Katie Van v. Llr, Inc. ( 2020 )


Menu:
  •                   FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    KATIE VAN, individually and on             No. 19-35242
    behalf of all others similarly situated,
    Plaintiff-Appellant,       D.C. No.
    3:18-cv-00197-
    v.                            HRH
    LLR, INC., DBA LuLaRoe;
    LULAROE, LLC,                                OPINION
    Defendants-Appellees.
    Appeal from the United States District Court
    for the District of Alaska
    H. Russel Holland, District Judge, Presiding
    Argued and Submitted June 3, 2020
    Anchorage, Alaska
    Filed June 24, 2020
    Before: Morgan Christen, Paul J. Watford,
    and Bridget S. Bade, Circuit Judges.
    Per Curiam Opinion
    2                       VAN V. LLR, INC.
    SUMMARY *
    Article III Standing
    The panel reversed the district court’s dismissal for lack
    of Article III standing, held that the temporary deprivation
    of money gives rise to an injury in fact for purposes of
    Article III standing, and remanded for further proceedings.
    Plaintiff filed this putative class action lawsuit on behalf
    of LLR, Inc. customers in Alaska who were improperly
    charged sales taxes. LLR moved to dismiss the complaint
    for lack of Article III standing because plaintiff could not
    establish an injury in fact where LLR had fully refunded the
    tax charges and her claim for interest alone was insufficient
    to establish standing. Plaintiff was refunded $531.25 for
    sales tax charges, but plaintiff contended that she was owed
    at least $3.76 in interest on that sum to account for lost use
    of the money.
    The panel held that the district court erred by concluding
    that $3.76 was too little to support Article III standing. The
    panel held that plaintiff suffered a cognizable and concrete
    injury: the loss of a significant amount of money (over $500)
    for a substantial amount of time. The panel concluded that
    the temporary loss of use of one’s money constituted an
    injury in fact for purposes of Article III. The panel noted
    that plaintiff did not assert that she was injured because she
    lost interest income, but rather that she was injured because
    *
    This summary constitutes no part of the opinion of the court. It
    has been prepared by court staff for the convenience of the reader.
    VAN V. LLR, INC.                       3
    she lost the use of her money, which was an actual, concrete,
    and particularized injury.
    COUNSEL
    Jamisen A. Etzel (argued), R. Bruce Carlson, Kelly K.
    Iverson, and Kevin W. Tucker, Carlson Lynch LLP,
    Pittsburgh, Pennsylvania, for Plaintiff-Appellant.
    Todd E. Lundell (argued), Steven T. Graham, Randolph T.
    Moore, Colin R. Higgins, and Anthony J. Carucci, Snell &
    Wilmer LLP, Costa Mesa, California, for Defendants-
    Appellees.
    OPINION
    PER CURIAM:
    This case requires us to address whether the temporary
    deprivation of money gives rise to an injury in fact for
    purposes of Article III standing. We agree with other
    circuits that “[t]he inability to have and use money to which
    a party is entitled is a concrete injury.” MSPA Claims 1, LLC
    v. Tenet Fla., Inc., 
    918 F.3d 1312
    , 1318 (11th Cir. 2019).
    This is so because “[e]very day that a sum of money is
    wrongfully withheld, its rightful owner loses the time value
    of the money.” Habitat Educ. Ctr. v. U.S. Forest Serv.,
    
    607 F.3d 453
    , 457 (7th Cir. 2010). We therefore reverse the
    district court’s dismissal of this action for lack of standing
    and remand for further proceedings.
    4                         VAN V. LLR, INC.
    I
    Defendants-Appellees, LLR, Inc., dba LuLaRoe, and
    LuLaRoe, LLC, improperly charged sales tax to customers
    residing in jurisdictions that do not impose such taxes. 1
    Later, after a related lawsuit was filed, LLR refunded the
    charges to affected customers, but LLR did not pay interest
    to account for the customers’ loss of use of their money.
    Plaintiff-Appellant, Katie Van, filed this putative class
    action lawsuit on behalf of LLR customers in Alaska who
    were improperly charged sales taxes. The operative
    complaint alleges, inter alia, that LLR failed to compensate
    Van and putative class members “for the full amount of their
    damages,” including interest. The complaint asserts claims
    for conversion and misappropriation and for violation of the
    Alaska Unfair Trade Practices and Consumer Protection Act,
    
