the state judge has assented to the motion. Hibbs v. Consolidation
Coal Co., 842 F. Supp. 215, 217 (N.D. W. Va. 1994).
B.

Subject Matter Jurisdiction
A defendant may remove a case from state court to federal

court in instances where the federal court is able to exercise
original jurisdiction over the matter. 28 U.S.C. § 1441. The CAFA
confers original jurisdiction on district courts over class actions
in which any member of a class comprised of at least one hundred
4

plaintiffs is of diverse citizenship from any defendant and in
which the amount in controversy exceeds $5,000,000.00, exclusive of
interests

and

individual

costs.

class

28

members

U.S.C.
may

§

1332(d).

be

$5,000,000.00 amount in controversy.

aggregated

The

claims

to

meet

of
the

28 U.S.C. § 1332(d)(6).

Generally, the party seeking removal bears the burden of
establishing

federal

jurisdiction.

See

Mulcahey

v.

Columbia

Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994).

The

Fourth Circuit has held “while CAFA was intended to open the doors
of the federal courts to class action litigants, its statutory
language did nothing to reverse the long-settled principle that a
defendant seeking to invoke a federal court’s removal jurisdiction
bears the burden of demonstrating that jurisdiction would be
proper.”

Bartnikowski v. NVR, Inc., 307 F. App’x 730, 734 (4th

Cir. 2009) (citing Strawn v. AT&T Mobility LLC, 530 F.3d 293, 297
(4th Cir. 2008)).

Therefore,

in

this

case,

the burden of

establishing the $5,000,000.00 jurisdictional threshold amount in
controversy rests with the defendants.
151.

See Mulcahey, 29 F.3d at

This Court has consistently applied the “preponderance of

evidence” standard to determine whether a removing defendant has
met its burden of proving the amount in controversy.

The well-

settled test in the Fourth Circuit for calculating the amount in
controversy is “‘the pecuniary result to either party which [a]
judgment would produce.’” Dixon v. Edwards, 290 F.3d 699, 710 (4th

5

Cir. 2002) (quoting Gov’t Employees Ins. Co. v. Lally, F.2d 568,
569 (4th Cir. 1964)).

Accordingly, in this case, the defendants

must show by a preponderance of the evidence that the pecuniary
interest, in the aggregate, of either party is greater than
$5,000,000.00.
Even if CAFA’s threshold jurisdictional requirements are met,
however,

remand

is

required

where

the

case

meets

certain

exceptions. 28 U.S.C. § 1332(d)(4). Title 28, United States Code,
Section 1332(d)(4) provides:
(4) A
district
court
jurisdiction . . .

must

decline

to exercise

(A)(i) over a class action in which -(I) greater than two-thirds of the members of all
proposed plaintiff classes in the aggregate are citizens
of the State in which the action was originally filed;
(II) at least 1 defendant is a defendant -(aa) from whom significant relief is sought by members of
the plaintiff class;
(bb) whose alleged conduct forms a significant basis for
the claims asserted by the proposed plaintiff class; and
(cc) who is a citizen of the State in which the action
was originally filed; and
(III) principal injuries resulting from the alleged
conduct or any related conduct of each defendant were
incurred in the State in which the action was originally
filed; and
(ii) during the 3-year period preceding the filing of
that class action, no other class action has been filed
asserting the same or similar factual allegations against
any of the defendants on behalf of the same or other
persons; or
6

(B) two-thirds or more of the members of all proposed
plaintiff classes in the aggregate, and the primary
defendants, are citizens of the State in which the action
was originally filed.
28 U.S.C.A. § 1332(d)(4).
Removal

jurisdiction

is

strictly

construed.

If

federal

jurisdiction is doubtful, the federal court must remand. Mulcahey,
29 F.3d at 151.
III.
A.

Discussion

Timeliness of Removal
In their motion to remand, the plaintiffs argue that the

defendants’ notice of removal is untimely.

