782 F. Supp. 2d 593
W.D. Tenn.2011Background
- Linebarger, a Texas law firm, collected delinquent Memphis property taxes under contract and charged a 20% attorney's fee, exceeding Tennessee's 10% cap.
- Plaintiff, administrator of Lenora Wright's estate, paid $960.33 to resolve a Chancery Court suit and alleges Linebarger kept unlawful 20% fees.
- Plaintiff asserts TCPA, unjust enrichment, negligence, and conversion claims on behalf of himself and Class Members who received similar notices after March 25, 2005.
- Plaintiff seeks class certification under Rule 23, arguing joinder is impracticable and common issues predominate.
- Linebarger moved to stay pending parallel state action, move to dismiss on multiple grounds, and motions addressing standing and substitution.
- Court declines stay, denies some dismissals, and grants substitution to Movants while resolving the merits of several claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CAFA jurisdiction and amount in controversy | CAFA satisfied due to aggregate Class Members' claims | No injury-of-record per-member; fails CAFA amount | CAFA jurisdiction satisfied; amount in controversy met. |
| Are state and federal actions parallel for Colorado River abstention | Actions are substantially similar; same theories and scope | Different defendants; nonparallel | Actions not parallel; Colorado River abstention inappropriate; jurisdiction retained. |
| Tax Injunction Act applicability | TIA does not apply to private party challenging fees | TIA bars federal relief in state-tax contexts | TIA does not bar the action. |
| Need for joinder under Rule 19 | City may be indispensable due to indemnity concerns | City not necessary; complete relief available against Linebarger | City not a necessary party; case may proceed without joinder. |
| TCPA and negligence claims adequacy | TCPA applies to Linebarger's conduct; negligence owed by Linebarger | TCPA inapplicable to attorney conduct; no duty to non-clients | TCPA claim dismissed; negligence claim dismissed. |
Key Cases Cited
- Baskin v. Baskin? (Sixth Circuit reference), 15 F.3d 569 (6th Cir. 1994) (non-overlapping state and federal actions not parallel when parties differ)
- Romine v. Cumpuserve Corp., 160 F.3d 337 (6th Cir. 1998) (parallelism where claims and theories substantially overlap)
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (U.S. 1976) (abstention is narrow; used to stay federal proceedings pending state action)
- BellSouth Telecomms., Inc. v. Farris, 542 F.3d 499 (6th Cir. 2008) (TIA applies to state tax relief actions; private party context considered)
- Gafford v. Gen. Elec. Co., 997 F.2d 150 (6th Cir. 1993) (bad faith or legal certainty standard for CAFA amount in controversy)
- Pagliara v. Johnson Barton Proctor & Rose, LLP, 2010 WL 3940993 (M.D. Tenn. 2010) (TCPA applicability to professionals treated as non-business conduct")
- Schultz v. General R.V. Ctr., 512 F.3d 754 (6th Cir. 2008) (well-pled allegations in avoiding dismissal for amount-in-controversy)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (state substantive law governs in diversity actions; forum-state choice rules apply)
- Klonson Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (Klaxon rule on choice of law for diversity actions)