Van v. LLR, Inc.

• Decision Date: 03 March 2021
• Docket Number: No. 3:18-cv-0197-HRH,3:18-cv-0197-HRH
• Parties: Katie VAN, individually and on behalf of all others similarly situated, Plaintiff, v. LLR, INC., d/b/a LuLaRoe, and LuLaRoe, LLC, Defendants.
• Court: U.S. District Court — District of Alaska

523 F.Supp.3d 1077

Katie VAN, individually and on behalf of all others similarly situated, Plaintiff,

v.LLR, INC., d/b/a LuLaRoe, and LuLaRoe, LLC, Defendants.

No. 3:18-cv-0197-HRH

United States District Court, D. Alaska.

Signed March 3, 2021

James J. Davis, Jr., Goriune Dudukgian, Northern Justice Project, Anchorage, AK, Kelly K. Iverson, Pro Hac Vice, Kevin W. Tucker, Pro Hac Vice, R. Bruce Carlson, Pro Hac Vice, Carlson Lynch Sweet Kilpela & Carpenter, LLP, Pittsburgh, PA, for Plaintiff.

Brewster H. Jamieson, Michael Bruce Baylous, Lane Powell LLC, Anchorage, AK, Randolph T. Moore, Pro Hac Vice, Steven T. Graham, Pro Hac Vice, Snell & Wilmer, L.L.P., Costa Mesa, CA, for Defendants.

ORDER

H. Russel Holland, United States District Judge

Motion to Strike Twentieth Affirmative Defense

Plaintiff Katie Van moves to strike defendants’ twentieth affirmative defense.¹ This motion is opposed by defendants LLR, Inc., d/b/a LuLaRoe and LuLaRoe LLC.² Oral argument was not requested and is not deemed necessary.

Background

"LuLaRoe is a multilevel-marketing company that sells clothing through fashion retailers located in all fifty states to consumers across the United States."³ Plaintiff alleges that she "resides in Anchorage, Alaska, which has no sales or use tax."⁴ She alleges that she "made purchases from LuLaRoe retailers in other states and had those purchases shipped to her home in Anchorage, Alaska."⁵ Plaintiff alleges that she "was charged a ‘tax’ on purchases that she made from LuLaRoe's remote consultants, but such charge was not a ‘tax’ and LuLaRoe knew it was not a ‘tax’."⁶

Plaintiff commenced this action on September 5, 2018. Plaintiff brings this action on behalf of herself and others similarly situated. In Count I of her second amended complaint, plaintiff asserts an Alaska Unfair Trade Practices and Consumer Protection Act (UTPCPA) claim. Plaintiff alleges that defendants have violated the UTPCPA

a. [by] representing on invoices issued to [p]laintiff and class member[s] that they owed a "tax" when that representation was false;

b. by programming their POS system to add a non-existent "tax" to [p]laintiff and the class members’ purchases;

c. by programming their online point-of-sale payment system to misrepresent there was a "tax" on class members’ purchases and thereby surcharging [p]laintiff and members of the class;

d. by failing to disclose to [p]laintiff and the class members that they were overcharging them because of Audrey's system failures;

e. by issuing invoices that included a non-existent "tax" that created a likelihood of confusion;

f. by issuing invoices that included a non-existent "tax" that caused [p]laintiff and the class members damages; and/or

g. by issuing invoices that included a non-existent "tax" that had a likelihood to deceive [the] customer and to be interpreted in a misleading way.^[7]

In Count II of her second amended complaint, plaintiff asserts a common law conversion claim.

In their answer to plaintiff's second amended complaint, defendants assert a number of affirmative defenses. At issue in the instant motion is defendants’ twentieth affirmative defense, which asserts that

[p]laintiff's and the putative class’ claims are barred, in whole or in part, under the voluntary payment doctrine because they voluntarily paid the sales taxes with full knowledge, or means of knowledge of the facts, of the sales taxes they paid.^{[8 ]}

Pursuant to Rule 12(f), Federal Rules of Civil Procedure, plaintiff now moves to strike defendants’ voluntary payment doctrine ("VPD") affirmative defense.

