Harvey v. Blockbuster, Inc.
| Decision Date | 08 August 2005 |
| Docket Number | No. Civ.A.05-1606 (MLC).,Civ.A.05-1606 (MLC). |
| Citation | 384 F.Supp.2d 749 |
| Parties | Peter C. HARVEY, Attorney General of State of New Jersey, and Jeffrey C. Burstein, Acting Director of New Jersey Division of Consumer Affairs, Plaintiffs, v. BLOCKBUSTER, INC., Defendant. |
| Court | U.S. District Court — District of New Jersey |
Peter C. Harvey, Attorney General of the State of New Jersey (Cathleen O'Donnell), Newark, NJ, plaintiff pro se, and for plaintiff Jeffrey C. Burstein.
DeCotiis, FitzPatrick, Cole & Wisler, LLP (Benjamin Clarke), Teaneck, NJ, and Vinson & Elkins, L.L.P. (Robert C. Walters and Michael L. Raiff), Dallas, TX, for defendant.
The plaintiffs brought this action in state court to recover civil penalties and for a permanent injunction under the New Jersey Consumer Fraud Act ("NJCFA") and regulations promulgated thereunder. (Compl., at 2-12.) The defendant — Blockbuster, Inc. ("BBI"), which is a Delaware corporation with its principal place of business in Texas — removed the action to this Court under (i) 28 U.S.C. § ("Section") 1332(a)(1), and (ii) the Class Action Fairness Act, Sections 1332(d)(1)(B) and (2)(A). (Rmvl. Not., at 2-6.)1
The plaintiffs move to remand the action and for an award of costs and expenses incurred from the removal. The Court, under Federal Rule of Civil Procedure ("Rule") 78, will decide the motion without oral hearing and on the papers. The Court will grant only the part of the motion seeking remand.
BBI is "engaged in the retail rental and/or sale of merchandise to consumers in th[e] State [of New Jersey] and elsewhere including, but not limited to, DVDs, VHS tapes and video and computer games." (Compl., at 3; see Ans., at 2.) The plaintiffs — (1) Peter C. Harvey, Attorney General of the State of New Jersey, and (2) Jeffrey C. Burstein, Acting Director of the New Jersey Division of Consumer Affairs — brought this action in New Jersey Superior Court, Mercer County. (Compl., at 1-2.) They allege that BBI violated the NJCFA by "[f]ailing to clearly and conspicuously disclose the terms of `The End of Late Fees' [or] `No More Late Fees' policy in its advertisements, in-store signage and through store personnel." (Id. at 9.)
BBI removed the action under Section 1332(a)(1) and Sections 1332(d)(1)(B) and (2)(A). The plaintiffs move: (1) to remand, arguing that jurisdiction is lacking under (a) Section 1332(d) since this is not a class action, and (b) all of Section 1332 since the action lacks diversity of citizenship; and, (2) for an award of costs and expenses incurred from the removal pursuant to Section 1447(c). (Pl. Br., at 4-6.)2
BBI argues in opposition that this is a class action — and there is jurisdiction — under Section 1332(d) because: (1) the plaintiffs are acting in a representative capacity; and, (2) Congress rejected an amendment creating an exception for consumer-fraud actions brought by attorneys general — even though Section 1332(d) excludes actions wherein a state official is the primary defendant, see 28 U.S.C. § 1332(d)(5)(A) — and thus intended to treat this type of action as a class action. (Def. Br., at 1-6.) BBI also argues that the New Jersey citizenship of the named plaintiffs and unnamed New Jersey citizens benefiting from any relief awarded should be considered for the purposes of determining jurisdiction under Section 1332. (Id. at 10; 5-13-05 Def. Letter, at 1-2.)
The Court has jurisdiction under Section 1332(a)(1) "of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different States." An action is not properly removed thereunder unless there is "complete diversity" between each plaintiff and each defendant. CGB Occ. Therapy v. RHA Health Services, 357 F.3d 375, 381 n. 6 (3d Cir.2004).
