Dennis v. Good Deal Charlie, Inc.
| Decision Date | 03 March 2021 |
| Docket Number | Case No. 20-CV-00295-GKF-JFJ |
| Parties | ELAINE DENNIS, and COURTNEY WHITE, Plaintiffs, v. GOOD DEAL CHARLIE, INC., d/b/a Overstock Furniture & Mattress, JONATHAN MCILLWAIN, SOUTHEASTERN LIQUIDATORS LLC, STRATEGIC PARTNER HOLDING, LLC, and CHEAP SLEEP, L.L.C., Defendants. |
| Court | U.S. District Court — Northern District of Oklahoma |
Before the court are the following motions to dismiss: (1) Motion to Dismiss [Doc. 34] of defendant Jonathan McIllwain; (2) Motion to Dismiss [Doc. 35] of defendants Good Deal Charlie, Inc., d/b/a Overstock Furniture & Mattress ("Overstock"), and McIllwain; (3) Motion to Dismiss [Doc. 39] of defendant Cheap Sleep, L.L.C.; (4) Motion to Dismiss [Doc. 46] of defendant Southeastern Liquidators LLC; and (5) Motion to Dismiss [Doc. 61] of defendant Strategic Partner Holding, LLC. For the reasons outlined below, the court grants the motion filed by defendant McIllwain [Doc. 34] and denies the remaining motions [Doc. 35; Doc. 39; Doc. 46; Doc. 61].
Plaintiff Elaine Dennis filed this putative class action on June 18, 2020 [Doc. 2] and, on August 27, 2020, plaintiffs Dennis and Courtney White filed an Amended Class Action Complaint [Doc. 31]. The lawsuit is brought "on behalf of all persons who purchased mattresses sold by Good Deal Charlie, Inc., d/b/a Overstock Furniture & Mattress, in any of their regularly maintained retail locations in Oklahoma, specifically Tulsa and Lawton." [Doc. 31, p. 2 ¶ 1]. In support, the plaintiffs allege the following: Overstock and McIllwain (collectively, "Seller Defendants")1 represented and sold mattresses "as new, 'scratch and dent' and/or factory second or irregular mattresses" when, in reality, the mattresses "were previously used, had not been adequately cleaned and sanitized, were not clearly and properly labeled as 'used,' and were unfit for consumer use." [Doc. 31, p. 2 ¶ 2]. In order to sell these used mattresses, Seller Defendants "train their sales staff to illegally deceive their customers" about the condition of the mattresses in a variety of ways, and store and present the mattresses in such a way as to "conceal the used, dirty and stained condition of the mattresses . . . ." [Doc. 31, pp. 2-5 ¶¶ 4-7, 10, 29]. When customers unpackage their mattresses at home, realize the condition of the mattresses, and try to return them, Seller Defendants refuse to take the mattresses back or refund the customers. [Doc. 31, p. 6 ¶ 15].
Specifically, Dennis alleges that her experience with Seller Defendants went as follows: Dennis bought a mattress for $544.94 from Seller Defendants' Lawton, Oklahoma store on January 3, 2020. [Doc. 31, p. 11 ¶ 34]. A sales person who approached Dennis said "that the mattresses are 'new' but are factory 'scratch and dents.'" Dennis asked if the mattresses were used, but was told "no." [Doc. 31, p. 11 ¶ 35]. "Dennis was not allowed to properly inspect the mattresses or see any tags because the mattresses were bagged, are too heavy and cumbersome to move, and because Defendant Overstock's handlers quickly moved the mattress she purchased." [Doc. 31, pp. 11-12 ¶ 35]. When "Dennis unwrapped the purchased mattress at her home, she observed that it was dirty and had only a tag with a manufacturing date of August 2015." [Doc.31, p. 12 ¶ 36]. When Dennis returned to the store on January 6, 2020 to ask for a refund, "Overstock refused to take back the mattress or provide a refund . . . ." [Doc. 31, p. 12 ¶ 37].
Plaintiff White alleges she bought a mattress for approximately $515 from the Overstock store in Tulsa, Oklahoma. [Doc. 31, p. 12 ¶ 38]. The sales staff told White that the mattresses "were 'new' and from 'the factory.'" [Doc. 31, p. 12 ¶ 38]. White financed the mattress through a third-party finance company suggested by Overstock; nothing in the finance agreement indicated that the mattress was used. [Doc. 31, p. 13 ¶ 39]. When she got home, White "realized that the mattress bag was not sealed at both ends, did not have all the mattress tags she expected for a new mattress, nor did it have any tag indicating that the mattress was used," and "the mattress was stained on the side and edge, and appeared to have been previously used." [Doc. 31, p. 13 ¶ 40]. Disgusted, White never used the mattress and abandoned it when she moved out-of-state. [Doc. 31, p. 13 ¶ 41].
