Opinion
No. C 03-01727 WHA
August 4, 2003
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING DEFENDANT'S MOTION TO STAY
INTRODUCTION
In this action alleging violation of California's unfair competition law, plaintiff moves to remand and defendant moves to the stay the proceedings. This order GRANTS plaintiff's motion and DENIES that of defendant.
STATEMENT
On March 14, 2003, in Alameda Superior Court, plaintiff filed a private-attorney-general action against defendant Ford Motor Company and John Doe defendants. The complaint alleges causes of action under Business and Professions Code 17200, California's unfair competition law. More specifically, the complaint alleges that there is a significant risk that the fuel tanks in Panther-platform vehicles will puncture in the event of a rear-end collision. The complaint further alleges that Ford has designed a repair kit for these vehicles and has made it available free of charge for Panther platform vehicles registered to certain law enforcement agencies. In spite of this, Ford has not, according to the complaint, made the repair kit available free of charge for all affected Panther-platform vehicles, nor has Ford notified customers of the problem or the repair kit's availability.
Plaintiff seeks "all appropriate relief as determined by the court" under the California Business and Professions Code 17203 and consistent with California Civil Code 1795.92, as well as fees and costs. The complaint states that "[n]either plaintiff nor any individual member of the general public for whose benefit this action is brought has a claim under [Section 17200], the value of which exceeds $75,000, exclusive of interest and costs." On April 18, 2003, Ford removed the action to federal court on grounds of diversity and federal-question jurisdiction. Ford has also sought transfer of this action, along with others related to Ford's Panther-platform vehicles and their fuel-tank systems, from the Judicial Panel on Multidistrict Litigation (the "MDL Panel") under 28 U.S.C. § 1407. On May 30, 2003, a conditional order issued transferring this action to the Northern District of Ohio, though the transfer did not go into effect because plaintiff filed an opposition. In light of the potential transfer, Ford moves to stay proceedings in this action. Plaintiff moves to remand. This order addresses both motions.
ANALYSIS
1. PLAINTIFF'S MOTION TO REMAND.
Plaintiff moves to remand on the ground that there is no basis for federal subject-matter jurisdiction. Ford maintains that both diversity jurisdiction and federal-question jurisdiction exist in case. This order finds that plaintiff is correct: the Court has neither diversity jurisdiction nor federal question jurisdiction over this matter.
A. Diversity Jurisdiction.
Ford argues that removal was proper because federal diversity jurisdiction exists over the action pursuant to 28 U.S.C. § 1332. Plaintiff is alleged to be a California resident; Ford is alleged to be a Delaware corporation with its corporate headquarters and principal place of business in Michigan. As to the amount-in-controversy requirement, Ford contends that it is satisfied because the administrative costs Ford would incur in complying with the injunction sought by plaintiff exceed $75,000. Ford principally relies on two cases, Mangini v. R.J. Reynolds Tobacco Co. , 793 F. Supp. 925 (N.D. Cal. 1992) (Conti, J.), and Myers v. Merrill Lynch Co. , 1999 WL 696082 (N.D. Cal. Aug. 23, 1999) (Orrick, J.), for the proposition that such costs may be taken into account when determining the amount in controversy in a private-attorney-general action brought under California's unfair competition law.
Plaintiff, on the other hand, argues that it is improper to determine the amount in controversy by considering the cost to defendant of complying with an injunction. In support of this argument, plaintiff points out that the majority of courts that have addressed the issue have found that representative actions under the California's unfair competition law should be treated like class actions under FRCP 23: for purposes of determining the amount in controversy, individual claims should not be aggregated and the potential cost to defendant of complying with an injunction should not be considered. See Boston Reed Co. v. Pitney Bowes, Inc. , 2002 WL 1379993 (N.D. Cal. June 20, 2002) (Conti, J.); Surber v. Reliance Nat'l Indem. Co. , 110 F. Supp.2d 1227 (N.D. Cal. 2000) (Breyer, J.); Phipps v. Praxair, Inc. , 1999 WL 1095331 (S.D. Cal. Nov. 12, 1999); Morrison v. Rand McNally Co. , 1997 WL 564028 (N.D. Cal. Sept. 4, 1997) (Smith, J.).
In his Boston Reed opinion, Judge Conti acknowledged taking a different position than he did ten years earlier in Mangini, explaining that he found "the reasoning in Phipps and Surber to be persuasive." 2002 WL 1379993, at *5.
As noted in Boston Reed , 2002 WL 1379993, at *5 n. 3, there is a lack of consensus in this district as to which approach is correct. The weight of authority, however, favors plaintiff's approach. So too does this order.
As observed elsewhere, plaintiff's approach is more consistent with the Supreme Court's analysis of the amount-in-controversy requirement in Snyder v. Harris , 394 U.S. 332 (1969). In Snyder , the Court disallowed aggregation of plaintiff's separate and distinct claims in a class action under FRCP 23 for purposes of satisfying the amount-in-controversy requirement. In so ruling, the Court emphasized that allowing aggregation would expand federal jurisdiction, undercut the amount-in-controversy requirement, and result in the federal courts more often resolving cases involving only state-law issues. Snyder , 394 U.S. at 340-41. The representative nature of a private-attorney-general action under California's unfair competition law renders it analogous to a class action under FRCP 23. The same principles that the Supreme Court cited in Snyder counsel against finding that the amount-in-controversy requirement is satisfied here on account of administrative costs Ford expects to incur in the event of an injunction.
