Colon v. Rent-A-Center, Inc.

13 F. Supp. 2d 553, 1998 U.S. Dist. LEXIS 11825, 1998 WL 437156
CourtDistrict Court, S.D. New York
DecidedAugust 3, 1998
Docket97 Civ. 9569(LBS)
StatusPublished
Cited by12 cases

This text of 13 F. Supp. 2d 553 (Colon v. Rent-A-Center, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Colon v. Rent-A-Center, Inc., 13 F. Supp. 2d 553, 1998 U.S. Dist. LEXIS 11825, 1998 WL 437156 (S.D.N.Y. 1998).

Opinion

OPINION

SAND, District Judge.

The Plaintiff, Tabitha Colon, brought this proposed class action in New York State Supreme Court, Bronx County, against the Defendants, Rent-A-Center, Inc. and Thorn Americas, Inc. (collectively “Rent-A-Center”), seeking damages and injunctive relief for alleged violations of state statutes governing rent-to-own transactions and deceptive trade practices. The Defendants removed the action to federal court asserting diversity jurisdiction under 28 U.S.C. § 1332. The Plaintiff now moves for remand pursuant to 28 U.S.C. § 1447(c). For the reasons set forth below, the Plaintiffs Motion is granted.

I. BACKGROUND

1. History

The Plaintiff filed suit in Supreme Court, Bronx County, on November 26, 1997. Her Complaint asserts both individual claims and claims on behalf of a putative statewide class, which would consist of all persons in the State of New York who rented merchandise from Rent-A-Center stores during the period from November 26, 1991 through November 26, 1997. (ComplA 12.) These claims are brought under N.Y. Gen. Bus. Law §§ 349-50 and N.Y. Pers. Prop. Law §§ 500 et seq. (ComplA 1.)

Renb-A-Center, which has over seventy stores in New York, engages in the rent-to-own business. (Defs.’ Mem. at 2.) It offers consumers the opportunity to acquire merchandise through a series of renewable weekly or monthly leases. As the Defendants explain: “At the end of each rental period, the consumer can terminate the lease without further obligation (thus distinguishing a rent-to-own transaction from an installment date). Alternatively, if the consumer renews the lease each week or month for the entire contractually stated term, he or she will acquire ownership of the goods.” (Id.)

The thrust of the Complaint is that Rent-A-Center engages in fraudulent business practices that coerce consumers to enter into contracts of adhesion that do not disclose the real economic costs of the rent-to-own transactions. (Compl.lffl 2-6.) Among other allegations, the Plaintiff claims that: (1) Renb-A-Center misrepresents or conceals material information concerning the true cost of renting its merchandise; (2) consumers lack sufficient information to compare Renb-A-Cen-ter to other credit options and have therefore unknowingly found themselves paying inflated amounts for the goods they rent or rent-to-own; (3) customers who exercise an early purchase option for the goods they rent may pay more than the “total cost” of the merchandise; (4) Rent-A-Center offers goods for purchase at a “cash price” higher than the price charged by other retailers for comparable goods; (5) Renb-A-Center fails to disclose the “effective interest rate” applicable to rent-to-own transactions, which rates may be as high as 200% annually, or more; *556 and (6) Rent-A-Center engages in a high-pressure sales scheme to coerce consumers-particularly low-income consumers-to enter into adhesion contracts. (Id.) Rent-A-Center denies any wrongdoing.

As relief, the Plaintiff requests, among other things, the following items: (1) compensatory and punitive damages; (2) treble damages, reasonable attorneys’ fees, filing fees and costs pursuant to Gen. Bus. Law §§ 349(h) and 350-d(3) and/or Pers. Prop. Law § 507; (3) rescission of the contracts of the Plaintiff and other putative class members; and (4) injunctive relief. - (Compl. at 18-20.) The request for injunctive relief has three components; specifically, the Plaintiff seeks relief requiring the Defendants: (1) to cease from marketing the services of Rent-A-Center by means of listing a cash price for merchandise that is significantly higher than the price charged for the merchandise in the retail marketplace; (2) to cease from setting a cash price for merchandise that could cause the total cost of a rent-to-own contract to be higher than the total cost stated in the contract if a customer exercises an early purchase option; and (3) to inform customers of the effective economic interest rate on their rent-to-own transactions. (Id. at 18.)

