1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 CARRINGTON STONEMASONS, INC., Case No. 24-cv-00080-BLF

9 Plaintiff,

ORDER VACATING HEARING

10 v. ON MOTION TO REMAND; AND

DENYING MOTION

11 FORD MOTOR COMPANY, [Re: ECF 13] 12 Defendant.

13

14 15 Plaintiff Carrington Stonemasons, Inc. (“Carrington”) filed this lemon law suit against 16 Defendant Ford Motor Company (“Ford”) in the Santa Cruz County Superior Court, asserting 17 state law warranty claims arising from the purchase of an allegedly defective vehicle. See Not. of 18 Removal Ex. A (Compl.), ECF 1-2. Ford removed the suit to federal district court based on 19 diversity jurisdiction. See Not. of Removal ¶ 38, ECF 1. 20 Carrington moves to remand the suit to state court, arguing that Ford cannot establish the 21 existence of diversity jurisdiction and that even if it could, this Court should decline to exercise 22 jurisdiction over Carrington’s state law claims under principles of comity. See Pl.’s Mot., ECF 13. 23 In opposition, Ford argues that the motion to remand should be denied because it has satisfied its 24 burden to establish the existence of diversity jurisdiction. See Def.’s Opp., ECF 14. Carrington 25 has not filed a reply. 26 The Court finds the motion to be suitable for decision without oral argument. See Civ. 27 L.R. 7-1(b). The hearing previously set for June 27, 2024 is VACATED. 1 I. BACKGROUND 2 Carrington filed this action in the Santa Cruz County Superior Court on November 8, 3 2023, naming Ford as the only defendant1 and alleging that Ford failed to meet its warranty and 4 repair obligations with respect to a 2019 Ford F-150 vehicle purchased on December 13, 2019. 5 See Compl. ¶¶ 5-13. The complaint asserts two claims for violation of California’s lemon law, the 6 Song-Beverly Consumer Warranty Act (“Song-Beverly Act”), Cal. Civ. Code § 1790, et seq. 7 Carrington seeks damages in the amount actually paid or payable under the contract, other 8 unspecified damages, a civil penalty of up to twice actual damages, reasonable attorneys’ fees and 9 costs, and other appropriate relief. See Compl. ¶¶ 22-24, 33-35, Prayer. The complaint does not 10 allege the purchase price of the vehicle or the amount of attorneys’ fees and costs incurred. See 11 generally Compl. Thus, it is not apparent from the face of the complaint whether the amount in 12 controversy exceeds $75,000. Carrington served Ford with the complaint on November 13, 2023, 13 and Ford answered on December 13, 2023. See Clayton Decl. ISO Removal ¶¶ 5, 30. ECF 1-1. 14 On December 15, 2023, counsel for Ford obtained a copy of the Retail Installment Sales 15 Contract (“RISC”) for the vehicle, and thereby learned that the purchase price was $67,111.46. 16 See Clayton Decl. ISO Opp. ¶¶ 5, 11 & Ex. B (RISC), ECF 14-1. Ford asserts that the RISC 17 disclosed sufficient information to determine that the amount in controversy exceeds $75,000, 18 taking into consideration the complaint’s request for damages in the amount actually paid or 19 payable under the contract, plus a civil penalty of up to twice actual damages, as well as 20 reasonable attorneys’ fees and costs. See Not. of Removal ¶ 25. Ford removed the action to 21 federal court on January 4, 2024, alleging that the amount in controversy exceeds $75,000 and that 22 there is complete diversity of citizenship between the parties because Carrington is a citizen of 23 California (Carrington’s place of incorporation and principal place of business) while Ford is a 24 citizen of both Delaware (Ford’s place of incorporation) and Michigan (Ford’s principal place of 25 business). See id. ¶¶ 25, 34-37. Carrington filed its motion to remand on February 6, 2024. 26 1 The Court observes that Carrington submitted a declaration of counsel and a proposed order 27 erroneously identifying “Big Valley Ford, Inc.” as an additional defendant. See Barry Decl. ISO 1 II. LEGAL STANDARD 2 A defendant may remove a civil action from state court to federal district court if the 3 district court would have had original jurisdiction over the action. See 28 U.S.C. § 1441(a). 4 District courts have original jurisdiction over civil actions based on the presence of a federal 5 question, see 28 U.S.C. § 1331, or diversity of citizenship, see 28 U.S.C. § 1332. Thus, “[a] 6 defendant may remove an action to federal court based on federal question jurisdiction or diversity 7 jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 8 A party who contests removal may file a motion to remand. See 28 U.S.C. § 1447(c). 