Court Opinion

ID: 4543621
Source: CourtListenerOpinion
Date Created: 2020-06-24 17:00:31.512008+00
Date Added: 2024-06-11T12:47:47.235027
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

KATIE VAN, individually and on             No. 19-35242
behalf of all others similarly situated,
                   Plaintiff-Appellant,       D.C. No.
                                           3:18-cv-00197-
                  v.                            HRH

LLR, INC., DBA LuLaRoe;
LULAROE, LLC,                                OPINION
             Defendants-Appellees.

      Appeal from the United States District Court
               for the District of Alaska
      H. Russel Holland, District Judge, Presiding

           Argued and Submitted June 3, 2020
                  Anchorage, Alaska

                    Filed June 24, 2020

       Before: Morgan Christen, Paul J. Watford,
          and Bridget S. Bade, Circuit Judges.

                    Per Curiam Opinion
2                       VAN V. LLR, INC.

                          SUMMARY *

                      Article III Standing

    The panel reversed the district court’s dismissal for lack
of Article III standing, held that the temporary deprivation
of money gives rise to an injury in fact for purposes of
Article III standing, and remanded for further proceedings.

    Plaintiff filed this putative class action lawsuit on behalf
of LLR, Inc. customers in Alaska who were improperly
charged sales taxes. LLR moved to dismiss the complaint
for lack of Article III standing because plaintiff could not
establish an injury in fact where LLR had fully refunded the
tax charges and her claim for interest alone was insufficient
to establish standing. Plaintiff was refunded $531.25 for
sales tax charges, but plaintiff contended that she was owed
at least $3.76 in interest on that sum to account for lost use
of the money.

    The panel held that the district court erred by concluding
that $3.76 was too little to support Article III standing. The
panel held that plaintiff suffered a cognizable and concrete
injury: the loss of a significant amount of money (over $500)
for a substantial amount of time. The panel concluded that
the temporary loss of use of one’s money constituted an
injury in fact for purposes of Article III. The panel noted
that plaintiff did not assert that she was injured because she
lost interest income, but rather that she was injured because

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                     VAN V. LLR, INC.                       3

she lost the use of her money, which was an actual, concrete,
and particularized injury.

                        COUNSEL

Jamisen A. Etzel (argued), R. Bruce Carlson, Kelly K.
Iverson, and Kevin W. Tucker, Carlson Lynch LLP,
Pittsburgh, Pennsylvania, for Plaintiff-Appellant.

Todd E. Lundell (argued), Steven T. Graham, Randolph T.
Moore, Colin R. Higgins, and Anthony J. Carucci, Snell &
Wilmer LLP, Costa Mesa, California, for Defendants-
Appellees.

                         OPINION

PER CURIAM:

    This case requires us to address whether the temporary
deprivation of money gives rise to an injury in fact for
purposes of Article III standing. We agree with other
circuits that “[t]he inability to have and use money to which
a party is entitled is a concrete injury.” MSPA Claims 1, LLC
v. Tenet Fla., Inc., 918 F.3d 1312, 1318 (11th Cir. 2019).
This is so because “[e]very day that a sum of money is
wrongfully withheld, its rightful owner loses the time value
of the money.” Habitat Educ. Ctr. v. U.S. Forest Serv.,
607 F.3d 453, 457 (7th Cir. 2010). We therefore reverse the
district court’s dismissal of this action for lack of standing
and remand for further proceedings.
4                         VAN V. LLR, INC.

                                    I

    Defendants-Appellees, LLR, Inc., dba LuLaRoe, and
LuLaRoe, LLC, improperly charged sales tax to customers
residing in jurisdictions that do not impose such taxes. 1
Later, after a related lawsuit was filed, LLR refunded the
charges to affected customers, but LLR did not pay interest
to account for the customers’ loss of use of their money.
Plaintiff-Appellant, Katie Van, filed this putative class
action lawsuit on behalf of LLR customers in Alaska who
were improperly charged sales taxes. The operative
complaint alleges, inter alia, that LLR failed to compensate
Van and putative class members “for the full amount of their
damages,” including interest. The complaint asserts claims
for conversion and misappropriation and for violation of the
Alaska Unfair Trade Practices and Consumer Protection Act,
Alaska Stat. Ann. § 45.50.471.

