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Beaton v. Rent-A-Center, Inc.

United States District Court, E.D. Missouri, Eastern Division

May 15, 2018

SADE BEATON, individually and on behalf of all others similarly situated, Plaintiffs,
v.
RENT-A-CENTER, INC., Defendant.

          MEMORANDUM AND ORDER

          JOHN A. ROSS, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiffs' Motion To Remand (Doc. No. 7) and Defendant Rent-A-Center, Inc.'s Motion to Compel Individual Arbitration and Stay Litigation (Doc. No. 15). The motions are fully briefed and ready for disposition.[1]

         Background

         On December 6, 2017, Plaintiff Myra Williams ("Williams") filed a Class Action Petition styled Myra Williams v. Rent-A-Center, Inc., No. 1722-CC11893, in the Circuit Court of the City of St. Louis, against Defendant Rent-A-Center ("RAC"). The petition was later amended to add Sade Beaton ("Beaton") as a named Plaintiff in the case.[2] (First Amended Class Action Petition ("AC"), Doc. No. 4) RAC is in the business of leasing household goods such as furniture and appliances; Plaintiff and the putative class members are current or former customers of RAC. According to Plaintiffs, RAC regularly uses court process to collect on lease agreements it asserts are in default. (AC ¶ 7) In Count I of the amended petition, Plaintiffs allege that RAC violated the Missouri Merchandising Practices Act ("MMPA") by taking default judgments against them in state court without having obtained personal jurisdiction. Specifically, Plaintiffs allege the default judgments were based on returns of service signed by special process servers who were not appointed by the Court to serve process in accordance with Missouri law. (AC ¶¶ 8-15, 21-23) In Count II of the amended petition, Plaintiffs allege that RAC was unjustly enriched at the expense of Plaintiffs and the putative class members by the default judgments and monies collected after those judgments were entered. (AC ¶¶ 56-60) Plaintiffs seek damages and an order declaring RAC's prior judgments against them void as a matter of law and directing RAC to set the judgments aside.

         RAC removed the case to this Court on January 5, 2018 based on diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, 1446 and 1453, and the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). (Doc. No. 1) Plaintiffs seek remand on the grounds that the Court lacks jurisdiction over their claims pursuant to the Rooker-Feldman doctrine. RAC opposes remand and moves to compel individual arbitration and stay litigation or, in the alternative, to dismiss the case without prejudice, pending the individual arbitrations.

         Discussion

         Rooker-Feldman is a jurisdictional doctrine that applies only to cases brought by "state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Heroux v. Callidus Portfolio Mgmt. Inc. & Messerli & Kramer, P.A., No. CV 17-5I32(DSD/HB), 2018 WL 2018069, at *2 (D. Minn. May 1, 2018) (quoting Exxon Mobile Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005)); see also Skit Int'L Ltd. v. DAC Techs. Of Ark.. Inc.. 487 F.3d 1154, 1157 (8th Cir. 2007). Under the doctrine, federal district courts are without jurisdiction to review state-court judgments or to address federal claims with allegations that are inextricably intertwined with a state-court decision. Id. (citing Prince v. Ark. Bd. of Exam'rs in Psychology, 380 F.3d 337, 340 (8th Cir. 2004)). A claim is inextricably intertwined if "the relief requested . . . would effectively reverse the state court decision or void its ruling." Fielder v. Credit Acceptance Corp.. 188 F.3d 1031, 1035 (8th Cir. 1999) (citation omitted). The fact that a judgment was entered on a party's default does not alter the doctrine's applicability. Id.

         Although Rooker-Feldman originally limited federal-question jurisdiction, the Supreme Court has recognized the applicability of the doctrine to cases brought under diversity jurisdiction. See Exxon, 544 U.S. at 291-92. Diversity proceedings removed to federal court under CAFA are also within the doctrine's purview. Pounds v. Portfolio Recovery Assocs.. LLC. No. 1:16CV1395, 2018 WL 1583670, at *2-3 (M.D. N.C. Mar. 28, 2018) (citing Dell Webb Cmtvs.. Inc. v. Carlson. 817 F.3d 867, 872 (4th Cir.), cert, denied, -U.S.- 137 S.Ct. 567, 196 L.Ed.2d 444 (2016); Bergquist v. Mann Bracken. LLP. 592 F.3d 816, 818 (7th Cir. 2010); Murray v. Midland Funding. LLC, Civil No. JKB-15-0532, 2015 WL 3874635, at *1, *3-4 (D. Md. June 23, 2015)).

