Filed: Nov. 10, 2008
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 07-1584 MILDRED F. JONES; RONALD L. LAZZARINE; TAMMY LAZZARINE; NELLIE G. MOSES, on behalf of themselves and others similarly situated, Plaintiffs – Appellants, v. SEARS ROEBUCK AND COMPANY; SEARS HOLDING CORPORATION; SEARS NATIONAL BANK; CITIBANK (USA), N.A., their successors and assigns jointly and severally, Defendants – Appellees. Appeal from the United States District Court for the Southern District of West Virginia, at B
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 07-1584 MILDRED F. JONES; RONALD L. LAZZARINE; TAMMY LAZZARINE; NELLIE G. MOSES, on behalf of themselves and others similarly situated, Plaintiffs – Appellants, v. SEARS ROEBUCK AND COMPANY; SEARS HOLDING CORPORATION; SEARS NATIONAL BANK; CITIBANK (USA), N.A., their successors and assigns jointly and severally, Defendants – Appellees. Appeal from the United States District Court for the Southern District of West Virginia, at Be..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1584
MILDRED F. JONES; RONALD L. LAZZARINE; TAMMY LAZZARINE;
NELLIE G. MOSES, on behalf of themselves and others
similarly situated,
Plaintiffs – Appellants,
v.
SEARS ROEBUCK AND COMPANY; SEARS HOLDING CORPORATION; SEARS
NATIONAL BANK; CITIBANK (USA), N.A., their successors and
assigns jointly and severally,
Defendants – Appellees.
Appeal from the United States District Court for the Southern
District of West Virginia, at Beckley. Thomas E. Johnston,
District Judge. (5:06-cv-00345)
Argued: September 23, 2008 Decided: November 10, 2008
Before TRAXLER, 1 KING, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
1
Judge Traxler participated in the oral argument of this
case, and thereafter recused himself. This decision is thus
rendered by a quorum of the panel pursuant to 28 U.S.C. § 46(d).
ARGUED: Henry Drewry McCoy, II, Peterstown, West Virginia, for
Appellants. Daniel Harris Squire, WILMER, CUTLER, PICKERING,
HALE & DORR, L.L.P., Washington, D.C., for Appellees. ON BRIEF:
Raymond A. Bragar, BRAGAR, WEXLER & EAGEL, P.C., New York, New
York, for Appellants. Rebecca J. K. Gelfond, Kelly Thompson
Cochran, WILMER, CUTLER, PICKERING, HALE & DORR, L.L.P.,
Washington, D.C.; Christopher R. Lipsett, WILMER, CUTLER,
PICKERING, HALE & DORR, L.L.P., New York, New York, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Mildred Jones, Ronald and Tammy Lazzarine, and Nellie G.
Moses, on behalf of themselves and others (collectively, the
“Plaintiffs”), appeal from an adverse judgment in their
purported class action proceeding against Sears Roebuck & Co.,
Sears Holding Corporation, Sears National Bank, and Citibank
USA, N.A. (collectively, the “Defendants”). The district court
disposed of the relevant contentions in three steps: (1)
denying the Plaintiffs’ motion to remand, Jones v. Sears Roebuck
& Co., No. 5:06-cv-00345 (S.D. W. Va. Mar. 8, 2007) (the “Remand
Denial”); 2 (2) granting the Defendants’ motion to dismiss, Jones
v. Sears Roebuck & Co., No. 5:06-cv-00345 (S.D. W. Va. Mar. 28,
2007) (the “Dismissal Opinion”); 3 and (3) denying the Plaintiffs’
motion for reconsideration, Jones v. Sears Roebuck & Co., No.
5:06-cv-00345 (S.D. W. Va. May 18, 2007) (the “Reconsideration
Denial”). 4 On appeal, the Plaintiffs maintain that the court
erred in dismissing their claims and declining to remand to
state court, in denying reconsideration, in failing to conduct a
2
The Remand Denial is found at J.A. 105-17. (Citations
herein to “J.A. ___” refer to the contents of the Joint Appendix
filed by the parties in this appeal.)
3
The Dismissal Opinion is found at J.A. 118-27.
4
The Reconsideration Denial is found at J.A. 129-30.
3
hearing on the motion to remand, and in failing to grant leave
to amend. As explained below, we affirm.
I.
A.
This proceeding originated on November 18, 2003, in the
Circuit Court of Raleigh County, West Virginia, when Mildred
Jones and Ronald and Tammy Lazzarine (collectively, the
“Original Plaintiffs”), filed suit against Sears National Bank
(“SNB”) and Sears, Roebuck & Co. (“Sears”), on behalf of all
West Virginia residents holding Sears credit cards. In that
complaint (the “State Complaint”), the Original Plaintiffs made
three claims: (1) seeking a declaration that the arbitration
provision in their Sears credit card agreements was
unconscionable (Count I); (2) seeking statutory damages under
the West Virginia Consumer Credit and Protection Act (the
“WVCCPA”) for unconscionable conduct (Count II); and (3) seeking
declaratory and equitable relief under the WVCCPA because SNB
and Sears failed to disclose trademark licensing relationships
or place their addresses on credit cards, misleading class
members as to the identification of the creditor (Count III). 5
On the face of the State Complaint, the words “Citibank USA,
5
The State Complaint is found at J.A. 278-88.