     LLR moved to dismiss the complaint for lack of Article
III standing, arguing that Van could not establish an injury
in fact, because LLR had fully refunded the tax charges and
her claim for interest alone was insufficient to establish
standing. The record shows that Van was refunded $531.25
for sales tax charges, but Van contends that she is owed at
least $3.76 in interest on that sum to account for her lost use
of the money. The district court granted the motion to
dismiss, albeit on a ground that LLR had not argued and that
LLR does not defend on appeal—that $3.76 “is too little to
support Article III standing.” Van timely appealed.

    1
        We refer to Defendants-Appellees collectively as LLR.
                      VAN V. LLR, INC.                         5

                               II

    “We review de novo a district court’s determination that
plaintiffs lack constitutional standing.” Maya v. Centex
Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).

                              III

    To establish standing under Article III of the
Constitution, a plaintiff must show that she has “(1) suffered
an injury in fact, (2) that is fairly traceable to the challenged
conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” Gill v. Whitford,
138 S. Ct. 1916, 1929 (2018) (quoting Spokeo, Inc. v.
Robins, 136 S. Ct. 1540, 1547 (2016)). An “injury in fact”
is “an invasion of a legally protected interest which is
(a) concrete and particularized and (b) actual or imminent,
not conjectural or hypothetical.” Lujan v. Defs. of Wildlife,
504 U.S. 555, 560 (1992) (citations and internal quotation
marks omitted).

                               A

     The district court erred by concluding that $3.76 is “too
little to support Article III standing.” “For standing
purposes, a loss of even a small amount of money is
ordinarily an ‘injury.’” Czyzewski v. Jevic Holding Corp.,
137 S. Ct. 973, 983 (2017); see also Sprint Commc’ns Co. v.
APCC Servs., Inc., 554 U.S. 269, 289 (2008) (noting that the
loss of “a dollar or two” is sufficient to confer Article III
standing); McGowan v. Maryland, 366 U.S. 420, 424, 430–
31 (1961) (holding that appellants fined $5 plus costs had
standing to assert an Establishment Clause challenge);
Carpenters Indus. Council v. Zinke, 854 F.3d 1, 5 (D.C. Cir.
2017) (Kavanaugh, J.) (“A dollar of economic harm is still
an injury-in-fact for standing purposes.”); Carter v.
6                     VAN V. LLR, INC.

HealthPort Techs., LLC, 822 F.3d 47, 55 (2d Cir. 2016)
(“Any monetary loss suffered by the plaintiff satisfies th[e
injury in fact] element; ‘[e]ven a small financial loss’
suffices.” (second alteration in original) (quoting Nat. Res.
Def. Council, Inc. v. U.S. Food & Drug Admin., 710 F.3d 71,
85 (2d Cir. 2013))).

     Our decision in Skaff v. Meridien North America Beverly
Hills, LLC, 506 F.3d 832 (9th Cir. 2007) (per curiam), is not
to the contrary. In Skaff, the defendant hotel failed to assign
a room with an accessible shower to the plaintiff, an
individual with a disability. See id. at 839. The mistake,
however, “was immediately corrected,” and the plaintiff
“suffered no cognizable injury.” Id. We held that “[t]he
mere delay during correction of the problem with the shower
is too trifling of an injury to support constitutional standing.”
Id. at 840. Here, by contrast, Van suffered a cognizable and
concrete injury: the loss of a significant amount of money
(over $500) for a substantial amount of time (months with
respect to some purchases, over a year with respect to
others). This injury is not too trifling to support standing.

                               B

     Although LLR does not defend the district court’s
reasoning, it argues that Van lacks standing because she
received a full refund, less interest, on the money she was
wrongfully charged. In LLR’s view, “the lost time value of
money standing alone is too speculative an injury to support
Article III standing.” Other circuits, however, have held to
the contrary. See MSPA Claims 1, 918 F.3d at 1318 (“The
inability to have and use money to which a party is entitled
is a concrete injury.”); Dieffenbach v. Barnes & Noble, Inc.,
887 F.3d 826, 828 (7th Cir. 2018) (“The plaintiffs have
standing . . . because unauthorized withdrawals from their
accounts cause a loss (the time value of money) even when
                      VAN V. LLR, INC.                        7

banks later restore the principal . . . .”); Habitat Educ. Ctr.,
607 F.3d at 457 (“Every day that a sum of money is
wrongfully withheld, its rightful owner loses the time value
of the money.”); cf. In re U.S. Office of Pers. Mgmt. Data
Sec. Breach Litig., 928 F.3d 42, 66 (D.C. Cir. 2019) (per
curiam) (addressing damages rather than standing) (“The
delay in those Plaintiffs’ receipt of their refunds, and the
forgone time value of that money, is an actual, tangible
pecuniary injury.”).

