Ecker v. Ford Motor Company

Full title: MELISSA ECKER, on behalf of herself and all others similarly situated and…

Court: United States District Court, C.D. California

Date published: Nov 12, 2002

Case No. CV 02-06833 SVW (JTLx) (C.D. Cal. Nov. 12, 2002)

Opinion

Case No. CV 02-06833 SVW (JTLx)

November 12, 2002

ORDER GRANTING PLAINTIFF'S EX PARTE APPLICATION FOR REMAND.

STEPHEN V. WILSON, United States District Judge

I. INTRODUCTION

This consumer class action originally was brought by Plaintiff Melissa Ecker ("Plaintiff") against Defendant Ford Motor Company ("Defendant") in the Superior Court of California for the County of Los Angeles. The case was removed by Defendant, and plaintiff now seeks an order immediately remanding the case to state court.

II. FACTUAL AND PROCEDURAL BACKGROUND

This consumer class action is brought against Defendant Ford Motor Company due to an allegedly faulty brake system on the 2000 and 2001 Ford Focus. Plaintiff asserts five causes of action: (1) breach of express warranty; (2) violation of the Magnuson-MOSS Warranty Improvement Act; (3) violation of the Consumer Legal Remedies Act; (4) violation of California Business and professions Code § 17200; and (5) violation of California Business and Professions Code § 17500.

The Complaint alleges that the 2000 and 2001 Ford focus vehicles have defective braking systems — the defect "results in the premature degeneration of the front brake pads and rotors that is grossly in excess of normal wear and tear and requires frequent replacement." Memorandum of Points Authorities in Support of Motion ("Memorandum of PA") at 1. This defect also "reduces the effectiveness of the front brake system and causes collateral damage to other front-end systems and components." Id.

Plaintiff, arguing that the Court does not have either diversity or federal question jurisdiction over this case, seeks an order immediately remanding the case to state court. In particular, Plaintiff claims that the amount-in-controversy does not exceed $75,000, the class claims should not be aggregated to satisfy the jurisdictional requirement, and the claims alleged in the Complaint do not "arise under," and are not preempted by, federal law.

For the reasons stated herein, the Court GRANTS Plaintiff's ex parte application for remand.

III. LEGAL STANDARDS GOVERNING A MOTION TO REMAND

The removal statute is strictly construed against removal jurisdiction. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992) (citingBoggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988); Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)). The defendant, as the removing party, has the burden of establishing that removal was proper. Gaus, 980 F.2d at 566 (citing Nishimoto v. Federman-Bachrach Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990); Emrich v. Touche Ross Co., 846 F.2d 1190, 1195 (9th Cir. 1988)).

The Court will have removal jurisdiction over this controversy only if the Court would have had original subject matter jurisdiction over the case. See 28 U.S.C. § 1441 (a); Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Furthermore, because there is a strong presumption against removal jurisdiction, Gaus, 980 F.2d at 566, if the court has any doubts about its subject matter jurisdiction, the case must be remanded to state court. See Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996).

IV. ANALYSIS

Defendant Ford Motor Co. argues that removal was proper for several reasons: (1) there is more than $75,000 in controversy because the Plaintiffs may be entitled to punitive damages (which the Defendant estimates will be $60,000 for each member of the class); (2) the §§ 17200 and 17500 UCL claims are brought on behalf of the general public and therefore the damages should be aggregated such that the amount-in-controversy requirement is satisfied; (3) with regard to the class claim for injunctive relief, the Court should aggregate the claims (in other words, look to the cost to the Defendant to determine the amount-in-controversy); and (4) a potential recall of the cars is exclusively governed by federal law. The Court will address each argument in turn in determining whether the Court should remand the case to state court.

A. The Court does not have diversity jurisdiction over this case.

Under 28 U.S.C. § 1332 (a), diversity jurisdiction exists where there is complete diversity of citizenship and the amount-in-controversy exceeds $75,000. Because it is undisputed that there is complete diversity of citizenship in this case, the only issue with regard to diversity jurisdiction is whether the amount-in-controversy requirement has been satisfied.

