Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Anderson v. Walmart Stores, Inc.

United States District Court, W.D. New York

February 17, 2017

CHARLES ANDERSEN, Plaintiff,
v.
WALMART STORES, INC. and DELL, INC., Defendants.

          For Plaintiff: Charles Andersen, pro se

          For Defendant Walmart Stores, Inc.: Nathaniel Ari Weisbrot Fox Rothschild LLP

          For Defendant Dell, Inc.: Kimball R. Anderson Kathleen W. Moss Winston & Strawn LLP, Timothy J. Graber Brian P. Crosby Gibson, McAskill & Crosby

          DECISION AND ORDER

          CHARLES J. SIRAGUSA United States District Judge

         INTRODUCTION

         This is a proposed class action asserting claims for “unfair and deceptive business practices and false advertising” in violation of New York General Business Law (“GBL”) § § 349[1], 350[2] and 350-a.[3] Now before the Court are the following applications: 1) Dell's motion [#9] to compel arbitration or alternatively to dismiss the Complaint pursuant to Federal Rule of Civil Procedure (“FRCP”) 12(b)(6); 2) Walmart's motion [#11] to dismiss the Complaint under FRCP 12(b)(6) or alternatively to compel arbitration; and 3) Andersen's cross-motion [#14] to remand the action to state court pursuant to 28 U.S.C. § 1447(c). Plaintiff's motion to remand is denied, and Defendants' motions to stay this action and compel arbitration are granted.

         BACKGROUND

         On May 16, 2016, Charles Andersen (“Plaintiff”) commenced this action in New York State Supreme Court, Chemung County. The proposed class-action Complaint alleges, in pertinent part, that defendants violated GBL § § 349, 350 and 350-a, by selling Dell 15-5000 laptop computers that were falsely represented to have “up to 7.58 hours of useable battery life, ” when they actually had “no more than three hours of useable battery life.” In this regard, the Complaint alleges that the subject laptops were not defective per se, but were “functioning properly, ” as “designed[, ] to have only 2 to 3 hours of useable battery life.” According to the Complaint, the problem was not with the product, but with the misrepresentations made about the product. More specifically, the Complaint contends that Dell provided Walmart with “scan codes and other information” with “grossly exaggerated figures” as to battery life, in order to gain a “marketplace advantage, ” and that Walmart continued to use such information in its stores “after having acquired information and belief as to the falsity of Dell's” claims as to battery life.

         Plaintiff is a citizen of New York State, while Defendants Walmart Stores, Inc. and Dell Inc. are Delaware Corporations with their principal places of business in Arkansas and Texas, respectively. The Complaint is purportedly brought on behalf of Plaintiff and all other persons who bought such Dell laptops in New York State, whom, Plaintiff estimates, comprise a proposed class “in excess of 10, 000 members.” The Complaint indicates that the subject laptop computers retailed for approximately $499, that each person who bought one “got something less tha[n] what [was] bargained for, ” and that “the damage to each member of the [proposed] class is relatively small.” The Complaint demands “[m]oney damages in excess of $1, 000, 000, " as well as costs and attorney's fees.

         On July 14, 2016, Defendants removed the action to this Court, contending that this Court has original diversity jurisdiction “pursuant to 28 U.S.C. § 1332(d) (as amended by the Class Action Fairness Act (‘CAFA]').” More specifically, Defendants stated:

Under § 1332(d), federal courts have original diversity jurisdiction over a class action whenever “any member of a [putative] class of plaintiffs is a citizen of a state different from any defendant, ” 28 U.S.C. § 1332(d)(2)(A), and “the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs.” 28 U.S.C. § 1332(d)(2). Both requirements are satisfied here because the matter in controversy in the aggregate exceeds the sum of $5, 000, 000, exclusive of interest and costs, and there is a diversity of citizenship between Plaintiff and Dell and Plaintiff and Walmart.

Notice of Removal [#1] at pp. 2-3.