9 “Removal statutes are strictly construed, and any doubt about the right of removal requires 10 resolution in favor of remand.” Casola v. Dexcom, Inc., --- F.4th ----, No. 23-55403, 2024 WL 11 1547021, at *5 (9th Cir. Apr. 10, 2024) (quotation marks and citation omitted). “The presumption 12 against removal means that the defendant always has the burden of establishing that removal is 13 proper.” Id. (quotation marks and citation omitted). 14 III. DISCUSSION 15 Carrington contends that remand is warranted on three grounds: (1) the amount in 16 controversy is speculative; (2) comity principles weigh in favor of remand; and (3) Ford has failed 17 to show complete diversity of citizenship between the parties. In opposition, Ford argues that it 18 has met its burden to show that the amount in controversy exceeds $75,000 and that there is 19 complete diversity of citizenship between the parties. Ford does not address Carrington’s 20 argument based on comity. The Court addresses each asserted ground for remand as follows. 21 A. Amount in Controversy 22 A district court may exercise diversity jurisdiction over a civil action only “where the 23 matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs[.]” 28 24 U.S.C. § 1332(a). “Where, as here, it is unclear from the face of the complaint whether the 25 amount in controversy exceeds $75,000, the removing defendant bears the burden of establishing, 26 by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional 27 threshold.” Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 416 (9th Cir. 2018) (quotation 1 punitive, or otherwise) and the cost of complying with an injunction, as well as attorneys’ fees 2 awarded under fee shifting statutes.” Id. (quotation marks and citation omitted). “In assessing the 3 amount in controversy, we may consider allegations in the complaint and in the notice of removal, 4 as well as summary-judgment-type evidence relevant to the amount in controversy.” Id. 5 Carrington seeks damages in the amount actually paid or payable under the RISC, a civil 6 penalty of up to twice actual damages, and reasonable attorneys’ fees and costs. See Compl. ¶¶ 7 22-24, 33-35, Prayer. Carrington has not pled specific amounts for any of these components of the 8 recovery it seeks, and it asserts that the amounts are too speculative for Ford to establish that the 9 amount in controversy exceeds $75,000. Ford contends that the amount in controversy clearly 10 exceeds $75,000 when Carrington’s requests for actual damages, civil penalty, and attorneys’ fees 11 are considered on this record. 12 1. Actual Damages 13 Carrington seeks damages in the amount actually paid or payable under the RISC. See 14 Compl. ¶ 22. Under the Song-Beverly Act, a plaintiff may recover “an amount equal to the actual 15 price paid or payable by the buyer,” offset by any decrease in the car’s value “directly attributable 16 to use by the buyer prior to the time the buyer first delivered the vehicle . . . for correction of the 17 problem that gave rise to the nonconformity.” Cal. Civ. Code § 1793.2(d)(2)(B)-(C). The 18 decrease in value is based on the number of miles the buyer drove the vehicle prior to the first 19 attempted repair. See id. § 1793.2(d)(2)(C). District courts within the Ninth Circuit disagree 20 whether this decrease in value, generally referred to as the “use offset” or the “mileage offset,” 21 should be considered when determining the amount in controversy for purposes of diversity 22 jurisdiction. See Cabrera v. FCA US LLC, No. 1:22-cv-00431-NODJ-BAM, 2023 WL 8477970, 23 at *2 (E.D. Cal. Dec. 7, 2023) (comparing cases). 24 Ford cites Geographic Expeditions, Inc. v. Est. of Lhotka ex rel. Lhotka, 599 F.3d 1102, 25 1108 (9th Cir. 2010), for the proposition that the amount in controversy should be determined 26 solely by what a plaintiff demands in the complaint, without consideration of any defense such as 27 offset. In Geographic Expeditions, the Ninth Circuit held that the district court erred in 1 jurisdictional purposes, stating “if a district court had to evaluate every possible defense that could 2 reduce recovery below the jurisdictional amount the district court would essentially have to decide 3 the merits of the case before it could determine if it had subject matter jurisdiction.” Id. 4 Eight years later, however, the Ninth Circuit held that a district court properly considered 5 the use offset when determining the amount in controversy in a lemon law case removed under the 6 Class Action Fairness Act (“CAFA”). See Schneider v. Ford Motor Co., 756 F. App’x 699, 701 7 n.3 (9th Cir. 2018). The Schneider court stated that “an estimate of the amount in controversy 8 must be based on the applicable measure of damages, not on what a plaintiff requests in a 9 complaint.” Id. (quotation marks and citation omitted). Thus, the Ninth Circuit held in Schneider 10 that “[c]onsideration of the Use Offset was appropriate” to determine the existence of CAFA 11 jurisdiction, because “the Use Offset measure[d] the value of the F-150s that the putative class 12 members purchased.” Id. 13 This Court need not resolve the issue of whether the use offset should be applied when 14 determining the amount in controversy, because the evidence of actual damages submitted with 15 Ford’s opposition brief accounts for the use offset. Ford presents evidence that the vehicle 16 purchase price was $67,111.46. See Clayton Decl. ISO Opp. ¶ 11. Carrington first presented the 17 vehicle for repair on October 10, 2020. See id. ¶ 15. At that time, the vehicle mileage was 23,067. 