Opinion
No. C 12-5636 CW
2013-10-17
MICHAEL TOTH, et al., Plaintiffs, v. ENVIVO, INC., et al., Defendants.
ORDER DENYING
MOTION FOR LEAVE
TO FILE MOTION FOR
RECONSIDERATION
(Docket No. 32)
Defendants, Envivo, Inc. and several of its officers and directors, move for leave to file a motion for reconsideration of the Court's October 11, 2013 order remanding this case to San Mateo County Superior Court. Plaintiffs Michael Toth and Joe Wiley Oppose the motion. After considering the parties submissions, the Court denies the motion.
DISCUSSION
A party may only file a motion for reconsideration after obtaining leave of the Court. Civil L.R. 7-9(a). Under Civil Local Rule 7-9(b), the party seeking leave to file such a motion must show (1) that "a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought"; (2) the "emergence of new material facts or a change of law occurring after the time of such order"; or (3) a "manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order."
Here, Defendants argue that "the Court manifestly failed to consider a dispositive legal argument, namely, that where, as here, an action is facially removable as a federal question, the burden is on the plaintiffs who are seeking remand to prove that an express exception to removal exists." Docket No. 32, Mot. Leave File Mot. Recons., at 1 (citing Breuer v. Jim's Concrete of Brevard, Inc., 538 U.S. 691, 698 (2003)). This argument rests on the faulty premise that this action is "facially removable as a federal question."
As explained in the Court's remand order, the 1933 Securities Act contains an anti-removal provision that expressly states, "Except as provided in section 77p(c) of this title, no case arising under this subchapter and brought in any State court of competent jurisdiction shall be removed to any court of the United States." 15 U.S.C. § 77v(a). Federal district courts are divided over whether or not section 77p(c) permits the removal of actions like this one -- which raise only federal securities fraud claims -- and the question remains unsettled. See Niitsoo v. Alpha Natural Res., Inc., 902 F. Supp. 2d 797, 807 (S.D.W. Va. 2012) ("No matter what Congress intended § 77p(c) to accomplish, there is no perfect way to read that section in conjunction with the plain meaning of the amendments in § 77v(a)."). In light of this continuing ambiguity over the scope of section 77p(c), Defendants have not demonstrated that the present action is "facially removable as a federal question."
Over the last decade, more than a dozen district courts around the country -- including two in this district -- have construed section 77p(c) to preclude removal in cases like this one. See, e.g., Reyes v. Zynga Inc., 2013 WL 5529754 (N.D. Cal.) (granting motion to remand); Young v. Pac. Biosciences of Cal., 2012 WL 851509 (N.D. Cal.) (same); but see Lapin v. Facebook, Inc., 2012 WL 3647409 (N.D. Cal.) (denying motion to remand).
Thus, contrary to Defendants' position, Plaintiffs were not required to prove that an exception to removal exists in order to prevail on their motion to remand. Rather, as the Ninth Circuit has explained, the burden to establish that federal jurisdiction exists rested at all times with Defendants themselves. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) ("The 'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper."). They failed to satisfy that burden.
CONCLUSION
For the reasons set forth above, Defendants' motion for leave to file a motion for reconsideration (Docket No. 32) is DENIED.
IT IS SO ORDERED.
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CLAUDIA WILKEN
United States District Judge