Opinion
2:24-cv-04882-SB-AGR
07-31-2024
MONICA SANCHEZ, Plaintiff, v. MARRIOTT INTERNATIONAL, INC., Defendant.
ORDER GRANTING MOTION TO REMAND [DKT. NO. 11]
Stanley Blumenfeld, Jr. United States District Judge
This website-tracking case involves a claim for $5,000 in maximum statutory damages for Defendant Marriott International Inc.'s alleged violation of the California Invasion of Privacy Act (CIPA). This is one of the many, low-dollar, boilerplate lawsuits filed by the same law firm. Plaintiff Monica Sanchez originally filed this case in state court. Dkt. No. 1-1 at 13-28 of 39 (Compl.). Marriott removed on the basis of diversity jurisdiction. Dkt. No. 1. Sanchez now moves to remand, alleging that the amount-in-controversy requirement is not met. Dkt. No. 11. Because Marriott has not met its burden of demonstrating by a preponderance of the evidence that more than $75,000 is in controversy, the Court grants the motion to remand.
I.
Sanchez, “a consumer privacy advocate who works as a ‘tester' to ensure that companies abide by the privacy obligations imposed by California law,” filed a complaint in Los Angeles Superior Court in May 2024, alleging that Marriott installed tracking software on her device, without her consent, when she visited its website. Compl. ¶¶ 1, 4. The software allegedly collects consumer data that can be used to send targeted advertising to the website user. Id. ¶¶ 56-58. The complaint includes only one cause of action: a violation of CIPA, California Penal Code § 638.51(a). Id. ¶¶ 68-78. For this violation, Sanchez “seeks statutory damages of $5,000,” as well as “punitive damages, reasonable attorneys' fees pursuant to Cal. Civ. Proc. Code § 1021.5, and costs of suit.” Id. ¶ 77; id. at 15 (prayer for relief).
On June 10, Marriott removed, alleging that this Court could properly exercise diversity jurisdiction. Dkt. No. 1. On June 28, Sanchez moved to remand. Dkt. No. 11. The Court heard argument on the motion on July 26.
II.
Federal courts have subject-matter jurisdiction only over matters authorized by the U.S. Constitution and Congress. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Section 1332 provides for federal jurisdiction over civil actions between citizens of different states where the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1). There is a strong presumption against removal jurisdiction, and the removing defendant bears the burden of establishing that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
Where a complaint does not expressly state the amount in controversy, a defendant may plausibly allege the amount in controversy in its notice of removal. Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014). When the defendant's assertion of the amount in controversy is challenged, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at 88. The removing party bears the burden to establish that its estimate is based on reasonable assumptions rather than “mere speculation,” “conjecture” or “assumptions . . . pulled from thin air.” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197, 1199 (9th Cir. 2015).
III.
To bridge the gap from the complaint's request for $5,000 in statutory damages to the jurisdictional threshold of $75,000.01, Marriott offers several theories, which the Court addresses in turn.
First, Marriott relies on the civil cover sheet in the state case, in which Sanchez checked the box stating: “Amount demanded exceeds $35,000.” Dkt. No. 1-1 at 6 of 39. Marriott argues that this establishes $35,000 in statutory damages alone. Dkt. No. 1 ¶ 22. Sanchez argues that the civil cover sheet is not part of the complaint, and even if it were, it would include punitive damages. Dkt. No. 11 at 6.
Marriott has provided no basis for its interpretation that the $35,000 is an estimate of statutory damages alone. At the hearing, defense counsel argued that this interpretation is required by the state statutory provision defining the amount in controversy for purposes of classifying an action as a “limited civil case”- which excludes attorney's fees from that definition. See Cal. Civ. Proc. Code § 85. Section 85 states in relevant part that an action is treated as a limited civil case if:
The amount in controversy does not exceed thirty-five thousand dollars ($35,000). As used in this section, “amount in controversy” means the amount of the demand, or the recovery sought, or the value of the property, or the amount of the lien, that is in controversy in the action, exclusive of attorneys' fees, interest, and costs.Cal. Civ. Proc. Code § 85(a).