According to the

plaintiffs, the defendants’ basis for removal is the same as was
raised during the 2007 removal -- CAFA. Because the second amended
complaint, not the third, was the first pleading to set forth the
CAFA

claim,

the

plaintiffs

contend

that

the

defendants

were

required to file their notice of removal within thirty days of the
receipt of the second amended complaint, which was filed on August
13, 2007.2

The plaintiffs claim that the thirty-day period cannot

be considered to run from the date of the filing of the third
amended complaint -- January 31, 2011.
In

response,

the

defendants

contend

that

because

the

plaintiffs amended their complaint to state an entirely new cause
of action under the MMWA, the notice of removal was timely filed

2

The second amended complaint was filed on August 7, 2007 and
was received by the defendants no later than August 13, 2007.
7

within thirty days after the receipt by the defendants of the third
amended complaint.
Title 28, United States Code, Section 1446(b) provides, in
pertinent part:
If the case stated by the initial pleading is not
removable, a notice of removal may be filed within thirty
days after receipt by the defendant, through service or
otherwise, of a copy of an amended pleading, motion,
order or other paper from which it may first be
ascertained that the case is one which is or has become
removable.
28 U.S.C. § 1446(b).

In their notice of removal, the defendants

identify the MMWA claim as the new cause of action upon which their
removal is based.

(Notice of Removal ¶ 8.)

However,

Section 1446(b) does not give a defendant a new
opportunity to file a notice of removal every time the
plaintiff amends his complaint to state a new claim
against the defendant. Rather, a defendant must file its
notice of removal within thirty days of first learning of
the grounds for removing the entire case.
Wingfield v. Franklin Life Ins. Co., 41 F. Supp. 2d 594, 598-99
(E.D. Va. 1999).

But a new civil action may be commenced under

CAFA when claims are added in an amended complaint.

“‘[W]hen a

claim relates back to the original complaint (and hence is treated
as part of the original suit),’ it does not commence a new suit,
but when a claim is ‘sufficiently independent of the original
contentions[,] . . . it must be treated as fresh litigation.’”
Admiral Ins. Co. v. Abshire, 574 F.3d 267, 274 (5th Cir. 2009)
(quoting Knudsen

v. Liberty Mut. Ins. Co., 411 F3d 805, 807 (7th

Cir. 2005)). Rule 15 of the West Virginia Rules of Civil Procedure
8

provides that “the amended complaint relates back to the date of
filing when: a) there is no essential change in the cause of
action;. . . and c) the adverse party is not prejudiced by the
assertion of the amendment.”

Huffman v. Criner, 624 S.E.2d 544,

546 (W. Va. 2005).
In this case, the defendants first removed the case based upon
the class action claims included in the plaintiffs’ second amended
complaint. But prior to the filing of the third amended complaint,
the defendants were not on notice of a MMWA claim and would
therefore be prejudiced in maintaining a defense on the merits if
this claim were viewed as relating back to the original complaint.
Thus, this Court concludes that the MMWA claim does not relate
back.

Because the third amended complaint sets forth a new cause

of action for class relief under the MMWA, the defendants’ notice
of removal was timely as it was filed within thirty days of the
filing of the third amended complaint.
B.

Subject Matter Jurisdiction
The second argument presented by the plaintiffs in their

motion to remand is that the defendants have not satisfied the
burden of proof as to the amount in controversy requirement of 28
U.S.C. § 1332(6).

Specifically, the plaintiffs allege that the

defendants inaccurately define the putative class.

Correcting the

defendants, the plaintiffs reiterate that the class remains “those
improperly denied warranty rights for a defective product.”

9

(Mem.

in Supp. of Mot. to Remand 10.)

The plaintiffs point to this

Court’s 2008 opinion granting remand in support of their contention
that the defendants’ definition of the putative class is overly
broad.
In response, the defendants claim that the putative class
constitutes more than the requisite one hundred members and the
alleged aggregate damages exceed $5,000,000.00.

