James Chung v. FCA US LLC

UNITED STATES DISTRICT COURT J S ™ 6

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No.: 2:21-cv-04577-AB-MAA Date: September 20, 2021

Title: James Chung v. FCA US LLC

Present: The Honorable ANDRE BIROTTE JR., United States District Judge

Carla Badirian N/A

Deputy Clerk Court Reporter

Attorney(s) Present for Plaintiff(s): Attorney(s) Present for Defendant(s):

None Appearing None Appearing

Proceedings: [In Chambers] ORDER GRANTING MOTION FOR REMAND

[Dkt. No. 12]

Before the Court is Plaintiff James Chung’s (“Plaintiff”) Motion for

Remand (“Motion,” Dkt. No. 12). Defendant FCA USA, LLC (“Defendant”) filed

an opposition and Plaintiff filed a reply. The Motion is GRANTED.

I BACKGROUND

Plaintiff filed this action in state court, asserting a claim for breach of

written warranty and a claim for breach of the implied warranty under the

Magnuson-Moss Warranty Act (““MMWA” or the Act), 15 U.S.C § 2301, ef seg.,

arising out of his purchase of a new vehicle for $79,205.76. Compl. § 4.

Defendant removed the action under federal question jurisdiction, stating

that the amount in controversy satisfies the MMWA’s $50,000 jurisdictional

minimum. See 15 U.S.C. § 2310(d)(3)(B). Plaintiff moves for remand, asserting

that Defendant has not established that this amount is satisfied.

CV-90 (12/02) CIVIL MINUTES — GENERAL Initials of Deputy Clerk CB

II. LEGAL STANDARD

Federal courts are courts of limited jurisdiction and thus have subject matter

jurisdiction only over matters authorized by the Constitution and Congress. See

Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986). “Because of

the Congressional purpose to restrict the jurisdiction of the federal courts on

removal,” statutes conferring jurisdiction are “strictly construed and federal

jurisdiction must be rejected if there is any doubt as to the right of removal in the

first instance.” Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations

and quotations omitted).

There is a strong presumption that the Court is without jurisdiction until

affirmatively proven otherwise. See Fifty Assocs. v. Prudential Ins. Co. of America,

446 F.2d 1187, 1190 (9th Cir. 1970). When an action is removed from state court,

the removing party bears the burden of demonstrating that removal is proper.

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

Federal diversity jurisdiction exists when the parties are completely diverse

and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332. Pursuant to

28 U.S.C. § 1441, a defendant may remove an action from state court to federal

court if the diversity and amount in controversy requirements are satisfied and if

none of the defendants are citizens of the forum state.

The amount in controversy, for purposes of diversity jurisdiction, is the total

“amount at stake in the underlying litigation.” Theis Research, Inc. v. Brown &

Bain, 400 F.3d 659, 662 (9th Cir. 2005). “[T]his includes any result of the

litigation, excluding interests and costs, that ‘entails a payment’ by the defendant.”

Gonzales v. CarMax Auto Superstores, LLC, 840 F.3d 644, 648 (9th Cir. 2016).

“Among other items, the amount in controversy includes damages (compensatory,

punitive, or otherwise), the costs of complying with an injunction, and attorneys’

fees awarded under fee-shifting statutes or contract.” Fritsch v. Swift

Transportation Co. of Arizona, LLC, 899 F.3d 785, 793 (9th Cir. 2018)

“The ‘strong presumption’ against removal jurisdiction means that the

defendant always has the burden of establishing that removal is proper.” Gaus, 980

F.2d at 566. And while “‘a defendant’s notice of removal need include only a

plausible allegation that the amount in controversy exceeds the jurisdictional

threshold,’ . . . ‘[e]vidence establishing the amount is required’” when “defendant’s

assertion of the amount in controversy is contested by plaintiffs.” Ibarra v.

Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (quoting Dart Cherokee

Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014)).

In determining the amount in controversy, courts first look to the allegations

in the complaint. Ibarra, 775 F.3d at 1197. But “where it is unclear or ambiguous

from the face of a state-court complaint whether the requisite amount in

controversy is pled[,]” courts apply a preponderance of the evidence standard,

which requires the defendant to provide evidence showing that it is more likely

than not that the $75,000.00 amount in controversy is met. Guglielmino v. McKee

Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007) (citing Sanchez v. Monumental

Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996)). In considering whether the

removing defendant has satisfied its burden, the court “may consider facts in the

removal petition” and “summary-judgment-type evidence relevant to the amount in

controversy at the time of removal.” Singer v. State Farm Mut. Auto. Ins. Co., 116

F.3d 373, 377 (9th Cir. 1997) (quoting Allen v. R & H Oil & Gas. Co., 63 F.3d

1326, 1335–36 (5th Cir. 1995)).

III. DISCUSSION

An MMWA claim is not cognizable in federal court “if the amount in

controversy is less than the sum or value of $50,000 (exclusive of interest[ ] and

costs) computed on the basis of all claims to be determined in this suit.” 15 U.S.C.

