Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-akd-3_18-cv-00197/USCOURTS-akd-3_18-cv-00197-1/pdf.json

Parties Involved:
LLR, Inc.
Defendant
LuLaRoe
Defendant
LuLaRoe, LLC
Defendant
Katie Van
Plaintiff

Document Text:

WO IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

KATIE VAN, individually and on behalf ) 

of all others similarly situated, )

) 

 Plaintiff, ) 

) 

vs. ) 

) 

LLR, INC., d/b/a LuLaRoe, and LULAROE, )

LLC, ) 

) No. 3:18-cv-0197-HRH

 Defendants. ) 

_______________________________________) 

O R D E R

Motion for Attorney’s Fees

Defendants move for an award of attorney’s fees.1 This motion is opposed.2 Oral

argument was not requested and is not deemed necessary. 

Background

Plaintiff Katie Van brought this diversity action against defendants LLR, Inc., d/b/a

LuLaRoe, and LuLaRoe, LLC based on allegations that she had been improperly charged

1Docket No. 55. 

2Docket No. 58.

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sales tax on purchases she had made from LuLaRoe retailers in other states. Plaintiff alleged

that defendants improperly charged sales tax “on at least 72,503 sales transactions shipped

into non-taxing jurisdictions in Alaska from April 2016 through June 1, 2017.”3 Plaintiff

asserted two claims on behalf of herself and others similarly situated. In Count I of her

amended complaint, plaintiff asserted an Alaska Unfair Trade Practices and Consumer

Protection Act (UTPCPA) claim. Plaintiff alleged that 

[d]efendants violated the UTPCPA by knowingly charging and

collecting an unlawful sales tax on its clothing sales to

[p]laintiff and class member[s]; by failing to disclose that they

were not authorized to collect such taxes; and by actively

misrepresenting to their customers, directly and through [their]

retailers, that their 2016 Tax Policy and their collection of “sales

tax” from the class members was proper and lawful.[4]

Plaintiff also alleged that “[d]efendants intentionally violated the UTPCPA by programming

their online point-of-sale payment system to collect sales tax on clothing when such

collection was unlawful and not authorized by the taxing authority of the buyer.”5In Count

II, plaintiff asserted a conversion claim. For relief, plaintiff sought “an accounting; interest;

statutory damages; and punitive damages.”6 Defendants contend that the potential statutory

damages for the proposed class would have exceeded $36 million. 

3First Amended Class Action Complaint at 11, ¶ 67, Docket No. 4. 

4

Id. at 19, ¶ 108. 

5

Id. at 19, ¶ 109. 

6Plaintiff’s Opposition to Defendants’ Motion to Dismiss at 1, Docket No. 35. 

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Defendants moved to dismiss plaintiff’s complaint, or in the alternative, to strike

plaintiff’s class allegations. On March 1, 2019, the court granted7defendants’ motion to

dismiss, finding that plaintifflacked Article III standing, in large part because defendants had

already refunded the sales tax she was improperly charged.8Judgment was entered on March

4, 2019.9 The judgment read that the court had ordered that “plaintiff recover nothing, the

action be dismissed on the merits.”10

Pursuant to Rule 54, Federal Rules of Civil Procedure, Local Rule 54.3, and Alaska

Civil Rule 82, defendants now move for an award of attorney’s fees.

Discussion

In an action where a district court is exercising its subject matter

jurisdiction over a state law claim, so long as “state law does not

run counter to a valid federal statute or rule of court, and usually

it will not, state law denying the right to attorney’s fees or

giving a right thereto, which reflects a substantial policy of the

state, should be followed.”

MRO Communications, Inc. v. American Tel. & Tel. Co., 197 F.3d 1276, 1281 (9th Cir.

1999) (quoting Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 259 n.31

7Docket No. 52. 

8The court dismissed plaintiff’s claims with prejudice because it determined that 

amendment would be futile. The court’s intention was to dismiss plaintiff’s claims without

leave to amend because of futility. Pursuant to Rule 60(b), Federal Rules of Civil Procedure,

the court has requested leave of the appellate court to correct its order and judgment to reflect

its intent. See Order at 3, Docket No. 66. 

9Docket No. 53. 

10Id. at 1. 

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(1975)). Attorney’s fees may be available in a diversity case such as this based on Alaska

Rule 82. Alaska Rent-A-Car, Inc. v. Avis Budget Group, Inc., 738 F.3d 960, 973 (9th Cir.

2013). Rule 82(a) provides that “[e]xcept as otherwise provided by law or agreed to by the

parties, the prevailing party in a civil case shall be awarded attorney’s fees calculated under

this rule.” Rule 82(b)(2) provides that “[i]n cases in which the prevailing party recovers no

money judgment, the court . . . shall award the prevailing party in a case resolved without

trial 20 percent of its actual attorney’s fees which were necessarily incurred.”

