1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Renay Kristapher, No. CV-24-02037-PHX-KML
10 Plaintiff, ORDER
11 v.
12 Raley's Arizona LLC,
13 Defendant. 14 15 Plaintiff Renay Kristapher filed in state court a single-count putative class action 16 under the Arizona Telephone, Utility, and Communication Service Records Act 17 (TUCSRA) against defendant Raley’s Arizona LLC. She alleges Raley’s embedded third- 18 party tracking technology in its marketing emails that revealed information about when, 19 where, and how she opened these emails. Raley’s removed the case to federal court then 20 moved to dismiss for lack of jurisdiction and failure to state a claim. Because Raley’s has 21 not carried its burden of establishing federal jurisdiction, this case is remanded to state 22 court. 23 I. Background 24 Renay Kristapher signed up for promotional emails from Raley’s, which operates 25 an Arizona grocery store chain. (Doc. 1-1 at 3.) Unbeknownst to Kristapher, Raley’s 26 emails used a digital tool known as “pixels.” (Doc. 1-1 at 5.) Pixels are embedded code 27 that provide the sender with data about how a recipient interacts with the email, such as 28 when the recipient accesses it, how often she reviews it, and the location where she views 1 it. (Doc. 1-1 at 6–7.) Tracking pixels are part of a larger system where third-party data 2 brokers aggregate and monetize consumer data. (Doc. 1-1 at 9.) 3 Kristapher filed a complaint in state court on behalf of a putative class of 4 similarly-situated consumers, alleging one count under TUCSRA based on Raley’s use of 5 pixels. (Doc. 1-1 at 15–16.) Raley’s removed to this court alleging diversity jurisdiction 6 under the Class Action Fairness Act. (Doc. 1 at 2.) 7 II. Motion to Dismiss 8 Raley’s now moves to dismiss Kristapher’s complaint under Rule 12(b)(1) for lack 9 of standing. (Doc. 11 at 4.) Raley’s motion is a facial challenge to jurisdiction because 10 Raley’s “accepts the truth of [Kristapher’s] allegations but asserts that they are 11 insufficient on their face to invoke federal jurisdiction.” Jones v. L.A. Cent. Plaza LLC, 12 74 F.4th 1053, 1056 n.1 (9th Cir. 2023) (simplified). According to Raley’s, Kristapher’s 13 “allegations of privacy-based harms [do] not rise to the level of a sufficient injury under 14 Article III . . . and therefore [she] lacks standing bring this claim.” (Doc. 11 at 2.) 15 Kristapher responds by arguing as the removing party, it is Raley’s burden to prove the 16 existence of federal jurisdiction. (Doc. 12 at 6.)1 Because Raley’s now argues jurisdiction 17 does not exist, remand to state court is required. (Doc. 12 at 6.) 18 Standing is “an essential and unchanging part of the case-or-controversy 19 requirement of Article III” of the United States Constitution. Lujan v. Defs. of Wildlife, 20 504 U.S. 555, 560 (1992). “Upon removal, the burden to demonstrate Article III 21 jurisdiction shifts to the Defendant as ‘[t]he party invoking federal jurisdiction.’” Jones v. 22 Ford Motor Co., 85 F.4th 570, 573 (9th Cir. 2023) (quoting Lujan, 504 U.S. at 561). 23 It is unclear what caused Raley’s to suddenly doubt this court’s jurisdiction in the 24 month between when it removed this case from state court and moved to dismiss. But 25 what is clear is that Raley’s has not carried its burden of establishing jurisdiction. When 26 the party with the burden of proof of establishing jurisdiction concedes it has no interest 27 in carrying that burden, there is no need to proceed any further and summary remand is
28 1 Kristapher’s response does not have an ECF-generated header, so citations are to its internal pagination. 1 appropriate. See Ott ex rel. L.O. v. Dep’t of Health, No. 3:24-CV-00153-SLG, 2024 WL 2 4512091, at *3 (D. Alaska Oct. 17, 2024) (“By removing the lawsuit to federal court 3 based on the assertion that this Court has subject matter jurisdiction and then reversing 4 course and asserting a lack of subject matter jurisdiction a mere 20 days later, the State 5 has not met its burden to establish that this Court has subject matter jurisdiction.”). 6 Curiously, Raley’s now asks the court to conduct its own full analysis of 7 Kristapher’s standing rather than summarily remanding. (Doc. 15 at 2–3.) As a general 8 matter, the court would hesitate to carry Raley’s burden for it. United States v. Sineneng- 9 Smith, 590 U.S. 371, 375–76 (2020) (parties “are responsible for advancing the facts and 10 argument entitling them to relief”) (quotations omitted). But here, it is particularly 11 inappropriate to do so because Raley’s argument is based on the premise that summary 12 remand is only appropriate when the parties agree the court lacks jurisdiction. (Doc. 15 13 at 2.) Confusingly, in making this argument, Raley’s recognizes Kristapher never argued 14 she has standing, and her opposition to the motion to dismiss contains a request to 15 remand. (Doc. 15 at 2.) In these circumstances, it takes no inferential leap to understand 16 that Kristapher agrees the court lacks jurisdiction. Summary remand is therefore 17 appropriate even if the parties’ agreement is required. 