McKinnon v. Restoration Hardware, Inc.

• Court: District Court, E.D. Missouri
• Decided: March 31, 2022
• Docket: 4:21-cv-00605
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI individually and on behalf of all otherEsA STE R N DIVISION ZsiOmEil MarClyK sIiNtuNaOteNd, , ) ) ) ) Plaintiff, ) ) v. ) Case No. 4:21-cv-00605-SEP ) RESTORATION HARDWARE, INC. ) ) Defendant. MEM ORAND U )M AND ORDER

Before the Court is Plaintiff Zoe McKinnon’s motion to remand this action to the Circuit Court of St. Louis County, Missouri. Doc. 18. The motion is fully briefed and ready for disposition. For the reasons set forFtAhC bTSe lAoNwD, BthAeC KmGoRtOioUnN Dis granted. On March 11, 2021, Plaintiff initiated this action on behalf of herself and a putative class of Missouri residents who purchased products from Defendant Restoration Hardware during the five-year period prior to the filing of the Complaint and who were allegedly charged excess use tax. Doc. 1 ¶ 1; Doc. 2 ¶¶ 11, 25, 31. The facts, as alleged, are as follows: Missouri law requires retailers to charge a state use tax of 4.225%, combined with any local use tax, for remote sales that are shipped to Missouri purchasers from an out-of-state facility. Id. Doc. 2 ¶ 24. The combined use tax for Plaintiff’s St. Louis address is 5.725%, according to the Missouri Department of Revenue. ¶ 29. Plaintiff purchased a towel set from Id. Defendant’s website. The set was shipped from Ohio to her Missouri address, and she was charged a 9.243% use tax. ¶¶ 27, 28, 30. According to Plaintiff, Defendant has charged Id. and continues to charge excess use tax for its remote sales to Missouri purchasers, and her situation is typical of the proposed class. ¶ 25. Defendant was served with Plaintiff’s Complaint on April 26, 2021. Doc. 1 ¶ 2. On May 26, 2021, Defendant removed the action to this Court under 28 U.S.C. §§ 1441 and 1446. Id. Doc. 1. Defendant’s Notice of Removal claims that this Court has jurisdiction over the matter Plaintiff filed a motion seeking remand on the grounds that Defendant’s Notice fails to show that this case satisfies CAFA’s amount-in-controversy requirement. Doc. 18 ¶ 4. During the pendency of this Motion, Plaintiff also filed notices of supplemental authority for two recent, related decisions from this district. DoLcEsG. A2L6 S, T2A7N.1 D A RD Any action brought in state court over which the United States district courts have original jurisdiction may be removed to the district court in the jurisdiction where the action is pending. 28 U.S.C. § 1441(a). CAFA grants federal district courts original jurisdiction over City of O’Fallon v. CenturyLink, Inc. class action lawsuits where, among other requirements, the amount in controversy exceeds $5 million. , 930 F. Supp. 2d 1035, 1039 (E.D. Mo. 2013) In re (citing 28 U.S.C § 1332(d)(2)). Prempro Prod. Liab. Litig Altimore v. Mount Mercy The removing defendant bears the burden of establishing federal jurisdiction, Coll. ., 591 F.3d 613, 620 (8th Cir. 2010) (citing Pirozzi v. Massage Envy Franchising, LLC , 420 F.3d 763, 768 (8th Cir. 2005)), but that burden is a pleading requirement, not a demand for proof. , 938 F.3d 981, 984 (8th Cir. 2019). “If the class action complaint does not allege that more than $5 million is in Id. Dart Cherokee controversy, ‘a defendant’s notice of removal need include only a plausible allegation that Basin Operating Co. v. Owens the amount in controversy exceeds the jurisdictional threshold.’” (quoting might , 574 U.S. 81, 89 (2014)). “When the notice of removal plausibly legally impossible Id. alleges that the class recover . . . more than $5 million, ‘then the case belongs in federal Raskas v. Johnson & Johnson court unless it is for the plaintiff to recover that much.’” (emphasis in original) (quoting , 719 F.3d 884, 888 (8th Cir. 2013)). “A defendant can rely on specific factual allegations, combined with reasonable deductions, Gallagher v. Santander Consumer USA Inc. reasonable inferences, or other reasonable extrapolations, but cannot rely on conjecture, Waters v. Ferrara Candy Co speculation, or star gazing.” , 2021 WL 2714101, Waters II at *2 (E.D. Mo. July 21, 2021) (cleaned up) (quoting ., 873 F.3d 633, 646 (8th Cir. 2017) ( )).

