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Crystal Waters v. Kohl's Department Stores, Inc.

United States District Court, C.D. California

April 4, 2018

CRYSTAL WATERS, an individual, and TONY VALENTI, an individual, on behalf of themselves and all others similarly situated, Plaintiffs,
KOHL'S DEPARTMENT STORES, INC., a corporation; and DOES 1-100, Defendants.




         This is a putative class action lawsuit brought by Plaintiffs Crystal Waters and Tony Valenti against Defendant Kohl's Department Stores, Inc. (“Kohl's”). On February 15, 2017, Plaintiffs filed their initial Complaint in state court. (Compl., ECF No. 1-1.) Kohl's subsequently removed the case to this Court. See Waters v. Kohl's Dep't Stores, Inc., Case 2:17-cv-02325-OWD-AFM (C.D. Cal. June 27, 2017) (“Waters I”). On June 28, 2017, the Court remanded the case to the Los Angeles Superior Court. (Waters I Remand Order, ECF No. 23.) Four months after remand, Kohl's removed the case a second time. (Not. Removal, ECF No. 1.)

         Plaintiffs filed the pending remand motion on January 29, 2018. (Mot., ECF No. 24.) Plaintiffs maintain that the Waters I Remand Order forecloses successive removal attempts in the absence of a new factual basis or a change in circumstances. (Mot. 2.) Kohl's argues that either the continued accrual of putative damages, or its own analysis of its internal sales data, or both, constitute a change in circumstances that entitles it to successive removal. (Opp'n 1, ECF No. 26.) For the reasons discussed below, the Court finds no change in circumstances permitting successive removal, and accordingly, the Court GRANTS Plaintiffs' motion to remand. The Court also DENIES Plaintiffs' request for attorney's fees and costs.[1]


          A. Factual Background

         Kohl's is a nationwide department store chain with 116 stores in the State of California. (Compl. ¶ 12, ECF No. 1-1.) From time to time, Kohl's implements a rewards program in which customers receive Kohl's Cash coupons when they purchase items from Kohl's. (Id. ¶ 15.) For every $50 a customer spends at Kohl's, he or she earns $10 in “Kohl's Cash.” (Id.) The customer may then use the Kohl's Cash for a future purchase, and the value of the Kohl's Cash will be deducted from the total amount owed. (Id.)

         This dispute arises because in the four years prior to the filing of the Complaint, customers used Kohl's Cash to purchase products in conjunction with percent-off discount coupons that Kohl's also offered. (Id. ¶ 18.) Plaintiffs are regular shoppers at Kohl's who engaged in such transactions. (Id. ¶¶ 6, 7, 25, 27.) To calculate the amount owed on these purchases, Kohl's would first apply the Kohl's Cash to the total purchase price, and then apply the percent-off discount to the amount that remained. (Id. ¶ 18.)

         Plaintiffs object to this practice and assert that Kohl's should treat Kohl's Cash like actual cash. This, they claim, would require Kohl's to first apply the percent-off discount to the total purchase price, and then apply the Kohl's Cash to the remaining amount. (Id. ¶¶ 18, 19.)

         A simple hypothetical example, presented by Plaintiffs in their Complaint and adopted by Kohl's in subsequent filings, suffices to demonstrate the controversy: A shopper enters Kohl's with $60 in Kohl's Cash, earned from a prior purchase of a $300 blender. The shopper also has a separate coupon for 20% off an entire purchase. The shopper wishes to buy a toaster whose regular price is $100. Plaintiffs argue that Kohl's should first apply the 20% coupon, and then subtract the $60 in Kohl's Cash, so that the amount owed at the cash register is $20. Instead, Kohl's first subtracts the $60 in Kohl's Cash, and then applies the 20% coupon to the remaining $40 balance, so that the amount owed in the transaction is $32. It is the $12 difference between these two results that Plaintiffs place into controversy.[2] (Compl. ¶ 20.)