The Court has jurisdiction under Section 1332(d), in relevant part, "of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d)(2)(A). A "class action" is defined as a "civil action filed under [R]ule 23 ... or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action." 28 U.S.C. § 1332(d)(1)(B). Thus, an action is not properly removed thereunder unless (1) it meets the definition of a class action, and (2) there is "minimal diversity" of citizenship. Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 806 (7th Cir.2005). See S.Rep. No. 109-14, at 28 (2005) (using phrase "balanced diversity").3
A defendant removing an action generally bears the initial burden of demonstrating that an action should not be remanded to state court. Dev. Fin. Corp. v. Alpha Hous. & Health Care, 54 F.3d 156, 158 (3d Cir.1995). But it appears that the party opposing removal under Section 1332(d) bears the initial burden of demonstrating that an action should be remanded. See S.Rep. 109-14, at 42-44. See also 151 Cong.Rec. H723-01, at H727 & H732 (2005) (statements of Reps. Sensenbrenner and Goodlatte).4
Several attorneys general — as Section 1332(d) does not exempt actions brought by state officials — expressed concern in a letter to the Senate that Section 1332(d) might adversely affect their ability to pursue claims on behalf of consumers:
State Attorneys General frequently investigate and bring actions against defendants who have caused harm to our citizens, usually pursuant to the Attorney General's parens patriae authority under our respective state consumer protection and antitrust statutes. In some instances, such actions have been brought with the Attorney General acting as the class representative for the consumers of the state. We are concerned that certain provisions of [Section 1332(d)] might be misinterpreted to impede the ability of the Attorneys General to bring such actions, thereby interfering with one means of protecting our citizens from unlawful activity and its resulting harm.... [Section 1332(d)] therefore should be amended to clarify that it does not apply to actions brought by any State Attorney General on behalf of his or her respective state or its citizens.
151 Cong.Rec. S999-02, at S1003 (2005). A proposed amendment to explicitly exempt an action brought by an attorney general from the reach of Section 1332(d) was defeated in the Senate. See 151 Cong.Rec. S1157-02, at S1157-58 (2005).
BBI construes the defeat of the proposed amendment as an indication that an action brought under NJCFA by state officials may be considered to be a class action under Section 1332(d). But the debate underlying that defeat reveals that:
the amendment [was] not necessary.... State attorneys general have authority under the laws of every State to bring enforcement actions to protect their citizens. Sometimes these laws are parens patriae cases, similar to class actions in the sense that the State attorney general represents the people of that State. In other instances, their actions are brought directly on behalf of that particular State. But they are not class actions; rather, they are very unique attorney general lawsuits authorized under State constitutions or under statutes.
One reason this amendment is not necessary is because our bill will not affect those lawsuits. Our bill provides class actions under that term "class action" as defined to mean any civil action filed in a district court of the United States under rule 23 of the Federal Rules of Civil Procedure or any civil action removed to a district court that was originally filed under State statute or rule authorizing an action to be brought by one or more representatives as a class action.
The key phrase there is "class action." Hence, because almost all civil suits brought by State attorneys general are parens patriae suits, similar representative suits or direct enforcement actions, it is clear they do not fall within this definition. That means that cases brought by State attorneys general will not be affected by this bill.
151 Cong.Rec. S1157-02, at S1163 (statement of Sen. Grassley) (emphasis added). The point was made several times that:
this amendment, which excludes from the scope of this legislation any "civil action brought by or on behalf of, the Attorney General of any State," is unnecessary....
State attorneys general have authority under the laws of every State in this country to bring enforcement actions to protect their citizens. These suits, known commonly as parens patriae cases, are similar to class actions to the extent that the attorney general represents a large group of people.
But let me be perfectly clear that they are not class actions.
There is no certification process, there are no representative class members named in the complaint, and plaintiffs' attorneys who stand to gain millions of dollars in fees. Rather, they are unique lawsuits authorized under State constitutions or State statutes that are brought on behalf of the citizenry of a particular State. These actions are brought typically in consumer protection matters under State law and usually involve local disputes. As such, [Section 1332(d)] in no way affects these lawsuits.
... [T]he bill applies only to class actions, and not parens patriae actions. Class actions being those lawsuits filed in Federal district court under rule 23 of the Federal rules of civil procedure or lawsuits brought in State court as a class action. Neither of these conditions are met when compared to the nature of a ...
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