Discussion

"A court may strike an affirmative defense under Federal Rule of Procedure 12(f) if it presents an ‘insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.’ " Cyber Acoustics, LLC v. Belkin Int'l Inc., 988 F. Supp. 2d 1236, 1239 (D. Or. 2013) (quoting Fed. R. Civ. P. 12(f) ). "The purpose of a Rule 12(f) motion is to avoid spending time and money litigating spurious issues." Id. "As a policy matter, when a defense is insufficient as a matter of law, it should be stricken to eliminate the delay and unnecessary expense of litigating an invalid claim." Medi-Temp LLC v. CVS Pharmacy, Inc., Case No. CV 05-3241-PCT-JAT (Lead), CV 05-3242-PCT-JAT (Cons), 2006 WL 8440902, at *6 (D. Ariz. July 21, 2006). However, "[c]ourts often regard motions to strike with disfavor, since such motions are frequently used as stalling tactics and since pleadings are of limited importance in federal practice." Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 1057 (N.D. Cal. 2004). " ‘[A] motion to strike will not be granted if the insufficiency of the defense is not clearly apparent, or if it raises factual issues that should be determined on a hearing on the merits.’ " Kubanyi v. Golden Valley Electric Association, Case No. 4:04-cv-0026-RRB, 2007 WL 9697873, at *3 (D. Alaska May 25, 2007) (quoting 5C Wright & Miller, Federal Practice and Procedure, § 1381, at 427-28 (3d ed.) ). "Some courts also refuse to grant Rule 12(f) motions unless prejudice would result to the moving party from denial of the motion." Platte Anchor Bolt, 352 F. Supp. 2d at 1057. But, the Ninth Circuit has never held that a showing of prejudice is required and in an unpublished case stated that " Rule 12(f) says nothing about a showing of prejudice...." Atlantic Richfield Co. v. Ramirez, Case No. 98-56372, 1999 WL 273241, at *2 (9th Cir. May 4, 1999). "[W]hen ruling on a motion to strike, the [c]ourt takes the plaintiff's allegations as true and must liberally construe the complaint in the light most favorable to the plaintiff." Stearns v. Select Comfort Retail Corp., 763 F. Supp. 2d 1128, 1140 (N.D. Cal. 2010). "Ultimately, whether to grant a motion to strike under Rule 12(f) lies within the sound discretion of the district court." Sirois v. East West Partners, Inc., 285 F. Supp. 3d 1152, 1159 (D. Hawai'i 2018).

Plaintiff argues that defendant's VPD defense should be stricken because Alaska does not recognize the VPD as a defense to her causes of action. " ‘The voluntary payment doctrine is an affirmative defense that provides that one who makes a payment voluntarily cannot recover it on the ground that he was under no legal obligation to make the payment.’ " JPMorgan Chase Bank, N.A. v. SFR Investments Pool 1, LLC, 200 F. Supp. 3d 1141, 1177 (D. Nev. 2016) (quoting Nevada Ass'n Servs., Inc. v. Eighth Jud. Dist. Court, 130 Nev. 949, 338 P.3d 1250, 1253 (2014) ); see also, Russ v. Apollo Group, Inc., Case No. 09-904-VBF(FMOx), 2010 WL 11515297, at *4 (C.D. Cal. March 19, 2010) (quotation marks omitted) ("voluntary payment doctrine [is] an equitable defense which prevents a party from recovering money paid with knowledge of the relevant facts, unless the payment was made under duress or fraud"). "The doctrine has been adopted or acknowledged in some form in every American jurisdiction." Brutus 630, LLC v. Town of Bel Air, 448 Md. 355, 139 A.3d 957, 960 (2016). "This doctrine exists because of ‘the stabilizing legal principle preventing payors from disturbing the status quo by demanding reimbursement subsequently of payments made by them voluntarily with full knowledge of [the] facts.’ " Sanders v. Washington Mut. Home Loans, Inc. ex rel. Washington Mut. Bank, 248 Fed.Appx. 513, 516 (5th Cir. 2007) (quoting Whitehall Oil Co. v. Boagni, 255 La. 67, 229 So.2d 702, 705 (1969) ).

The Alaska Supreme Court has never recognized the VPD as a defense to a conversion claim or a statutory consumer protection claim. "When the highest court of a state has not directly spoken on a matter of state law, a federal court sitting in diversity must generally use its ‘own best judgment in predicting how the state's highest court would decide the case.’ " Fast Trak Investment Co. v. Sax, 962 F.3d 455, 465 (9th Cir. 2020) (quoting Fiorito Bros., Inc. v. Fruehauf Corp., 747 F.2d 1309, 1314 (9th Cir. 1984) ). "In making this prediction, the federal court ‘must ascertain from all available data what the state law is and apply it.’ " Id. (quoting Estrella v. Brandt, 682 F.2d 814, 817 (9th Cir. 1982) ). " ‘An intermediate state appellate court decision is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.’ " Id. (quoting Estrella, 682 F.2d at 817 ). The federal court may also look to " ‘decisions from other jurisdictions, statutes, treatises, and restatements [for] guidance’ " in predicting how the state's highest court would decide the issue at hand. Eichacker v. Paul Revere Life Ins. Co., 354 F.3d 1142, 1145 (9th Cir. 2004) (quoting S.D. Myers, Inc. v. City and County of San Francisco, 253 F.3d 461, 473 (9th Cir. 2001) ).

Plaintiff argues that this court need look no further than State v. Stein, 806 P.2d 346 (Alaska Ct. App. 1991), to predict that the Alaska Supreme Court would reject the VPD as a viable defense to her claims. There, "Alan Stein was convicted in a non-jury trial of commercial fishing in closed waters, in violation of 5 Alaska Administrative Code (AAC) 33.310(c)(5)." Id. at 346. "A fine of $1,000 was imposed and paid." Id. "Two years later, Stein moved to correct his sentence and reduce the fine to $300." Id. The district court denied Stein's motion and Stein appealed. Id. The court of appeals "concluded that Stein's sentence was illegal and that the trial court erred in not correcting it" because "the legislature had limited fines for strict liability violations of fishing regulations to $300." Id. But, the court of appeals declined to determine whether "Stein [was] entitled to any remedy beyond correction of the judgment against him." Id. at 346-47. The court of appeals "express[ed] no opinion as to whether the district court ha[d] jurisdiction to grant restitution because the parties h[ad] not briefed the issue." Id. at 347. "Subsequently, Stein moved for return of $700 of the $1,000...