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Garcia v. Tempoe, LLC

United States District Court, D. New Jersey

November 15, 2017

ALICIA GARCIA, and PRISCILA DOMINGUEZ, on behalf of themselves and others similarly situated, Plaintiffs,


          LEDA DUNN WETTRE. United States Magistrate Judge.

         This matter comes before the Court on a motion by plaintiffs Alicia Garcia and Priscila Dominguez to remand this action to the Superior Court of New Jersey, Law Division, Essex County. ECF No. 11. Defendant Tempoe, LLC ("Tempoe") opposes the motion.[1] ECF No. 16 United States District Judge Susan D. Wigenton referred this motion to the undersigned for a Report and Recommendation. Having considered the parties' submissions, oral argument before the Court, and for good cause shown, the Court recommends that plaintiffs' motion be DENIED.

         I. BACKGROUND

         This is a putative class action alleging Defendant Tempoe's rent-to-own contracts for furniture and appliances violate New Jersey consumer protection laws. Complaint ("Compl."), ECF No. 1-3 ¶ 1. Tempoe, a Delaware limited liability company that offers financing for consumer goods, has relationships with various merchants located in New Jersey and elsewhere throughout the United States. Id. ¶ 2; Defendant Tempoe's Opposition to Plaintiffs' Motion to Remand ("Def. Opp."), ECF No. 16 at 3. Plaintiffs allege that Tempoe's standard financing agreement is structured so that a customer makes installment payments over the course of several months, totaling about 90% of die retail price, after which the customer has the option to purchase the product for about 55% of the total price. Compl. ¶ 3. Plaintiffs allege that this results in the "consumer paying interest in excess of 175% APR to obtain ownership of the goods, in violation of New Jersey's Criminal Usury Statute." Id. Plaintiffs further allege defendant characterizes these contracts as leases, rather than a loan or installment sales contract, in an attempt to circumvent usury and consumer protection laws. Id. ¶ 4.

         Plaintiff Alicia Garcia alleges she purchased furniture from Defendant Buy & Save Furniture, Inc. and agreed to finance the purchase through WhyNotLeaselt[2] in April 2014, making a down payment of $615 and financing the balance of $1400. Compl. ¶ 44. After me transaction, defendant sent Garcia a Consumer Lease Agreement (the "Lease Agreement"), which indicates that after the lease period, the consumer had the following options: to continue the lease with additional payments, negotiate a price to purchase the property, or return the furniture. Id. ¶¶ 50-53. Before a scheduled payment, Garcia called Tempoe's customer service to make a principal reduction payment and was told that the contract was a lease, rather than a purchase, and that to purchase the furniture, she would have to finish the terms of the lease and make an additional payment. Id. ¶ 65. Garcia did not authorize additional payments on the furniture and, after Garcia defaulted, Tempoe sold and assigned her purported debt of $3, 273 to a third-party debt-collector. Id. ¶ 68. The debt collector filed suit against Garcia on January 22, 2016, which suit has been stayed pending the outcome of this litigation. Id. ¶¶ 69-70. Plaintiff Priscila Dominguez alleges similar facts against defendants. See Id. ¶¶ 74-101.

         Plaintiffs initiated this putative class action in the Superior Court of New Jersey, Law Division, Essex County on January 9, 2017. See Compl, ECF No. 1-3. They assert the following claims: violations of the New Jersey Consumer Fraud Act ("CFA") for which they seek declaratory and equitable relief (Count I); violations of the Truth in Consumer Contract, Warranty and Notice Act ("TCCWNA") (Count II); and for a declaratory judgment as to the dispute resolution provisions of the Lease Agreement. Id.

         On March 30, 2017, defendant Tempoe removed the case to this Court pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). See ECF No. 1. On May 1, 2017, plaintiffs filed a motion to remand pursuant to the local controversy exception to CAFA, 28 U.S.C. § 1332(d)(4)(A). See Plaintiffs' Motion to Remand ("PI. Mot.") ECF No. 11. Defendant opposed the motion. See Def. Opp. After Plaintiffs' reply brief called into question whether the amount in controversy had been met, this Court ordered supplemental briefing on that issue. ECF Nos. 27-28. This Court heard oral argument on this motion on October 23, 2017.