4
N.A.” were handwritten in the caption, although Citibank was not
mentioned in the factual allegations. 6
In February 2004, SNB and Sears filed a motion to dismiss
the State Complaint, contending that Counts I and II failed to
present any justiciable issues because the Original Plaintiffs
had not alleged an underlying dispute or sought to invoke the
arbitration provision, and that Count III failed to state a
claim. In December 2005, the state court dismissed Counts I and
II, explaining,
(1) . . . [T]here exists no case or controversy
between the parties sufficient to support this court’s
exercise of its constitutional jurisdiction, or, in
the alternative, (2) if constitutional jurisdiction
exists, the proper exercise of this court’s discretion
is that it should decline to consider declaratory
relief as requested by the individual plaintiffs.
Jones v. Sears, Roebuck & Co., No. 03-C-1011-B, slip op. at 6
(W. Va. Cir. Ct. Dec. 15, 2005) (the “State Court Opinion”). 7
The state court also dismissed Count III, ruling that the
Original Plaintiffs had not proffered any legal basis for the
argument that a credit card issuer must disclose certain
geographic licensing and trademark information to its customers.
6
The state court declined to treat Citibank as a party to
the State Complaint because no factual allegations were made
against it.
7
The State Court Opinion is found at J.A. 313-20.
5
Id. at 8. Notably, the state court dismissed the State
Complaint without certifying the class.
Subsequently, on March 9, 2006, the Plaintiffs — the
Original Plaintiffs plus Nellie Moses — filed an amended
complaint in the state court that the Defendants removed to
federal court (the “Federal Complaint”). 8 The Plaintiffs therein
added Citibank and Sears Holdings Corporation (“SHC”) as
defendants. 9 The Federal Complaint alleges five counts, with
Counts I through III being substantially the same as Counts I
through III of the State Complaint.
Count IV of the Federal Complaint alleges violations of (1)
a Federal Trade Commission (“FTC”) consent decree, and (2) the
WVCCPA, on behalf of Moses and other Plaintiffs. Count IV
asserts that Sears’s actions violated an FTC consent decree
forbidding Sears to “[c]ollect any debt . . . that has been
legally discharged in bankruptcy proceedings and that respondent
is not permitted by law to collect.” In the Matter of Sears
8
The Federal Complaint is found at J.A. 13-34.
9
According to the Federal Complaint, Citibank is a
“successor and assignee in interest” of Sears credit card
accounts because Citibank acquired the accounts in November of
2003 for approximately $3.5 billion. Federal Complaint ¶ 7. It
further alleges that SHC is the parent company that resulted
from a merger between Sears and KMart Corporation in March 2005,
that SHC took the place of Sears on the New York Stock Exchange,
and that SHC is the parent corporation of Sears.
6
Roebuck & Co., FTC File No. 972-3187 (June 4, 1997) (the
“Consent Decree”). 10 Count IV further alleges that Sears
contravened the Consent Decree because it had initiated an
action against Moses in state court in January 2001 — the year
after her liability had been discharged due to Chapter 7
bankruptcy — to enforce a security interest in goods she
purchased using a Sears credit card (the “Collection Suit”).
The Collection Suit was dismissed in March 2002 for
nonprosecution, but allegedly violated the WVCCPA because
Sears’s conduct constituted “unfair methods of competition and
unfair or deceptive acts or practices.” W. Va. Code § 46A-6-
104. 11
Count V of the Federal Complaint contains the same
allegations as Counts I through IV, and is asserted on behalf of
a limited subclass of plaintiffs (“Subclass A”), namely, all
Sears credit card holders in West Virginia (1) who held credit
cards between the filing of the Consent Decree (June 4, 1997),
and the filing of the Federal Complaint (November 18, 2003), and
(2) against whom Sears or SNB enforced or sought to enforce a
10
The Consent Decree is found at J.A. 70-78.
11
The entire text of West Virginia Code section 46A-6-104
provides, “Unfair methods of competition and unfair or deceptive
acts or practices in the conduct of any trade or commerce are
hereby declared unlawful.”
7
security interest while the card agreements contained the
arbitration provision.
B.
On May 10, 2006, Citibank removed the Federal Complaint to
the Southern District of West Virginia, pursuant to 28 U.S.C. §
1446 and a Class Action Fairness Act (“CAFA”) provision, 28
U.S.C. § 1453. The Plaintiffs moved to remand to state court,
and the district court denied the motion. On May 17, 2006, all
Defendants (SNB, Sears, SHC, and Citibank) sought dismissal of
the Federal Complaint, and the court filed the Dismissal Opinion
on March 28, 2007. In its ruling, the court made the following
conclusions: (1) Counts I and II are not justiciable under
Article III of the Constitution of the United States because
they present no case or controversy; (2) the state court’s 2005
dismissal of Count III should stand, pursuant to the law of the
case doctrine; (3) Count IV does not state a claim under the
terms of the Consent Decree or under West Virginia law; and (4)
Count V simply restated the other counts on behalf of a limited
subclass of plaintiffs, and therefore should also be dismissed.
By letter of February 23, 2007, the Plaintiffs had
informally suggested that the district court conduct a
“preliminary hearing” before it disposed of the motion to
remand. The Plaintiffs later sought reconsideration of the
Dismissal Opinion, and the court filed its Reconsideration
8
Denial on May 18, 2007, explaining that the Plaintiffs were
rehashing old arguments or raising assertions that could have
been made earlier. In seeking reconsideration, the Plaintiffs
also sought leave to amend, and the Reconsideration Denial did
not explicitly refer to the amendment request. The Plaintiffs
have timely noted this appeal, and we possess jurisdiction
pursuant to 28 U.S.C. § 1291.
II.
We review de novo issues of standing and justiciability.
