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Doucet v. International Hair Institute, LLC

United States District Court, S.D. California

November 17, 2017

IZABELLE J. DOUCET, et al., Plaintiff,
v.
INTERNATIONAL HAIR INSTITUTE, LLC, et al., Defendant.

          ORDER OF REMAND

          Larry Alan Burns United States District Judge

         Defendants removed this case from state court, citing diversity jurisdiction under the Class Action Fairness Act. After Plaintiffs amended their complaint, Defendants moved to dismiss or stay the action in favor of bilateral arbitration.

         The briefing on this motion brought to the forefront some reasons to doubt whether the Court had jurisdiction over this case. In particular it appeared Izabelle Doucet and Charlotte Dukich, the two named Plaintiffs, [1] may lack standing. Where no named plaintiff has standing, the Court cannot exercise jurisdiction over the case, and the defect cannot be cured by substitution of another plaintiff. Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1023 (9th Cir. 2003). The Court therefore issued an order (Docket no. 31 (the “OSC”)) directing both parties to address jurisdiction. The parties have now filed their responses.

         Legal Standards

         The Court is obligated to confirm its jurisdiction, sua sponte if necessary, whenever doubts arise. Mt. Healthy City School Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977). In this case, as in every other case in federal court, jurisdiction is presumed to be lacking unless it is affirmatively shown. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006). As the OSC pointed out, each party bears the burden of establishing jurisdiction, for different reasons.

         Plaintiffs must show that the Court has jurisdiction over their claims. See Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007). This includes a showing of standing as to each type of industry and form of relief they seek. See Friends of the Earth v. Laidlaw Envtl. Servs. (TOC), 528 U.S. 167, 185 (2000). Because no class has been certified, Plaintiffs must establish standing on their own behalf; the standing of putative class members does not come into play. Warth v. Seldin, 422 U.S. 490, 502 (1975); LaDuke v. Nelson, 762 F.2d 1318, 1325 (9th Cir. 1986). And Defendants, as the removing parties, bear the burden of showing that removal was proper, which includes establishing jurisdiction. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992).

         A lack of standing cannot be cured by substituting in new class representatives. Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022- 23 (9th Cir. 2003). If the Court lacks jurisdiction, the case must be remanded. 28 U.S.C. § 1447(c); Polo v. Innoventions, Int'l, LLC, 833 F.3d 1193, 1196 (9th Cir. 2016).

         Article III standing contains three elements: an injury-in-fact, causal connection of the injury to the defendant's actions, and a likelihood that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Although the standing inquiry is not the same as an inquiry into the merits, the two often overlap. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 97 n.2 (1998); Sun Valley Gasoline, Inc. v. Ernst Enterprises, Inc., 711 F.2d 138, 139 (9th Cir. 1983) (holding that the question of jurisdiction and the merits of an action will be considered intertwined where a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiff's substantive claim for relief). Where jurisdiction is intertwined with the merits, the Court assumes the truth of the allegations in a complaint unless controverted by undisputed facts in the record. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003).

         Standing, the Supreme Court has explained, is not commutative. DaimlerChrysler Corp., 547 U.S. at 352. That is, a plaintiff's standing to bring one claim does not mean she has standing to bring all claims that arise from the same nucleus of operative fact. Id. Rather, standing must be shown as each claim, id., and each type of relief sought. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009). This means that injury-in-fact, causal connection, and redressability must be shown as to each claim and type of relief sought. The fact that plaintiffs might have been injured in ways not connected to their claims does not confer standing. Such injuries would not be redressed by a favorable decision. See Lujan, 504 U.S. at 560-61. And injuries to supposed interests that are not legally-protected do not amount to an injury-in fact. See id.[2] This also means that standing can only be based on claims a plaintiff is actually bringing, not on claims she hypothetically might have brought but didn't.

         Although state courts may afford plaintiffs broad standing, in federal court standing is limited by Article III's requirements. Perry v. Brown, 671 F.3d 1052 (9th Cir. 2012) (“State courts may afford litigants standing to appear where federal courts would not, but whether they do so has no bearing on the parties' Article III standing in federal court.”); Lee v. American Nat'l Ins. Co., 260 F.3d 997, 999-1000, 1001-02 (9th Cir. 2001). This, together with the principle that standing must be established on the basis of a plaintiff's actual claims, means that while Article III standing can be narrower than the state law would permit, it cannot be broader.

