Tawanna Ware v. Best Buy StoresTawanna Ware v. Best Buy Stores
Because this appeal comes to us from the grant of a motion to dismiss for failure to state a claim for relief, our discussion of the merits accepts all facts alleged in the complaint. Thornley v. Clearview AI, Inc., 984 F.3d 1241, 1242 (7th Cir. 2021); Silha v. ACT, Inc., 807 F.3d 169, 173–74 (7th Cir. 2015). In 2013, Plaintiffs Tawanna and Anthony Ware decided to buy a home-theater system. In discussions with the manager of a Chicago Best Buy store, they decided to buy the then-cutting-edge technology of a large plasma-screen, 3-D television. The manager warned them thаt plasma-screen televisions frequently experienced longevity problems, and he encouraged them to buy a five-year extended warranty, the “Geek Squad Protection Plan,” with the television. The plaintiffs ultimately bought a Samsung 64-inch plasma-screen television for $3,119.99 and the Plan for an additional $519.99. Accounting for other television accessories and discounts applied at checkout, the plaintiffs spent a total of $5,128.44 at Best Buy on the home theater.
The manager‘s advice was prescient: the plaintiffs’ television broke down four years
The Plan provided that if the television could not be repaired, Best Buy could elect either to replace the television or to compensate the consumer with a gift card. Best Buy chose to provide the plaintiffs with a gift card, the value of which was keyed to the current market price of a new television of similar quality to the one thе plaintiffs had purchased in 2013. For our purposes, suffice it to say that plaintiffs were not satisfied with Best Buy‘s inability to repair the television and its subsequent remedial measures, though the complaint does not allege that the gift card value was too low. The parties’ submissions in the district court and this court debate a host of other factual issues related to the merits of these claims. Those faсtual disputes do not affect the merits issues that the district court decided nor the jurisdictional questions that we address.
The plaintiffs filed this suit against Best Buy for violating the Magnuson-Moss Warranty Act of 1975,
The Magnuson-Moss Warranty Act requires that if a warrantied consumer good
Plaintiffs’ complaint also included claims under state law against Samsung that are relevant to two jurisdictional theories. Samsung manufactured the television they bought, and plaintiffs sought to represent a putative class of Illinois residents who bought Samsung plasma televisions that later failed. They contended thаt Samsung violated the Illinois Consumer Fraud and Deceptive Business Practices Act,
The present appeal asks us to apply principles of administrative law and statutory interpretation to the Magnuson-Moss Warranty Act‘s term, “written warranty,” which it defines as, among other things:
any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking, which ... becomes part of the basis of the bargain between a supplier and a buyer for purposes other than resale of such product.
Plaintiffs contend that the Geek Squad Protection Plan fits that definition neatly because it is an undertaking to repair, replace, or refund if the television fails. They further assert that the Plan fоrmed “part of the basis of the bargain” for their television because they relied on the benefits of the extended warranty period in choosing to purchase this expensive and unreliable product. In the alternative, they claim, the web of bundled discounts they received on the Plan and the home theater system intertwined these contemporaneous purchases so that they wеre all part of the same bargain.
Best Buy‘s argument on the merits relies on a 1977 Federal Trade Commission regulation interpreting the “part of the basis of the bargain” language in the Act‘s definition of a written warranty. See generally
Best Buy urges us to apply “a reasonably high degree of deference” to the Commission‘s expertise here and to uphold this
The district court deferred to this regulation and dismissed this case pursuant to
On appeal, plaintiffs urge us to set this regulation aside. They argue that the regulation is directly contrary to Congress‘s intent, as the Act was specifically designed to close counterintuitive and consumer-unfriendly loopholes in warranties on consumer prоducts. To plaintiffs, the FTC‘s interpretation created exactly the kind of loophole the Act was crafted to close. See generally Senate Report 93-151 at 6–8 (general purposes of the Act; suggesting that warranties can and should be sold separately for additional consideration); 40 Fed. Reg. 60168, 60168 (Dec. 31, 1975) (quoting same); cf. House Report 93-1107 at 28 (discussing criticisms of extended warrantiеs).
According to plaintiffs, Congress used deliberately expansive language in the statutory text: ”part of the basis of the bargain.” This standard, they posit, echoes the Uniform Commercial Code, where that phrase means, at the very least, that promises upon which consumers rely become part of the basis of the bargain. For sales of goods, the UCC provides in relevant part: “Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.” UCC § 2-313(1)(b). Comment 3 to § 2-313 explains:
The present section deals with affirmations of fact by the seller, descriptions of the goods or exhibitions of samples, exactly as any other part of a negotiation which ends in a contract is dealt with. No specific intention to makе a warranty is necessary if any of these factors is made part of the basis of the bargain. In actual practice affirmations of fact made by the seller about the goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown in order to weave them into the fabric of the agreement. Rather, any fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof. The issue normally is one of fact.