Piney Run Pres. Ass’n v. County Comm’rs, 268 F.3d 255, 262 (4th
Cir. 2001). We also review de novo a district court’s dismissal
for failure to state a claim upon which relief can be granted.
Mayes v. Rapoport,
198 F.3d 457, 460 (4th Cir. 1999). By
contrast, we review for abuse of discretion a district court’s
denial of a motion for reconsideration or a request for leave to
amend. Ingle v. Yelton,
439 F.3d 191, 197 (4th Cir. 2006)
(providing standard for denial of reconsideration); Franks v.
Ross,
313 F.3d 184, 192 (4th Cir. 2002) (explaining standard for
denial of leave to amend).
III.
This appeal challenges the Dismissal Opinion’s rulings
(1) that Counts I and II are not justiciable under Article III,
9
and thus subject to dismissal, because each fails to present a
case or controversy; (2) that dismissal of Count III was
mandated under the law of the case doctrine; (3) that Count IV
fails to allege a claim under either the FTC Consent Decree or
West Virginia law; and (4) that Count V simply restates the
other counts on behalf of a limited subclass of plaintiffs, and
therefore must be dismissed as well. The Plaintiffs also
contend that the court erred in the Remand Denial, the
Reconsideration Denial, and in failing to grant leave to amend.
As explained below, we affirm the Dismissal Opinion on the
following bases: Counts I and II because the Plaintiffs lack
standing; Count III as to the Original Plaintiffs under the law
of the case doctrine, and because the added Plaintiffs lack
standing; and Counts IV and V for lack of standing.
A.
First of all, we assess the district court’s dismissal of
Counts I and II of the Federal Complaint. In Count I, the
Plaintiffs seek declaratory relief under the West Virginia
Declaratory Judgment Act, 12 maintaining that the arbitration
12
Although the State Complaint purported to invoke West
Virginia’s Declaratory Judgment Act, we apply the federal
Declaratory Judgment Act in this proceeding. See 28 U.S.C. §
2201; Chapman v. Clarendon Nat’l Ins. Co., 299 F. Supp. 2d 559,
562-63 (E.D. Va. 2004) (holding that removal of state
declaratory judgment action invokes § 2201).
10
provisions of the Sears credit card agreements are
unconscionable. They claim that the agreements unlawfully bar
participation in class actions, prevent access to the courts,
and unconstitutionally deprive them of their right to a jury
trial. In Count II, the Plaintiffs allege violations of the
WVCCPA and claim statutory damages. As explained below, we
agree that Counts I and II fail to present a justiciable case or
controversy under Article III of the Constitution.
A federal court may exercise its jurisdiction in a
declaratory judgment proceeding only when “the complaint alleges
an actual controversy between the parties of sufficient
immediacy and reality to warrant issuance of a declaratory
judgment.” Volvo Constr. Equip. N. Am., Inc. v. CLM Equip. Co.,
386 F.3d 581, 592 (4th Cir. 2004) (internal quotation marks
omitted). In order to satisfy this requirement, a plaintiff
must possess standing to sue, meaning that a claim must present
a “controversy that qualifies as an actual controversy under
Article III of the Constitution.”
Id. Standing encompasses
three components: “(1) the plaintiff must allege that he or she
suffered an actual or threatened injury that is not conjectural
or hypothetical, (2) the injury must be fairly traceable to the
challenged conduct, and (3) a favorable decision must be likely
to redress the injury.” Miller v. Brown,
462 F.3d 312, 316 (4th
11
Cir. 2006) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61 (1992)).
In light of our decision in Volvo, Count I fails to show an
actual or threatened injury that rises to the level of a case or
controversy. Volvo also concerned a claim for declaratory
relief, and although we found a controversy present, we observed
that one is not present when “the defendant ha[s] not taken any
action, even of a preliminary nature, against the plaintiff, and
the defendant ha[s] not indicated that it intend[s] to take any
future legal action against the plaintiff.” 386 F.3d at 592
n.12 (distinguishing N. Jefferson Square Assocs. v. Va. Hous.
Dev. Auth.,
94 F. Supp. 2d 709, 714 (E.D. Va. 2000)). Such is
precisely the situation at hand: none of the Defendants has
threatened to invoke the arbitration provision, and none of the
Plaintiffs has alleged an underlying dispute that might
legitimately progress to that point.
The Plaintiffs apparently added Moses as a named plaintiff
in the Federal Complaint to correct their standing problem, as
evidenced by their present contention that “only one plaintiff
must have standing in order that a federal court have
jurisdiction over a class action suit under Article III.” Br.
of Appellants 17 (citing Bowsher v. Synar, 478 U.S. 714, 721
(1986)). The addition of plaintiff Moses, however, fails to
cure the Plaintiffs’ standing problem. Moses was subjected to
12
the Collection Suit by Sears in 2001, and the Plaintiffs
maintain that it “relegate[ed] her solely to arbitration under
NAF [National Arbitration Forum] auspices.” Id. at 22. In
other words, the Plaintiffs contend, if Moses had filed a
counterclaim in the Collection Suit, she would likely have had
to submit to arbitration in an NAF forum.
Assuming the validity of such an assertion, it does not
raise Moses’s claim in Count I to an Article III case or
controversy. Declaratory judgment actions must allege disputes
that are “real and substantial and admi[t] of specific relief
through a decree of a conclusive character, as distinguished
from an opinion advising what the law would be upon a
hypothetical state of facts.” MedImmune, Inc. v. Genetech,
Inc., 127 S. Ct. 764, 771 (2007) (internal quotation marks
omitted). As with other Plaintiffs, Sears neither invoked nor
threatened to invoke the arbitration provision of Moses’s credit
card agreement, and any ruling made here on the arbitration
provision would constitute an advisory opinion.