    Alaska Stat. Ann. § 45.50.471
    .
    LLR moved to dismiss the complaint for lack of Article
    III standing, arguing that Van could not establish an injury
    in fact, because LLR had fully refunded the tax charges and
    her claim for interest alone was insufficient to establish
    standing. The record shows that Van was refunded $531.25
    for sales tax charges, but Van contends that she is owed at
    least $3.76 in interest on that sum to account for her lost use
    of the money. The district court granted the motion to
    dismiss, albeit on a ground that LLR had not argued and that
    LLR does not defend on appeal—that $3.76 “is too little to
    support Article III standing.” Van timely appealed.
    1
    We refer to Defendants-Appellees collectively as LLR.
    VAN V. LLR, INC.                         5
    II
    “We review de novo a district court’s determination that
    plaintiffs lack constitutional standing.” Maya v. Centex
    Corp., 
    658 F.3d 1060
    , 1067 (9th Cir. 2011).
    III
    To establish standing under Article III of the
    Constitution, a plaintiff must show that she has “(1) suffered
    an injury in fact, (2) that is fairly traceable to the challenged
    conduct of the defendant, and (3) that is likely to be
    redressed by a favorable judicial decision.” Gill v. Whitford,
    
    138 S. Ct. 1916
    , 1929 (2018) (quoting Spokeo, Inc. v.
    Robins, 
    136 S. Ct. 1540
    , 1547 (2016)). An “injury in fact”
    is “an invasion of a legally protected interest which is
    (a) concrete and particularized and (b) actual or imminent,
    not conjectural or hypothetical.” Lujan v. Defs. of Wildlife,
    
    504 U.S. 555
    , 560 (1992) (citations and internal quotation
    marks omitted).
    A
    The district court erred by concluding that $3.76 is “too
    little to support Article III standing.” “For standing
    purposes, a loss of even a small amount of money is
    ordinarily an ‘injury.’” Czyzewski v. Jevic Holding Corp.,
    
    137 S. Ct. 973
    , 983 (2017); see also Sprint Commc’ns Co. v.
    APCC Servs., Inc., 
    554 U.S. 269
    , 289 (2008) (noting that the
    loss of “a dollar or two” is sufficient to confer Article III
    standing); McGowan v. Maryland, 
    366 U.S. 420
    , 424, 430–
    31 (1961) (holding that appellants fined $5 plus costs had
    standing to assert an Establishment Clause challenge);
    Carpenters Indus. Council v. Zinke, 
    854 F.3d 1
    , 5 (D.C. Cir.
    2017) (Kavanaugh, J.) (“A dollar of economic harm is still
    an injury-in-fact for standing purposes.”); Carter v.
    6                     VAN V. LLR, INC.
    HealthPort Techs., LLC, 
    822 F.3d 47
    , 55 (2d Cir. 2016)
    (“Any monetary loss suffered by the plaintiff satisfies th[e
    injury in fact] element; ‘[e]ven a small financial loss’
    suffices.” (second alteration in original) (quoting Nat. Res.
    Def. Council, Inc. v. U.S. Food & Drug Admin., 
    710 F.3d 71
    ,
    85 (2d Cir. 2013))).
    Our decision in Skaff v. Meridien North America Beverly
    Hills, LLC, 
    506 F.3d 832
     (9th Cir. 2007) (per curiam), is not
    to the contrary. In Skaff, the defendant hotel failed to assign
    a room with an accessible shower to the plaintiff, an
    individual with a disability. See 
    id. at 839
    . The mistake,
    however, “was immediately corrected,” and the plaintiff
    “suffered no cognizable injury.” 
    Id.
     We held that “[t]he
    mere delay during correction of the problem with the shower
    is too trifling of an injury to support constitutional standing.”
    
    Id. at 840
    . Here, by contrast, Van suffered a cognizable and
    concrete injury: the loss of a significant amount of money
    (over $500) for a substantial amount of time (months with
    respect to some purchases, over a year with respect to
    others). This injury is not too trifling to support standing.
    B
    Although LLR does not defend the district court’s
    reasoning, it argues that Van lacks standing because she
    received a full refund, less interest, on the money she was
    wrongfully charged. In LLR’s view, “the lost time value of
    money standing alone is too speculative an injury to support
    Article III standing.” Other circuits, however, have held to
    the contrary. See MSPA Claims 1, 918 F.3d at 1318 (“The
    inability to have and use money to which a party is entitled
    is a concrete injury.”); Dieffenbach v. Barnes & Noble, Inc.,
    