1 Id. Defendant moves to strike Plaintiff’s notices, Doc. 28, or, in the alternative, grant Defendant leave to file its contemporaneously filed response thereto. at 4. The Court grants Defendant’s see Dahl v. R.J. Reynolds Tobacco Co. Federal courts ordinarily “resolve all doubts about federal jurisdiction in favor of Transit Cas. Co. v. Certain Underwriters at Lloyd's of London remand” and strictly construe removal statutes, , 478 F.3d 965, 968 (8th Cir. 2007) (quoting , 119 F.3d 619, 625 (8th Cir. 1997)), but “no antiremoval presumption attends cases invoking Dart Cherokee Standard Fire Ins. Co.v. Knowles CAFA,” because the purpose of the statute was to expand federal jurisdiction for certain class actions. , 574 U.S. at 89 (citing , 568 U.S. 588, 595 (2013); S. Rep. No. 109–14, at 43 (2005) (CAFA’s “provisions should be read broadly, see also , Applying the with a strong preference that interstate class actions should be heard in a federal court if Jurisdictional Provisions of the Class Action Fairness Act of 2005: In Search of a Sensible Judicial properly removed by any defendant.”)); Stephen J. Shapiro Approach, 59 Baylor L. Rev. 77, 80 (2007D) (IScCitUiSnSgI OSN. Rep. No. 109-14, at 26–27 (2005)). Defendant claims that CAFA’s $5 million amount-in-controversy requirement is satisfied by Plaintiff’s claim for compensatory damages, attorneys’ fees, and injunctive relief. Doc. 1 ¶¶ 15-28. Plaintiff argues that Defendant fails to establish CAFA’s $5 million amount in controversy because the Notice does not plausibly allege the value of the requested injunctive relief. Doc. 18 ¶ 4; Doc. 19 at 6–7. The Court agrees. The Notice estimates that the value of Plaintiff’s claim for compensatory damages is $1,970,080, Doc. 1 ¶ 21, and that the value of Plaintiff’s claim for attorneys’ fees is $656,693.33, Doc. 1 ¶ 24. Assuming those estimates to be plausible, in order to reach CAFA’s $5 million amount-in-controversy requirement, Defendant must rely on the value of 2 Plaintiff’s requested injuncti ve relief. 2 See Waters v. Home Depot USA, Inc. Schott v. O vTehres tCoocku.rcto mno, tIensc .that at least three other nearly-identical cases have beLeinz afmilead v i.n V tihctios rdiais’st rSicetc rbeyt PStloairnetsi, fLf’Ls Ccounsel. , 446 F. Supp. 3d 484 (E.D. Mo. 2020); , 2021 WL 148875 (E.D. MoW. Jaante. r1s5, 202S1ch) o(tstlip op.); , 2021 WL 6125034 (E.D. Mo. Dec. 28, 2021) (slip op.). A motion to remand was filed in each of thosSee ec aWseaste arss well. In two of those, Sch aonttd , remand was denied because the plaintiffs’ claims for punitive damages put the amount in controversy Saebeo ivde. CAFA’s $5 million threshold. , 446 F. Supp. 3d aLti z4a9m2a-9 3; , 2021 WL 148875, at *4-5. Nseeeit her case required the court to analyze the plaintiffs’ requested injunctive relief. After remand was denied in those two cases, tsheee plaintiff in chose not to requWesatt perusn itiveS dcahmotatges, Case No. 4:21-cv-00763-HEA, Doc. 1-1 ¶ 88, even though the Missouri Merchandising Practices Act expressly authorizes such damages, Mo. Rev. Stat. § 407 .025, and the and courts found it The Notice alleges that the value of the injunction, which would permanently enjoin Defendant from continuing to charge the allegedly excessive use tax rate, is between $3,162,081.32 and $5,055,336.22. Doc. 