The Plaintiffs also maintain on appeal that a district
court “should refuse to entertain a declaratory judgment only
for good cause.” Br. of Appellants 27 (citing Aetna Cas. &
Surety Co. v. Quarles, 92 F.2d 321, 324 (4th Cir. 1937)). The
lack of standing is sufficient good cause, however; it is the
“threshold question in every federal case, determining the power
13
of the court to entertain the suit.” Warth v. Seldin, 422 U.S.
490, 498 (1975). Thus, in the absence of an injury and with no
“real and substantial” dispute, the court properly declined to
entertain Count I upon removal.
In its Dismissal Opinion, the district court compared this
proceeding to the situation in Bowen v. First Family Financial
Services, Inc., 233 F.3d 1331 (11th Cir. 2000). In Bowen, the
class action plaintiffs lacked standing to question whether
arbitration agreements are generally unenforceable under the
Truth-in-Lending Act. The Eleventh Circuit so ruled because
“there [was] no allegation that First Family has invoked, or
threatened to invoke, the arbitration agreement to compel the
plaintiffs to submit any claim to arbitration.”
Id. at 1339. 13
13
The Eleventh Circuit addressed two separate standing
issues in Bowen: first, under the Truth-in-Lending Act and
second, under the Equal Credit Opportunity Act (the “ECOA”).
Although the court ruled that the plaintiffs did not possess
standing to pursue a Truth-in-Lending Act claim, it concluded
that they possessed standing to challenge the defendant’s
requirement that customers must execute arbitration agreements
as a condition of credit under the ECOA. But the plaintiffs’
standing only arose from the ECOA itself, which creates an
explicit cause of action for consumers who are discriminated
against “with respect to any aspect of a credit transaction”
because they “in good faith, exercise[] any right under [the
Consumer Credit Protection Act].” Bowen, 233 F.3d at 1334-35
(citing 15 U.S.C. § 1691(a)). In so ruling, the court of appeals
reasoned that “[t]he difference is that the plaintiffs were
required to and did sign the arbitration agreement, but there
has been no occasion for First Family to attempt to enforce it
against them.”
Id. at 1339. The matter on appeal is more
analogous to the Truth-in-Lending Act claim because these
(Continued)
14
This action is similar to Bowen because the Plaintiffs have not
sufficiently alleged that the Defendants either invoked or
threatened to invoke the arbitration provision of the Sears
credit card agreements.
We thus agree, in disposing of Count I, with the courts
that have deemed a challenge to an arbitration provision, in the
absence of an underlying dispute or imminent injury, to be
nonjusticiable. See, e.g., Bowen, 233 F.3d 1331; Lee v. Am.
Express Travel Related Servs., No. 07-04765,
2007 WL 4287557, at
*5 (N.D. Cal. Dec. 6, 2007) (concluding that plaintiffs “have
not and cannot allege any damage because they do not have a
dispute with defendants that they tried unsuccessfully to
litigate as a class action”); Rivera v. Salomon Smith Barney
Inc., No. 01 Civ. 9282,
2002 WL 31106418, at *6-7 (S.D.N.Y.
Sept. 20, 2002) (recognizing that plaintiff lacked standing to
seek declaratory relief on arbitration provision because she did
not “file[] or serve[] any lawsuit alleging that [defendant] . .
. [or] anyone representing any of the defendants has informed
her that they will seek to invoke the Arbitration Policy”);
Tamplenizza v. Josephthal & Co., 32 F. Supp. 2d 702, 704
Plaintiffs do not allege that they were coerced into signing an
arbitration provision in exchange for exercising a statutory
right.
15
(S.D.N.Y. 1999) (recognizing as nonjusticiable challenge to
arbitration provision, absent sufficient indications that it
would be invoked). Notably, some courts have premised such
decisions on the ripeness doctrine. See Ruckelshaus v. Monsanto
Co., 467 U.S. 986, 1019-20 (1984) (recognizing lack of ripeness
on whether arbitration will provide reasonable compensation,
where plaintiff "did not allege or establish that it had been
injured by actual arbitration under the statute”); Bd. of Trade
v. Commodity Futures Trading Comm’n,
704 F.2d 929, 932 (7th Cir.
1983) (concluding that threatened enforcement of arbitration
rule did not establish ripeness).
The Plaintiffs rely on the Second Circuit’s decision in
Ross v. Bank of America, N.A., for the proposition that they
suffered an injury-in-fact and therefore possess standing. See
524 F.3d 217 (2d Cir. 2008). In Ross, a group of plaintiffs
sued Bank of America and Citibank, among others, because their
credit card agreements included provisions imposing arbitration
“as the sole method of resolving disputes relating to the credit
accounts” and disallowing class action proceedings.
Id. at 220.
The Ross plaintiffs, however, were pursuing a different
proposition than we face here. They claimed that the agreements
violated the antitrust statutes because the banks had colluded
“to constrict the options available to cardholders”; they did
not simply allege that the provision alone caused them injury.
16
Id. at 223. The Second Circuit held that the plaintiffs
possessed standing “in terms of the antitrust injuries that the
cardholders have asserted,” observing that “one form of
antitrust injury is ‘[c]oercive activity that prevents its
victims from making free choices.’”
