CHELSEA RUTTER v. BRIGHT HORIZONS FAMILY SOLUTIONS INC,
CASE NO. C23-0233-KKE
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE
January 25, 2024
Kymberly K. Evanson
ORDER DENYING MOTION TO DISMISS AND REMANDING CASE TO STATE COURT
I. BACKGROUND
Bright Horizons runs a network of more than 650 early education and childcare centers across the United States. Dkt. No. 1-2 ¶ 11. Plaintiff Chelsea Rutter was employed as a teacher by Bright Horizons in Seattle from approximately April 2019 to May 2021. Id. ¶ 9. Rutter alleges she was hired to work at the Interbay center, and did so until March 2020, when Bright Horizons temporarily closed many of its childcare centers because of the COVID-19 pandemic. Id. ¶ 28. During the closure, Rutter alleges she worked as a babysitter for client families she knew from the
Bright Horizons’ enrollment contract with its client families provides “if a staff member leaves Bright Horizons’ employment to work for [a client family] within six (6) months of his or her departure; [the client family] agree[s] to pay a placement fee of $5,000.” Dkt. No. 1-2 ¶ 16; Dkt. No. 8-1 (hereafter “placement fee provision“). Rutter alleges that she “knew the families for whom she was providing care would likely not be able to hire her for permanent positions because of the [placement fee provision].” Dkt. No. 1-2 ¶ 32. Rutter left her employment with Bright Horizons in May 2021, though does not allege what caused her departure. Id. ¶ 33.
Rutter filed this putative class action against Bright Horizons in state court, alleging the placement fee provision violates Washington‘s Noncompetition Covenants statute1 and the Washington Consumer Protection Act (“CPA“).2 Dkt. No. 1-2. Bright Horizons subsequently removed the case to this Court. Dkt. No. 1. Rutter alleges the placement fee provision both “restrained” her ability to obtain employment directly with Bright Horizons client families and had the effect of suppressing her wages by reducing her bargaining power. Dkt. No. 1-2 ¶¶ 43, 46.
Bright Horizons moved to dismiss Rutter‘s complaint for failure to state a claim under
A. Rutter Lacks Article III Standing.
In order to establish standing to sue under Article III of the Constitution, a plaintiff must establish: “(1) it has suffered an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” In re Brower, 651 B.R. 770, 775 (N.D. Cal. 2023) (cleaned up). Standing is required for each claim and each form of relief sought. Davis v. Fed. Election Comm‘n, 554 U.S. 724, 734 (2008).
Standing is a “threshold question in every federal case, determining the power of the court to entertain the suit.” Warth v. Seldin, 422 U.S. 490, 498 (1975). The requirements for standing “can neither be waived by the parties nor ignored by the court[.]” Yakima Valley Mem‘l Hosp. v. Wash. State Dep‘t of Health, 654 F.3d 919, 932 n.17 (9th Cir. 2011). Standing to sue in federal court is governed by federal law, even in diversity cases based on state-law claims and in actions removed from state court. Wheeler v. Travelers Ins. Co., 22 F.3d 534, 537 (3d Cir. 1994). This Court is obligated to assure itself of its own subject-matter jurisdiction, and as such, must examine a plaintiff‘s standing to sue, even when not raised by an opposing party. Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006).
“A concrete injury must be de facto; that is, it must actually exist.” Spokeo, Inc. v. Robins, 578 U.S. 330, 340 (2016), as revised (May 24, 2016) (cleaned up). “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. at 341. This is equally true in class action cases. TransUnion LLC v. Ramirez, 594 U.S. 413, 437-39 (2021) (where class members’ credit reports contained errors in violation of the Fair Credit Reporting Act but had not been shared with third parties, class members lacked standing for want of injury).
Rutter argues the placement fee provision constitutes a void and unenforceable noncompetition covenant under section 49.62.050 of the Revised Code of Washington. Dkt. No. 11 at 10.3 While Rutter concedes she was not “prohibited” from engaging in a lawful profession, she argues she was nonetheless “restrained” in terms of her mobility in the labor market and her ability to be hired as a nanny by Bright Horizons client families. Id. at 12. The only allegation in the complaint that directly supports her “restraint” theory is that Rutter claims she “knew that the families for whom she was providing care would likely not be able to hire her for permanent positions because of the noncompetition covenant and the $5,000 penalty.” Dkt. No. 1-2 ¶ 32. Rutter also argues the Court should draw a reasonable inference that Rutter “could not leave her job for alternative work, at least in part because of the $5,000 penalty” because Rutter remained employed at Bright Horizons despite a prolonged period of alleged mistreatment. Dkt. No. 11 at 12; Dkt. No. 1-2 ¶ 33.
Bright Horizons argues that the Noncompetition Covenants statute does not apply to the placement fee provision because it appears in the enrollment agreement between Bright Horizons and its customers, not in any employment agreement with Rutter. Dkt. No. 7 at 5. No Washington court has determined whether section 49.62.050 of the Revised Code of Washington encompasses agreements that merely impact employees in some way, as opposed to agreements with employees that restrict their workplace mobility. Both Rutter and Bright Horizons cite mixed authority from other jurisdictions evaluating analogous restrictions on hiring under allegedly analogous state laws. Dkt. No. 7 at 8-9; Dkt. No. 11 at 13-15.
Because Rutter does not allege a concrete, non-hypothetical injury, she lacks standing, and this Court does not have subject matter jurisdiction over this claim. Warth, 422 U.S. at 498.
2. Rutter has not alleged an injury arising under the CPA.
Rutter‘s CPA claim suffers from the same deficiency. Rutter alleges the placement fee provision constitutes a prohibited unfair or deceptive practice because it was not disclosed to her before she accepted employment. Dkt. No. 1-2 ¶ 53;
While generally claiming the placement fee provision suppressed her wages or reduced her bargaining power, Rutter does not allege that she ever sought an increase in her wages from Bright Horizons and was turned down. She likewise fails to allege that she ever sought a nanny position
B. This Case is Remanded to State Court.
When a case has been removed from state court, and a federal court finds the plaintiff does not have Article III standing, the proper remedy is to remand the case to state court.
III. CONCLUSION
Because the Court lacks subject-matter jurisdiction to hear any of Rutter‘s claims, Bright Horizons’ motion to dismiss (Dkt. No. 7) is DENIED, and the case is REMANDED to the King County Superior Court for further proceedings.
Dated this 25th day of January, 2024.
Kymberly K. Evanson
United States District Judge