§ 2310(d)(3)(B). The amount in controversy in this case consists of Plaintiff’s

potential recovery under the MMWA, and attorneys’ fees. Defendant has not

established by a preponderance of the evidence that these amounts add up to at

least $50,000

Defendant argues that the entire $79,205.76 purchase price of the vehicle

counts towards Plaintiff’s potential recovery under the MWWA because Plaintiff

revoked acceptance of the vehicle and demanded a refund. See Compl. ¶ 14. In his

demand letter, Plaintiff did demand a refund “of all funds paid towards this

vehicle.” See Compl. Ex. B (demand letter) (emphasis added). But this demand

was not made in the Complaint, so this amount is not established on the face of the

Complaint. Nor is any other amount established on the face of the Complaint.

Furthermore, there is no evidence in record establishing the amount of funds paid.

Regardless, the Complaint itself demands a different remedy: damages

pursuant to Cal. Comm. Code § 2714, which states: “The measure of damages for

breach of warranty is the difference at the time and place of acceptance between

the value of the goods accepted and the value they would have had if they had been

as warranted, unless special circumstances show proximate damages of a different

amount.” Cal. Comm. Code § 2714(2). Sometimes referred to as diminished value,

Plaintiff argues, and Defendant does not dispute, that § 2714(2)’s calculation of

establishes the measure of damages available under an MWWA claim. See, e.g.,

Mot. 6:7-17 (citing Gavaldon v. DaimlerChrysler Corp., 32 Cal. 4th 1246, 1264

(2004), as modified (June 23, 2004) (discussing damages available for warranty

claims)). Once again, this amount is not clear from the face of the Complaint.

Furthermore, neither side has pointed to evidence that is truly probative of what the

“value of the goods as accepted” in 2017 was, that is, the value of the vehicle in

2017 given its alleged defects. Instead, Plaintiff suggests that the difference in

value can be calculated by subtracting the current average Kelley Blue Book

(“KBB”) value of a used vehicle from the 2017 purchase price, yielding the

following calculation:

$79,205.76 [purchase price] - $32,289.00 [KBB value] = $46,916.76 [damages]

Thus, according to Plaintiff, the diminished value would yield damages of

$46,916.76. Defendant argues that a lower KBB value should be used given the

vehicle’s alleged defects, resulting in a higher damages amount of $49,817.76.

However, neither calculation makes much sense because the KBB value is the

current value of a used vehicle, not the value of the defective but new vehicle in

2017. The Court is not persuaded that the current value of a used vehicle is a

reasonable proxy for the value of the defective new vehicle in 2017, and thus finds

that this calculation using any current KBB value is speculative. Speculative

calculations are not sufficient to establish an amount in controversy for

jurisdictional purposes. Although neither side addressed this issue adequately, this

calculation is rendered more uncertain because damages calculated pursuant to §

2714(2) may be subject to being offset by the value of Plaintiff’s use of the

vehicle. See Cal. Civ. Code § 1793.2(d)(2)(B)-(C), Cal. Comm. Code § 2714; see

also Schneider v. Ford Motor Co., 756 F. App’x 699, 701 (9th Cir. 2018) (in

warranty case, court must consider use offset to calculate amount in controversy

because “an estimate of the amount in controversy must be reduced if ‘a specific

rule of law or measure of damages limits the amount of damages recoverable.’”)

(citation omitted); see also Harnden v. Jayco, Inc., 496 F.3d 579, 582 (6th Cir.

2007) (discussing use offsets for MMWA amount-in-controversy calculations).

Plaintiff did not suggest what such an offset might be, and Defendant—who bears

the burden—ignored this issue entirely, presenting neither argument nor evidence

on it. Thus, the amount put in controversy by MMWA damages is too speculative

for the Court to determine, let alone to find that it satisfies the $50,000 minimum.

Regarding attorneys’ fees, they must be considered in calculating the amount

in controversy. See Fritsch, 899 F.3d at 793. Defense counsel attests that fees for

MMWA claims commonly exceed $35,000, and pointed to a “recent matter with

very similar facts” where $96,000 in attorneys’ fees was incurred prior to trial. See

Gregg Decl. ¶ 10. But these generalized statements do not establish by a

preponderance of the evidence the attorneys’ fees that reasonably might be

incurred in this case, and courts commonly hold that such generalized statements

fail to satisfy the defendant’s burden. Schneider v. Ford Motor Co., 441 F. Supp.

3d 909, 914 (N.D. Cal. 2020) (so noting); see also Makol v. Jaguar Land Rover N.

Am., LLC, No. 18-CV-03414-NC, 2018 WL 3194424, at *3 (N.D. Cal. June 28,

2018) (finding generalized assertions are not sufficient evidence of fees in

controversy). This Court agrees. Defendants have failed to provide the Court with

specific evidence showing that the attorneys’ fees in this case are more likely than

not to exceed any particular amount, so attorneys’ fees cannot be used to satisfy the

amount-in-controversy requirement.

Given the open questions discussed above concerning Plaintiff’s potential

recovery under the MMWA, the insufficient evidence concerning attorneys’ fees

reasonably likely to be incurred in this case, and that doubts about jurisdiction

must be resolved against exercising it, the Court finds that Defendant has not met

its burden of establishing by a preponderance of the evidence that the amount in

controversy here is at least $50,000. The MMWA’s jurisdictional minimum is

therefore not satisfied, so the Motion for Remand will be granted.

IV. CONCLUSION

For the foregoing reason, Plaintiff’s Motion for Remand is GRANTED. The

Clerk of Court is therefore ordered to REMAND this action back to the state court

from which it was removed.

IT IS SO ORDERED.