1. The pro rata amount-in-controversy does not exceed $75,000.

Defendant argues that punitive damages should be included in the pro rata estimate of the amount-in-controversy. However, because Plaintiff does not seek punitive damages, Defendant cannot include punitive damages in calculating the amount-in-controversy simply because Plaintiff could seek punitive damages.

Defendant argues that the language in the Complaint stating that Plaintiff requests "such other relief as this Court may deem just and proper" indicates that punitive damages are a possibility. However, as Plaintiff points out, this is form language that is included in most complaints. Thus, it is "entirely speculative" that punitive damages will be awarded in this case, see Memorandum of PA at 3. Furthermore, as Plaintiff points out, an award of punitive damages in the amount of $60,000 per class member seems extremely high — Defendant certainly has not shown that each class member will receive any, let alone $60,000, in punitive damages. See Gibson v. Chrysler Corp., 261 F.3d 927, 933 (9th Cir. 2001) (citations omitted) ("A defendant attempting to remove a diversity case must show by a preponderance of the evidence that the amount-in-controversy requirement is satisfied."), cert. denied, 534 U.S. 1104 (2002).

Because it is improper to include punitive damages in computing the amount-in-controversy, the total pro rata amount-in-controversy is well below $75,000.¹

2. The claims brought on behalf of the public under California Business and Professions Code §§ 17200 and 17500 should not be aggregated.

1 According to Plaintiff's calculations, the pro rata amount in-controversy is approximately $17,333 — this includes restitution of the vehicle purchase price, out-of-pocket expenses, and attorneys's fees. Defendants do not reject this estimate, see Opposition at 13, which appears to be an accurate assessment of the potential damage award.

Because this is a class action, the court looks to the named plaintiff only to determine whether the $75,000 jurisdictional requirement is satisfied. See Kanter v. Warner-Lambert Co., 265 F.3d 853, 858-59 (9th Cir. 2001). Defendant argues, however, that in a private attorney general action brought on behalf of the general public, the Court should analyze the cost to the defendant to determine the amount-in-controversy (which, in essence, is the same as aggregating the claims).²

2 See note 3.

While the Complaint does state that the UCC claims are brought on behalf of the general public, the Complaint also incorporates these two claims (the fourth and fifth) under the heading "Class Action Allegations." Thus, Plaintiff contends, these causes of action, like the first three claims, are brought on behalf of the class.

Defendant cites Mangini v. R.J. Reynolds Tobacco Co., 793 F. Supp. 925 (N.D. Cal. 1992), a case in which a district court held that the complaint, which prayed for an injunction and disgorgement of ill-gotten gains to be placed in a constructive trust, satisfied the jurisdictional minimum because the court looked to the cost to the defendant to determine the amount-in-controversy. While Mangini was a private attorney general action, it was not a class action and the court explicitly narrowed its holding to non-class action cases: "[I]n non-class action cases, the amount-in-controversy may be measured either by the value of the relief sought by the plaintiff or the cost to the defendant if the relief is granted." Id. at 928 (emphasis added).

Thus, while the Mangini court decided not to treat a private attorney general action the same as a class action, this case is a class action and should be treated as such. At the least, Defendant has not met its burden here and any doubts that may exist should be resolved in favor of Plaintiff.

In addition, in Gibson, the Ninth Circuit analyzed a consumer class action (related to a defective automobile paint job) analogous to the case before this Court and held that even though the claims were brought on behalf of the public, "plaintiffs' disgorgement claims in this case [we]re each cognizable, calculable, and correctable individually. . . . [The sum attributable to each vehicle sold] can be traced to particular transactions involving individual plaintiffs, each of whom can sue Chrysler for disgorgement of the pre-vehicle profit." 262. F.3d at 945 (citations omitted). Thus, even in a non-class action private attorney general action, the court looked to each individual Plaintiff to determine the amount-in-controversy.

Lastly, in Boston Reed Co. v. Pitney Bowes, Inc., 2002 U.S. Dist. LEXIS 11683, 2002 WL 1379993 (N.D. Cal. June 20, 2002), the court held that a private attorney general action brought under the California Business and Professions Code is analogous to a class action and should be treated as such:

The question turns on whether a state private attorney general action should be treated as a class action for purposes of determining the amount in controversy, and, if so, whether the plaintiffs' claims can be aggregated. After considering the California courts' interpretation of the statute and recent district court decisions addressing the issue, the Court answers the first question in the affirmative and the second in the negative and remands this case to state court.