Id. (emphasis added)
(quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State
Council of Carpenters,
459 U.S. 519, 528 (1983)). Our situation
is distinguishable — the Plaintiffs have not alleged antitrust
violations or collusion by credit card companies. We thus agree
with the Defendants that Ross does not support the Plaintiffs’
argument on standing. 14
Turning to Count II, we recognize that this claim turns on
the possibility of collecting damages under the WVCCPA for the
14
The Plaintiffs also rely on Arnold v. United Cos. Lending
Corp., for the proposition that an arbitration agreement
“contain[ing] a substantial waiver of the borrower’s rights . .
. while preserving the lender’s right to a judicial forum . . .
is unconscionable.” 511 S.E.2d 854, 862 (W. Va. 1988). Arnold,
however, involved certified questions concerning arbitration
provisions, and the ruling was premised on the presumption that
“some controversy remains before the circuit court.”
Id. at
858. Thus, Arnold did not present a standing issue. The
Plaintiffs also rely on State ex rel. Dunlap v. Berger, and
assert that arbitration provisions are unconscionable because
they are rarely read or understood by cardholders.
567 S.E.2d
265, 274 (W. Va. 2002). Dunlap addressed the merits of the
unconscionability issue only, not the question of standing.
Id.
at 269. These West Virginia decisions thus do not aid our
analysis.
17
Defendants’ conduct. 15 The Plaintiffs contend that Moses and the
other Plaintiffs seek to “redress th[e] wrong” of allegedly
unconscionable arbitration provisions under West Virginia law.
Br. of Appellants 25. In order to award damages, however, a
court would be required to first decide that the arbitration
provisions are unconscionable, or that the Defendants engaged in
unconscionable conduct. Because we have already concluded that
this issue is nonjusticiable, the Plaintiffs lack Article III
standing to pursue Count II.
B.
We must now analyze the issues presented with respect to
the district court’s dismissal of Count III of the Federal
Complaint. As explained below, we also affirm the Dismissal
Opinion with respect to this claim.
We first examine the Plaintiffs’ contention that the
district court erroneously dismissed Count III of the Federal
Complaint, which alleges that Defendants engaged in unfair and
15
In Count II, the Plaintiffs claim $1,000 for each
violation of the WVCCPA, under sections 46A-5-101 and/or 46A-5-
105. Section 46A-5-101(1) provides that a debtor who can show
that his or her creditor violated Chapter 46A “has a cause of
action to recover actual damages and . . . a penalty [of] . . .
not less than one hundred dollars nor more than one thousand
dollars.” Pursuant to section 46A-5-105, “if a creditor has
willfully violated the provisions of this chapter, . . . in
addition to the remedy provided in [section 46A-5-101], the
court may cancel the debt when the debt is not secured by a
security interest.”
18
deceptive trade practices, in violation of the WVCCPA. More
specifically, it asserts that, in failing to disclose their
trademark licensing relationships and their physical addresses
on credit cards, the Defendants misled the class members with
respect to the corporate entities and geographical addresses of
their creditors. For such deceptive practices, the Plaintiffs
maintain that section 46A-6-106 of the WVCCPA permits them to
collect statutory damages of $200 per violation. Because the
state court dismissed Count III with respect to the original
parties only, we will separately examine the Plaintiffs’
contentions with regard to both the original parties and the
added parties.
1.
In 2005, the state court dismissed Count III of the State
Complaint under West Virginia Rule 12(b)(6), for failure to
state a claim upon which relief can be granted. The Dismissal
Opinion dismissed the virtually identical Count III of the
Federal Complaint under the law of the case doctrine and 28
U.S.C. § 1450. 16 Pursuant to the law of the case doctrine, “a
16
The Plaintiffs contend that Count III of the Federal
Complaint contains “material revisions” from the State
Complaint. Br. of Appellants 33. This contention is without
merit, however, because the only revisions made to the Federal
Complaint are not materially distinct allegations. First, the
Plaintiffs simply added the allegation that Sears and SNB were
likely not the true and correct owners of the accounts because
(Continued)
19
court should not reopen issues decided in earlier stages of the
same litigation.” Agnostini v. Felton, 521 U.S. 203, 236
(1997). Similarly, under § 1450, “[a]ll injunctions, orders,
and other proceedings had in such [state court] action prior to
its removal shall remain in full force and effect until
dissolved or modified by the district court.” See also Granny
Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers
Local No. 70,
415 U.S. 423, 436 (1974) (“After removal, the
federal court ‘takes the case up where the State court left it
off.’” (quoting Duncan v. Gegan,
101 U.S. 810, 812 (1880))). As
the Supreme Court explained in Granny Goose Foods, in
recognizing that the underlying state court rulings are
effective in federal court, the interests of judicial economy
they sold them as “securitized assets” to unknown parties.
Federal Complaint ¶ 19, n.2. Second, the Plaintiffs contend
that the Federal Complaint alleges — in contrast to the State
Complaint — that SNB has disappeared or has been liquidated.
These revisions merely reflect a change in the Defendants’
situation, however, and do not affect the state court’s
dismissal of its Count III. Third, the Plaintiffs also claim
that they added specific statutes to Count III of the Federal
Complaint. These are all grounded in West Virginia law,
however, and the state court ruled that the Original Plaintiffs
have failed to allege a cause of action under West Virginia law.
Finally, the Dismissal Opinion correctly observed that, in
response to the Defendants’ motion to dismiss the Federal
Complaint, the Plaintiffs addressed Count III simply by
incorporating by reference the arguments they had made in state
court.
20
are promoted and the parties’ rights are protected. See 415
U.S. at 435-36.