18 Raley’s also argues without the court’s “independent review, Plaintiffs would be 19 incentivized to advocate for remand while contradictorily highlighting their damages – all 20 with a clear intent to advance those same damages upon remand.” (Doc. 15 at 6.) But 21 allegations of damages alone do not rise to the level of an injury sufficient for Article III 22 standing, as Raley’s itself argues in its motion. (Doc. 11 at 5.) Further, to the extent 23 Raley’s wishes to extinguish an argument Kristapher might raise in state court, the court 24 is “not inclined to resolve an issue that is not actually in dispute, solely for the purpose of 25 advancing, in some advisory fashion, an argument defendant may wish to make in state 26 court.” Mocek v. Allsaints USA Ltd., 220 F. Supp. 3d 910, 914 (N.D. Ill. 2016). 27 Ninth Circuit law is clear that in a removed case, the proper course of action for a 28 lack of jurisdiction is to remand, not dismiss. Polo v. Innoventions Int’l, LLC, 833 F.3d 1 1193, 1196 (9th Cir. 2016) (“Remand is the correct remedy because a failure of federal 2 subject-matter jurisdiction means only that the federal courts have no power to adjudicate 3 the matter. State courts are not bound by the constraints of Article III.”). With neither 4 party arguing jurisdiction exists, this case must be remanded.2 5 III. Attorneys’ Fees 6 Kristapher requests an award of attorneys’ fees for Raley’s removal. (Doc. 12 7 at 2.) “Absent unusual circumstances, courts may award attorney’s fees . . . only where 8 the removing party lacked an objectively reasonable basis for seeking removal.” Martin 9 v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). Courts consider the “clarity of the law 10 at the time of removal” and whether it “clearly foreclosed the defendant’s basis of 11 removal” when evaluating the objective reasonableness of a party’s removal. Lussier v. 12 Dollar Tree Stores, Inc., 518 F.3d 1062, 1066 (9th Cir. 2008). Raley’s filings in federal 13 court make it a close call whether to award fees.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Renay Kristapher, No. CV-24-02037-PHX-KML
10 Plaintiff, ORDER
11 v.
12 Raley's Arizona LLC,
13 Defendant. 14 15 Plaintiff Renay Kristapher filed in state court a single-count putative class action 16 under the Arizona Telephone, Utility, and Communication Service Records Act 17 (TUCSRA) against defendant Raley’s Arizona LLC. She alleges Raley’s embedded third- 18 party tracking technology in its marketing emails that revealed information about when, 19 where, and how she opened these emails. Raley’s removed the case to federal court then 20 moved to dismiss for lack of jurisdiction and failure to state a claim. Because Raley’s has 21 not carried its burden of establishing federal jurisdiction, this case is remanded to state 22 court. 23 I. Background 24 Renay Kristapher signed up for promotional emails from Raley’s, which operates 25 an Arizona grocery store chain. (Doc. 1-1 at 3.) Unbeknownst to Kristapher, Raley’s 26 emails used a digital tool known as “pixels.” (Doc. 1-1 at 5.) Pixels are embedded code 27 that provide the sender with data about how a recipient interacts with the email, such as 28 when the recipient accesses it, how often she reviews it, and the location where she views 1 it. (Doc. 1-1 at 6–7.) Tracking pixels are part of a larger system where third-party data 2 brokers aggregate and monetize consumer data. (Doc. 1-1 at 9.) 3 Kristapher filed a complaint in state court on behalf of a putative class of 4 similarly-situated consumers, alleging one count under TUCSRA based on Raley’s use of 5 pixels. (Doc. 1-1 at 15–16.) Raley’s removed to this court alleging diversity jurisdiction 6 under the Class Action Fairness Act. (Doc. 1 at 2.) 7 II. Motion to Dismiss 8 Raley’s now moves to dismiss Kristapher’s complaint under Rule 12(b)(1) for lack 9 of standing. (Doc. 11 at 4.) Raley’s motion is a facial challenge to jurisdiction because 10 Raley’s “accepts the truth of [Kristapher’s] allegations but asserts that they are 11 insufficient on their face to invoke federal jurisdiction.” Jones v. L.A. Cent. Plaza LLC, 12 74 F.4th 1053, 1056 n.1 (9th Cir. 2023) (simplified). According to Raley’s, Kristapher’s 13 “allegations of privacy-based harms [do] not rise to the level of a sufficient injury under 14 Article III . . . and therefore [she] lacks standing bring this claim.” (Doc. 11 at 2.) 