But § 85(a) does not exclude punitive damages from the amount in controversy and thus does not justify interpreting the civil cover sheet as an estimate of statutory damages alone. Id. Perhaps more fundamentally, Marriott has not demonstrated that a state civil cover sheet-an administrative form primarily designed to distinguish between limited and unlimited civil cases in state court-is a reliable estimate of the amount in controversy for federal jurisdictional purposes. See Zolfaghari v. Wall & Assoc., Inc., No. 19-cv-08101, 2020 WL 733810, at *5 (N.D. Cal. Feb. 13, 2020) (“A civil cover sheet does not supplant the complaint.... Defendants cannot use Plaintiff's civil cover sheet as a basis for their argument that Plaintiff seeks declaratory or injunctive relief in an amount that would exceed the amount in controversy.”); Don't Tread on US, LLC v. Twitter Inc., No. 23-cv-02461, 2024 WL 40200, at *2 (N.D. Cal. Jan. 3, 2024) (rejecting argument that civil cover sheet established jurisdiction by valuing the claims in an amount “over $100,000”). Accordingly, the civil cover sheet does not establish that the amount in controversy exceeds $75,000.
Second, Marriott relies on Sanchez's pre-suit settlement letter demanding $69,500-to which Marriott attempts to add attorneys' fees to exceed the jurisdictional threshold. Dkt. No. 17-1 at 3. A settlement demand is relevant to the amount in controversy, though it is not dispositive if a plaintiff reasonably contends that “the demand was inflated and not an honest assessment of damages.” Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). In this case, the demand already includes Plaintiff's estimate of punitive damages and attorneys' fees, and the total does not exceed $75,000. Dkt. No. 17-1 at 3 (demanding “$69,500 inclusive of statutory penalties, damages, attorneys' fees, and costs”). In her motion to remand, Sanchez confirms that the amount demanded in her settlement offer “is inclusive of both past and future attorneys' fees and costs.”Dkt. No. 23 at 2 (emphasis in original). Thus, the settlement demand, assuming it is a reasonable estimate of the value of the case, is an all-inclusive one that does not exceed the jurisdictional threshold. In contrast, each of the settlement letters at issue in the two cases cited by Marriott demanded more than the jurisdictional threshold. See Cohn, 281 F.3d at 840 (plaintiff claimed trademark at issue was “worth more than $100,000 to him”); Guillen v. Kindred Healthcare, No. 17-cv-02196-JAK, 2018 WL 1183354, at *4 (C.D. Cal. Mar. 7, 2018) (settlement demand letters requested over $300,000 each).
Because costs may not be considered when calculating the amount in controversy, 28 U.S.C. § 1332(a), the amount in controversy ascertainable from the settlement demand must be less than $69,500.
Marriott's remaining arguments are based on its own estimate of statutory damages, punitive damages, and attorneys' fees. Beginning with statutory damages, Marriott argues that the complaint requests more than $5,000, claiming that the complaint alleges multiple separate violations of CIPA. Dkt. No. 1 ¶ 21. Marriott points out that separate violations of CIPA can entitle a plaintiff to multiples of the $5,000 statutory maximum amount, citing Coulter v. Bank of Am., 28 Cal.App.4th 923, 925 (1994), which involved an award of $132,000 in CIPA statutory damages ($3,000 each for 44 specific violations), when a bank employee secretly recorded 160 separate conversations with his coworkers using two small tape recorders. In arguing that multiple violations are at issue here, Marriott cites paragraph 41 of the complaint, which explains how the tracking software works: “In all cases, the PR/TT beacon receives a user's IP address each and every time a user interacts with the website of one of the PR/TT beacon's developer's clients, including Defendant's [w]ebsite.” Compl. ¶ 41. But this paragraph does not allege that Sanchez seeks damages for multiple, independent violations; it instead explains in general terms how the software operates. Indeed, Marriott's reading contradicts the express language of the complaint, which refers to one violation and “seeks statutory damages of $5,000 for Defendant's violation of section 638.51(a).” Id. ¶ 77. In short, Marriott has not shown the complaint puts more than $5,000 in statutory damages at issue.
Marriott next argues that Sanchez will seek punitive damages, “likely [at] the outer limit presently permitted by Due Process,” i.e., at a nine-to-one ratio to statutory damages. Dkt. No. 1 ¶ 23. Marriott argues that nine-to-one is appropriate because the Court “should consider the ‘maximum recovery' in the event Plaintiff is victorious.” Dkt. No. 16 at 5 (citing Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019)); see also Dkt. No. 1 ¶ 23 (citing State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) for proposition that single-digit multipliers comport with due process). The language Marriott cites in Arias is more qualified than Marriott suggests, defining the amount in controversy as “the maximum recovery the plaintiff could reasonably recover.” 936 F.3d at 927 (emphasis omitted). And the procedural posture was notably different. In that case, the district court had remanded the case sua sponte based on the notice of removal, without providing the defendant an opportunity to support its assumptions with evidence once challenged. Id. at 924. In such a posture, the Ninth Circuit held that the district court should have evaluated the plausibility of the allegation that the amount in controversy was met, rather than whether the defendant had carried its burden of proof. Id. at 925. On remand, however, the defendant would be required to bear the burden of demonstrating to the district court that its “estimated amount in controversy relies on reasonable assumptions.” Id. at 927 (cleaned up).