         In estimating the jurisdictional amount in controversy, Defendants took the Complaint's allegation that there are “in excess of 10, 000 members” of the proposed class, and multiplied that figure by the maximum damages-per-violation allowed under GBL § § 349 and 350-e, which is one thousand dollars and ten thousand dollars, respectively, for willful or knowing violations.[4]

         On July 20, 2016, Dell filed the subject motion [#9] to compel arbitration or, in the alternative, to dismiss the Complaint pursuant to FRCP 12(b)(6). The motion to compel arbitration alleges that the packaging of the subject laptop computers included a conspicuous label, advising buyers that the purchase and use of each computer was subject to Dell's terms of sale, which include “the use of arbitration to resolve disputes on an individual basis, ” “instead of jury trials or class actions.” The notice on the box further directed purchasers to the web address for Dell's complete statement of terms of sale.

         Dell's motion to compel further indicates that the subject computers had preloaded start-up screens, setting forth “Dell's full Terms and Conditions, ” including an arbitration clause and class-action waiver.[5] According to Dell, purchasers had to indicate their agreement with those terms, by clicking on a box labeled “Accept, ” before using the laptop. The start-up screen further contained a notice advising purchasers to return the product if they did not agree with Dell's terms.[6] Dell's Terms and Conditions further indicated that Dell would pay for the purchaser's arbitration fees, and that any disputes would be governed by the laws of the State of Texas. Id. at ¶ ¶ 9-10. Based upon these facts, Dell contends that Plaintiff, and any potential class members, agreed to arbitrate any claims, both by keeping and using the laptops and by clicking the onscreen box to indicate their acceptance of Dell's terms. Dell therefore maintains that this Court should stay this action and compel arbitration.

         Alternatively, Dell contends that the Complaint fails to state actionable claims, and should be dismissed. Dell contends, for example, that the Complaint does not adequately describe the model of computer that Plaintiff purchased. The main thrust of Dell's 12(b)(6) argument, however, is that the Complaint does not allege that Dell's description of the potential battery life of the computer -- that it had “up to 7.58 hours” of battery life -- was false, or that it would have misled a reasonable consumer. As to these points, Dell argues that the Complaint fails to explain specifically how Plaintiff uses his laptop, or to allege that it is impossible for the laptop to achieve 7.58 hours of battery life. Dell further maintains that the Complaint fails to properly plead injury or damages.

         On July 21, 2016, defendant Walmart Stores, Inc. moved to dismiss the Complaint, pursuant to FRCP 12(b)(6), or, in the alternative, to join in Dell's motion to compel arbitration. Specifically, Walmart contends that the Complaint fails to allege injury, which, Walmart maintains, must be something more than having purchased a product based on an alleged misleading statement about the product. Walmart further states that the Complaint fails to plead that the statement complained of (battery life “up to 7.58 hours”) was false, deceptive or misleading to a reasonable consumer, since a battery life of two-to-three hours falls within the range of “up to 7.58 hours, ” and a reasonable consumer would not expect “up to 7.58 hours” to mean that the computer's battery actually lasted that long under ordinary use. Walmart also indicates that the Complaint fails to allege that Walmart did anything apart from passively displaying “the promises that were made by Dell on the Dell laptop's advertising label.” Alternatively, Walmart agrees with Dell that Plaintiff is bound by the arbitration agreement to arbitrate his claims against both Dell and Walmart. On this point, Walmart indicates that the arbitration agreement covers disputes with Dell as well as disputes with “any third party providing products or services” in connection with the purchase of the Dell laptop, which includes Walmart.