Because this case involved diversity jurisdiction, the parties’ arguments as to

attorney’s fees focus on Rule 82. However, there is Ninth Circuit case law that was not cited

by the parties that stands for the proposition that “[a] court that lacks jurisdiction at the outset

of a case lacks the authority to award attorneys’ fees.” Skaff v. Meridien North America

Beverly Hills, LLC, 506 F.3d 832, 837 (9th Cir. 2007). Here, the court lacked jurisdiction

of plaintiff’s case at the outset because plaintiff lacked Article III standing. Thus, pursuant

to Skaff, the court does not have the authority to award attorney’s fees to defendants. 

The court is mindful that Skaff appears to be contrary to the Ninth Circuit’s statement

in Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 887 (9th Cir. 2000), that “[u]nder

the law of our circuit, a district court sitting in diversity may award attorneys’ fees to the

prevailing party under applicable state law, despite a dismissal of the action for lack of

subject matter jurisdiction.” But, district courts have routinely declined to follow Kona

Enterprises either because that case is distinguishable because the jurisdictional problemwas

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cured by amendment, see Skaaning v. Sorensen, 679 F. Supp. 2d 1220, 1224 (D. Hawai’i

2010), or because the court has found Kona Enterprises to not be binding authority because

it “is contrary to prior established precedent as well as subsequent Ninth Circuit case law[.]” 

Willow Farms, LLC v. AWCC WCW Holdings, LLC, Case No. 2:15-CV-01862-BR, 2016

WL 4150749, at *2 (D. Or. August 2, 2016) (citation omitted). This court too declines to

follow Kona Enterprises and instead follows Skaff and the cases cited therein that hold that

when the court lacks subject matter jurisdiction of a case at the outset, it lacks authority to

award attorney’s fees.

Because the court lacked subject matter jurisdiction of this case from the outset, it

lacks authority to award attorney’s fees. Defendants’ motion for attorney’s fees is thus

denied.

But even if the court were to consider the Rule 82 arguments raised by the parties, the

court would still conclude that defendants’ motion for attorney’s fees should be denied. 

Defendants argue that they are entitled to attorney’s fees because they were the prevailing

parties even though this case was dismissed on jurisdictional grounds. Defendants then cite

to a number of cases in support of this argument. 

Defendants first cite to Hawkins v. Attatayuk, 322 P.3d 891 (Alaska 2014), in support

of their argument. Hawkins involved a dispute over property for which a restricted deed

pursuant to the Alaska Native Townsite Act had been granted. Id. at 893-894. Hawkins and

Attatayuk, who had once been married, both claimed ownership of the property in question. 

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Id. Although Hawkins argued that the state superior court did not have subject matter

jurisdiction, the superior court disagreed, and the case went to trial. Id. at 894. The jury

found in favor of Attatayuk, and the court thereafter awarded her attorney’s fees. Id. On

appeal by Hawkins, the Alaska Supreme Court held that “[s]tate courts do not have subject

matter jurisdiction to adjudicate the title or right to possession of restricted townsite lots.” 

Id. at 895. The Alaska Supreme Court reversed and remanded “with directions to the

superior court to DISMISS the case.” Id. at 897. The Alaska Supreme Court noted that “[i]n

light of this disposition, the award of attorney’s fees in favor of Attatayuk must be vacated. 

Hawkins is the prevailing party and is entitled to an award of attorney’s fees in the superior

court.” Id. at 897 n.21. 

Defendants also cite to Foster v. State, Department of Transportation, 34 P.3d 1288

(Alaska 2001). There, Foster brought a trespass claim against the State of Alaska, which

“[t]he superior court dismissed for lack of subject matter jurisdiction . . . [b]ecause

adjudicating Foster’s claim would have required [it] to determine the scope of an easement

on Foster’s Native allotment, and . . . state courts lack jurisdiction to adjudicate the

ownership or right to possession of Native allotment land[.]” Id. at 1289. The superior court

awarded attorney’s fees to the state, and on appeal, “Foster argue[d] that it was an abuse of

discretion to award costs and attorney’s fees to the state under Alaska Civil Rules 79 and 82,

given the superior court’s conclusion that it lacked jurisdiction to adjudicate Foster’s

complaint.” Id. at 1291. The Alaska Supreme Court rejected this argument, holding that the

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superior “court could award the state costs and attorney’s fees under Civil Rules 79 and 82,

even after it concluded that it lacked jurisdiction over Foster’s claims.” Id.