Here, where the amount in controversy is challenged and Marriott has had an opportunity to present evidence, Marriott must demonstrate that its estimated amount in controversy is supported by reasonable assumptions. As for punitive damages, Marriott has failed to do so. Marriott applies a nine-to-one ratio to the $35,000 civil cover sheet amount to arrive at $315,000 in punitive damages. Dkt. No. 1 ¶ 23. For the reasons analyzed above, Marriott has not shown $35,000 is an appropriate multiplicand. Nor has Marriott demonstrated that nine is an appropriate multiplier. While Marriott argues that Sanchez's cases on punitive damages are distinguishable, it does not provide any support for its suggestion that an award of punitive damages at a nine-to-one ratio is proper. Dkt. No. 16 at 4-6. The closest Marriott gets is in pointing out that Andalon v. 9W Halo W. Opco L.P. assumed in determining the amount in controversy punitive damages at a ratio of approximately three-to-one to actual damages. No. 5:21-cv-00133-SB, 2021 WL 1754314, at *2 (C.D. Cal. Dec. 8, 2022). But Andalon is factually distinct as it involved a suit alleging wrongful termination, not a CIPA violation. Even if a three-to-one ratio were appropriate here, however, Marriott provides no estimate of “actual damages” that can serve as the multiplicand. See Cal. Penal Code § 637.2(a)(1)-(2) (distinguishing between actual and statutory damages). Thus, Marriott has not carried its burden of establishing the amount of punitive damages in controversy here. See Heiting v. Valvoline, Inc., No. 2:23-cv-09121-MCS, 2023 WL 9319039, at *2 (C.D. Cal. Dec. 4, 2023) (“Given the dearth of nonspeculative information . . ., the Court cannot estimate a measure of reasonable and proportional punitive damages.”); Casillas v. Hanesbrands Inc., No. 2:24-cv-01641-RGK, 2024 WL 943915, at *1 (C.D. Cal. Mar. 5, 2024) (rejecting defendant's unsupported estimate of punitive damages in website CIPA case). Nevertheless, because Sanchez seeks punitive damages in her complaint and suggests that a one-to-one ratio would be an appropriate measure (using the $5,000 statutory amount as the multiplicand) (Dkt. No. 11 at 7), the Court will assume an additional $5,000 is placed in controversy in punitive damages.
Marriott's final argument is that attorneys' fees will exceed the jurisdictional threshold. Dkt. No. 1 ¶ 25. In light of the Court's conclusions above, Marriott needs to demonstrate that attorneys' fees exceed $65,000.While attorneys' fees may be included in the amount in controversy, the district court is charged with “determin[ing] whether defendants have carried their burden of proving future attorneys' fees, and [determining] when a fee estimate is too speculative because of the likelihood of a prompt settlement.” Fritsch v. Swift Transp. Co. of Arizona, LLC, 899 F.3d 785, 795 (9th Cir. 2018).
At the hearing, Marriott argued that it need only demonstrate that the attorneys' fees at issue potentially exceed $40,000, because the civil cover sheet estimate excludes attorneys' fees. For the reasons described above, Marriott has not shown that the civil cover sheet serves as a reliable estimate of the amount in controversy. For the reasons described below, Marriott also has not demonstrated that more than $40,000 in attorneys' fees are at issue in this case.
In support of its estimate, Marriott submits documents showing the amount awarded or requested by Sanchez's attorneys and their firm in other cases, including time records showing that Scott Ferrell, counsel for Sanchez, bills at $850 per hour (Dkt. No. 17-2 at 3); a declaration in which Ferrell asserts that it is reasonable to increase one's billing rate by $30 per hour per year (Dkt. No. 17-3 ¶ 10); a class action certification in which a court in this district calculated the lodestar value of fees awarded to Pacific Trial Attorneys to be $192,073.75 (Dkt. No. 17-4 at 14); and a 2016 state court award of $38,818.75 in fees to Pacific Trial Attorneys (Dkt. No. 17-5 at 3). Marriott also cites an order awarding $19,705 for 26.1 hours of work by the same counsel. Hedley & Bennett, Inc. v. Mejico, No. 22-cv-816-JGB, 2022 WL 2309891, at *2 (C.D. Cal. June 24, 2022). Marriott argues that litigating this case has already required (1) a status conference and (2) a motion to remand and will require (3) forthcoming motion practice for a motion to dismiss for lack of personal jurisdiction and failure to state a claim, (4) discovery, (5) summary judgment motions, (6) pretrial practice, and a (7) a three- to five-witness trial. Dkt. No. 16 at 9. Applying the high rates cited above to the volume of work expected, Marriott argues that it is “inconceivable that the fees Plaintiff put in controversy are less than $75,000.” Id.