         The presence or absence of subject matter jurisdiction under Rooker-Feldman is a threshold issue the Court must determine before considering the merits of the case. See Friedman's. Inc. v. Dunlap, 290 F.3d 191, 196 (4th Cir. 2002) ("Because the Rooker-Feldman doctrine is jurisdictional, we are obliged to address it before proceeding further in our analysis."); see also Stanton v. District of Columbia Court of Appeals. 127 F.3d 72, 75 (D.C. 1997) ("Because it is jurisdictional, we first consider the Rooker-Feldman doctrine . . ." (emphasis added)); Neal v. Wilsoa 112 F.3d 351, 356 (8th Cir. 1997) (explaining that "to the extent that any portion of [the] complaint survived the jurisdictional bar of the Rooker-Feldman doctrine, the district court correctly ruled that Younger abstention was warranted").

         RAC urges the Court to bypass Rooker-Feldman jurisdictional issues and grant its pending motion to stay and compel arbitration because arbitration is a procedural rather than a merits-based issue, citing Sinochem Intern. Co. Ltd. v. Malaysia Intern. Shipping Corp., 549 U.S. 422 (2007) and its progeny. (Doc. No. 24 at 7-9) In Sinochem. the Supreme Court held that a district court acted within its discretion to first decide a forum non conveniens motion before determining whether it had personal jurisdiction over the defendant, because "[r]esolving a forum non conveniens motion does not entail any assumption by the court of substantive 'law-declaring power.'" Id. at 433. Sinochem did not, however, specifically address the applicability of Rooker-Feldman and is thus distinguishable from the instant case.

         Further, when the question of jurisdiction "will involve no arduous inquiry, " the Court should address jurisdiction first. Id. (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 587-88 (1999)). Because Plaintiffs amended petition is "a classic illustration of the cases covered by the Rooker-Feldman doctrine, " Skit, 487 F.3d at 1157, jurisdiction will not involve an "arduous inquiry." The Court will, therefore, determine the threshold question of jurisdiction by addressing Plaintiffs motion to remand.

         Motion to remand

         Federal courts are courts of limited jurisdiction. Ark. Blue Cross & Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d 812, 816 (8th Cir. 2009). A federal district court may exercise removal jurisdiction only where the court would have had original subject-matter jurisdiction had the action initially been filed there. Krispin v. May Dep't Stores Co., 218 F.3d 919, 922 (8th Cir. 2000) (citing 28 U.S.C. § 1441(b)). A party seeking removal and opposing remand carries the burden of establishing federal subject-matter jurisdiction by a preponderance of the evidence. In re Prempro Prods. Liab. Litis., 591 F.3d 613, 620 (8th Cir. 2010). Generally, a court must resolve all doubts about federal jurisdiction in favor of remanding the case to state court. In re Prempro, 591 F.3d at 620.

         In support of their motion to remand this case to state court, Plaintiffs argue the Court lacks subject matter jurisdiction under the Rooker-Feldman[3] doctrine because they are challenging the validity Of default judgments entered against them by a Missouri state court. (Doc. No. 8 at 3-5) RAC responds that Rooker-Feldman does not apply to cases that raise independent claims of misconduct, separate and apart from any state court judgment, citing Riehm v. Engelking. 538 F.3d 952, 965 (8th Cir. 2008) and MSK EvEs Ltd. v. Wells Fargo Bank. Nat'l. Ass'n, 546 F.3d 533, 539 (8th Cir. 2008). (Doc. No. 24 at 10-12) RAC argues that Plaintiffs' claims are premised on RAC's alleged misconduct in ...


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