Id. at *10.

The Boston Reed court, in acknowledging the change in reasoning since the court's decision in Mangini, explained that "[t]he Court finds the reasoning in [two cases decided after Mangini] to be persuasive, especially since the California courts themselves have recently recognized the representative nature of a § 17204 [Business and Professions Code] claim." Id. at *15 (footnote omitted). Thus, Business and Professions Code actions, even if not brought as class actions, should be treated as class actions in determining the amount-in-controversy.

In this case, even assuming that Defendant is correct that the Section 17200 and 17500 claims are not brought on behalf of the class (which does not seem to be the case), the class members' claims should not be aggregated (nor should the Court look to the cost to the Defendant to determine the amount-in-controversy). This applies equally to Plaintiff's claims for monetary and injunctive relief. See Surber v. Reliance Nat'l Indem. Co., 110 F. Supp.2d 1227, 1233 (N.D. Cal. 2000) (citations omitted) ("Elm class suits, courts should not consider the cost to defendant of complying with a potential injunction. . . . Like class actions, claims under section 17200 seek relief on behalf of numerous individuals. Accordingly, in determining jurisdiction over section 17200 claims, courts should not consider the potential costs to the defendant of compliance with a potential injunction.").

3. The class claim for injunctive relief should not be aggregated to satisfy the amount-in-controversy requirement.

Defendant also argues that the class claims should be aggregated (in other words, the Court should look to the cost to the Defendant) with regard to the claim for injunctive relief because "the requested injunctive relief is based upon a common and undivided interest held, if at all, by a putative class as a whole." Opposition at 13-14. However, the case law is clear that in class claims for injunctive relief, "where the equitable relief sought is but a means through which the individual claims may be satisfied, the ban on aggregation [applies] with equal force to the equitable as well as the monetary relief." Snow v. Ford Motor Co., 561 F.2d 787, 789 (9th Cir. 1977) (cited by Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F. Supp.2d 993, 1002 (C.D. Cal. 2002)).

Just as in Snow and Kenneth Rothschild, the nature of the right asserted in this case is an individual right: "Each plaintiff can sue to vindicate that right as an individual; he need not join the members of the class in order to bring a cognizable claims." Kanter v. Warner-Lambert Co., 265 F.3d at 860. Thus, the class claim for injunctive relief in this case should not be aggregated.³ Because the value of injunctive relief for each member of the class does not exceed $75,000 (and therefore the total pro rata amount-in-controversy does not exceed $75,000), this Court does not have diversity jurisdiction over Plaintiff's claims.

3 Aggregation of the claim for injunctive relief would create, for practical purposes, "a defendant's viewpoint approach to calculating the cost of an injunction." See Kanter, 265 F.3d at 860 (citing Snow, 561 F.2d at 790). In class suits, the Court should not consider the cost to defendant of complying with a potential injunction to determine the amount-in-controversy. See Surber. 110 F. Supp.2d at 1233; In re Ford Motor Co./Citibank, 264 F.3d 952, 961 (9th Cir. 2001) (citation and internal quotation marks omitted) ("If . . . the administrative costs of complying with an injunction were permitted to count as the amount in controversy, then every case, however trivial, against a large company would cross the threshold.").
Thus, the Court will not consider Defendant's cost in complying with an injunction. Nor will the Court aggregate the class claims for injunctive relief to satisfy the amount-in-controversy requirement.

B. The Court does not have federal question jurisdiction in this case because Plaintiff's claims are not preempted by the federal National Traffic and Motor Vehicle Safety Act and do not "arise under" federal law.

Defendant argues that Plaintiff's Complaint falls within the Court's federal question jurisdiction because it states: "[A] working, defect-free braking system is required for the safe operation of the automobile and to bring it into compliance with the requirements imposed by the United States and each State and/or Territory." Compl. ¶ 5. Further, the Complaint states that the alleged defect "can be remedied adequately only through a redesigned or remanufactured braking system." Compl. ¶ 41. Defendant also argues that car recalls are governed exclusively by federal law under the National Traffic and Motor Vehicle Safety Act ("Safety Act"), 49 U.S.C. § 30118-30120, and 29 C.F.R. § 577.5.