    887 F.3d 826
    , 828 (7th Cir. 2018) (“The plaintiffs have
    standing . . . because unauthorized withdrawals from their
    accounts cause a loss (the time value of money) even when
    VAN V. LLR, INC.                        7
    banks later restore the principal . . . .”); Habitat Educ. Ctr.,
    
    607 F.3d at 457
     (“Every day that a sum of money is
    wrongfully withheld, its rightful owner loses the time value
    of the money.”); cf. In re U.S. Office of Pers. Mgmt. Data
    Sec. Breach Litig., 
    928 F.3d 42
    , 66 (D.C. Cir. 2019) (per
    curiam) (addressing damages rather than standing) (“The
    delay in those Plaintiffs’ receipt of their refunds, and the
    forgone time value of that money, is an actual, tangible
    pecuniary injury.”).
    We find the reasoning of these cases persuasive. In
    MSPA Claims 1, 918 F.3d at 1317, for example, two health
    care plans covered a car accident victim who received
    treatment at St. Mary’s hospital—Allstate, the primary
    payer, and Florida Healthcare Plus (FHCP), the secondary
    payer. “[I]nstead of billing Allstate first,” as it should have,
    “St. Mary’s billed both Allstate and FHCP for the same
    medical treatment,” and “they both paid.” Id. “Several
    months later, without any prompting from FHCP, St. Mary’s
    reimbursed FHCP for the full amount of its prior payment—
    about $286.” Id. FHCP’s assignee, MSPA, subsequently
    sued St. Mary’s parent company, Tenet Florida, Inc., over
    the delayed $286 reimbursement. Id.
    As in this case, Tenet argued that MSPA failed to allege
    an injury in fact because “FHCP’s only ‘injury’ was not
    getting its $286 reimbursement, and that injury disappeared
    when FHCP was paid in full.” Id. at 1318. The Eleventh
    Circuit disagreed:
    FHCP’s alleged injury stems not just from its
    entitlement to reimbursement of the
    appropriate amount but also from its
    entitlement to receive that reimbursement on
    time. MSPA alleges that the reimbursement
    was seven months late.
    8                       VAN V. LLR, INC.
    The question is whether delay alone is a
    “concrete” injury. It is. MSPA alleges a type
    of economic injury, which is the epitome of
    “concrete.” For seven months, FHCP was
    unable to use money that (allegedly)
    belonged to it. The inability to have and use
    money to which a party is entitled is a
    concrete injury. FHCP’s harm cannot be
    remedied by simply receiving the amount
    owed—it requires something more to
    compensate for the lost time, like interest.
    And MSPA alleges it is entitled to both
    interest (and double damages) because of St.
    Mary’s delay in reimbursing FHCP.
    Id. (citations omitted).
    In Habitat, the district court required Habitat to post a
    $10,000 injunction bond. 
    607 F.3d at 455
    . Habitat sought
    review of the bond order on appeal, and the relevant question
    before the court was whether Habitat had standing to
    appeal. 2 The court noted that Habitat had not yet been
    required to pay damages out of the bond, and it was possible
    that no damages would ever be assessed and thus that the
    district court would eventually return the $10,000 to Habitat.
    See 
    id. at 457
    . The court nevertheless concluded that Habitat
    had standing to challenge the bond order on appeal based on
    2
    Habitat involved standing to appeal, rather than Article III
    standing, but that distinction is not material to our analysis. See
    15A Edward H. Cooper, Federal Practice and Procedure § 3902 (2d ed.
    2020) (noting “the strong affinity between standing to appeal and more
    general standing doctrines”); cf. Envtl. Prot. Info. Ctr., Inc. v. Pac.
    Lumber Co., 
    257 F.3d 1071
    , 1075 (9th Cir. 2001) (discussing the general
    rule that a party “aggrieved” by a judgment has standing to appeal it).
    VAN V. LLR, INC.                       9
    the “time value” of the $10,000 deposited with the district
    court:
    It could be argued that unless and until
    damages are assessed, Habitat has incurred
    no loss and therefore lacks standing to
    appeal. But it has incurred a loss—a loss of
    the use of $10,000. Every day that a sum of
    money is wrongfully withheld, its rightful
    owner loses the time value of the money.
    Suppose no damages are ever assessed
    against Habitat and so eventually the court
    returns the $10,000 that it is holding; there
    would be no procedural vehicle to enable
    Habitat to recover the loss of the time value
    of its money. Therefore it had standing to
    challenge the bond order on appeal from the
    final judgment.
    