    We find the reasoning of these cases persuasive. In
MSPA Claims 1, 918 F.3d at 1317, for example, two health
care plans covered a car accident victim who received
treatment at St. Mary’s hospital—Allstate, the primary
payer, and Florida Healthcare Plus (FHCP), the secondary
payer. “[I]nstead of billing Allstate first,” as it should have,
“St. Mary’s billed both Allstate and FHCP for the same
medical treatment,” and “they both paid.” Id. “Several
months later, without any prompting from FHCP, St. Mary’s
reimbursed FHCP for the full amount of its prior payment—
about $286.” Id. FHCP’s assignee, MSPA, subsequently
sued St. Mary’s parent company, Tenet Florida, Inc., over
the delayed $286 reimbursement. Id.

    As in this case, Tenet argued that MSPA failed to allege
an injury in fact because “FHCP’s only ‘injury’ was not
getting its $286 reimbursement, and that injury disappeared
when FHCP was paid in full.” Id. at 1318. The Eleventh
Circuit disagreed:

       FHCP’s alleged injury stems not just from its
       entitlement to reimbursement of the
       appropriate amount but also from its
       entitlement to receive that reimbursement on
       time. MSPA alleges that the reimbursement
       was seven months late.
8                       VAN V. LLR, INC.

            The question is whether delay alone is a
        “concrete” injury. It is. MSPA alleges a type
        of economic injury, which is the epitome of
        “concrete.” For seven months, FHCP was
        unable to use money that (allegedly)
        belonged to it. The inability to have and use
        money to which a party is entitled is a
        concrete injury. FHCP’s harm cannot be
        remedied by simply receiving the amount
        owed—it requires something more to
        compensate for the lost time, like interest.
        And MSPA alleges it is entitled to both
        interest (and double damages) because of St.
        Mary’s delay in reimbursing FHCP.

Id. (citations omitted).

    In Habitat, the district court required Habitat to post a
$10,000 injunction bond. 607 F.3d at 455. Habitat sought
review of the bond order on appeal, and the relevant question
before the court was whether Habitat had standing to
appeal. 2 The court noted that Habitat had not yet been
required to pay damages out of the bond, and it was possible
that no damages would ever be assessed and thus that the
district court would eventually return the $10,000 to Habitat.
See id. at 457. The court nevertheless concluded that Habitat
had standing to challenge the bond order on appeal based on

    2
       Habitat involved standing to appeal, rather than Article III
standing, but that distinction is not material to our analysis. See
15A Edward H. Cooper, Federal Practice and Procedure § 3902 (2d ed.
2020) (noting “the strong affinity between standing to appeal and more
general standing doctrines”); cf. Envtl. Prot. Info. Ctr., Inc. v. Pac.
Lumber Co., 257 F.3d 1071, 1075 (9th Cir. 2001) (discussing the general
rule that a party “aggrieved” by a judgment has standing to appeal it).
                     VAN V. LLR, INC.                       9

the “time value” of the $10,000 deposited with the district
court:

           It could be argued that unless and until
       damages are assessed, Habitat has incurred
       no loss and therefore lacks standing to
       appeal. But it has incurred a loss—a loss of
       the use of $10,000. Every day that a sum of
       money is wrongfully withheld, its rightful
       owner loses the time value of the money.
       Suppose no damages are ever assessed
       against Habitat and so eventually the court
       returns the $10,000 that it is holding; there
       would be no procedural vehicle to enable
       Habitat to recover the loss of the time value
       of its money. Therefore it had standing to
       challenge the bond order on appeal from the
       final judgment.

Id.