Although most of the decisions invoking § 1450 relate to
state court injunctions and interlocutory rulings in removed
federal cases, their reasoning extends to proceedings such as
this, where a federal court must address a claim that has been
previously dismissed in state court. The utilization of § 1450
in this setting thus advances the principles that it seeks to
promote — judicial economy and protection of the parties’ rights
— and also implicates the law of the case doctrine. In sum, the
Plaintiffs have not presented us with any reason for disturbing
the state court’s ruling on Count III as to the Original
Plaintiffs.
2.
Because Citibank and SHC were first made defendants in the
Federal Complaint (the state court found that Citibank was not a
defendant in the State Complaint), we must assess Count III with
regard to these additional defendants. Similarly, because Moses
and the Subclass A plaintiffs were added as plaintiffs in the
Federal Complaint, we must analyze Count III as to them. As
explained below, the new plaintiffs lack standing to pursue
Count III against Citibank and SHC because the Federal Complaint
fails to sufficiently allege an injury or threatened injury.
In that respect, the Plaintiffs contend that the Defendants
21
engage in a definite and elaborate scheme and unfair
method of doing business so that consumers and credit
cardholders may not readily locate either any
telephone number or physical mailing address or actual
place of business other than post office boxes and
other than so-called “Customer Service” 800 numbers.
Federal Complaint ¶ 57. The Plaintiffs also allege that “Sears
National Bank is not in fact and in law the owner of the
trademarks” of the credit cards, as Sears has led its consumers
to believe. Id. at ¶ 55. The Plaintiffs allege that Sears and
Citibank caused SNB to be liquidated and dissolved, “without any
merger or supersedes clauses in any agreement upon which a Sears
cardholder may rely,” and classify the Defendants’ actions as a
“classic ‘shell’ game.”
Id. at ¶ 56, 58. They assert that
Citibank continues a pattern of “deceptive practices” and
“should similarly be enjoined from such practices” for violation
of West Virginia Code section 46A-6-102(f)(3), (f)(4). 17
Id. at
¶ 60.
The Plaintiffs have failed, however, to explain how they
were or could be injured by the alleged “tremendous confusion”
created by defendants’ conduct. Federal Complaint ¶ 56. The
solution to this problem, they maintain, is that Citibank
17
Under the WVCCPA, “unfair trade practices” include:
“[c]ausing likelihood of confusion or of misunderstanding as to
affiliation, connection or association with or certification by
another” and “[u]sing deceptive representations or designations
of geographic origin in connection with goods or services.” W.
Va. Code § 46A-6-102(7)(C),(7)(D) (renumbered 2005).
22
“should be ordered to place the physical location and street
address on their credit cards as to where a cardholder may
dispute dealings of defendants, including service of legal
process.” Id. at 60. Again, they fail to explain how such a
mandate would have assisted them in locating the Defendants, or
how any of the Plaintiffs were harmed by the absence of such a
disclosure.
Although the Plaintiffs seek to utilize the WVCCPA as a
means to secure standing, this effort also fails. The WVCCPA
provides that “unfair methods of competition and unfair or
deceptive acts or practices” include
[t]he act, use or employment by any person of any
deception, fraud, false pretense, false promise or
misrepresentation, or the concealment, suppression or
omission of any material fact with intent that others
rely upon such concealment, suppression or omission,
in connection with the sale or advertisement of any
goods or services, whether or not any person has in
fact been misled, deceived or damaged thereby.
W. Va. Code § 46A-6-102(7)(M) (emphasis added). In order to
invoke this provision, however, a plaintiff is obliged to plead
with particularity that defendants have fraudulently
misrepresented their identity to consumers, or intended that
others rely on the omission of a correct address and phone
number. See Fed. R. Civ. P. 9(b). No such pleading was
presented, and a cursory reference to a “shell game” and “a
pattern of deceptive practices” is simply not sufficiently
23
particular to proceed. See Garvin v. S. States Ins. Exch. Co.,
329 F. Supp. 2d 756, 760 (N.D. W. Va. 2004) (concluding that, on
fraud claims, elements pleaded with particularity include time,
place, and contents of false representations), aff’d, No. 05-
1812,
2006 U.S. App. LEXIS 1593 (4th Cir. Jan. 23, 2006).
Finally, although the Plaintiffs allege in Count III that
locating the actual place of business of the Defendants causes
extreme difficulty, the state court observed that “[t]his is a
rather difficult point for Plaintiffs to maintain because they
have, it seems, managed to sue the Defendants.” State Court
Opinion 7. In any event, the Sears credit card agreement states
that SNB, as issuer, is an affiliate of Sears. J.A. 51
(defining “we,” “us,” and “our” as “Sears National Bank (an
affiliate of Sears) or any subsequent holder of the account or .
. . any servicer of your account authorized by us”). For these
reasons, the Dismissal Opinion must be affirmed as to Count III
— with respect to both Moses and the Subclass A plaintiffs —
because they lack standing to pursue it.
C.
Having disposed of the three counts that were first pursued
in the State Complaint, we turn to Counts IV and V, the claims
alleged for the first time in the Federal Complaint. We begin
with Count IV.
24
1.
The district court dismissed Count IV under Rule 12(b)(6)
for failure to state a claim upon which relief can be granted.
If we disagree with that ruling, we are nonetheless entitled to
affirm on different grounds “if fully supported by the record.”