1 ¶¶ 25, 27. To reach that figure, the Notice begins Id. with the average annual amount of allegedly over-collected taxes over the five-year class period: $396,016. ¶ 27. Projecting that annual average over the next 10-to-20 years and discounting at 5% per year, the Notice alleges that the present value of the taxes Defendant Id. Keeling v. Esurance Ins. Co. would have to forego collecting over the next 10 years is $3,162,081.32, and over the next 20 years is $5,055,336.22. ¶ 26 (citing , 660 F.3d 273, 274 (7th Lizama Cir. 2011)). Lizama As in , “[t]he flaw in Defendant’s position arises in their argument with regard to the value of injunctive relief.” , 2021 WL 6125034, at *3. Defendant’s calculations do not reflect the value of the injunction from the plaintiff’s point of view, because they non-class members calculate future foregone taxes based on Defendant’s future sales not just to the putative class members but also to future . Defendant cannot plausibly allege that within the last five years the putative class members—that is, Missouri residents who have purchased an item from Restoration Hardware —will purchase items of similar value at a all similar rate over the upcoming 10 to 20 years. Rather, Defendant’s calculation considers the aggregate future sales to Missouri purchasers, regardless of their affiliation to this action. Thus, what Defendant’s calculation actually approximates is the effect of the injunction from

See Waters Schott Lizama cases, respectively. , 446 F. Supp. 3d at 492; , 2021 WL 148875, at *4. Therefore, in , the vSaeleu eL iozfa mthae requested injunctive relief determined whether the amount in controversy exceeded $5 million, and the court concluded that defendant had not made a sufficient showing in that regard. , 2021 WL 6125034, at *4. see Dart CAhltehrooukgehe this Court acknowledgSetsa nthdaatr dC FAiFrAe is to be read broadly in order to expand federal jurisdiction over interstate class actions and prevent attorneys from “gaming the system,” , 574 U.S. at 89 (citing , 568 U.S. at 595; S. Rep. Nsoe.e 1 a0ls9o– 14, at 4,3 A p(2pl0y0in5g) (thCeA FJuAr’iss d“ipcrtoiovnisailo Pnrso svhisoiounlds obfe trheea Cdl absrso Aadctlyio, nw Fitahir an esstsr oAncgt opfr e2f0e0r5e:n cIen tSheaatr cinht eorf sat aSteen csliabsles Jaucdtiiocinasl sAhpopurolda bche, heard in a federal court if properly removed by any defendant.”)); Shapiro 59 Baylor L. Rev. at 78-79 (citing S. Rep. No. 109-14, at 26–27 (2005)); S. Rep. No. 109-14, at *4 (pre-CAFA “law enable[ds]e lea Mw.y Nerash taos ‘g&a Cmoe.,’ Itnhce. pvr. oFciresdtu Nraalt .r Bulaensk a onfd H koete pSp nraintigosnwide or multi- state class actions in state courts . . . .”), the Court also notes thaSt,e lei ke Mr. Lizama, Ms. McKinLnizoanm, aas the master of her complaint, , 930 F.2d 608, 611 (8th Cir. 1991), has chosen not to seek punitive damages. Doc. 2 ¶ 74. Thus, as in , the point of view of the Defendant, as the injunction would effectively prevent Defendant from collecting taxes from all future purchasers, whether they are class members or not. See Cowell v. City Water Supply Co. The Eighth Circuit did at one time approve of considering either party’s viewpoint in Elliot v. Empire Nat. Gas Co. Hatridge assessing the amount in controversy in a class action. , 121 v. Aetna