977 F.3d 1039
11th Cir.2020Background
- Michael Fox ate at three restaurants (Key Pantry, Cantina Beach, Lightkeepers) at the Ritz-Carlton Key Biscayne on April 5–6, 2017 and was charged an 18% automatic gratuity; menus either failed to disclose the gratuity or used deceptive language (e.g., "suggested" but billed as mandatory); Lightkeepers also taxed the gratuity.
- Fox alleged Ritz-Carlton followed the same practices at 49 Florida restaurants over four years, charging automatic gratuities without adequate notice and sometimes collecting sales tax on those gratuities.
- He filed a putative class action under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and Florida tax rules, seeking damages, a sales-tax refund, and declaratory/injunctive relief for all similarly situated patrons.
- The district court dismissed counts 1–2 (FDUTPA claims) for lack of subject-matter jurisdiction, reasoning Fox lacked class-representative standing for restaurants/dates he did not visit and that the CAFA $5 million amount-in-controversy was not met; it dismissed the tax-refund claim for failure to exhaust administrative remedies.
- The Eleventh Circuit affirmed dismissal of the tax-refund claim (exhaustion) but reversed dismissal of counts 1–2 and related declaratory/injunctive relief, holding Fox had class-representative standing and alleged the CAFA amount-in-controversy in good faith; the case was remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Class-representative standing to sue on behalf of patrons at Ritz-Carlton Florida restaurants Fox did not visit | Fox argued he and the class suffered the same injury from a common business practice (automatic gratuities and taxed gratuities), so he has class standing though he did not dine at every restaurant | Ritz-Carlton/district court argued Fox lacked standing for restaurants/dates he did not visit because he suffered no injury traceable to those specific locations/dates | Held: Reversed district court — Fox has class-representative standing because he alleges the same injury and interest as class members (Mills/Prado-Steiman principles) |
| CAFA amount-in-controversy ($5M) | Fox alleged hundreds of thousands of affected patrons across 49 restaurants over 4 years; aggregated claims exceed $5M in good faith | Ritz-Carlton argued damages should be limited to the incremental overpayment (difference between mandatory 18% and what patrons would have tipped) and district court speculated many would still have tipped 15–25% so $5M not met | Held: Reversed — complaint alleges amount-in-controversy in good faith; district court improperly speculated about individual tipping habits and essentially measured likely recovery rather than what’s in controversy |
| Claim for sales-tax refund: need to exhaust administrative remedies under Fla. law (section 215.26) | Fox contended no administrative remedy was required (or none existed) for his FDUTPA-based relief | Ritz-Carlton and district court pointed to Florida refund procedures requiring administrative claim under §215.26 before suit | Held: Affirmed dismissal — Florida law requires exhaustion via administrative refund procedure; Erie compels applying that jurisdictional bar in federal diversity suits |
| Scope of injunctive/declaratory relief under FDUTPA | Fox sought declaratory/injunctive relief as part of FDUTPA counts | Ritz-Carlton opposed; district court dismissed those portions with counts 1–2 | Held: Reversed to extent those remedies were tied to counts 1–2 and survived the reversal of dismissal of those counts |
Key Cases Cited
- Mills v. Foremost Ins. Co., 511 F.3d 1300 (11th Cir. 2008) (class-representative standing requires representative to have same interest and injury as class)
- Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266 (11th Cir. 2000) (named plaintiff must be part of class and possess same interest/injury)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (standing requires concrete injury-in-fact; pleading-stage allegations must show standing)
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (jurisdictional allegations under CAFA governed by complaint and supporting documents)
- Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744 (11th Cir. 2010) (district courts need not suspend reality but cannot speculate about jurisdictional amount without evidence)
- BJ's Wholesale Club, Inc. v. Bugliaro, 273 So. 3d 1119 (Fla. 3d DCA 2019) (tax-refund plaintiffs must exhaust administrative remedies under Fla. §215.26 before suing)
- Woods v. Holy Cross Hosp., 591 F.2d 1164 (5th Cir. 1979) (Erie requires federal courts to apply state exhaustion rules that create jurisdictional bars)