Brewster of Lynchburg, Inc. v. Dial Corp., 33 F.3d 355, 361 n.3
(4th Cir. 1994). Because this record reveals that none of the
Plaintiffs — i.e., the Original Plaintiffs, the Subclass A
plaintiffs, or Moses — has standing to pursue Count IV, we
affirm for that reason. See Davis v. Fed. Election Comm’n,
128
S. Ct. 2759, 2769 (2008) (“A party facing prospective injury has
standing to sue where the threatened injury is real, immediate,
and direct.”);
Bowen, 233 F.3d at 1340 (“A threatened injury
must be ‘certainly impending’ to constitute injury in fact.”
(quoting Whitmore v. Arkansas,
495 U.S. 149, 158 (1990))).
In Count IV, the Plaintiffs allege violations of the
Consent Decree and seek statutory damages for violations of the
WVCCPA (specifically section 46A-6-104). In the Decree, Sears
was ordered not to “[c]ollect any debt (including any interest,
fee, charge, or expense, incidental to the principal obligation)
that has been legally discharged in bankruptcy proceedings and
that respondent is not permitted by law to collect.” Consent
Decree 3. Count IV alleges that Sears violated the Decree and
the WVCCPA by filing the Collection Suit.
25
The state court terminated the Collection Suit in March
2002 for nonprosecution, and Count IV fails to plead any facts
to show that Sears had “collect[ed] any debt” from Moses either
before or after termination of the Collection Suit. The
Plaintiffs contend, however, that “the law suit [sic],
nonetheless, constitutes . . . a continuing violation of the
[Consent Decree] . . . until the date of [the Collection Suit’s]
dismissal.” Federal Complaint ¶ 43. To the contrary, the
Collection Suit could not be classified as a threatened
violation of the Consent Decree.
The Collection Suit sought the enforcement of a security
interest, not the collection of a debt, and “[a] discharge in
bankruptcy . . . ordinarily does not wipe out previously
perfected security interests in tangible personal property. The
lienholder retains a right of repossession, subject, however, to
the bankrupt’s possible right of redemption.” Arruda v. Sears
Roebuck & Co., 310 F.3d 13, 16 (1st Cir. 2002); see also Farrey
v. Sanderfoot,
500 U.S. 291, 297 (1991) (“Ordinarily, liens and
other secured interests survive bankruptcy.”); Johnson v. Home
St. Bank,
501 U.S. 78, 83 (1991) (concluding that Chapter 7
liquidation “extinguishes only the personal liability of the
debtor” (internal quotation marks omitted) (emphasis in
original)). Because the Consent Decree addressed conduct not
26
alleged in Count IV, that claim fails to allege an injury, or a
threatened or imminent injury.
2.
The Plaintiffs also allege in Count IV that Sears’s conduct
— filing suit against Moses while knowing that she had filed
bankruptcy, and its purported violation of the Consent Decree —
entitles them to recover statutory damages under the WVCCPA.
This aspect of Count IV also fails, however, because Moses and
the Subclass A plaintiffs lack standing to collect such damages.
In Orlando v. Finance One of West Virginia, Inc., the
Supreme Court of Appeals of West Virginia ruled that a plaintiff
cannot collect damages under sections 46A-6-102(f) or 46A-6-104
of the WVCCPA if he “ha[s] suffered no ‘ascertainable loss of
money or property’ as a result of the inclusion of” an allegedly
unconscionable provision in a contract. 369 S.E.2d 882, 888 (W.
Va. 1988) (quoting W. Va. Code § 46A-6-106). In Orlando, the
plaintiffs challenged a purported waiver of a homestead and
personal property exemption in their loan contract with Finance
One.
Id. at 883. After the Plaintiffs defaulted on their loan,
Finance One instituted collection activities. It did not,
however, seek judicial enforcement of the waiver clause.
Id.
As in this proceeding, the plaintiffs sued Finance One for a
declaration that the waiver clause was unconscionable, and
27
seeking statutory penalties under the WVCCPA because inclusion
of the clause was an unfair and deceptive act or practice. Id.
The state supreme court concluded that the Orlando
plaintiffs could not collect damages for violations of the
WVCCPA because “Finance One made no attempt to enforce [the
waiver clause],” and, therefore, “[plaintiffs] suffered no
ascertainable loss of money or property.”
Orlando, 369 S.E.2d
at 888. Similarly, Moses and the other Plaintiffs have never
alleged a loss of money or property due to the inclusion of an
alleged unconscionable provision in their credit card
agreements. In such circumstances, they lack standing to pursue
a claim for damages under Count IV. 18
D.
Count V purports to reallege the allegations of Counts I
through IV on behalf of Subclass A, a limited number of
plaintiffs who held credit cards between June 4, 1997, and
November 18, 2003, and against whom Sears or SNB either enforced
or attempted to enforce a security interest while the cardholder
18
The Plaintiffs also make an argument with respect to
common law fraud. This issue was mentioned in passing in the
Federal Complaint, but nothing was pleaded “with particularity”
pursuant to Rule 9(b). The district court did not address this
point, and neither do we. See In re Wallace and Gale Co., 385
F.3d 820, 835 (4th Cir. 2004) (observing that failure to raise
argument before district court results in waiver on appeal,
absent exceptional circumstances).
28
agreement contained the arbitration provision. These
plaintiffs, however, have no greater cognizable injuries or
causes of action than the other plaintiffs, as they have not
shown either the invocation or the impending invocation of the
arbitration provision. Furthermore, because Moses satisfies the
requirements of Subclass A, the conclusions we have made
regarding Moses are attributable to the Subclass A plaintiffs.
We thus affirm the dismissal of Count V for lack of standing.
E.
Finally, we turn to the Plaintiffs’ several allegations of
procedural error. First and foremost, we are generally unable
to review the propriety of the denial of a motion to remand.