    In Dieffenbach, 887 F.3d at 827, customers of Barnes &
Noble sued after a data breach that resulted in the theft of
their credit and debit card information. The Seventh Circuit
held that customers had standing because they “temporarily
lost the use of their funds while waiting for banks to reverse
unauthorized charges to their accounts.” Id. They had
standing “because unauthorized withdrawals from their
accounts cause a loss (the time value of money) even when
banks later restore the principal.” Id. at 828.

    These decisions reflect the firmly established principle
that tort victims should be compensated for loss of use of
money—through either an award of damages or the payment
of prejudgment interest. Under the common law tort
remedies of replevin and conversion, damages for loss of use
10                   VAN V. LLR, INC.

are the norm. See Dressel v. Weeks, 779 P.2d 324, 328
(Alaska 1989) (“Damages in an action of conversion
generally are measured by the value of the item at the time it
was converted plus interest.” (quoting Rollins v. Leibold,
512 P.2d 937, 944 (Alaska 1973))); Rollins, 512 P.2d at 944
(“Replevin is defined as an action brought to recover goods
unlawfully taken. Thus, the normal remedy is the return of
the goods. Damages are also allowed for the value of the use
of the goods during the period of detention.” (footnote
omitted)); Restatement (Second) of Torts §§ 922, 927, 931
(1979). As the Eleventh Circuit explained in MSPA
Claims 1:

           Paying interest as compensation for lost
       time is nothing new. FHCP’s alleged harm is
       analogous “to a harm that has traditionally
       been regarded as providing a basis for a
       lawsuit in English or American courts[,]”
       Spokeo, 136 S. Ct. at 1549—a debtor’s
       delinquent payment to a creditor. In effect,
       FHCP gave St. Mary’s a $286 loan, and
       St. Mary’s paid it back seven months late. As
       Spokeo teaches, this close analogy to a
       traditional common law right further supports
       concreteness.      Id.    Thus, MSPA has
       adequately alleged that FHCP suffered an
       injury-in-fact.

918 F.3d at 1318 (alteration in original). Alternatively, loss
of use may be addressed through the payment of
prejudgment interest. See West Virginia v. United States,
479 U.S. 305, 310–11 n.2 (1987) (“Prejudgment interest
serves to compensate for the loss of use of money due as
damages from the time the claim accrues until judgment is
                      VAN V. LLR, INC.                       11

entered, thereby achieving full compensation for the injury
those damages are intended to redress.”).

     In sum, we hold that the temporary loss of use of one’s
money constitutes an injury in fact for purposes of Article
III.

                               C

    Though not raised before the district court, we close by
addressing what would otherwise likely arise as an issue on
remand: LLR’s fallback argument that Van has failed to
adequately allege injury because, to have standing based on
the time value of money, “a plaintiff must make specific
allegations regarding how it would have earned interest on
the money but for the defendant’s wrongful conduct.” This
argument misstates Van’s claimed injury. Van does not
assert that she is injured because she lost interest income.
She asserts that she is injured because she lost the use of her
money. Consistent with our opinion here, although the
former injury may be speculative, the latter injury is actual,
concrete, and particularized. Interest is simply a way of
measuring and remedying Van’s injury, not the injury itself.
To the extent the Eleventh Circuit’s decision in Kawa
Orthodontics, LLP v. Secretary, U.S. Department of the
Treasury, 773 F.3d 243, 246 (11th Cir. 2014), suggests that
a plaintiff must allege “specific plans to invest its money into
an interest-bearing asset” to establish standing based on a
temporary deprivation of money, we respectfully decline to
follow it. We note that the Eleventh Circuit did not mention
those types of allegations in its subsequent decision in MSPA
12                        VAN V. LLR, INC.

Claims 1, which recognized standing based on the lost use
of money. 3

                                   IV

    We reverse the judgment of the district court dismissing
this action for lack of Article III standing and remand for
further proceedings consistent with this opinion.

   REVERSED AND REMANDED. Costs of appeal are
awarded to Plaintiff-Appellant Van.

     3
       We need not consider what evidentiary showing a plaintiff must
make under Alaska law to recover interest as a component of damages
in connection with a temporary, wrongful deprivation of money. That
issue has not been presented, and our focus is on whether Van has shown
an injury in fact under Article III, not whether she has adequately alleged
a claim for compensatory damages under Alaska law.