15 Kristapher responds by arguing as the removing party, it is Raley’s burden to prove the 16 existence of federal jurisdiction. (Doc. 12 at 6.)1 Because Raley’s now argues jurisdiction 17 does not exist, remand to state court is required. (Doc. 12 at 6.) 18 Standing is “an essential and unchanging part of the case-or-controversy 19 requirement of Article III” of the United States Constitution. Lujan v. Defs. of Wildlife, 20 504 U.S. 555, 560 (1992). “Upon removal, the burden to demonstrate Article III 21 jurisdiction shifts to the Defendant as ‘[t]he party invoking federal jurisdiction.’” Jones v. 22 Ford Motor Co., 85 F.4th 570, 573 (9th Cir. 2023) (quoting Lujan, 504 U.S. at 561). 23 It is unclear what caused Raley’s to suddenly doubt this court’s jurisdiction in the 24 month between when it removed this case from state court and moved to dismiss. But 25 what is clear is that Raley’s has not carried its burden of establishing jurisdiction. When 26 the party with the burden of proof of establishing jurisdiction concedes it has no interest 27 in carrying that burden, there is no need to proceed any further and summary remand is
28 1 Kristapher’s response does not have an ECF-generated header, so citations are to its internal pagination. 1 appropriate. See Ott ex rel. L.O. v. Dep’t of Health, No. 3:24-CV-00153-SLG, 2024 WL 2 4512091, at *3 (D. Alaska Oct. 17, 2024) (“By removing the lawsuit to federal court 3 based on the assertion that this Court has subject matter jurisdiction and then reversing 4 course and asserting a lack of subject matter jurisdiction a mere 20 days later, the State 5 has not met its burden to establish that this Court has subject matter jurisdiction.”). 6 Curiously, Raley’s now asks the court to conduct its own full analysis of 7 Kristapher’s standing rather than summarily remanding. (Doc. 15 at 2–3.) As a general 8 matter, the court would hesitate to carry Raley’s burden for it. United States v. Sineneng- 9 Smith, 590 U.S. 371, 375–76 (2020) (parties “are responsible for advancing the facts and 10 argument entitling them to relief”) (quotations omitted). But here, it is particularly 11 inappropriate to do so because Raley’s argument is based on the premise that summary 12 remand is only appropriate when the parties agree the court lacks jurisdiction. (Doc. 15 13 at 2.) Confusingly, in making this argument, Raley’s recognizes Kristapher never argued 14 she has standing, and her opposition to the motion to dismiss contains a request to 15 remand. (Doc. 15 at 2.) In these circumstances, it takes no inferential leap to understand 16 that Kristapher agrees the court lacks jurisdiction. Summary remand is therefore 17 appropriate even if the parties’ agreement is required. 18 Raley’s also argues without the court’s “independent review, Plaintiffs would be 19 incentivized to advocate for remand while contradictorily highlighting their damages – all 20 with a clear intent to advance those same damages upon remand.” (Doc. 15 at 6.) But 21 allegations of damages alone do not rise to the level of an injury sufficient for Article III 22 standing, as Raley’s itself argues in its motion. (Doc. 11 at 5.) Further, to the extent 23 Raley’s wishes to extinguish an argument Kristapher might raise in state court, the court 24 is “not inclined to resolve an issue that is not actually in dispute, solely for the purpose of 25 advancing, in some advisory fashion, an argument defendant may wish to make in state 26 court.” Mocek v. Allsaints USA Ltd., 220 F. Supp. 3d 910, 914 (N.D. Ill. 2016). 27 Ninth Circuit law is clear that in a removed case, the proper course of action for a 28 lack of jurisdiction is to remand, not dismiss. Polo v. Innoventions Int’l, LLC, 833 F.3d 1 1193, 1196 (9th Cir. 2016) (“Remand is the correct remedy because a failure of federal 2 subject-matter jurisdiction means only that the federal courts have no power to adjudicate 3 the matter. State courts are not bound by the constraints of Article III.”). With neither 4 party arguing jurisdiction exists, this case must be remanded.2 5 III. Attorneys’ Fees 6 Kristapher requests an award of attorneys’ fees for Raley’s removal. (Doc. 12 7 at 2.) “Absent unusual circumstances, courts may award attorney’s fees . . . only where 8 the removing party lacked an objectively reasonable basis for seeking removal.” Martin 9 v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). Courts consider the “clarity of the law 10 at the time of removal” and whether it “clearly foreclosed the defendant’s basis of 11 removal” when evaluating the objective reasonableness of a party’s removal. Lussier v. 12 Dollar Tree Stores, Inc., 518 F.3d 1062, 1066 (9th Cir. 2008). Raley’s filings in federal 13 court make it a close call whether to award fees. 14 In its motion to dismiss, Raley’s argues a plaintiff alleging an intangible harm 15 must consider whether that harm was sufficiently concrete by analogizing the injury to 16 one “traditionally recognized as providing a basis for a lawsuit in American courts.” 