Cas. & Sur. Co. dictum Hedberg v. State Farm F. 53, 57 (8th Cir. 1903); , 4 F.2d 493, 500 (8th Cir. 1925); Mut. Automobile Ins. Co. , 415 F.2d 809, 814-15 (8th Cir. 1969) ( ); Snyder v. Harris , 350 F.2d 924, 928 (8th Cir. 1965). But after the Supreme Court’s 3 See Mass. St. reinforcement of the non-aggregation rule in , 394 U.S. 332, 336 (1969), the Pharm. Ass’n v. Fed. Prescription Serv. Eighth Circuit began applying a strict plaintiff-viewpoint rule in class actions. Snyder see also Trimble v. Asarco, Inc. , 431 F.2d 130, 132 n.1 (8th Cir. 1970) (relying on Snyder Smith v. Am. States Preferred Ins. Co. , 394 U.S. at 336); , 232 F.3d 946, 960-62 (8th Cir. 2000) Mass. St. Pharm. Trimble (relying on , 394 U.S. at 336); , 249 F.3d 812, 813- Waters v. Ferrara Candy Co. Mass. 14 (8th Cir. 2001) (citing , 431 F.2d at 132; , 232 F.3d at 960-62); St. Pharm Trimble Smith , 2017 WL 2618271, at *4 (E.D. Mo. June 16, 2017) (citing , 431 F.2d at 132; , 232 F.3d at 960-62; , 249 F.3d at 813-14). Since 1970, district courts in this circuit have thus acknowledged that “[t]he traditional rule in the See e.g. Waters Eighth Circuit is that value is judged solely from the plaintiff’s viewpoint in determining the amount in controversy.” , , , 2017 WL 2618271, at *4. shall be aggregated CAFA, enacted in 2005, rejects the non-aggregation rule in its plain text: “In any class action, the claims of the individual class members to determine whether the matter in controversy exceeds the sum or value of $5,000,000[.]” 28 U.S.C. § 1332(d)(6) Snyder (emphasis added). A number of district courts in this circuit and others have concluded that See, e.g. Pagel v. Dairy Farmers of Am., Inc. CAFA’s text mandates a return to a pre- , party-neutral understanding of “matter in controversy.” , , 986 F. Supp. 2d 1151, 1159-60 (C.D.

3 “When twToro oyr B manokr ev .p Gla. iAn.t iWffsh, itheahveiandg &se Cpoa.rate and distinct demands, unite for convenience and economy in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount.” , 222 U.S. 39, 40 (1911). “In a class action where the aggregate amount of daSmnaygdeesr to the class exceeds $10,000, the value of the thing to be accomplished by the actioMn,a (sjsu. dSgt.m Pehnatr mfo.r Atshse'n a gv.g Freegda. tPer easmcroiupntito)n a Sse trov .t, hIne cdefendant exceeds the jurisdictional amount. The Court in does not recognize the presence of the jurisdictional amount in that situation.” ., 431 F.2d 130, 132 (8th Cir. 1970) Cal. 2013) (“The reason for the prohibition on the [either-party-viewpoint] rule having Toller v. vanished, the rule should continue to be used to measure the value of the thing sought to be Sagamore Ins. Co accomplished by the action.”) (internal quotation marks and citation omitted); ., 558 F. Supp. 2d 924, 930 (E.D. Ark. 2008) (CAFA’s “provision requiring aggregation of the plaintiffs’ claims is inconsistent with the old rule that required that the 4 amount in controversy be viewed solely from the plaintiff’s viewpoint.”). Having reviewed those opinions, the Court acknowledges that there are strong arguments in favor of adopting the either-party-viewpoint rule in assessing the value of injunctive relief in a CAFA case. Still, the Court declines to take a position on that contested issue, because it would not affect the 5 outcome of this case.

