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McMullen v. Synchrony Bank

United States District Court, District of Columbia

February 13, 2015

VALERIE McMULLEN, individually and on behalf of others similarly situated, Plaintiff,
SYNCHRONY BANK, et al., Defendants.


JOHN D. BATES, District Judge.

Plaintiff Valerie McMullen has moved to remand this action to the Superior Court of the District of Columbia or, in the alternative, for limited discovery related to her motion to remand. Defendant JP Morgan Chase & Co. ("Chase") resists remand and discovery, claiming that this Court has jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d).[1] Upon careful consideration of the motion and the parties' memoranda, [2] the applicable law, and the record, and for the reasons set forth below, the Court finds that it has jurisdiction under CAFA, but that the local controversy exception may apply. Accordingly, the Court will deny the motion to remand with leave to renew and will order limited discovery regarding the citizenship of the putative class members.


McMullen, a citizen of the District of Columbia, brought this action against Chase, Synchrony Bank, Wayne Bullen, Karim Steward, One World Fitness, Bullen Wellness, Washington Chiropractic, and several John Does and John Doe Corporations. One World Fitness is a local health club in Washington, D.C. owned by Bullen and Steward. McMullen alleges that Bullen and Steward, through One World Fitness and two other District of Columbia companies they owned - Bullen Wellness and Washington Chiropractic - fraudulently took out lines of credit against customers and billed against these lines of credit without the customers' knowledge or authorization. Synchrony Bank and Chase provided the lines of credit. McMullen alleges that she is a One World Fitness customer harmed by the fraudulent scheme.

McMullen brought this action on September 12, 2014, in the Superior Court of the District of Columbia for alleged violations of the D.C. Consumer Protection Procedures Act ("CPPA") and for fraud, conspiracy to commit fraud, conversion, and breach of contract. On October 31, 2014, she filed an amended complaint on behalf of herself and all others similarly situated under D.C. Code § 28-3905(k) (private right of action under the CPPA) and as a class action. Chase then filed a Notice of Removal, pursuant to 28 U.S.C. § 1332(d), seeking to remove the case to the U.S. District Court for the District of Columbia. Shortly thereafter, McMullen filed a motion to remand to Superior Court or, in the alternative, for limited discovery. Chase, joined by Synchrony Bank, resists the remand. Chase also opposes discovery.


CAFA was enacted "to amend the procedures that apply to consideration of interstate class actions" to make it easier to establish federal diversity jurisdiction. Mississippi ex rel. Hood v. AU Optronics Corp., 134 S.Ct. 736, 744 (2014) (internal quotation marks omitted); see also Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554 (2014) ("[N]o antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court."). A qualifying "class action" under CAFA is "any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure, " 28 U.S.C. § 1332(d)(1)(B), in which "the number of members of all proposed plaintiff classes in the aggregate" is at least 100, id. § 1332(d)(5)(B). Because CAFA expanded diversity jurisdiction over CAFA class actions by replacing complete diversity with "minimal diversity, " AU Optronics, 134 S.Ct. at 740, federal courts may exercise jurisdiction over a class action where "any member of a class of plaintiffs is a citizen of a State different from any defendant, " 28 U.S.C. § 1332(d)(2)(A). And in lieu of diversity jurisdiction's general requirement that each plaintiff's claim exceed the sum or value of $75, 000, "CAFA grants federal jurisdiction over class... actions in which the aggregate amount in controversy exceeds $5 million." AU Optronics, 134 S.Ct. at 740 (citing §§ 1332(d)(2), (d)(6), (d)(11)(A)). In sum, "CAFA gives federal courts jurisdiction over certain class actions, ... if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million." Dart Cherokee, 135 S.Ct. at 552. The party supporting removal bears the burden of establishing the Court's jurisdiction. Breakman v. AOL LLC, 545 F.Supp.2d 96, 100 (D.D.C. 2008).

Even if a court otherwise has jurisdiction under CAFA, however, the statute provides mandatory abstention provisions for actions that involve matters of principally local or state concern. See 28 U.S.C. §§ 1332(d)(4). These provisions, known as the local controversy exception and the home state exception, are "designed to draw a delicate balance between making a federal forum available to genuinely national litigation and allowing the state courts to retain cases when the controversy is strongly linked to that state." Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 682 (7th Cir. 2006). Once a party establishes that CAFA's basic jurisdictional requirements are satisfied, the burden shifts to the party seeking remand to establish that a CAFA exception applies. Westerfeld v. Indep. Processing, LLC, 621 F.3d 819, 822-23 (8th Cir. 2010).


It is undisputed that McMullen has alleged a class action and that the parties are minimally diverse.[3] Before the Court, then, are only three issues: (1) whether Chase has shown that the putative class has at least 100 members; (2) whether Chase has shown that the amount in controversy exceeds $5 million; and (3) if those two showings have been made by Chase, whether McMullen has shown that CAFA's local controversy exception applies.


In order for an action to be removable under CAFA, the proposed plaintiff class must consist of 100 or more people. 28 U.S.C. § 1332(d)(5)(B). CAFA defines "class members" as "the persons (named or unnamed) who fall within the definition of the proposed or certified class." Id. § 1332(d)(1)(D).

Here, the amended complaint defines the class as former One World Fitness members who received financing from defendant banks and asserts that "[o]n information and belief, there are approximately one hundred One World Fitness customers who received [such] financing." Am. Compl. ¶¶ 37-38. Nevertheless, McMullen argues that this action should be remanded because Chase may not rely on her estimate alone and has therefore "failed to identify the size of the class with any certainty." Mot. at 4. Indeed, this District Court has held that a defendant's reliance on a plaintiff's estimate of class size alone fails to meet the defendant's burden of establishing jurisdiction on plaintiff's motion to remand. See Wexler v. United Air Lines, Inc., 496 F.Supp.2d 150, 155 (D.D.C. 2007). But Chase does not merely rely on McMullen's estimated class size. Instead, Chase provides a declaration stating that its business records indicate that Chase "financed 367 separate accounts for Bullen Wellness, the entity that allegedly received the funds from Defendant Banks." Opp'n at 5 (citing Decl. of Kristina L. Ash [ECF No. 13-2] ¶ 3). Chase explains, moreover, that "[t]his number, while sufficient to support CAFA jurisdiction, understates Plaintiff's ...

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