18 See id. & Ex. E. Ford calculates the use offset to be $12,855.76. See id. ¶ 17. Subtracting the use 19 offset from the vehicle purchase price results in actual damages of $54,255.70 ($67,111.46 - 20 $12,855.76 = $54,255.70). See id. Because Carrington has not filed a reply, Ford’s calculation of 21 the use offset and actual damages is undisputed. Accordingly, the Court accepts Ford’s assertion 22 of actual damages in the amount of $54,255.70 for purpose of the present motion. 23 2. Civil Penalty 24 In addition to actual damages, Carrington seeks a civil penalty of up to twice actual 25 damages. See Compl., Prayer. Under the Song-Beverly Act, “[i]f the buyer establishes that the 26 failure to comply was willful, the judgment may include . . . a civil penalty which shall not exceed 27 two times the amount of actual damages.” Cal. Civ. Code § 1794(c). Using the above calculation 1 $108,511.40 ($54,255.70 x 2). Adding this requested penalty to the requested actual damages, 2 Carrington seeks a total of $162,767.10, well in excess of the jurisdictional threshold of $75,000. 3 Carrington contends that Ford must show not only that Carrington seeks monetary relief in 4 excess of $75,000, but that Carrington is likely to recover in excess of $75,000. That argument is 5 foreclosed by the Ninth Circuit’s holding that “[t]he amount in controversy is not a prospective 6 assessment of [a] defendant’s liability.” Chavez, 888 F.3d at 417 (quotation marks and citation 7 omitted, alteration in original). For purposes of satisfying the amount in controversy requirement, 8 the relevant amount is not what Carrington is likely to recover, but “[r]ather, it is the amount at 9 stake in the underlying litigation.” Id. (quotation marks and citation omitted). 10 In its motion, Carrington suggests that another Ninth Circuit decision, Sanchez v. 11 Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996), supports its position that a removing 12 defendant must show it is “more likely than not” that the plaintiff will recover more than the 13 jurisdictional minimum. Carrington quotes the “more likely than not” language out of context. In 14 Sanchez, the Ninth Circuit held that a defendant who removes a case to federal court must prove 15 by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional 16 minimum. Sanchez, 102 F.3d at 404. The Sanchez court explained that “[u]nder this burden, the 17 defendant must provide evidence establishing that it is ‘more likely than not’ that the amount in 18 controversy exceeds that amount.” Id. The “more likely than not” language relates to the 19 defendant’s burden to establish that the amount at stake – not the ultimate recovery – exceeds the 20 jurisdictional threshold. Thus, Carrington’s reliance on Sanchez is misplaced. 21 Carrington cites district court cases holding that a plaintiff’s request for a civil penalty may 22 not be included in the amount in controversy unless the defendant makes a “showing that such a 23 civil penalty is more likely than not to be awarded.” Castillo v. FCA USA, LLC, No. 19-CV-151- 24 CAB-MDD, 2019 WL 6607006, at *2 (S.D. Cal. Dec. 5, 2019); see also Herko v. FCA US, LLC, 25 No. 19-CV-2057 JLS (WVG), 2019 WL 5587140, at *2 (S.D. Cal. Oct. 30, 2019) (same). This 26 Court declines to follow those cases, as they are directly contrary to the Ninth Circuit’s 27 articulation of the defendant’s burden in Chavez and Sanchez. Applying the controlling Ninth 1 plus a civil penalty of up to twice actual damages. This approach is consistent with that of 2 numerous district courts within the Ninth Circuit. See, e.g., Van Horn v. Gen. Motors, LLC, No. 3 23-CV-04320-PCP, 2024 WL 1335195, at *1 (N.D. Cal. Mar. 27, 2024) (finding jurisdictional 4 threshold met based on consideration of vehicle purchase price and plaintiff’s request for a civil 5 penalty under the Song-Beverly Act in an amount equal to twice her damages); Solis v. Nissan N. 6 Am. Inc., No. CV 24-00728-MWF (EX), 2024 WL 1311275, at *4 (C.D. Cal. Mar. 27, 2024) 7 (“Several courts have found that the maximum recoverable civil penalty – two times Plaintiff’s 8 actual damages – should be considered for purposes of determining the amount in controversy.”); 9 Cabrera, 2023 WL 8477970, at *2 (“[T]he court will include the requested civil penalties in the 10 amount in controversy.”). 