Jack v. Ring LLC

Background

Brandon Jack and Jean Alda filed a proposed class action against Ring LLC in San Francisco Superior Court on November 19, 2020. They alleged that Ring manufactures and sells video doorbells and security cameras whose recording, playback, and snapshot features require an additional Protect Plan fee of $3 per month or $30 per year per device. According to the allegations, Ring’s product boxes and webpages did not adequately disclose those fees.

The plaintiffs asserted claims under California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law. They sought relief for themselves and proposed classes of California consumers who bought specified Ring products. They also requested a public injunction requiring Ring to disclose the additional fees on product packaging and website pages.

Ring removed the case to federal court, asserting jurisdiction under the Class Action Fairness Act of 2005 (CAFA) and, alternatively, under ordinary diversity jurisdiction. The plaintiffs moved to remand the case to state court.

CAFA jurisdiction

CAFA permits removal of a qualifying class action when, among other requirements, the amount in controversy exceeds $5 million, the proposed class has more than 100 members, and there is minimal diversity—meaning at least one plaintiff is a citizen of a different state from at least one defendant.

The parties appeared to agree that the named plaintiffs and proposed class members were California citizens. They disputed how to determine Ring’s citizenship. Ring is a limited liability company with its principal place of business in California, organized under Delaware law, and a member who is a citizen of Washington and Delaware.

The plaintiffs argued that CAFA treats a limited liability company as an “unincorporated association,” whose citizenship is based on its principal place of business and the state where it was organized. Ring argued that the traditional rule should apply, under which a limited liability company is a citizen of every state where its members are citizens.

The court adopted the plaintiffs’ interpretation. It reasoned that CAFA likely treats a limited liability company as an unincorporated association for this purpose and that this interpretation is consistent with CAFA’s goal of facilitating federal-court jurisdiction over certain class actions. Because Ring’s principal place of business was California and the plaintiffs were also California citizens, Ring could not establish the required minimal diversity under CAFA.

Traditional diversity jurisdiction

The court separately considered Ring’s argument for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a). That jurisdiction generally requires complete diversity—no plaintiff sharing citizenship with any defendant—and an amount in controversy greater than $75,000.

The parties appeared to agree that complete diversity existed under the traditional rule because Ring’s member was a citizen of Delaware and Washington. The dispute concerned the amount in controversy. Jack sought, among other relief, $398 for his devices and fees totaling $512 at the time described in the complaint. Alda sought $249 for her security camera and fees totaling $448 at that time.

The plaintiffs argued that their individual damages could not be combined to reach $75,000. Ring appeared to agree that the plaintiffs’ separate monetary claims could not be aggregated, but argued that the court could consider the total cost of complying with the requested public injunction. Ring said that changing all relevant packaging and advertising would cost more than $75,000 and estimated the cost in the millions, although it did not provide a specific estimate.

The court rejected that method of valuing the injunction. Relying on Ninth Circuit precedent, it held that when injunctive relief is only a means of satisfying separate individual claims, the prohibition on combining those claims applies to the requested equitable relief as well as monetary relief. The court therefore concluded that Ring had not established the required amount in controversy for traditional diversity jurisdiction.

Disposition

The court granted the plaintiffs’ motion to remand and remanded the case to San Francisco Superior Court. It directed the clerk to remand the case and close the federal file. The order was signed by Haywood S. Gilliam, Jr., United States District Judge.