A corporation, X, is a retail seller of furniture and appliances. X has stores in 20 states. X sells much of its merchandise under installment contracts. A purchaser can buy an item by making a small down payment, and then making ongoing, periodic payments until the purchase price is paid in full. The standard contract provides that if a purchaser completes the payments, then the purchaser owns the item. But if not, then X can repossess the item. X contracts with Y, a separate corporation, to repossess the items and deliver them to X.
The plaintiff, P, tried to buy a refrigerator from X under X’s standard sales contract. After P fell behind on the payments, X directed Y to repossess the refrigerator. P feels that X engaged in deceptive sales practices by misrepresenting the interest rate and payment terms under the sales contract. P also alleges that Y’s employees committed trespass and damaged P’s property, by forcibly entering P’s home to repossess the item. Both P and X are citizens of State A.
On these grounds, P sues X in a State A court of general jurisdiction, relying on State A’s common law of trespass and a State A statute prohibiting deceptive sales practices. P seeks $5,000 in damages for herself.
P also invokes the State A procedures for class actions, which are the same as the procedures under Fed. R. Civ. P. (Rule) 23. P seeks to represent a class of all persons from whom X has repossessed items within the relevant statute of limitations. There are 5,000 potential class members, whose citizenship is distributed evenly among the 20 states where X has its stores. The individual class members’ claims range from $1,000 to $5,000 in damages. The aggregate claims of the entire class total $10,000,000.
P properly serves the summons and complaint upon X. X then timely removes the case to the U.S. District Court for the District of State A. To support removal, X invokes federal diversity jurisdiction.
P files a timely motion to remand, arguing that: (1) the court lacks subject-matter jurisdiction, because the amount in controversy is insufficient; (2) the court lacks subject-matter jurisdiction, because there is not complete diversity of citizenship; (3) removal is improper, because the state court has not yet certified a class; and (4) removal is improper, because a defendant cannot remove a case in a state where it is a citizen. The judge denies P’s motion and eventually certifies the class.
During discovery, P serves the following request for admission on X: “Please admit that at all times relevant to this case, Y was an agent of X in repossessing goods from X’s customers.”Within 20 days, X’s attorney responds in writing as follows: “X cannot answer this request, because the question of agency is a legal matter to be determined at trial.”
At the pretrial conference, P argues that X’s response to the request for admission was inadequate, and moves that the request be deemed admitted for trial. The judge rules in favor of P, and states that at trial, the judge will instruct the jury that Y was X’s agent.
- Was the judge correct to deny P’s motion to remand? Explain.
- Was the judge correct to grant P’s motion regarding the request for admission? Explain.