    Id.
    In Dieffenbach, 887 F.3d at 827, customers of Barnes &
    Noble sued after a data breach that resulted in the theft of
    their credit and debit card information. The Seventh Circuit
    held that customers had standing because they “temporarily
    lost the use of their funds while waiting for banks to reverse
    unauthorized charges to their accounts.” Id. They had
    standing “because unauthorized withdrawals from their
    accounts cause a loss (the time value of money) even when
    banks later restore the principal.” Id. at 828.
    These decisions reflect the firmly established principle
    that tort victims should be compensated for loss of use of
    money—through either an award of damages or the payment
    of prejudgment interest. Under the common law tort
    remedies of replevin and conversion, damages for loss of use
    10                   VAN V. LLR, INC.
    are the norm. See Dressel v. Weeks, 
    779 P.2d 324
    , 328
    (Alaska 1989) (“Damages in an action of conversion
    generally are measured by the value of the item at the time it
    was converted plus interest.” (quoting Rollins v. Leibold,
    
    512 P.2d 937
    , 944 (Alaska 1973))); Rollins, 512 P.2d at 944
    (“Replevin is defined as an action brought to recover goods
    unlawfully taken. Thus, the normal remedy is the return of
    the goods. Damages are also allowed for the value of the use
    of the goods during the period of detention.” (footnote
    omitted)); Restatement (Second) of Torts §§ 922, 927, 931
    (1979). As the Eleventh Circuit explained in MSPA
    Claims 1:
    Paying interest as compensation for lost
    time is nothing new. FHCP’s alleged harm is
    analogous “to a harm that has traditionally
    been regarded as providing a basis for a
    lawsuit in English or American courts[,]”
    Spokeo, 
    136 S. Ct. at
    1549—a debtor’s
    delinquent payment to a creditor. In effect,
    FHCP gave St. Mary’s a $286 loan, and
    St. Mary’s paid it back seven months late. As
    Spokeo teaches, this close analogy to a
    traditional common law right further supports
    concreteness.      
    Id.
        Thus, MSPA has
    adequately alleged that FHCP suffered an
    injury-in-fact.
    918 F.3d at 1318 (alteration in original). Alternatively, loss
    of use may be addressed through the payment of
    prejudgment interest. See West Virginia v. United States,
    
    479 U.S. 305
    , 310–11 n.2 (1987) (“Prejudgment interest
    serves to compensate for the loss of use of money due as
    damages from the time the claim accrues until judgment is
    VAN V. LLR, INC.                       11
    entered, thereby achieving full compensation for the injury
    those damages are intended to redress.”).
    In sum, we hold that the temporary loss of use of one’s
    money constitutes an injury in fact for purposes of Article
    III.
    C
    Though not raised before the district court, we close by
    addressing what would otherwise likely arise as an issue on
    remand: LLR’s fallback argument that Van has failed to
    adequately allege injury because, to have standing based on
    the time value of money, “a plaintiff must make specific
    allegations regarding how it would have earned interest on
    the money but for the defendant’s wrongful conduct.” This
    argument misstates Van’s claimed injury. Van does not
    assert that she is injured because she lost interest income.
    She asserts that she is injured because she lost the use of her
    money. Consistent with our opinion here, although the
    former injury may be speculative, the latter injury is actual,
    concrete, and particularized. Interest is simply a way of
    measuring and remedying Van’s injury, not the injury itself.
    To the extent the Eleventh Circuit’s decision in Kawa
    Orthodontics, LLP v. Secretary, U.S. Department of the
    Treasury, 
    773 F.3d 243
    , 246 (11th Cir. 2014), suggests that
    a plaintiff must allege “specific plans to invest its money into
    an interest-bearing asset” to establish standing based on a
    temporary deprivation of money, we respectfully decline to
    follow it. We note that the Eleventh Circuit did not mention
    those types of allegations in its subsequent decision in MSPA
    12                        VAN V. LLR, INC.
    Claims 1, which recognized standing based on the lost use
    of money. 3
    IV
    We reverse the judgment of the district court dismissing
    this action for lack of Article III standing and remand for
    further proceedings consistent with this opinion.
    REVERSED AND REMANDED. Costs of appeal are
    awarded to Plaintiff-Appellant Van.
    3
    We need not consider what evidentiary showing a plaintiff must
    make under Alaska law to recover interest as a component of damages
    in connection with a temporary, wrongful deprivation of money. That
    issue has not been presented, and our focus is on whether Van has shown
    an injury in fact under Article III, not whether she has adequately alleged
    a claim for compensatory damages under Alaska law.