"A state-created cause of action can be deemed to arise under federal law (1) where federal Law completely preempts state law [citation]; (2) where the claim is necessarily federal in character [citation]; or (3) where the right to relief depends on the resolution of a substantial, disputed federal question [citation]." Arco Envtl. Remediation v. Dep't of Health and Envtl. Quality, 213 F.3d 1108, 1114 (9th Cir. 2000) (citations omitted). Thus, simply because an issue of federal law may be involved in this case does not mean that the Complaint asserts a federal question.

The Ninth Circuit has held that "if a federal law does not provide a private right of action, then a state law action based on its violation perforce does not raise a `substantial' federal question." Utley v. Varian Assocs., Inc., 811 F.2d 1279, 1283 (9th Cir. 1987), cert. denied, 484 U.S. 824 (1987). Here, it is possible that Defendants could be found to have violated state law without finding a violation of federal law. Plaintiff's claims, therefore, do not rest entirely on federal law because an action "arises under" federal law only if the plaintiff's right to relief necessarily depends on resolution of a substantial federal question. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983). This is not the case here.

Furthermore, while Defendant contends that automobile recalls are exclusively governed by federal law, as Plaintiff points out, a federal preemption defense does not establish federal question jurisdiction (unless Congress intended for the statute to completely preempt state law).⁴ See Rivet v. Regions Bank, 522 U.S. 470, 475 (1998); Gully v. First Nat'l Bank, 299 U.S. 109, 116 (1936). In addition, in a recent case also dealing with a potential recall in which the defendant argued that NHTSA had the sole authority under the federal Safety Act to order a recall, Judge Snyder held:

4 Defendant points to a district court case from Maryland that in which the court stated: "Congress has completely preempted the field with respect to the initiation and conduct of motor vehicle and tire recalls."Namovicz v. Cooper Tire Rubber Co., 2001 U.S. Dist. LEXIS 24770, at *5-*6, 2001 WL 327886 (D. Md. Feb. 26, 2001).
The Namovicz court held that the National Highway Traffic Safety Administration ("NHTSA") had the exclusive authority to determine whether a vehicle violates the Safety Act. Id. at *7 However, Judge Snyder, sitting in this District, implicitly held that the Safety Act does not completely preempt state law — Judge Snyder remanded the case to state court because Plaintiff was simply asserting preemption as a defense. Kagan v. Carwell Corp., 2001 U.S. Dict. LEXIS 4544, at *6-*7 (C.D. Cal. Apr. 2, 2001). The Court agrees with Judge Snyder and therefore rejects Defendant's argument that Plaintiff's claims are preempted by the Safety Act.

Even if, as the removing defendants also contend, plaintiff may petition the NHTSA for relief, such an administrative right is not a "cause of action," as Ninth Circuit authority requires. The Safety Act establishes a right of action by the Attorney General of the United States, see 49 U.S.C. § 30162, and permits the Secretary of Transportation to order a manufacturer to recall defective vehicles see 49 U.S.C. § 30118, but does not appear to create a private right of action for injured members of the public. Under the well-pleaded complaint rule, federal question jurisdiction thus does not exist, and this case is not removable.

Kagan v. Carwell Corp., 2001 U.S. Dist. LEXIS 4544, at *7-*8 (C.D. Cal. Apr. 2, 2001).

This same reasoning applies here. While Defendant claims that the Safety Act preempts Plaintiff's claims, this is not the case. The Act allows the Secretary of Transportation to order a recall, but as Judge Snyder explained, it does not create a private right of action. Plaintiff's claims thus are not preempted by federal law and not "arise under" federal law, and the Court therefore does not have federal question jurisdiction over Plaintiff's claims.

V. CONCLUSION

Because defendants have failed to carry their burden to establish that the Court has diversity and/or federal question jurisdiction over this controversy, the Court GRANTS Plaintiff's ex parte application for remand.

IT IS SO ORDERED.