* * *
This order also rejects defendant's argument that the amount-in-controversy requirement is satisfied on account of potential attorney's fees. Attorney's fees may be considered as part of the amount in controversy when they are authorized, either with mandatory or discretionary language, by an underlying statute. Galt G/S v. JSS Scandanavia, 142 F.3d 1150, 1156 (9th Cir. 1998). Section 1021.5 of the California Code of Civil Procedure provides for the award of attorney's fees to a "successful party" in a case that results in public benefit. Under this provision, a court may award attorney's fees to a prevailing plaintiff in a private-attorney-general action brought under California's unfair competition law. Walker v. Countrywide Home Loans, 121 Cal.Rptr.2d 79, 94 (2002).Although it is appropriate in this case to consider the attorney's fees sought by plaintiff as part of the amount in controversy, the Court is unwilling to find on this record that the jurisdictional minimum is satisfied. As the removing party, defendant must establish that the amount-in-controversy requirement is satisfied by a preponderance of the evidence. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). Ford points in its notice of removal to the fact that plaintiff designated this case "complex" on its state-court cover sheet and checked boxes indicating that there will be a "[s]ubstantial amount of documentary evidence" and "[e]xtensive motion practice raising difficult or novel issues that will be time-consuming to resolve." This is not enough. Terms like "extensive" and "time-consuming" are entirely subjective and relative. Ford has submitted no evidence as to hourly billing rates or the actual number of hours that it would likely take to litigate a case of this kind. On this record, Ford has failed to establish by a preponderance of the evidence that attorney's fees are likely to exceed $75,000. The Court is mindful that any doubt regarding the propriety of removal is to be resolved in favor of remand. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979).
B. Federal-Question Jurisdiction.
Ford also argues against remand by claiming that federal-question jurisdiction exists over the action. Specifically, Ford contends that the National Traffic and Motor Vehicle Safety Act, 49 U.S.C. § 30101-170 (hereinafter "Safety Act") completely preempts plaintiff's state-law claims and that plaintiff's state-law claims present a substantial question of federal law. These arguments are without merit.
An ordinary federal preemption defense does not create a removable federal question; for federal-question jurisdiction to exist, Congress must have clearly intended complete preemption of state law by a federal scheme. See ARCO Envtl. Remediation, L.L.C. v. Dep't of Health Envtl. Quality, 213 F.3d 1108, 1114 (9th Cir. 2000). Despite defendant's contentions, the intent for complete federal preemption of plaintiff's state-law claims cannot be found in the Safety Act. In fact, 49 U.S.C. § 30103(d) specifically provides that various sections of the Safety Act, including Section 30118 concerning recalls, "do not establish or affect a warranty obligation under a law of the United States or a State." In a similar vein, 49 U.S.C. § 30103(e) makes clear that "[c]ompliance with a motor vehicle safety standard prescribed under this chapter does not exempt a person from liability at common law." The Safety Act, it should also be noted, does not itself provide a private right of action. Plainly, it cannot be said that the Safety Act completely preempts plaintiff's claims.
Also unconvincing is Ford's argument that federal-question jurisdiction exists because plaintiff's claims raise a substantial question of federal law. Even when "state law creates the cause of action, and no federal law completely preempts it, federal jurisdiction may still lie if it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims." Rains v. Criterion Sys., Inc. , 80 F.3d 339, 345 (9th Cir. 1996) (internal quotation omitted). Advancing this jurisdictional theory, Ford maintains that the instant action is an implicit attack on the National Highway Traffic Safety Administration's safety standards for fuel-tank integrity and that the relief sought by plaintiff is the functional equivalent of a safety-related recall. This order disagrees. The instant action concerns whether Ford has violated its duties under California law by allegedly making a repair kit available free of charge to only a select group of Panther-platform-vehicle owners and not informing others of the kit's existence. The issues raised can be resolved independent of any "substantial federal question."
C. Plaintiff's Request for Fees and Costs.
As discussed above, the law regarding the determination of the amount in controversy in this context is unsettled. Ford therefore had a colorable basis for asserting that removal was proper. Under the circumstances, this order declines to award attorney's fees and costs to plaintiff.
2. DEFENDANT'S MOTION TO STAY
This order denies defendant's motion to stay the case while the MDL Panel considers defendant's request to transfer under 28 U.S.C. § 1407. "A putative transferor court need not automatically postpone rulings on pending motions, or in any way generally suspend proceedings, merely on grounds that a MDL transfer motion has been filed." Tortola Restaurants, L.P. v. Kimberly-Clark Corp. , 987 F. Supp. 1186, 1188 (N.D.Cal. 1997) (Illston, J.). Defendant's arguments in favor of a stay, including the assertions that it would save judicial resources and prevent hardship, are unpersuasive. It is best to resolve promptly the question of federal subject-matter jurisdiction so that this case may proceed in the appropriate forum without delay.
CONCLUSION
For the foregoing reasons, plaintiff's motion to remand is GRANTED, though its request for attorney's fees and costs is DENIED. Defendant's motion to stay is DENIED. This action is hereby REMANDED to the Alameda County Superior Court.