2. Motion

The Defendants filed a Notice of Removal on December 31, 1997, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332. On March 4, 1998, the Plaintiff filed her Motion to Remand (“Motion”) pursuant to 28 U.S.C. § 1447(c). After granting several adjournments, the Court heard oral argument on May 21, 1998. (See Tr. of 5/21/98, at 1-21.) At the close of argument, the Court reserved decision and the Motion became fully submitted. (Id. at 21.)

II. DISCUSSION

A.Legal Standard

The district court may exercise diversity jurisdiction only where: (1) the parties are completely diverse; and (2) the amount in controversy exceeds $75,000, exclusive of interests and costs. 28 U.S.C. § 1332(a). The party seeking federal jurisdiction bears the burden of establishing these statutory requirements. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936).

In the Second Circuit, courts must “construe the removal statute narrowly, resolving any doubts against removability.” Somlyo v. J. Lu-Rob Enters., Inc., 932 F.2d 1043, 1045-46 (2d Cir.1991). This policy recognizes: (1) the well-documented intent of Congress to limit the jurisdiction of federal courts; and (2) the significance of “preserving the independence of state governments.” Id.

B. Complete Diversity

No one disputes that the requirement of complete diversity is met here. Ren1>-A-Center is a Delaware corporation with its principal place of business in Wichita, Kansas, (Notice of Removal ¶ 7), while the putative class is composed of New York citizens exclusively. (ComplJ 12.) Accordingly, the only question is whether the amount-in-eon-troversy requirement is satisfied.

C. Amount in Controversy

1. General Rule

In a diversity class action, the general rule is that members of the class are not permitted to aggregate their claims to reach the requisite amount in controversy. Snyder v. Harris, 394 U.S. 332, 338, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969). Instead, each member of the putative class must be able to establish the minimum jurisdictional amount. Zahn v. International Paper Co.,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

American Standard, Inc. v. Oakfabco, Inc.
498 F. Supp. 2d 711 (S.D. New York, 2007)
Maxons Restorations, Inc. v. Newman
292 F. Supp. 2d 477 (S.D. New York, 2003)
Mehlenbacher v. Akzo Nobel Salt, Inc.
207 F. Supp. 2d 71 (W.D. New York, 2002)
Gavriles v. Verizon Wireless
194 F. Supp. 2d 674 (E.D. Michigan, 2002)
In Re Ciprofloxacin Hydrochloride Antitrust Litigation
166 F. Supp. 2d 740 (E.D. New York, 2001)
Lastih v. Elk Corp. of Alabama
140 F. Supp. 2d 166 (D. Connecticut, 2001)
Freeman v. Great Lakes Energy Partners, L.L.C.
144 F. Supp. 2d 201 (W.D. New York, 2001)
Briggs v. Goodyear Tire & Rubber Co.
79 F. Supp. 2d 228 (W.D. New York, 1999)
In Re Cardizem CD Antitrust Litigation
90 F. Supp. 2d 819 (E.D. Michigan, 1999)
Allendale Mutual Insurance v. Excess Insurance
62 F. Supp. 2d 1116 (S.D. New York, 1999)
Allendale Mut. Ins. Co. v. Excess Ins. Co. Ltd.
62 F. Supp. 2d 1116 (S.D. New York, 1999)

Cite This Page — Counsel Stack

Bluebook (online)
13 F. Supp. 2d 553, 1998 U.S. Dist. LEXIS 11825, 1998 WL 437156, Counsel Stack Legal Research, https://law.counselstack.com/opinion/colon-v-rent-a-center-inc-nysd-1998.