17 Spokeo, Inc. v. Robins, 578 U.S. 330, 341 (2016). Raley’s argues these harms are most 18 analogous to the state-law privacy claims of intrusion upon seclusion and public 19 disclosure of private facts, providing an example of another court rejecting a TUCSRA 20 claim for lack of standing “with almost identical facts.” (Doc. 11 at 5–6 (citing Hartley v. 21 Urb. Outfitters, Inc., 740 F. Supp.3d 410, 422 (E.D. Pa. 2024).) It also cites five other 22 instances where other district courts have “rejected similar purported harms as 23 insufficient to establish an Article III injury.” (Doc. 11 at 7 (collecting cases).) According 24 2 Raley’s claims in its reply that it argued its motion to dismiss under Rule 12(b)(1) as an 25 alternative to its motion to dismiss under Rule 12(b)(6) because it was “uncertain whether this Court would find standing.” (Doc. 15 at 6.) But Raley’s opened with, and dedicated 26 the majority of its argument to, standing. (Doc. 11 at 2 (“First, Plaintiff’s allegations . . . does [sic] not rise to the level of a sufficient injury under Article III”).) Separately, “[a]s 27 always, before resolving any of the merits arguments, [the court] must first assure itself that [it has] jurisdiction.” Weeping Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1112 (9th 28 Cir. 2016) (quotations omitted). Naturally the court would therefore addresses standing before analyzing the merits of Kristapher’s complaint. 1 to Raley’s motion, “[t]he Ninth Circuit, along with its sister Circuits, has consistently 2 rejected” similar privacy claims based on a reasonable expectation of privacy of an IP 3 address. (Doc. 11 at 8.) Only after Kristapher pointed out Raley’s standing argument 4 would require remand did Raley’s abruptly backpedal, arguing “the overall legal 5 landscape on privacy harms post-Spokeo and TransUnion remains muddled.” (Doc. 15 6 at 5.) 7 Courts have awarded attorneys’ fees where a party removes and then “[does] an 8 about-face regarding standing (and, ergo, jurisdiction).” Pioneers Mem’l Healthcare Dist. 9 v. Imperial Valley Healthcare Dist., 745 F. Supp. 3d 1088, 1107 (S.D. Cal. 2024); see 10 also Parrish v. Everi Payments Inc., No. 22-CV-00511-GMN-DJA, 2023 WL 3276400, 11 at *3 (D. Nev. May 4, 2023) (“Defendants ‘assert[ed], then immediately disavow[ed] 12 federal jurisdiction, apparently in hopes of achieving outright dismissal.’”) (quoting 13 Mocek, 220 F. Supp.3d at 914). But in those cases, the lack of jurisdiction was clearer 14 than in the TUCSRA context. See, e.g., Parrish, 2023 WL 3276400, at *3 (“Defendants 15 themselves have previously attempted to remove a FACTA claim lacking Article III 16 standing only to be remanded to state court.”). Indeed, in several cases originally filed in 17 federal court in this district, defendants did not challenge jurisdiction and instead settled 18 or moved to dismiss under Rule 12(b)(6). See, e.g., Carbajal v. Home Depot U.S.A., Inc., 19 No. CV-24-00730-PHX-DGC, 2024 WL 5118416 (D. Ariz. Dec. 16, 2024); Carbajal v. 20 Gap Inc., No. 24-1056 (D. Ariz. May 7, 2024). 21 Raley’s “dubious strategy” of removing this case and immediately arguing federal 22 jurisdiction does not exist “resulted in a significant waste of federal judicial resources, 23 much of which was avoidable.” Collier v. SP Plus Corp., 889 F.3d 894, 897 (7th Cir. 24 2018). But based on the murkiness in Article III standing as it relates to TUCSRA, the 25 court concludes Raley’s had—just barely—an objectively reasonable basis for removal. 26 Future similar removals may merit an award of fees but the present one does not. 27 Accordingly, 28 IT IS ORDERED the Motion to Dismiss (Doc. 11) is GRANTED to the extent 1 || this court lacks jurisdiction. 2 IT IS FURTHER ORDERED plaintiffs request for attorneys’ fees 1s DENIED. 3 IT IS FURTHER ORDERED this case is REMANDED to the Maricopa County Superior Court. The Clerk of Court shall close this case. 5 Dated this 11th day of April, 2025. 6
3 WN blo WM. AA Honorable Krissa M. Lanham 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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