         Plaintiffs allege an additional class of damages arising out of Kohl's methods of calculation. When a customer returns a product (in the aforementioned example, the blender), Kohl's deducts from the refund the amount of Kohl's Cash that the customer redeemed since the initial purchase, without making any adjustments for customers who used a percent-off coupon with the Kohl's Cash. (Id. ¶ 23). In Plaintiffs' hypothetical, the $60 in Kohl's Cash was originally obtained through the purchase of a $300 blender. Were the customer to return that blender after the purchases described above, he or she would receive only $240 in return for the blender. The $60 difference is a loss to that customer and an amount paid to Kohl's. But the customer already spent $32 on the toaster. Therefore, the customer has given Kohl's $60 $32 = $92 for an item that would have cost $80 if the customer had never used the Kohl's Cash in the first place. The difference between these two costs is $12, and Plaintiffs also place this amount into controversy.[3] (Id. ¶ 23.)

         A notice printed in boldface type on the face of Kohl's Cash coupons informs customers of Kohl's methods of calculation when Kohl's Cash is used in conjunction with a percent-off coupon. (Decl. of Jordan S. Esensten (“Esensten Decl.”) Ex. 10 at 8, ECF No. 24-2.)

         B. Procedural Background

         On February 15, 2017, Plaintiffs filed a Complaint in the Superior Court of California, County of Los Angeles. (Compl. 1.) The next month, Kohl's removed the case to federal court. In its Notice of Removal, Kohl's contended that the amount in controversy in this suit exceeded $5 million, sufficient for jurisdiction under the Class Action Fairness Act (“CAFA”). (Waters I Not. Removal ¶¶ 14-17, ECF No. 1.) In support of this contention, Kohl's alleged only that total amount spent in transactions in which Kohl's Cash was used in conjunction with a percent-off discount “well exceed[ed] $5, 000, 000.” (Id. ¶ 16.)

         However, one cannot calculate the amount in controversy armed only with the total amount spent across all the contested transactions. To calculate the amount in controversy, the total amount of redeemed Kohl's Cash must be multiplied by the average percent discount offered across all contested transactions (“Average Percent Discount”). See supra note 2.

         Apparently realizing this fact, Kohl's filed a supplemental declaration, alleging that the amount of Kohl's Cash used in conjunction with a percent-off discount over the past four years (“redeemed Kohl's Cash”) was “more than $25 million.” (Waters I Decl. of Jessica Stemper (“Stemper Decl. I”) ¶ 7, ECF No. 19-1.) Kohl's also alleged that the Average Percent Discount was 20%, and that, therefore, the amount in controversy exceeded $5 million. (Id. ¶¶ 7-9.) However, Kohl's provided no evidentiary support for this 20% figure. (Id.)

         Kohl's was aware at the time of the first removal that its allegations might fail to establish the minimum amount in controversy for CAFA jurisdiction. On May 9, 2017, counsel for Plaintiffs encouraged counsel for Kohl's to supplement its evidence, asserting that the evidence in Kohl's supplemental declaration “could not support Kohl's amount in controversy calculation because it was based on an unsupported assumption rather than Kohl's own records.” (Esensten Decl. ¶ 10.) Nevertheless, Kohl's declined to calculate the Average Percent Discount across the disputed transactions. Instead, Kohl's evidently assumed that, because 20% was the figure Plaintiffs used in their toaster example, Plaintiffs were actually alleging that the average percent discount was 20%. (Stemper Decl. I ¶ 5.)

         On this evidence, the Court ruled that Kohl's had not shown the amount in controversy exceeded $5 million and remanded the case. (Waters I Remand Order 5.) Shortly thereafter, Kohl's filed a demurrer in state court, which that court denied. (Esensten Decl. Ex. 11 at 2.) Kohl's then informed the court of its desire to move for summary judgment, and the court gave Kohl's until January 16, 2018 to file the motion. (Id.) Four days before this deadline, and nearly ten months after its first removal attempt, Kohl's removed the case for the second time. (Not. Removal, ECF No. 1.) Kohl's simultaneously provided to the court, under seal, sensitive sales data- data that, according to Kohl's, took “considerable effort” to procure-in support of its amount-in-controversy ...

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