Specifically, the

defendants argue that the MMWA claim supports a class comprised of
all

consumers

who

have

been

issued

a

sales

receipt

by

the

defendants referring the consumer to warranty information available
on Advance’s website or elsewhere. (Defs.’ Mem. in Opp’n 12.) The
defendants offer the affidavit of Jeffrey W. Fralin as evidence
establishing

the

total

number

of

sales

transactions

at

West

Virginia Advance Auto Parts stores and that each such sales
transaction was accompanied by a sales receipt that referenced the
warranty.

Because

the

number

of

consumers

is

so

large,

by

multiplying the number of potential class members by the damages
asserted per class member, the defendants claim that the damages
far exceed the $5,000,000.00 jurisdictional threshold.3

3

The defendants consider the plaintiffs’ CCPA claim, which
would allow them to recover actual damages or $200.00, whichever is
greater. W. Va. Code. § 46A-6-106. By multiplying $200.00 by the
number of potential class members, 19,857,409, the defendants argue
that damages equal approximately $3,971,481,800.00. (Defs.’ Mem.
in Opp’n 18-19.)
10

Given the parties’ arguments presented above, the remand
decision seems to hinge upon how the class is defined.
determining

the

amount

in

controversy

for

federal

In

diversity

jurisdiction, the court must examine the complaint at the time of
removal.
291

St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283,

(1938)

(“[T]he

status

of

the

case

as

disclosed

by

the

plaintiff’s complaint is controlling in the case of a removal.”).
Further, it is well established that “the plaintiff is the master
of his complaint.” Custer v. Sweeney, 89 F.3d 1156, 1165 (4th Cir.
1996); see also Morgan v. Gay, 471 F.3d 469, 474 (3d Cir. 2006)
(“CAFA does not change the proposition that the plaintiff is the
master of her own claim.”).

Thus, this Court looks to the

plaintiff’s third amended complaint to identify the putative class
and to determine the amount in controversy.
The third amended complaint does not specify damages.

The

defendants calculated damages by first concluding that the putative
class consists of “all persons who received a sales receipt
referring

the

consumer

to

warranty

information

available

on

Advance’s website or elsewhere, with a purchase from Advance.”
(Notice of Removal ¶ 18.)

Because approximately 19,857,409 sales

transactions took place in West Virginia Advance stores over the
course of the past four years, the defendants contend that this is
the number of people in the putative class.

Then, because a

consumer may seek relief for violations of the West Virginia

11

Consumer Protection Act (“CPPA”) in the amount of actual damages or
$200.00, the defendants multiple these numbers and conclude that
the

damages

in

this

case

exceed

$3

billion.

W.

Va.

Code.

§ 46A-6-106.
This Court finds the defendants’ definition of the class to be
overly broad. The plaintiffs third amended complaint describes the
putative

class

as

“others

similarly

situated

and

other

West

Virginia consumers [who] have been denied the protections of the
warranties for products purchased in violation of West Virginia
law.”

(Third Am. Compl. ¶ 8.)

A common sense reading reveals that

the class does not include all consumers who made a purchase from
Advance and received a receipt referencing the warranty, as the
defendants suggest, but instead is limited to those consumers who
purchased defective products from Advance and were then denied the
protection of the warranty.

If this Court were to adopt the

defendants’ definition, the class would arguably include consumers
who purchased defective products from Advance and never took
advantage of the warranty, or who successfully took advantage of
the warranty.

Under the defendants’ definition, the class would

also consist of consumers who did not purchase defective products
from Advance.

After examining the third amended complaint, this

Court finds that the putative class includes those consumers who
were improperly denied warranty claims on a defective product
purchased from Advance.

As in the defendants’ first notice of

12

removal, their estimates concerning potential damages encompass
putative claims that fall beyond the plaintiffs’ class complaint.
Not only do the defendants misdefine the class, but this Court
again finds their evidence to be infirm and concludes that the
defendants have failed to meet their evidentiary burden regarding
the amount in controversy. Once again, the defendants rely largely
on assumptions and estimated sales figures in calculating the
amount of damages in this case.