Regarding the remaining defendants, the plaintiffs allege the following: the Seller Defendants "purchased the improperly labeled and un-sanitized used mattresses from" Southeastern Liquidators LLC ("Southeastern"), Strategic Partner Holding, LLC ("Strategic"), and Cheap Sleep, L.L.C. ("Cheap Sleep") (collectively, "Distributor Defendants"). The Distributor Defendants "distribute[] and sell[] used liquidation mattresses to Overstock, which are soiled, stained and unfit for consumer purchase or use." [Doc. 31, pp. 13-14 ¶¶ 43-45]. Further, the Distributor Defendants "knew or should have known they were selling improperly labeled and un-sanitized used mattresses to the Seller Defendants who would in turn resell those used mattresses as is and without proper labeling or disclosure to consumers about the true nature and condition of those mattresses." [Doc. 31, p. 2 ¶ 3].
Plaintiffs claim that potential class members include "[a]ll persons and entities that have purchased used mattresses from Overstock in the state of Oklahoma," and allege that allrequirements of Federal Rule of Civil Procedure 23 are met. [Doc. 31, pp. 14-17 ¶¶ 48-54]. Plaintiffs bring eight counts against the following defendants:
[Doc. 31, pp. 17-30 ¶¶ 55-119]. In summary, the Seller Defendants are defendants in all Counts but Count 6, and the Distributor Defendants are defendants in only Counts 3 and 6. The plaintiffs seek punitive damages from all defendants. [Doc. 31, p. 30 ¶ 121].
The defendants move to dismiss the plaintiffs' Amended Class Action Complaint on various grounds: (1) all defendants move to dismiss the case for lack of subject matter jurisdiction [see Doc. 35; Doc. 39; Doc. 61];2 (2) McIllwain moves to dismiss all counts against him for failure to state a claim upon which relief can be granted in light of Okla. Stat. tit. 12, § 682(B) () [Doc. 34]; (3) Strategic moves to dismiss Count 3 and Count 6 for lack of personal jurisdiction [Doc. 61, p. 8];3 and (4) Southeastern moves to dismiss Counts 3 and 6 for failure to state a claim upon which relief can be granted [Doc. 46]. The court addresses each argument in turn.
"'Federal courts are courts of limited jurisdiction,' possessing 'only that power authorized by Constitution and statute.'" Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). Therefore, federal courts "must have a statutory basis for their jurisdiction." Dutcher v. Matheson, 733 F.3d 980, 984 (10th Cir. 2013) (citing Rural Water Dist. No. 2 v. City of Glenpool, 698 F.3d 1270, 1274 (10th Cir. 2012)). "If jurisdiction is challenged, the burden is on the party claiming jurisdiction to show it by a preponderance of the evidence." Celli v. Shoell, 40 F.3d 324, 327 (10th Cir. 1994) (citing United States v. Bustillos, 31 F.3d 931, 933 (10th Cir. 1994)).
Rule 12(b)(1) permits a party to seek dismissal of a case for lack of subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Challenges to subject-matter jurisdiction under this rule generally take "one of two forms: (1) facial attacks; and (2) factual attacks." Paper, Allied-Indus., Chem. & Energy Workers Int'l Union v. Cont'l Carbon Co., 428 F.3d 1285, 1292 (10th Cir. 2005). Facial attacks "merely challenge the sufficiency of the complaint, requiring the . . . court to accept the allegations in the complaint as true." Id. Factual attacks go beyond the allegations in the complaint and challenge the facts upon which subject-matter jurisdiction depends. See id. In such situations, the court has "wide discretion" to consider documentary and testimonial evidence. See id. The court need not convert a motion to dismiss under Rule 12(b)(1) to a motion for summary judgment under Rule 56 unless the "resolution of the jurisdictional question is intertwined with the merits of the case." See id. (quoting Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995)).
In considering a motion to dismiss pursuant to Rule 12(b)(2), a court must determine whether the plaintiff has alleged sufficient facts to establish the court's personal jurisdiction overthe defendant. See Fed. R. Civ. P. 12(b)(2). A plaintiff bears the burden of establishing that the court has personal jurisdiction over all defendants. Dental Dynamics, LLC v. Jolly Dental Grp., LLC, 946 F.3d 1223, 1228 (10th Cir. 2020). However, where, as here, the question of personal jurisdiction is disputed in the preliminary stages of litigation, "the plaintiff need only make a prima facie showing of jurisdiction to defeat the motion [to dismiss]." AST Sports Sci., Inc. v. CLF Dist. Ltd., 514 F.3d 1054, 1056 (10th Cir. 2008). The plaintiff may make this prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). The court will accept as true the allegations in a plaintiff's complaint, and all factual...
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