Seealso Adams v. Am. Family Mut. Ins. Co Toller 4 Am. Tiger Firearms, LLC v. Facebook, Inc Toller ., 981 F. SuppB. e2rdr y8 3v.7 A, 8m4. 9E-x5p0r e(Sss.D P. uIobw. Cao 2r0p13) (citing , 558 F. Supp. 2d at 927); ., 2019 WL 7833951, at *1 (E.D. Ark. Aug. 1, 2019) (citing , 558 F. Supp. 2d at 930); ., 381 F. Supp. 2d Compare Snow v. Ford Motor Co Snyder 1118, 1123 (C.D. Cal. 2005). andIn re Ford Motor Co.., C5it6i1b aFn.k2 d(S 7.D8.)7, , N7.A89-90 (9th Cir. 1977) (relying on and cSonnydcleurd ing tShnaot wthe non-aggregation rule mandated the use of the plaintiff-viewpoint test in class actions), with Int’l Padi, Inc./ v. Diverlink ., 264 F.3d 952, 960-61 (9th Cir. 2001) (citing and and finding that the amount in controversya nwdaAs nndoetr smone tv u. nSdeaewr othrled pPlaarinktsi f&f- vEinetwerptoaiinntm teenstt), ,I nc , 2005 WL 1635347, at *1 (9th CirI. nJu rley F1o3r, d2 0M0o5t)o (rp Coos.t- CAFA decision that applied the eInitth’le Pr-apdairty-viewpoint test) ., 132 F. Supp. 3d 1156, 1161-62 (N.D. Cal. 2015) (rejecting ’s Compare Hill v. Hom Ade Foods, Inc. plaintiff-viewpoint test in favor of ’s return to the either-viewpoint test). withThompson v. Louisiana Regional Landfill Co / , 136 F. Supp. 2d 605, 608-09 (5th Cir. 2000) (applying a “strict plaintiff-viewpoint rule”), ., 365 F. Supp. 3d 725, 730 (E.D. La. 2019) (finding jurisdiction existed in CAFA case because the amount in controversy was Compare Ericsson GE Mobile Comms., Inc. v. Motorola Comms. & Electronics, Inc satisfied when viewed “from the defendant’s viewpoint”). withBernstein v. JP Morgan Chase & C o ., 120 F.3d 216, 219 (11th Cir. 1997) (“this circuit has adopted the plaintiff-viewpoint rule”), ., 2009 WL 10699864, at *4 (S.D. Fla. Aug. 4, 2009) (“Under CAFA, courts are also able to See alsoPagel determine the amount in controversy by looking at defendant’s potential losses”). , 986 F. Supp. 2d at 1159-60 (“The “either viewpoint” rule is not used in diversity class actions because it would subvert the anti-aggregation rule. It does not follow that the “either See Waters v. Ferrara viewpoint” rule is prohibited in CAFA cases. The opposite is true[.]”) (citations omitted). C5andy Co The Eighth Circuit has acknowledged the disagreement without resolving it. ., 873 F.3d 633, 646 (8th Cir. 2017)(“We need not resolve the issue of whether courts should apply the plaintiffs’ viewpoint rule or the either viewpoint rule when determining the amount in Even if the Court were to adopt the either-party-viewpoint test—and therefore assess the value of the requested injunction according to what Defendant stands to lose, rather than what Plaintiff stands to gain—the Court still could not find that it has jurisdiction in this case, because Defendant here does not plausibly allege any prospective losses. In fact, Defendant rejects the idea that it stands to “lose” anything, “considering that taxes are collected for the benefit of the State of Missouri.” Doc. 22 at 10. There may be an argument to make that the appropriate measure of an injunction in a case like this one—i.e., where the defendant denies being the beneficiary of allegedly ill-gotten gains—is the amount that the ultimate recipient of those gains stands to lose as a result of the requested injunction. But if there is, Defendant has not made it. Rather, as in Lizama, Defendant has “not presented any authority that an award of injunctive relief analysis should include Defendant's inability to collect future taxes.” Lizama, 2021 WL 6125034, at *4 (emphasis added). Therefore, the Court finds Defendant's proposed valuation of the requested injunction implausible. Because Defendant’s Notice does not plausibly allege that the amount in controversy exceeds $5 million, this Court does not have subject matter jurisdiction over this action. See 28 U.S.C. § 1332(d); Pirozzi, 938 F.3d at 984. Accordingly, IT IS HEREBY ORDERED that Plaintiff's Motion to Remand (Doc. [18]) is GRANTED. A separate Order of Remand shall be filed herewith. IT IS FURTHER ORDERED that Defendant's Motion to Strike (Doc. [28]) is GRANTED in part. The Court grants Defendant leave to file its contemporaneously filed response to Plaintiff's notices of supplemental authority. Dated this 31st day of March, 2022.

CZhuak Lg SARAH E. PITL UNITED STATES DISTRICT JUDGE