11 Accordingly, the Court finds that Ford has demonstrated that the amount in controversy is 12 at least $162,767.10, representing Carrington’s request for actual damages plus a civil penalty of 13 twice actual damages, well in excess of the jurisdictional minimum. 14 3. Attorneys’ Fees 15 Carrington requests reasonable attorneys’ fees in an unspecified amount. See Compl., 16 Prayer. A buyer who prevails on an action under the Song-Beverly Act may recover attorneys’ 17 fees “reasonably incurred by the buyer in connection with the commencement and prosecution of 18 such action.” Cal. Civ. Code § 1794(d). “[A] court must include future attorneys’ fees 19 recoverable by statute or contract when assessing whether the amount-in-controversy requirement 20 is met.” Fritsch v. Swift Transportation Co. of Arizona, LLC, 899 F.3d 785, 794 (9th Cir. 2018) 21 With its opposition, Ford presents evidence that attorneys’ fees incurred in Song-Beverly 22 Act actions such as the present case usually total at least $35,000 and commonly exceed $100,000. 23 See Hugret Decl. ISO Opp. ¶¶ 4-6, ECF 14-2. Carrington has not filed a reply and thus Ford’s 24 showing on attorneys’ fees is undisputed. Including attorneys’ fees of $35,000, the Court finds 25 that the amount in controversy is $197,767.10. 26 4. Conclusion re Amount in Controversy 27 Based on the foregoing, the Court finds that Ford has demonstrated that the amount in 1 B. Comity 2 Carrington argues that even if there is diversity jurisdiction, this Court should decline to 3 exercise jurisdiction under principles of comity. In essence, Carrington argues that state court is 4 the more appropriate forum for its state law claims. Ford does not address the comity argument in 5 its opposition. 6 Carrington ignores the “virtually unflagging obligation of the federal courts to exercise the 7 jurisdiction given them.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 8 800, 817 (1976). “[C]ourts at every level of the federal judiciary have rejected the precise premise 9 on which Plaintiffs’ ‘comity’ argument is based: that a court has authority to decline to exercise 10 diversity jurisdiction.” Bratton v. FCA US LLC, No. 17-CV-01458-JSW, 2017 WL 11687946, at 11 *8 (N.D. Cal. June 22, 2017) (collecting cases). Following those cases, this Court finds 12 Carrington’s comity argument to be without merit. 13 C. Diversity of the Parties 14 A district court may exercise diversity jurisdiction over a civil action only where there is 15 complete diversity of citizenship between the plaintiff and the defendant. See 28 U.S.C. § 16 1332(a). As relevant here, that means that Carrington and Ford must be “citizens of different 17 States.” Id. § 1332(a)(1). Carrington argues that Ford has not adequately established diversity of 18 citizenship. 19 Both Carrington and Ford are corporations. A corporation is a citizen of both its state of 20 incorporation and the state in which it has its principal place of business. See 28 U.S.C. § 21 1332(c)(1). Ford points out that the complaint itself alleges that Carrington is “a California 22 corporation in good standing.” Compl. at 2:1-2. In addition, Ford submits Carrington’s Statement 23 of Information filed with the California Secretary of State, indicating that its principle place of 24 business is in California. See Clayton Decl. ISO Opp. ¶ 7 & Ex. C. Ford also submits its own 25 10-K filing for the fiscal year ending December 31, 2022, showing that it is a corporation 26 organized under the laws of the State of Delaware with its principle place of business in Michigan. 27 See id. ¶ 8 & Ex. D. Carrington has not filed a reply and therefore Ford’s evidence regarding 1 The Court finds that Ford has met its burden to establish that it and Carrington are citizens 2 || of different states. 3 D. Conclusion Re Diversity Jurisdiction 4 Ford has submitted evidence with its opposition brief establishing that the amount in 5 controversy exceeds $75,000 and that there is complete diversity of citizenship between the 6 || parties. Because Carrington has not filed a reply, Ford’s evidence is unrefuted. Based on Ford’s 7 showing, the Court finds that Ford has established the existence of diversity jurisdiction in this 8 || case. 9 Accordingly, Carrington’s motion to remand is DENIED. 10 IV. ORDER 11 (1) Carrington’s motion to remand is DENIED. 12 (2) This order terminates ECF 13.

15 || Dated: April 22, 2024 16 Alii hacnan

ETH LABSON FREEMAN

17 United States District Judge 18 19 20 21 22 23 24 25 26 27 28