In support of their calculations,

the defendants offer only the affidavit of Jeffrey Fralin, who
approximates the total sales transactions for West Virginia Advance
Auto

Parts

stores

and

confirms

that

these

transactions

accompanied by sales receipts that refer to the warranty.
Aff. ¶¶ 4-5.)

were

(Fralin

Fralin does not discuss, however, the number of

consumers who were improperly denied warranty claims on a defective
product purchased from Advance.
The defendants cite to Lewis v. Ford Motor Co., 610 F. Supp.
2d 476 (W.D. Pa. 2009), in support of their argument that the
amount in controversy has been satisfied, but unlike Lewis, the
complaint in this case is more precise.

In Lewis, the allegations

in the complaint and the defendant’s evidence regarding the number
of

vehicles

in

question

enabled

the

court

to

determine

the

approximate number of members in the putative class and the dollar
amount per claim.
that

the

Id. at 486-88.

defendant

had

Thus, the court could conclude

established

13

damages

of

at

least

$5,000,000.00.

Id. at 488.

In this case, however, the putative

class, as defined in the third amended complaint, is less expansive
-- it is limited to those consumers who have been denied the
protections of the warranties for defective products purchased from
Advance.

But the affidavit submitted by the defendants offers no

help in determining the exact size of the class.

Instead, it

simply lists the total sales transactions. Calculating the figures
used in the simple multiplication operation in Lewis requires much
more speculation in this case.
Similarly, the complaint in Newport v. Dell, No. CIV 08-096,
2008 WL 2705364 (D. Ariz., July 2, 2008), another case cited by the
defendants, is also more broad than the complaint in this case. In
Newport, the plaintiff’s complaint alleges that the class consists
of “all persons in the State of Arizona who have purchased desktop
or notebook systems manufactured by Dell and who also received a
warranty from Defendants.”

Id. at *6.

The defendants in Newport

could rely on the total number of extended warranties issued to
consumers

multiplied

by

the

plaintiff’s

damages

estimates

to

determine that the amount in controversy exceeds $5,000,000.00.
Id. The case before this Court, however, can be distinguished from
Newport in that the class described in the third amended complaint
is more limited.
This Court concludes that the defendants’ calculations, based
as they are upon unfounded assumptions and ill-defined estimates

14

for a class that they incorrectly define, cannot be deemed reliable
bases for calculating the amount in controversy in this case.

See

Bartnikowski, 307 F. App’x at 739 (holding that the defendant’s
calculations were too speculative and that the record was too bare
to allow for a reasonable estimate of the amount in controversy);
Miedema v. Maytag Corp., 450 F.3d 1322, 1328-29 (11th Cir. 2006)
(holding that the district court did not err when it found that
“great uncertainty” remained about the amount in controversy and
resolved that uncertainty in favor of remand).

Consequently, the

defendants have not demonstrated by a preponderance of the evidence
that the pecuniary result to either party which a judgment would
produce exceeds $5,000,000.00, exclusive of interests and costs.
The amount in controversy has not been satisfied, and this Court,
therefore, lacks subject matter jurisdiction.4
C.

Local Exception Controversy
Having determined that it lacks subject matter jurisdiction,

this Court need not, and does not, address whether the local
controversy exception to CAFA applies.
IV.

Conclusion

For the reasons stated above, this Court concludes that the
defendants have failed to carry their burden of showing by a

4

This Court notes
burden for removal may
later, as Congress has
removal actions. See
App’x at 739.

that a CAFA defendant who cannot meet his
still have recourse to the federal courts
eliminated the one-year time limit on CAFA
28 U.S.C. § 1453(b); Bartnikowski, 307 F.
15

preponderance

of

evidence

controversy has been met.

that

the

jurisdictional

amount

in

Therefore, this Court lacks subject

matter jurisdiction over this action. Accordingly, the plaintiffs’
motion to remand is GRANTED and it is ORDERED that this civil
action be REMANDED to the Circuit Court of Ohio County, West
Virginia.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein and to the Clerk of
the Circuit Court of Ohio County, West Virginia.

Pursuant to

Federal Rule of Civil Procedure 58, the Clerk is DIRECTED to enter
judgment on this matter.
DATED:

May 24, 2011

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

16