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Hill v. LLR, Inc.

United States District Court, D. Montana, Great Falls Division

July 11, 2019

MELISSA HILL, individually and on behalf of all others similarly situated, Plaintiff,
LLR, INC. d/b/a LuLaRoe, and LULAROE, INC., Defendants.


          Brian Morris United States District Court Judge


         United States Magistrate Judge Jeremiah C. Lynch entered Findings and Recommendations on Defendants LLR, Inc. and LuLaRoe, LLC (“LLR”) Motion to Dismiss and Motion to Strike Class Allegations on March 8, 2019. (Doc. 50.) Judge Lynch recommended that the Court grant LLR's motion to dismiss as to Hill's claim for injunctive relief. Id. at 36. Judge Lynch further recommended that the Court deny LLR's motion to dismiss as to Hill's claims arising under the Montana Consumer Protection Act (“MCPA”), deny LLR's motion to dismiss for failure to state a claim, and deny LLR's motion to strike class allegations. Id.

         LLR timely filed objections to Judge Lynch's Findings and Recommendations on March 22, 2019. (Doc. 52.) Because the parties are familiar with the facts, the Court will not recite them here.


         The Court reviews de novo Findings and Recommendations to which a party timely objects. 28 U.S.C. § 636(b)(1). “A party makes a proper objection by identifying the parts of the magistrate's disposition that the party finds objectionable, and presenting legal argument and supporting authority, such that the district court is able to identify the issues and the reasons supporting a contrary result.” Montana Shooting Sports Ass'n v. Holder, 2010 WL 4102940, at *2 (D. Mont. Oct. 18, 2010) (citation omitted). The Court reviews for clear error findings and recommendations to which no party objects. McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir. 1981).

         Where a party's objections constitute perfunctory responses argued in an attempt to engage the district court in a rehashing of the same arguments set forth in the original response the Court likewise will review the applicable portions of the findings and recommendations for clear error. Rosling v. Kirkegard, 2014 WL 693315 *3 (D. Mont. Feb. 21, 2014) (internal citations omitted). Clear error exists if the Court is left with a “definite and firm conviction that a mistake has been committed.” United States v. Syrax, 235 F.3d 422, 427 (9th Cir. 2000) (citations omitted).


         A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The Court “must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party” when evaluating a Rule 12(b)(6) motion. Kwan v. Sanmedica Int'l, 854 F.3d 1088, 1096 (9th Cir. 2017) (quoting Turner v. City & County of San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015)). The complaint must allege sufficient facts to state a plausible claim for relief to survive a motion to dismiss. Taylor v. Yee, 780 F.3d 928, 935 (9th Cir. 2015).

         Federal courts generally view “with disfavor” Rule 12(b)(6) dismissals. Rennie & Laughlin, Inc. v. Chrysler Corp., 242 F.3d 208, 213 (9th Cir. 1957). “A case should be tried on the proofs rather than the pleadings.” Id. The Court may consider documents “whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994).


         LLR submitted four objections to Judge Lynch's Findings and Recommendations. (Doc. 52 at 7-36.) LLR contends (1) that the Court should enforce the MCPA's prohibition on class action lawsuits; (2) that Hill does not possess Article III standing; (3) that Hill also does not possess standing under the MCPA; and (4) that Judge Johnston should have specified in his Findings and Recommendations that LLR's motion to strike be denied without prejudice. Id. The Court will address each objection in turn.

         I. MCPA's Prohibition on Class Action Lawsuits

         LLR argued in its motion to dismiss that Hill's MCPA claim should be dismissed as the MCPA expressly prohibits class actions. (Doc. 20 at 32.) (citation omitted). LLR recognized that this Court had concluded previously that Federal Rule of Civil Procedure 23 preempted the MCPA's class action ban in Wittman v. CB1, Inc., 2016 WL 3093427 (D. Mont. June 1, 2016). LLR nonetheless requested that this Court abandon its conclusion in Wittman insofar as it applies to the instant action in light of both the different procedural posture of the instant matter and the Ninth Circuit's recent decision in Makaeff v. Trump Univ., LLC, 736 F.3d 1180 (9th Cir. 2013). Id. at 32, 36.

         Judge Lynch, after considering LLR's argument, and after reviewing the various district court cases LLR cited to in support of its motion to dismiss brief, concluded that “Wittman remains good law.” (Doc. 50 at 29.) Judge Lynch ultimately determined that this Court's decision in Wittman disposes of LLR's argument, and that the MCPA's prohibition on class actions fails to apply to the instant litigation. Id. LLR objects to Judge Lynch's determination and asks this Court to again reconsider its Wittman decision. Id. LLR specifically requests that this Court review de novo the issue of whether Rule 23 ...

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