Abraham Lizama v. Victoria's Secret Stores, LLC ( 2022 )

United States Court of Appeals
For the Eighth Circuit
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No. 22-1702
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Abraham Lizama, on behalf of himself and all others similarly situated,
lllllllllllllllllllllPlaintiff - Appellee,
v.
Victoria’s Secret Stores, LLC; Victoria’s Secret Direct, LLC,
lllllllllllllllllllllDefendants - Appellants.
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: April 19, 2022
Filed: June 3, 2022
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Before COLLOTON, SHEPHERD, and GRASZ, Circuit Judges.
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COLLOTON, Circuit Judge.
Victoria’s Secret Stores, LLC and Victoria’s Secret Direct, LLC (collectively
“Victoria’s Secret”) appeal an order of the district court1 remanding this putative class
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The Honorable Henry Edward Autrey, United States District Judge for the
Eastern District of Missouri.
action to state court. We accepted the appeal under 28 U.S.C. § 1453(c)(1), and now
affirm.
Abraham Lizama filed a putative class action in Missouri state court against
Victoria’s Secret. The petition alleged that the company violated the Missouri
Merchandising Practices Act, Mo. Rev. Stat. § 407.010 et seq., by assessing tax on
a category of purchases at a rate greater than required by the Missouri tax code.
Lizama asserts that products sold online and shipped to customers in Missouri from
out-of-state facilities are subject to Missouri use tax rates and not the higher sales tax
rates that Victoria’s Secret charged.
On behalf of a putative class, Lizama seeks compensatory damages, attorney’s
fees, and a permanent injunction preventing Victoria’s Secret from collecting excess
tax in the future. The putative class is defined as “[a]ll persons and entities who,
during the five-year period before the filing of [the] Petition, purchased a product
from Victoria’s Secret for personal, family or household use through a remote sales
channel, including its internet website, that was delivered from an out-of-state facility
to a Missouri delivery address and were charged tax monies at a higher tax rate rather
than the lower use tax rate.”
Victoria’s Secret removed the action to the federal district court under the Class
Action Fairness Act, 28 U.S.C. § 1332(d)(2). Lizama moved to remand the case to
state court, arguing that Victoria’s Secret failed to show that the amount in
controversy exceeds $5 million—the threshold amount for federal diversity
jurisdiction in a class action where a member of the class is a citizen of a different
State than a defendant. Id. Victoria’s Secret opposed the motion and submitted a
declaration from a company official averring that over the previous five years, the
“sum of the difference between sales tax collected and hypothetical use tax calculated
for the online sales . . . is more than $2.5 million.” The parties agreed that the amount
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in controversy includes $2.5 million in actual damages and about $800,000 in
attorney’s fees, bringing the amount to at least $3.3 million.
Victoria’s Secret argues that the amount in controversy exceeds $5 million
because the value of injunctive relief is more than $1.7 million, and that amount must
be added to the $3.3 million that the parties agree is in controversy. The company
maintains that the $2.5 million of allegedly excess tax collected over the last five
years provides a reasonable basis to project the disputed tax differential in future
years. Using the figure of $2.5 million for the last five years, and applying a discount
rate of five percent, Victoria’s Secret calculates the value of the injunction to be about
$2.2 million over the next five years or $3.9 million over the next ten years.
The district court agreed with the parties that compensatory damages and
attorney’s fees would total about $3.3 million. But the court concluded that
Victoria’s Secret’s estimate of the value of injunctive relief was “speculative,” and
that Victoria’s Secret had failed to show the amount in controversy exceeds $5
million. The court thus remanded the case to state court, and Victoria’s Secret
appeals. We review the district court’s legal conclusions de novo, Bell v. Hershey
Co., 557 F.3d 953, 956 (8th Cir. 2009), and review for clear error the court’s findings
of jurisdictional facts regarding the amount in controversy. Faltermeier v. FCA US
LLC, 899 F.3d 617, 621 (8th Cir. 2018). The relevant jurisdictional fact is whether
a factfinder might legally conclude that the amount in controversy exceeds the
jurisdictional amount. Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002).