The Court disagrees. As a starting point, the attorneys' fees reasonably incurred at this stage of the case are minimal. This case was filed two months ago and removed one month ago. By Marriott's own characterization, this is a “copypaste” complaint, requiring virtually no case-specific work from Sanchez's counsel (Ferrell, Victoria Knowles, and their firm Pacific Trial Attorneys). Dkt. No. 16 at 1. For reference, when Knowles prevailed on a motion to remand and an award of attorneys' fees in this district in 2021, she received $4,375 due to the “relatively simple” and “routine” nature of the case. Mejico v. Boat U.S., Inc., No. 20-cv-9863-GW, 2021 WL 677904, at *2 (C.D. Cal. Feb. 18, 2021).
Even assuming that the litigation will extend for several months without settling, the Court is not persuaded that the jurisdictional threshold is met. Assuming a rate of $850 per hour, Sanchez's attorneys would need to bill 76.5 hours to incur more than $65,000 in fees. Given that it is more likely that multiple attorneys and paralegals from Pacific Trial Attorneys will be working on the case rather than just the highest billing partner (three attorneys appear on the docket and Ferrell is not the lead attorney on the case), it is more reasonable to use the average billing rate awarded to Pacific Trial Attorneys in the class action certification cited by Marriott: $522.93 per hour.Using that rate, Pacific Trial Attorneys would have to spend 124 hours on the case to exceed $65,000.This single-claim, boilerplate, website-wiretapping case does not merit that amount of hours. See Ramirez v. Indochino Apparel Inc., No. 23-cv-8637-JAK, 2024 WL 1256277, at *5 (C.D. Cal. Mar. 22, 2024) (estimating that litigating a case involving CIPA claim and one other claim would only take 55-65 billable hours even if prosecuted through trial, and would result in a “range of $35,750 to $42,250”). This is especially so when the Court considers the unlikely prospect of the parties actually litigating this case through trial. See Ramirez v. Herschel Supply Co., Ltd., No. 2:23-cv-7278-MCS, 2024 WL 324897, at *3 (C.D. Cal. Jan. 29, 2024) (noting “no website-wiretapping cases have gone to trial”); Fritsch, 899 F.3d at 795 (“[D]istrict courts are well equipped . . . to determine when a fee estimate is too speculative because of the likelihood of a prompt settlement.”).
$192,073.75 / (212.75 + 60.55 + 7 + 34.9 + 15.7 + 30.1 + 6.3) = $522.93. See Dkt. No. 17-4 at 14. In relying on this amount, the Court finds only that the average billable rates of legal personnel working on a matter are a more reasonable reflection of attorneys' fees than the rate of the highest billing partner alone-not that each individual rate is reasonable (an issue which is not before this Court).
Or 76 hours to exceed $40,000. See n.3, supra.
Marriott's concluding citations to three cases in which this Court denied remand are distinguishable. Rahman v. FCA U.S. LLC involved a prayer for $25,636.95 in actual damages, up to twice that amount in civil penalties, and attorney's fees. No. 2:21-cv-02584-SB, 2021 WL 2285102, at *1-2 (C.D. Cal. June 4, 2021). Rimicci v. FCA U.S. LLC involved a prayer for $66,000 in actual damages, up to twice that amount in civil penalties, and attorney's fees. No. 2:24-cv-01907-SB, 2024 WL 1858533, at *2 (C.D. Cal. Apr. 26, 2024). Nehme v. Garfield Beach CVS LLC involved a prayer for $71,796 in actual damages and attorney's fees. No. 2:21-cv-2652-SB, 2021 WL 2865100, at *2 (C.D. Cal. June 14, 2021). None of these cases required the Court to estimate $65,000-or even $40,000-in attorneys' fees to satisfy the jurisdictional threshold.
Marriott has thus not carried its burden of demonstrating by a preponderance of the evidence that the amount in controversy exceeds $75,000.
IV.
The Court grants Sanchez's motion and remands the case for lack of subject matter jurisdiction.