         II. STANDARD

         Prior to the enactment of CAFA, many class actions, even those implicating matters of national importance, were excluded from federal courts as a result of the complete diversity of citizenship rule and the rule against aggregating claims. See Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 148 (3d Cir. 2009). CAFA was passed to provide for "[f]ederal court consideration of interstate cases of national importance under diversity jurisdiction." Id. at 149 (quoting CAFA § 2, Pub. L. 109-2, 119 Stat. 4)). Pursuant to CAFA, federal courts have subject matter jurisdiction over any civil action where there are at least 100 members in the putative class, minimal diversity is established, and the aggregated amount in controversy exceeds $5, 000, 000, exclusive of interest and costs. 28 U.S.C. § 1332(d). CAFA allows a defendant to remove a qualifying class action from state to federal court. Id. § 1453(b).

         CAFA also contains two mandatory exceptions, §§ 1332(d)(4)(A) & (B), "which require a district court to decline jurisdiction when the controversy is uniquely local and does not reach into multiple states." Kaufman, 561 F.3d at 149. First, the "home-state" exception, not at issue here, requires a court to decline jurisdiction "when the primary defendants and at least two-thirds of the members of the putative classes are local." Id., Second, the "local controversy" exception, which plaintiffs argue applies to the instant matter, requires a court to decline jurisdiction "if certain conditions are met, including that a super-majority of the members of the putative class and at least one significant defendant are from the state in which the class action was originally filed." Id. at 148 (citing 28 U.S.C. § 1332(d)(4)(A)).

         III. ANALYSIS

         Plaintiffs move to remand on the grounds that the local controversy exception requires this Court to decline jurisdiction. Before reaching the issue of the local controversy exception, however, the Court must satisfy itself as a preliminary matter that it has subject matter jurisdiction over this action and that it was properly removed to this Court. See Kaufman, 561 F.3d at 151 (explaining that even though the parties did not dispute that CAFA's threshold requirements were met, "[w]e must nevertheless satisfy ourselves that federal subject matter jurisdiction exists in the first instance"). In deciding the motion, the Court notes that "no antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court." Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014) (citations omitted).

         A. Amount In Controversy

         As stated above, CAFA provides that district courts have subject matter jurisdiction over cases where, inter alia, the total amount in controversy exceeds $5 million, exclusive of interest and costs. 28 U.S.C. § 1332(d)(2). In their reply brief on this motion, plaintiffs suggested, while not arguing explicitly, that the amount in controversy may not have been satisfied. See ECF No. 18 at 9. With this, the Court sua sponte ordered supplemental briefing regarding this issue to examine whether there is the requisite $5 million in controversy to confer subject matter jurisdiction on this Court.

         "It is now settled in this Court that the party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, mat the case is properly before the federal court." Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007). Generally, "[w]hen the plaintiffs complaint does not state the amount in controversy, the defendant's notice of removal may do so, " and should be accepted when not "contested by the plaintiff or questioned by the court." Owens, 135 S.Ct. at 551-53 (citing 28 U.S.C. § 1446(c)(2)(A)). Where there are contested jurisdictional facts, "both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied." Id. at 554. "It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F.3d 388, 395 (3d Cir. 2016) (quoting St. Paul Mercury Indent. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938)). The amount in controversy is measured "not ... by the low end of an open-ended claim, but rather by a reasonable reading of the value of the rights being litigated." Werwinski v. Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 2002).

         To determine if a claim meets the jurisdictional amount under § 1332, the Court must examine what damages are available under state law. Muchler v. Greenwald, 624 Fed.Appx. 794, 798 (3d Cir. 2015) (citing Packard v. Provident Nat'l Bank,994 F.2d 1039, 1046 (3d Cir. 1993)). CAFA "tells the District Court to determine whether it has jurisdiction by adding up the value of the claim of each person who falls within the definition of [the] proposed class and determine whether the resulting sum exceeds $5 million." Standard Fire Ins, Co. v. Knowles, 568 U.S 588, 592 (2013). "If the sum exceeds $5 million by a preponderance of the evidence-after the court's evaluation of the submitted proofs-the amount in ...

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