         Merely alleging that standing requirements are met does not establish standing. Lujan, 497 U.S. at 888 (refusing to find standing based on the “conclusory allegations of an affidavit”); Carrico v. City & Cnty. of San Francisco, 656 F.3d 1002, 1006 (9th Cir. 2011) (refusing to find standing based on conclusory allegations). Similarly, the mere fact that a plaintiff has asked for relief for an alleged injury does not necessarily mean she has standing to seek that relief. This is true for both injunctive and monetary relief. See generally Lujan (holding that plaintiffs lacked standing to seek the injunctive relief they were asking for). See also Somers v. Apple, Inc., 729 F.3d 953, 962 (9th Cir. 2013) (indirect purchasers of products lacked standing to sue for damages); Chuck v. Hewlett Packard Co., 455 F.3d 1026, 1038 (9th Cir. 2006) (non-participant in benefit plan lacked standing to seek statutory damages under ERISA).

         While the Court is not examining Plaintiffs' adequacy as class representatives, and does not rely on it as a basis for this order, it should be remembered that under either federal or state law, a named plaintiff must be a member of the class she purports to represent. Representatives who are not members of the class lack standing to bring class claims. E. Tex. Motor Freight Sys, Inc. v. Rodriguez, 431 U.S. 395, 403 (1977) (class representative must be a part of the class, possess the same interest, and suffer the same injury as class members); First Am. Title Ins. Co. v. Superior Court, 146 Cal.App.4th 1564, 1573 (2007). Ordinarily, this is examined in terms of a class representative's adequacy under Fed.R.Civ.P. 23. But the reason for Rule 23's requirement is to satisfy standing requirements. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348-49 (2011). See also Kremens v. Bartley, 431 U.S. 119, 131 n.12 (1977) (reasoning that, allowing a class action to be litigated by named plaintiffs without live claims would do away with Article III standing requirements).

         Factual Background

         The claims in this case arise from the purchase of hair products. The amended complaint alleges:

when consumers respond to one of Defendants' “riskfree” trial offers, Defendants require the consumer to provide his or her credit card or debit card billing information, purportedly to pay nominal shipping and handling fees (typically less than $5.00) to receive the advertised product. However, 30 days after the consumer receives the product, Defendants charge the consumer the full price of the “trial” product, imposing charges that often amount to $159.90 or more onto the consumer's credit or debit card. Moreover, when a consumer accepts a “risk-free” trial offer, Defendants enroll the consumer in a negative option “auto shipment” plan, in which Defendants periodically ship additional products and charge the consumer's credit or debit card the full cost of the products, often $79.95 per month or more. To make matters worse, after consumers discover credit or debit card charges they did not authorize, and/or when consumers receive shipments they did not request, Defendants resist consumers' requests to return product for a refund and/or cancel further shipments.

(Am. Compl., ¶ 2.) The putative class consists of:

All individuals in California who, within the statute of limitations period, were either (i) charged the full price for a Defendants' Product that was represented as a “free” trial, a “risk-free” trial, or at a discounted price, and for which Defendants charged a higher price if the product was not returned within a limited period of time, and/or (ii) enrolled in Defendants' auto shipment program.

(Id., ¶ 33.) None of the briefing identifies, even approximately, the number of class members or the amount they spent; the notice of removal merely says that over 100 California residents purchased Defendants' products during this time period, and that the sales of products as part of an automatic renewal program “well exceeds” $5 million. (Notice of Removal, ¶¶ 16, 23.)

         The complaint identifies four California statutes as the basis for Plaintiffs' claims: the Automatic Renewal Law, Cal. Bus. & Prof. Code ''17600, et seq.; the False Advertising Law, Cal. Bus. & Prof. Code ''17500, et seq.; the California Consumers Legal Remedies Act, Cal. Civ. Code ' 1750, et seq.; and the Unfair Competition Law, Cal. Bus. & Prof. Code ''17200, et seq.

         The claims do not allege any defect in the products, or that the products did not live up to their claims. Instead, the claims depend solely on the price charged for the products, and customers' enrollment in the auto shipment program. Nor do the claims arise from any other behavior by Defendants, such as fraudulently inducing customers to hand ...


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