McMahon et al v. Advance Stores Company Incorporated et al
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,
Civil Action No. 5:11CV34
ADVANCE STORES COMPANY INCORPORATED
d/b/a ADVANCE AUTO PARTS
and DONN FREE,
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND
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
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
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.
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
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).
timely; that the jurisdictional requirements are met; and that
CAFA’s “local controversy” exception does not apply to the facts of
The plaintiffs filed a timely reply.
The plaintiffs’ second motion to remand is now ripe for
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.
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
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
(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).
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
plaintiffs is of diverse citizenship from any defendant and in
which the amount in controversy exceeds $5,000,000.00, exclusive of
$5,000,000.00 amount in controversy.
28 U.S.C. § 1332(d)(6).
Generally, the party seeking removal bears the burden of
Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994).
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
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)).
the burden of
establishing the $5,000,000.00 jurisdictional threshold amount in
controversy rests with the defendants.
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.
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
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
Even if CAFA’s threshold jurisdictional requirements are met,
exceptions. 28 U.S.C. § 1332(d)(4). Title 28, United States Code,
Section 1332(d)(4) provides:
jurisdiction . . .
(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
(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
(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).
jurisdiction is doubtful, the federal court must remand. Mulcahey,
29 F.3d at 151.
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
required to file their notice of removal within thirty days of the
receipt of the second amended complaint, which was filed on August
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.
plaintiffs amended their complaint to state an entirely new cause
of action under the MMWA, the notice of removal was timely filed
The second amended complaint was filed on August 7, 2007 and
was received by the defendants no later than August 13, 2007.
within thirty days after the receipt by the defendants of the third
Title 28, United States Code, Section 1446(b) provides, in
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
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.)
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.
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)
v. Liberty Mut. Ins. Co., 411 F3d 805, 807 (7th
Cir. 2005)). Rule 15 of the West Virginia Rules of Civil Procedure
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
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.
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.
defendants, the plaintiffs reiterate that the class remains “those
improperly denied warranty rights for a defective product.”
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
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.
defendants argue that the MMWA claim supports a class comprised of
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
Virginia Advance Auto Parts stores and that each such sales
transaction was accompanied by a sales receipt that referenced the
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
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.)
Given the parties’ arguments presented above, the remand
decision seems to hinge upon how the class is defined.
jurisdiction, the court must examine the complaint at the time of
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283,
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.
defendants calculated damages by first concluding that the putative
class consists of “all persons who received a sales receipt
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
Consumer Protection Act (“CPPA”) in the amount of actual damages or
$200.00, the defendants multiple these numbers and conclude that
This Court finds the defendants’ definition of the class to be
overly broad. The plaintiffs third amended complaint describes the
Virginia consumers [who] have been denied the protections of the
warranties for products purchased in violation of West Virginia
(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
Under the defendants’ definition, the class would
also consist of consumers who did not purchase defective products
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
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
accompanied by sales receipts that refer to the warranty.
Aff. ¶¶ 4-5.)
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
approximate number of members in the putative class and the dollar
amount per claim.
Id. at 486-88.
Thus, the court could conclude
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
But the affidavit submitted by the defendants offers no
help in determining the exact size of the class.
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
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
for a class that they incorrectly define, cannot be deemed reliable
bases for calculating the amount in controversy in this case.
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).
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
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.
For the reasons stated above, this Court concludes that the
defendants have failed to carry their burden of showing by a
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.
controversy has been met.
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
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.
Federal Rule of Civil Procedure 58, the Clerk is DIRECTED to enter
judgment on this matter.
May 24, 2011
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
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