“It is, of course, beyond question that an order of a district
court denying a motion to remand, standing alone, is not a final
order appealable under 28 U.S.C. § 1291.” Three J Farms, Inc.
v. Alton Box Bd. Co., 609 F.2d 112, 114 (4th Cir. 1979).
Nevertheless, the Plaintiffs argue that this case was improperly
removed and that we can now address that issue. In Aqualon Co.
v. Mac Equipment, Inc., however, we recognized that, even if
removal was improper, the judgment should not be disturbed if
the court possessed jurisdiction to enter it. See
149 F.3d 262,
264 (4th Cir. 1998). Because the district court possessed
subject matter jurisdiction, we will not disturb the Remand
Denial.
29
The district court properly concluded under CAFA that it
possessed subject matter jurisdiction at the time of judgment.
See 28 U.S.C. § 1332(d). 19 Under CAFA, a class action may be
initiated in federal court if (1) the controversy exceeds the
sum or value of $5,000,000; (2) the claim was originally filed
as a class action under Rule 23 of the Federal Rules or a
comparable state statute; and (3) any member of the class of
plaintiffs is a citizen of a state different from any defendant.
28 U.S.C. § 1332(d)(1)(B), (d)(2)(A). Here, the Federal
Complaint seeks damages of approximately $370 million; the claim
was filed under West Virginia Rule 23 (governing class actions);
and the Plaintiffs are citizens and residents of West Virginia,
while the Defendants are citizens of Illinois, South Dakota, and
Arizona. In those circumstances, the court possessed diversity
jurisdiction over the Federal Complaint.
The Plaintiffs contend, however, that the CAFA provisions
do not apply to the Federal Complaint, because the State
Complaint was filed in November 2003, prior to CAFA being
enacted. CAFA became effective in February 2005 and, according
to the Plaintiffs, the Federal Complaint relates back to
November 2003. It is uncontested that CAFA applies to any suit
19
Although the Remand Denial concluded that the court
possessed diversity jurisdiction under CAFA, it appears to have
also possessed diversity jurisdiction under § 1332(a).
30
commenced on or after February 18, 2005. See Pub. L. No. 109-2,
§ 9, 119 Stat. 14 (2005); Adams v. Ins. Co. of N. Am., 426 F.
Supp. 2d 356, 367 (S.D. W. Va. 2006). The Remand Denial
correctly determined, however, that CAFA applies here,
concluding that the Federal Complaint “commenced” a new action
when it was filed in 2006, because it alleged claims that were
“factually and legally distinct” from those in the State
Complaint. Remand Denial 8.
Because state law controls the issue of whether an amended
complaint has “commenced” a new action, we look to West Virginia
Rule of Civil Procedure 15(c) for guidance. See Adams, 426 F.
Supp. 2d at 370. Pursuant thereto, an amendment of a complaint
relates back when it “ar[ises] out of the conduct, transaction,
or occurrence set forth or attempted to be set forth in the
original pleading.” W. Va. R. Civ. P. 15(c)(2). In other
words, a complaint will relate back when its amendments “state a
cause of action growing out of the specified conduct of the
defendant which gave rise to the original cause of action.”
Adams, 426 F. Supp. 2d at 375 (citing Roberts v. Wagner
Chevrolet-Olds, Inc., 258 S.E.2d 901, 903 (W. Va. 1979)). It
follows that, if an amended complaint states a claim growing out
of conduct distinct from the original complaint, the amended
complaint does not relate back.
31
In this situation, Counts IV and V present new claims that
are premised on conduct and occurrences that are readily
distinct from the allegations of the State Complaint, and the
Federal Complaint thus does not relate back. For example, the
Federal Complaint alleges Sears’s enforcement of its security
interests and violation of the Consent Decree, and it added
Moses and a new subclass of plaintiffs presumably affected by
such conduct. Because these are distinct and new allegations,
the Federal Complaint does not, pursuant to state Rule 15(c)(2),
relate back to the filing of the State Complaint. CAFA thus
applies here, and the district court possessed subject matter
jurisdiction of the Federal Complaint. Any alleged procedural
deficiency in the removal process thus does not affect the final
judgment of the district court. 20
20
The district court did not abuse its discretion in filing
the Reconsideration Denial and denying the Plaintiffs’ request
for amendment of the Federal Complaint. First, we have
recognized three potential grounds for reconsideration: (1) to
accommodate an intervening change in controlling law, (2) to
account for new evidence not available at trial, or (3) to
correct a clear error of law to prevent manifest injustice.
Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th Cir. 1993). The
Plaintiffs did not assert any of these grounds; thus, their
motion was properly denied. The court also did not abuse its
discretion in declining to grant leave to amend the Federal
Complaint. In Healthsouth Rehabilitation Hospital v. American
National Red Cross, we explained that disposition of a motion to
amend lies within the sound discretion of the district court.
101 F.3d 1005, 1010 (4th Cir. 1996). The court need not
articulate grounds for denying leave to amend, “as long as its
reasons are apparent.”
Id. The Plaintiffs’ proposed amendments
(Continued)
32
IV.
Pursuant to the foregoing, the judgment of the district
court is affirmed.
AFFIRMED
— relabeling Count V as Count IV and deleting all references to
the Consent Decree — would be futile; therefore, the district
court did not err in this respect. Finally, we are not
satisfied that the Plaintiffs sufficiently requested a hearing
by way of their February 23, 2007 letter to the court. In any
event, nothing in the Federal Rules of Civil Procedure obliged
the court to hold a hearing in that situation; thus, the court
could not have abused its discretion in declining to do so.
33