Courts have recognized the broad, pro-buyer terms of the key phrase, “part of the basis of the bargain.” E.g., Downie v. Abex Corp., 741 F.2d 1235, 1240 (10th Cir. 1984) (reversing judgment notwithstanding verdict; rational jury could conclude that supplier‘s post-sale representations became part of the basis of the bargain under any interpretation of that phrase because purchaser relied on them); see also Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 171 F.3d 818, 826 (3d Cir. 1999) (outlining consumer-friendly presumptions in UCC definition of “part of the basis of the bargain” and vacating summary judgment for supplier despite undisputed evidence that additional consideration was paid for some extended warrantiеs). Plaintiffs here also cite another FTC regulation telling sellers
We cannot tackle these arguments today because the federal courts lack subject-matter jurisdiction over this case. “Subject-matter jurisdiction is the first issue in any case.” Miller v. Southwest Airlines Co., 926 F.3d 898, 902 (7th Cir. 2019). Though Best Buy did not move to dismiss for lack of subject-matter jurisdiction, “we have an independent obligation to determine that jurisdictional requirements are satisfied.” Knopick v. Jayco, Inc., 895 F.3d 525, 528 (7th Cir. 2018).
Once jurisdiction has been called into doubt, the proponent of federal jurisdiction bears the risk of non-persuasion. Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536, 540 (7th Cir. 2006), discussing McNutt v. General Motors Acceptance Corp., 298 U.S. 178 (1936). “Federal courts are courts of limited jurisdiction: ‘It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.‘” Hart v. FedEx Ground Package System, Inc., 457 F.3d 675, 679 (7th Cir. 2006), quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994).
After argument, we questioned jurisdiction and invited supplemental submissions. The parties have addressed three possible statutes for the district court‘s subject-matter jurisdiction over plaintiffs’ Magnuson-Moss claim: the federal-question statute,
The Wares originally cited the federal-question jurisdiction statute,
That reasoning works under most federal statutes, but Magnuson-Moss has additional jurisdictional criteria for federal-question jurisdiction. Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 956 (7th Cir. 1998). The Act provides that federal courts do not have federal-question jurisdiction over breach-of-warranty actions under the Act:
(A) if the amount in controversy of any individual claim is less than the sum or value of $25;
(B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or
(C) if the action is brоught as a class action, and the number of named plaintiffs is less than one hundred.
The Wares’ damages are certainly less than $50,000. After all, they paid only about $5,000 for the television and accessories, and the value of a replacement television with four-year-old technology would have been quite a bit less than they initially spent. See Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 406 (7th Cir. 2004) (vacating judgment for lack of jurisdiction; even though рurchase price of defective vehicle exceeded $50,000, actual amount in
To reach $50,000, then, the plaintiffs would need to aggregate the putative class members’ claims. But the Act requires 100 named plaintiffs in a putative class. See generally Abraham v. Volkswagen of America, Inc., 795 F.2d 238, 243–46 (2d Cir. 1986) (discussing origins of named-plaintiff requirement). The Wares have not named any plaintiffs besides themselves, so they cannot satisfy the class-aсtion requirements in the Act. Accordingly, we lack jurisdiction under the Magnuson-Moss Warranty Act and, by extension,
Both sides agree that the district court did not have original subject-matter jurisdiction under
The plaintiffs now argue that the district court had supplemental or CAFA jurisdiction. These arguments fail because plaintiffs have failed to plausibly allege an amount in controversy that would support jurisdiction under either theory. We generally treat the amount-in-controversy threshold as a “pleading requirement.” Blomberg v. Service Corp., International, 639 F.3d 761, 763 (7th Cir. 2011) (reversing district court‘s remand order where defendant told a plausible story about how the amount in controversy exceeded the statutory minimum), quoting Spivey v. Vertrue, Inc., 528 F.3d 982, 986 (7th Cir. 2008). “Once the proponent of federal jurisdiction has explained plausibly how the stakes exceed” the amount- in-controversy threshold of a jurisdictional statute, “then the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.” Spivey, 528 F.3d at 986. Normally, a plaintiff can meet this pleading requirement by simply alleging a plausible amount in controversy. E.g., St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288 (1938) (“[U]nless thе law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith.“) (internal footnotes omitted); see also Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 89 (2014) (same for removal jurisdiction); Silha, 807 F.3d at 174 (“[W]hen evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly–Iqbal‘s ‘plausibility’ requirement.“).
First, the plaintiffs posit that the district court had supplemental jurisdiction over this Magnuson-Moss claim because their сomplaint invoked diversity jurisdiction for their claims against Samsung. See generally
Under the diversity jurisdiction statute, a district court has subject-matter jurisdiction over “all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States.”
Finally, the plaintiffs argue that we have jurisdiction under the Class Action Fairness Act,
The plaintiffs’ invocation оf CAFA cannot save jurisdiction here because any inference that the amount in controversy exceeds $5 million would be entirely speculative. In the complaint, plaintiffs alleged that there are potentially thousands of class members and the aggregated amount in controversy across the putative Magnuson-Moss class exceeded $50,000. That allegation is not enough for us tо plausibly infer that the amount in controversy for the Magnuson-Moss class is actually greater than $5 million, especially given the technical election-of-remedy theory that plaintiffs press here and the lack of any allegations regarding the monetary insufficiency of the gift-card remedy. In their supplemental memorandum, the plaintiffs imply that the amount in controversy is greater than $5 million, but thеy do not actually make any specific factual allegations or assertions on that point. See Dancel v. Groupon, Inc., 940 F.3d 381, 385 (7th Cir. 2019) (conclusory invocation of CAFA is insufficient to establish subject-matter jurisdiction without specific factual allegations; remanding for jurisdictional discovery).2
The judgment of the district court is accordingly VACATED and this case is REMANDED with instructions to dismiss for laсk of jurisdiction. Each side shall bear its own costs on appeal.