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State v. CLA Estate Services, Inc.

United States District Court, W.D. Washington, Seattle

May 3, 2018

CLA ESTATE SERVICES, INC, et al., Defendants.


          Honorable Marsha J. Pechman United States Senior District Court Judge.

         The above-entitled Court, having received and reviewed:

1. State of Washington's Motion to Remand (Dkt. No. 7),
2. Defendants' Opposition to Motion to Remand (Dkt. No. 8),
3. State of Washington's Reply in Support of Motion to Remand (Dkt. No. 9), all attached declarations and exhibits, and relevant portions of the record, rules as follows:

         IT IS ORDERED that the motion is GRANTED and this matter is REMANDED to King County Superior Court.

         IT IS FURTHER ORDERED that, pursuant to 28 U.S.C. § 1447(c), Defendants shall pay to Plaintiff the “just cost and any actual expenses, including attorney fees, incurred as a result of the removal.” The State of Washington shall submit a request, with declaration and proposed order, to that effect within seven (7) days of the entry of this order. Defendants shall file any response (not to exceed 6 pages) within five days of the filing of the State's request.


         The State of Washington sued CLE Estate Services, Inc., CLA USA, Inc. (“CLA”) and Mitchell Reed Johnson (“Johnson”) in King County Superior Court, alleging violations of the Washington Consumer Protection Act (“CPA”), RCW § 19.86, and the Washington Estate Distribution Documents Act, RCW § 19.25. Defendants removed the case to federal court, alleging that individual state citizens are the real parties in interest and that all remaining requirements for diversity jurisdiction were met. (See Dkt. No. 1, Notice of Removal at 2.)

         Initially, the Court notes that Defendants do not dispute the State's argument that this matter does not fall under the purview of the Class Action Fairness Act, 28 U.S.C. § 1332(d). The Court agrees.

         The State cites multiple cases from multiple jurisdictions in support of its position that enforcement of its consumer protection laws on behalf of its citizens has long been recognized as an area traditionally regulated and litigated by the states.[1] In fact, the Washington CPA reserves certain legal actions specifically and exclusively to the Attorney General. See, e.g., RCW §§ 19.86.090, 19.86.0995, 19.86.100 19.86.140, and 19.86.150. The Washington Supreme Court has made it clear the Attorney General's statutory authority to seek consumer restitution is intended for the general public benefit. State v. LG Elecs., Inc., 375 P.3d 636, 643 (Wash. 2016).

         There is also widespread legal support for the State's position that its suit to enforce its quasi-sovereign interest in guaranteeing an honest marketplace and the economic welfare of its citizenry bestows “real party in interest” status upon it.[2] Plaintiffs' position that a state cannot claim real party in interest status when it sues for broad prospective relief and also for restitution for a limited set of consumers has been rejected by the majority of courts.[3]

         For their part, Defendants have little response to the State's case authority and instead cite a series of cases which are distinguishable from the legal circumstances before this Court. Missouri, Kansas, & Texas Railway Co. v. Hickman, 183 U.S. 53 (1901) is inapposite - the Supreme Court in that matter was analyzing whether a state not named to a lawsuit could be a real party in interest; an Eleventh Amendment inquiry which concluded that the state's lack of interest in the litigation was evidence that it was not a real party in interest, but did not hold that a state must be the sole beneficiary of an action to qualify as a real party in interest. See also United States Fidelity & Guaranty Co. v. United States, 204 U.S. 349 (1907)(in a case brought by a federal contractor who was the sole beneficiary of any resulting judgment, the United States was still the real party in interest for jurisdictional purposes).

         Nor does Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161 (2014) affirm Defendants' interpretation of Hickman, as they claim. The case mentions Hickman as an example of looking past the pleadings to defeat attempts to create or destroy diversity, but does not hold that the relief sought must inure to the benefit of the State alone in order to qualify the State as a “real party in interest.” On the contrary, the Optronics court rejected the argument that courts must conduct a background inquiry into unnamed ...

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