Holzum v. Wal-Mart Stores, Inc.
| Decision Date | 10 August 2018 |
| Docket Number | No. 4:17-CV-2275 RLW,4:17-CV-2275 RLW |
| Parties | NICHOLE HOLZUM, et al., Plaintiffs, v. WAL-MART STORES, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Plaintiffs' Motion to Remand (ECF No. 18). This matter is fully briefed and ready for disposition.
Removal statutes are strictly construed, and any doubts about the correctness of removal are resolved in favor of state court jurisdiction and remand. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993); Manning v. Wal-Mart Stores East, Inc., 304 F. Supp. 2d 1146, 1148 (E.D. Mo. 2004) (citing Transit Cas. Co. v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 625 (8th Cir. 1997)). The party seeking removal and opposing remand has the burden of establishing jurisdiction. Cent. Iowa Power Coop. v. Midwest Indep. Transmission Sys. Operator, 561 F.3d 904, 912 (8th Cir. 2009); City of Univ. City, Missouri v. AT & T Wireless Services, Inc., 229 F. Supp. 2d 927, 929 (E.D. Mo. 2002).
This case is a putative class action by Plaintiffs Nichole Holzum, Katheryn Schlott, and Marilyn Rogers (collectively, "Plaintiffs") against Defendants Wal-Mart Stores, Inc., Wal- Mart.com USA, LLC, and Wal-Mart Stores East 1, LP (collectively referred to as "Defendants" or "Wal-Mart"). Plaintiffs brought this action on behalf of themselves and all persons who purchased retail food items with a "Nutrition Facts" label at any Wal-Mart store located in Missouri, or online from Wal-Mart for Missouri delivery, that were charged sales tax monies at the 4.225% state sales tax rate rather than the reduced 1.225% state sales tax rate for qualifying food. Plaintiffs seek damages for the overcollection of state sales tax. Plaintiffs seek injunctive relief, damages and costs for violations of the Missouri Merchandising Practices Act ("MMPA"), Mo. Rev. Stat. §407.010, et seq., and damages for unjust enrichment, negligence, and money had and received.
Wal-Mart removed this case from the Circuit Court of St. Louis County to the U.S. District Court for the Eastern District of Missouri on August 18, 2017. (ECF No. 1). Wal-Mart asserts original jurisdiction pursuant to 28 U.S.C. §1332(a)(1) and the Class Action Fairness Act ("CAFA"), 28 U.S.C. §1332(d).
Plaintiffs move for this Court to remand this action based upon principles of comity and federalism, lack of jurisdiction under the Tax Injunction Act ("TIA"), and because the amount in controversy does not exceed $5 million in the aggregate. (ECF No. 19). The Court decides this Motion based upon the amount in controversy and, therefore, decides this action without addressing the principles of comity, federalism, and the Tax Injunction Act.
I. AMOUNT IN CONTROVERSY
CAFA "confers federal jurisdiction over class actions where, among other things, 1) there is minimal diversity; 2) the proposed class contains at least 100 members; and 3) the amount incontroversy is at least $5 million in the aggregate." Plubell v. Merck & Co., 434 F.3d 1070, 1071 (8th Cir.2006) (citing 28 U.S.C. § 1332(d)); Raskas v. Johnson & Johnson, 719 F.3d 884, 886-87 (8th Cir. 2013). "Although CAFA expanded federal jurisdiction over class actions, it did not alter the general rule that the party seeking to remove a case to federal court bears the burden of establishing federal jurisdiction." Westerfeld v. Indep. Processing, LLC, 621 F.3d 819, 822 (8th Cir. 2010) (citing Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 151 (3d Cir.2009); Amoche v. Guarantee Trust Life Ins. Co., 556 F.3d 41, 48 (1st Cir.2009); Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021 (9th Cir.2007); Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 (11th Cir. 2006)). "[A] party seeking to remove under CAFA must establish the amount in controversy by a preponderance of the evidence...." Bell v. Hershey Co., 557 F.3d 953, 958 (8th Cir. 2009); Raskas v. Johnson & Johnson, 719 F.3d 884, 887 (8th Cir. 2013). Under the preponderance standard, the jurisdictional fact "is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude" that they are. Hartis v. Chicago Title Ins. Co., 694 F.3d 935, 944 (8th Cir.2012) (quoting 557 F.3d at 959) (emphasis in original). "Such an inquiry is fact intensive." Jarrett v. Panasonic Corp. of N. Am., 934 F. Supp. 2d 1020, 1023 (E.D. Ark. 2013) (citing Hartis, 694 F.3d at 944). The removing party's burden of describing how the controversy exceeds $5 million constitutes a pleading requirement, not a demand for proof. Hartis, 694 F.3d at 944-945 (quotation marks and citation omitted).