Defendants next cite to Conoco, Inc. v. State, Department of Natural Resources, Case

No. 1JU-91-796, 1993 WL 13563632 (Alaska June 9, 1993). There, the superior court

awarded attorney’s fees to the state after it dismissed the plaintiffs’ breach of contract claims

because the plaintiffs had to pursue their claims against the state administratively. Id. at *1. 

The plaintiffs argued that no attorney’s fees should have been awarded because the state was

not the prevailing party. Id. at *3. The Alaska Supreme Court observed that “[a] dismissal

for lack of subject matter jurisdiction is without prejudice, so in a technical sense no issues

have been joined and no prevailing party yet exists. On the other hand, we do not approach

the definition of a prevailing party in such a rigid fashion.” Id. The Alaska Supreme Court

held that the plaintiffs’ “independent action required the state to expend time and money on

considerable motion-related paperwork and oral arguments, even if the state simply

challenged the trial court’s jurisdiction. Therefore, the issues here were joined in a practical

sense, and [the lower court] did not abuse [its] discretion by awarding the state attorney’s

fees.” Id.

In all of these state court cases cited by defendants, the cases were dismissed based

on state law jurisdictional grounds. But, in this case, plaintiff’s claims were dismissed

because plaintiff lacked Article III standing. In other words, plaintiffs’ claims were

dismissed based on federal law, not state law. Because defendants did not prevail on any

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issue of state law, plaintiff argues that defendants cannot be considered the “prevailing

parties” for purposes of Rule 82. 

Plaintiff cites to Gentemann v. NANA Development Corp., Case No. 3:08–cv–221

JWS, 2009 WL 2486040 (D. Alaska Aug. 12, 2009), in support of her argument. There, the

court had dismissed the plaintiffs’ state law tort claim against NANA for lack of subject

matter jurisdiction. Id. at *1. NANA then moved for an award of attorney’s fees. Id. at *2. 

The court denied the motion, explaining that 

the only action taken by the court when it dismissed this case

was entirely the result of federal law, not Alaska law. The court

resolved no dispute respecting state law, not even a state law

standing or jurisdictional issue. In such circumstances, it would

seem obvious that it would be inappropriate to award attorney’s

fees to NANA based on the application of the principles of state

substantive law reflected in Rule 82 when the dismissal was

dictated entirely by federal law without consideration of any

state law issue. To hold otherwise would substitute Rule 82’s

variation on the “English Rule” allowing recovery of fees by the

successful litigant for the “American Rule” which is generally

applied to disputes decided under federal law and makes no

provision for the recovery of fees. Furthermore, awarding fees

based on state law when no state law issue was considered,

much less decided, would promote neither any state interest, nor

any federal interest.

Id. Similarly here, plaintiff argues that the dismissal of her claims was based entirely on

federal law. Plaintiff insists that in order for defendants to be entitled to attorney’s fees

under Rule 82, defendants must have prevailed on some issue of state law, which they did

not do here.

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There is, however, case law from this district to the contrary. In United States ex rel.

Rebar Placement Co. v. GBC, L.L.C. Contractors, Case No. A03–73 CV JWS, 2005 WL

846211 (D. Alaska Jan. 18, 2005), Rebar brought Miller Act claims against GBC’s sureties

and state law claims against the GBC, and GBC brought a state law counterclaim against

Rebar. Id. at *1. After the court dismissed the Miller Act claims, GBC moved for dismissal

of the parties’ state law claims and counterclaim arguing that the court should decline to 

exercise supplemental jurisdiction. Id. The court granted GBC’s motion to dismiss and GBC

then moved for an award of attorney’s fees pursuant to Rule 82. Id. The court held that GBC

was “entitled to recover the attorney’s fees it incurred in defending against RPC’s state-law

claims because it is the prevailing party under Rule 82.” Id. The court explained: 

District courts follow state rules for awarding attorney’s fees

when exercising their subject matter jurisdiction over state-law

claims. In Alaska, Rule 82 provides for an award of attorney’s

fees to the prevailing party in a civil case. A party prevails if it

succeeds on the main issues in the action, or if the case against

it is dismissed, even when there is no final determination on the

merits.

Id. (citations omitted). 

This court finds Gentemann, which is the later of the two cases, more persuasive. To

award attorney’s fees based on a state substantive rule such as Rule 82 in a case in which the

defendants did not prevail on any issue of state law would run counter to the general rule that

applies in federal cases, which is that attorney’s fees are not recoverable. Because

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defendants did not prevail on any issue of state law, they are not “prevailing parties” for

purposes of Rule 82. 

Conclusion

Based on the foregoing, defendants’ motion for attorney’s fees is denied. 

DATED at Anchorage, Alaska, this 2nd day of May, 2019. 

/s/ H. Russel Holland 

United States District Judge

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