         On July 26, 2016, Plaintiff filed a cross-motion to remand this action to state court. Plaintiff contends both that the amount in controversy is not sufficient to support federal diversity jurisdiction for a class action under 28 U.S.C. § 1332(d), and that the Court must decline jurisdiction under 28 U.S.C. § 1332(d)(4)(A)(i)(I), because “greater than two-thirds of the members of [the proposed class] are citizens” of New York. Plaintiff also opposes Defendants' motions to compel arbitration and to dismiss for failure to state a claim. With regard to the motion to compel arbitration, Plaintiff essentially asserts four arguments: 1) the arbitration agreement is unenforceable because it was not presented to him until after he purchased the computer; 2) the arbitration agreement is void because he was fraudulently induced to buy the computer; 3) the arbitration agreement is unenforceable because it is contrary to the consumer-protection purposes of GBL § § 349 & 350; and 4) the arbitration agreement is unenforceable because it is contrary to GBL § 399-c, which prohibits arbitration clauses involving the sale of consumer goods. With regard to Defendants' 12(b)(6) motions, Plaintiff insists that he has adequately stated claims under GBL § § 349 and 350.

         On January 6, 2017, Plaintiff and counsel for the Defendants appeared before the undersigned for oral argument of the motions.

         DISCUSSION

         Before the Court are a motion to remand the action to state court, motions to compel arbitration and motions to dismiss the Complaint for failure to state a claim. The Court will address the motion to remand first, since it involves the Court's subject-matter jurisdiction over this action.

         Plaintiff's Motion to Remand

         After Plaintiff commenced this action in state court as a proposed class action, Defendants removed the action to this Court on the grounds of diversity jurisdiction, pursuant to 28 U.S.C. § 1332(d)(2)(A), which states in pertinent part:

The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs, and is a class action in which . . . any member of a class of plaintiffs is a citizen of a State different from any defendant[.]

28 U.S.C.A. § 1332 (West 2017). Plaintiff timely filed the subject motion to remand, alleging that the amount in controversy, consisting of the aggregated claims of the class members, does not exceed $5 million, as required by the statute. Plaintiff further contends that even if the amount in controversy was met, that remand would still be required pursuant to 28 U.S.C. § 1332(d)(4)(A)(I), which states:

A district court shall decline to exercise jurisdiction under paragraph (2)--(A)(i) over a class action in which--(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed; (II) at least 1 defendant is a defendant--(aa) from whom significant relief is sought by members of the plaintiff class;(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally filed; and (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and (ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons;

28 U.S.C.A. § 1332(d)(4) (West 2017). On this point, Plaintiff maintains that this Court must decline jurisdiction because greater than two-thirds of the members of the proposed class are citizens of the State of New York.[7]

         At the outset, Defendants maintain, and the Court agrees, that little discussion is required to deny Plaintiff's application to remand insofar as it is based upon § 1332(d)(4). As Defendants correctly point out, Plaintiff has focused on § 1332(d)(4)(A)(i)(I), while ignoring the rest of § 1332(d)(4)(A)(i) & (ii), which also must be satisfied before a court is required to decline jurisdiction. See, e.g., Wurtz v. Rawlings Co., LLC, 761 F.3d 232, 240 (2d Cir. 2014) (Observing that for § 1332(d)(4)(A) to apply, all of the subsections of that provision must be met).[8] Subsection (d)(4)(A)(i)(II) cannot be satisfied here, since neither of the Defendants is a citizen of New York. Accordingly, that aspect of Plaintiff's motion to remand is denied.

         Alternatively, Plaintiff contends that the requisite $5 million amount-in-controversy is not satisfied here. The applicable law on this point is well settled. “The burden of proving jurisdiction is on the party asserting it, ” Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996), which in this case is the Defendants. Such a showing of jurisdiction must be made by a preponderance of the evidence. Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000). With regard to the amount-in-controversy requirement found in 28 U.S.C. § 1332(d),

a party invoking the jurisdiction of the federal court has the burden of proving that it appears to a ‘reasonable probability' that the claim is in excess of the statutory jurisdictional amount. In order for a case to fall under the federal diversity statute, the plaintiff must prove diversity of the parties, and an amount in controversy that appears, to a “reasonable probability, ” to be in excess of the statutory jurisdictional amount of [$5, 000, 000, exclusive of interest and costs].
This burden is hardly onerous, however, for we recognize a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy. To overcome the face-of-the-complaint presumption, the party opposing jurisdiction must show “to a legal ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.