Plaintiffs contend the $5 million amount in controversy element of CAFA jurisdiction has not been satisfied. 28 U.S.C. §1332(d)(2).1 Plaintiffs propose a class defined as "[a]ll personsand entities who, during the five-year period before filing of this Petition, purchased retail food items with a 'Nutritional Facts' label at any Wal-Mart store located in Missouri, or online from Wal-Mart for Missouri delivery, that were charged sales tax monies at the 4.225% state sales tax rate rather than the reduced 1.225% state sales tax rate for qualifying food." (Petition, ¶38).
Damages, attorneys' fees and punitive damages may all be considered when determining whether a class action meets the $5 million threshold. See Jarrett v. Panasonic Corp. of N. Am., 934 F. Supp. 2d 1020, 1025 (E.D. Ark. 2013) ().
As part of its opposition to Plaintiffs' Motion to Remand, Wal-Mart provides an affidavit from Nicholas Haverkamp, Senior Manager, Sales Tax Manager, stating that there are actual damages in the amount of $232,392.67 in over-collected sales tax from September 20, 2014 through June 28, 2017. (ECF No. 28 at 4). Wal-Mart further notes that the MMPA permits recovery of attorneys' fees. (ECF No. 28 (citing Mo. Rev. Stat. §407.025.1)). Wal-Mart cites to Berry v. Volkswagen Grp. of Am., Inc., 397 S.W.3d 425, 432 (Mo. 2013), where the Missouri Supreme Court approved of an attorney fee award in an MMPA class action claim in the amount of $6,174,640 from an actual damages award of $125,261.2 Extrapolating from Berry, Defendants argue that attorneys' fees alone could exceed $6,000,000. (ECF No. 28 at 5). Finally, Defendants rely on Lewellen v. Franklin, 441 S.W.3d 136, 139 (Mo. 2014), where the Missouri Supreme Court upheld a jury aware of punitive damages of $1 million on an individual's fraudulent misrepresentation and unlawful merchandising practices under theMMPA. Based on Lewellen, Defendants argue that punitive damages of at least $1,000,000 are reasonably at issue. (ECF No. 28 at 6). Defendants argue that they have met their burden of demonstrating that a fact finder "might legally conclude" that damages in excess of $5,000,000 is recoverable. Thereafter, Defendants contend that the burden shifts to Plaintiff to establish "to a legal certainty" that the amount in controversy is not met. Defendants assert that Plaintiffs cannot overcome this burden based upon the evidence presented. (ECF No. 28 at 6).
As an initial matter, the Court is confused by the change in numbers relied upon by Defendants. In their removal papers, Wal-Mart swore that "the total sales during the Putative Class Period of Muscle Milk, Pure Protein, and ReliOn by [Defendants] between April 2014 and June 2017 in Missouri totaled $1,312,041.63" (ECF No. 1-6), which makes the amount of damages only $39,361.25. (ECF No. 19 at 11). In contrast, Wal-Mart, through Haverkamp's affidavit, now claims that "the total sales revenue of 430 identified products sold by Wal-Mart in-store, similar to those purchased by Plaintiffs ... which were taxed at 4.225% in Missouri, during the period of September 20, 2014 through June 28, 2017 was $7,746,422.27." (ECF No. 28-1, ¶7). Wal-Mart failed to provide an explanation for this dramatic 490% increase in the sale of products with "Nutrition Facts" labels that were taxed at the 4.225% tax rate. As noted by Plaintiffs, this unexplained change in mathematics indicates that Wal-Mart's numbers are unreliable. (ECF No. 32 at 14). Nevertheless, even with Wal-Mart's revised calculations, the Court still finds that this case does not meet the $5 million threshold for CAFA jurisdiction. That is, 3% of $7,746,422.27 equals $232,392.67, which is significantly less than $5 million dollars.
Moreover, the rest of Wal-Mart's purported calculations to reach the $5 million dollar mark are based upon speculation, assumptions and false comparisons. Wal-Mart claims that itreaches the $5 million dollar threshold based upon attorneys' fees and punitive damages awards that have been awarded in other MMPA cases. The Court, however, finds that the cases cited by Wal-Mart are irrelevant to the facts in this case and not representative of the majority of MMPA awards in Missouri. For example, Berry is an outlier case "in that the fee award is forty-nine times the amount of Class recovery." Berry, 397 S.W.3d at 429. The attorneys' fee award in Berry was disproportionately high because the Court applied a multiplier. The Berry court acknowledged that "an enhancement to the lodestar amount may be awarded in rare and exceptional circumstances." Berry, 397 S.W.3d at 430. Wal-Mart has provided no evidence that this case would qualify for an enhancement as a rare and exceptional case. Wal-Mart has evinced nothing to demonstrate that this case involves a novel problem or that it would require exceptional skill and experience to try this case. See Berry, 397 S.W.3d at 432. Therefore, the Court finds that the Berry case provides no support for such an extreme and overreaching attorneys' fee award in this case.
Likewise, the Court does not reasonably conclude that Lewellen supports federal...
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