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Hill v. LLR, Inc.

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

November 18, 2019

MELISSA HILL, Plaintiff,
v.
LLR, INC. d/b/a/ LuLaRoe, and LULAROE, LLC, Defendants.

          ORDER ADOPTING FINDINGS AND RECOMMENDATIONS

          Brian Morris United States District Court Judge

         LLR, Inc., and LULAROE, LLC (collectively “Defendants” or “LLR”) filed timely objections, (Doc. 72), to United States Magistrate Judge Kathleen DeSoto's recommendation to deny LLR' Motion to Certify Order for Interlocutory Appeal, (Doc. 71). LLR initially moved to dismiss Plaintiff's complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. Defendants argued that Hill's Montana Consumer Protection Act (MCPA) claim should be dismissed as the MCPA expressly prohibits class actions. (Doc. 20 at 32). United States Magistrate Judge Lynch recommended that the Court deny LLR's motion to dismiss. (Doc. 50).

         Judge Lynch based his decision, in part, on his determination that Wittman v. CB1, Inc., 2016 WL 3093427 (D. Mont. June 1, 2016) remained good law. This Court held in Wittman that Federal Rule of Civil Procedure 23 preempted the MCPA's class action ban. Id. at *6. This Court issued an order (“Order”) denying Defendants' motion to dismiss and adopting, in part, and modifying, in part, Judge Lynch's Findings and Recommendations. (Doc. 56). The Court modified Judge Lynch's recommendation to deny LLR's Motion to Strike Class Allegations to allow LLR to refile the motion after the close of discovery. (Doc. 56).

         LLR then filed a Motion to Certify Order for Interlocutory Appeal. (Doc. 59). The case was transferred to Judge DeSoto, who entered her Findings and Recommendations on October 9, 2019. Judge DeSoto recommended that Defendants' motion be denied. (Doc. 71).

         Defendants filed a timely objection and are therefore entitled to de novo review of the specified findings and recommendations to which they object. 28 U.S.C. § 636(b)(1). Those portions of the findings and recommendations to which no party objected will be reviewed for clear error. 28 U.S.C. § 636(b)(1)(A); McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir. 1981). 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).

         Alternatively, 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 motion, the Court 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). For the reasons stated below, Judge DeSoto's Findings and Recommendations are adopted in full.

         DISCUSSION

         To certify an order for interlocutory appeal, LLR must demonstrate the following: (1) the order involves a controlling question of law; (2) as to which there is substantial ground for difference of opinion, and; (3) an immediate appeal may materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b).

         Defendants raise two objections to Judge DeSoto's Findings and Recommendations. Defendants contend that Judge DeSoto erred in finding that the Court's Order does not involve a controlling question of law. Defendants also argue that, contrary to Judge DeSoto's conclusion, substantial grounds exist for difference of opinion on the issues presented for interlocutory review. Therefore, the Court conducts a de novo review of the two bases for LLR's objections.

         1. Whether the Order resolved a controlling question of law

         A question of law is controlling if its resolution “on appeal could materially affect the outcome of the litigation in district court.” In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). Controlling issues of law may include questions concerning the proper parties to an action and whether federal law preempts state law. Id.

         LLR's first argues that the application of Justice Stevens' concurrence in Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010), constitutes a controlling question of law. LLR points to the fact that the district courts that have analyzed the MCPA under Justice Stevens' concurrence have enforced the MCPA class action ban. As LLR notes, however, district courts have also determined that Rule 23 prevails over the MCPA class action ban without explicitly following Justice Stevens' concurrence of Justice Scalia's plurality opinion in Shady Grove. Shady Grove itself held that Rule 23 prevailed over a state law banning class actions. Id. at 398-407. The Court agrees that the application of Justice Stevens' concurrence does not present a controlling question of law.

         Second, LLR takes issue with Judge DeSoto's conclusion that Plaintiff may still be able to meet the $5 million in controversy requirement for 28 U.S.C. § 1332. LLR contends that an issue that would determine a substantial category of damages constitutes a controlling question of law. LLR cites to Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Ready Pac Foods, Inc., in support of its argument. No. CV 09-3220, 2011 WL 1059284 (C.D. Cal. March 18, 2011). The district court in National Union determined that an issue that would “resol[ve] the largest portion of damages and materially advance the termination of this litigation, ” constituted a controlling issue of law proper for certification. Id. at *3.

         The Court agrees that “it is not clear that [Plaintiff] would be wholly unable to meet 28 U.S.C. § 1332's requirements.” (Doc. 71 at 6). Judge DeSoto noted that the amount in controversy requirement would encompass a court's award of punitive damages, statutory damages, and attorney fees. See Chavez v. JP Morgan Chase & Co., 888 F.3d 413 (9th Cir. 2018). Interlocutory review would not materially advance the litigation because the amount in controversy requirement still may be met and because class claims could remain even if the Court were to strike class claims under the MCPA. Further, any questions regarding the ...


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