When a plaintiff contests the amount in controversy after removal, the party
seeking to remove under the Class Action Fairness Act must establish the amount in
controversy by a preponderance of the evidence. Hargis v. Access Capital Funding,
LLC, 674 F.3d 783, 789 (8th Cir. 2012); see also Waters v. Ferrara Candy Co., 873
F.3d 633, 636 (8th Cir. 2017) (per curiam). To establish jurisdiction, the removing
party must show that a factfinder might legally conclude that the amount in
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controversy is greater than the threshold amount. See Bell, 557 F.3d at 959. An
amount is not “in controversy” if no factfinder could legally award it. Kopp, 280 F.3d
at 885.
“A removing defendant can establish federal jurisdiction with ‘specific factual
allegations . . . combined with reasonable deductions, reasonable inferences, or other
reasonable extrapolations.’” Waters, 873 F.3d at 636 (quoting Pretka v. Kolter City
Plaza II, Inc., 608 F.3d 744, 754 (11th Cir. 2010)). If the defendant establishes by
a preponderance of the evidence that the jurisdictional minimum is satisfied, then
remand is appropriate only if the plaintiff establishes to a legal certainty that the claim
is for less than the requisite amount. Bell, 557 F.3d at 956.
The parties debate whether the amount in controversy should be measured only
from the plaintiffs’ perspective—i.e., the aggregate value of the claims to the class
members—or whether a district court may determine the amount from either party’s
point of view, and thus may consider the amount from the defendant’s
perspective—i.e., the total potential cost to the defendant if the plaintiffs prevail. See
Waters, 873 F.3d at 635. We need not resolve that issue here, because we conclude
that Victoria’s Secret did not meet its burden to show an amount in controversy over
$5 million from either perspective.
Measuring from the defendant’s viewpoint, it is possible for injunctive relief
to contribute to the amount in controversy where the injunction would cause the
defendant to suffer a financial loss. E.g., Keeling v. Esurance Ins. Co., 660 F.3d 273,
274 (7th Cir. 2011). In this case, however, the requested injunction would simply
prevent Victoria’s Secret from collecting an allegedly unnecessary tax that the
company remits to the State of Missouri. That order, if entered, would impose no cost
on Victoria’s Secret, so the amount in controversy from the defendant’s perspective
does not exceed $5 million.
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Considering the amount from the plaintiffs’ viewpoint, it is necessary to
distinguish between future customers of Victoria’s Secret and members of the
putative plaintiff class. The requested injunctive relief does have value to future
customers of Victoria’s Secret, as the order sought by the petition would allow
customers to avoid paying allegedly excess tax on future purchases. The question
here, however, is whether Victoria’s Secret has established by a preponderance of the
evidence that the injunction would have value of at least $1.7 million to members of
the putative class. That class is not defined as all customers who will make
qualifying purchases from Victoria’s Secret in the future, but rather as a group of
customers who made qualifying purchases from Victoria’s Secret over the preceding
five years.
While Victoria’s Secret projects that the company would collect $2.5 million
in allegedly excess tax over the next five years, the company presented no evidence
to support a reasonable inference that putative class members would be the future
purchasers who pay that amount of disputed tax. The petition does not define the
putative class as future purchasers or allege that all class members who are past
purchasers intend to make future purchases. The absence of such an allegation may
mean that the class could not properly be certified for purposes of injunctive relief.
See Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010). But even
assuming that the amount in controversy properly includes projected taxes that would
be paid by some class members who make future purchases, Victoria’s Secret did not
meet its burden. The company presented no data or other evidence to support a
reasonable inference that the number of class members who would become repeat
purchasers is likely to be sufficient to generate at least $1.7 million in disputed tax.
Without a non-speculative basis to infer that the requested injunction would bring the
amount in controversy between these parties over $5 million, the district court
properly concluded that it lacked jurisdiction.
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For these reasons, the order of the district court remanding this action to the
Circuit Court of St. Louis County, Missouri, is affirmed. The appellee’s motion for
leave to file a sur-reply is denied.
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