Petition — Volvo of America Corp. v. Schwarzer

Supreme Court brief1977

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IN THE

Supreme Court of the United States

October Term, 1976

UNS aitteinthiienaiih

76-9778

VOLVO OF AMERICA CORPORATION,

Petitioner,

vs.

THE HONORABLE WILLIAM W. SCHWARZER, Judge,

United States District Court for the Northern District

of California,

Respondent.

CHARLENE P. ROSACK, individually, and on behalf of

all others similarly situated,

Real Parties in Interest.

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit.

PAUL, HasTINGs & JANOFSKY,

DANIEL H. WILLIAMS, III,

DouGLas C. Conroy,

ROBERT S. SPAN,

555 South Flower Street, 22nd Floor,

Los Angeles, Calif. 90071,

(213) 489-4000,

Attorneys for Petitioner

Volvo of America Corporation.

Parker & Son, Inc., Law Printers, Los Angeles. Phone 724-6622

SUBJECT INDEX

Page

TCE AEE TL TES MO EC l

a ienilinlnieeslanins 2

I a id sacioctbnlinsinenipinneniditel 2

Statutory Provisions Involved ........................------+- 3

Oe Ti i 6 ccccsicnotintnscinensichensisianinsioemnes 3

Reasons for Granting the Writ ................................ 7

A Remand Order Based on Grounds Not Au-

thorized by 28 U.S.C. §1447(c) Is Review-

able. The Mere Citation of §1447(c) Does Not

I 7

The District Court’s Remand Order Was Not

Authorized by 28 U.S.C. §1447(c), and Con-

stituted an Act in Excess of Its Jurisdiction .... 8

Il.

The Court of Appeals’ Denial of the Petition for

Writ of Mandamus Was Contrary to and in

Conflict With the Applicable Decisions of This

ae ne 10

IV.

This Case Raises the Issue of the Proper Standard

for Removal Jurisdiction Over Class Actions.

This Is an Important Question of Federal Law

Which Has Not Been, but Should Be, Settled

Si SIRT IIE witatdpsneiinedbaeenntpetiecitiaiateddanbtinnadssiachtiies 11

I a le 12

APPENDIX

Page

On Application of Stay ...................-..-2:20000++ App. p. 1

Order Filed November 11, 1976 .2.0.......0200.0002222--2000- 4

oe LB, Gt BD, , En 5

Order Setting Aside Magistrate’s Findings and Rec-

ommendation and Remanding Action to State

UNG scissercavicosieccitieiiediedaleinpses schluep lelanpialeaitaiataiasitie

Magistrate’s Findings and Recommendations ........

Petition for Writ of Mandamus and/or Petition

ne re ie rR ii

Class Action Complaint for Damages (Cartwright

Act, Bus. & Prof. Code § 16700 et seq.) ............

Notice of Filing of Petition and Bond for Removal

Petition for Removal of Civil Action ................... |

Magistrate’s Findings and Recommendations ..........

Order Setting Aside Magistrate’s Findings and Rec-

ommendation and Remanding Action to State

SUE © \cccccckiniasecdipiaieddamsceaibidatbadiediestdbiaamciontie

Supplemental Memorandum of Points and Authori-

ties in Support of Petition for Writ of Mandamus

SS IO Seicbivtinitnnititatataiideaiidbamatiininaeiins

TABLE OF AUTHORITIES CITED

Cases Page

City of Inglewood v. City of Los Angeles, 451 F.2d

8 2, eae 12

Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 40

L.Ed.2d 732, 94 S.Ct. 2140 (1974) ..0000000002..... 12

Kinsey v. General Motors Acceptance Corp., 359 F.

Se SE CIEE, GPEED cdatncensnsctatedtociecsiiensuitinss 12

Knapp v. Bankers Securities Corporation, 17 FRD

I diet ciciccaliantiigidan 12

Missouri State Life Insurance Company v. Jones,

290 U.S. 199, 78 L.Ed. 267 (1933) ................ 4

Snyder v. Harris, 394 U.S. 332, 22 L.Ed.2d 319, 89

8, Ea eee 11

Thermtron Products, Inc. v. Hermansdorfer, 423

U.S. 336, 46 L.Ed.2d 542 (1976) ..2, 7, 8,9, 10, 11

Zahn v. International Paper Corporation, 414 U.S.

291, 38 L.Ed.2d 511, 94 S.Ct. 505 (1971) ....11, 12

Rules

Federal Rules of Civil Procedure, Rule 23 ...... 9, 11

Federal Rules of Civil Procedure, Rule 82 .......... 9

Statutes

California Business and Professions Code, Sec.

I ih acahiine ites lla at enialtahtedidpelilinnndsdadanéinans 4

United States Code, Title 28, Sec. 1254(1) ........ 2

United States Code, Title 28, Sec. 1332(a) ....3, 4

United States Code, Title 28, Sec. 1441(a) ....3, 4

United States Code, Title 28, Sec. 1447(c) ........

aN Re AON ae Oe ENA CSET NE 2, 3, 7, 8, 9, 10, 11

- ee ee

IN THE

Supreme Court of the United States

October Term, 1976

VOLVO OF AMERICA CORPORATION,

Petitioner,

vs.

THE HONORABLE WILLIAM W. SCHWARZER, Judge,

United States District Court for the Northern District

of California,

Respondent.

CHARLENE P. ROSACK, individually, and on behalf of

all others similarly situated,

Real Parties in Interest.

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit.

The Petitioner, Volvo of America Corporation, re-

spectfully prays that a Writ of Certiorari issue to

review the judgment and opinion of the United States

Court of Appeals for the Ninth Circuit entered in

this proceeding on November 11, 1976.

Opinion Below.

The unpublished opinion of the Court of Appeals

appears in the Appendix hereto. The unpublished opin-

_ we

ion rendered by the District Court for the Northern

District of California appears in the Appendix hereto.

Additionally, the unpublished findings and conclusions

of the United States Magistrate to whom the remand

proceedings were originally referred, appears in the

Appendix hereto.

Jurisdiction.

The judgment of the Court of Appeals for the Ninth

Circuit was entered on November 11, 1976. The juris-

diction of this court is invoked pursuant to 28 U.S.C.

§1254(1).

Questions Presented.

1. Can this Court’s holding in Thermtron Products,

Inc. v. Hermansdorfer, 423 U.S. 336, 46 L.Ed.2d

542 (1976), be circumvented by the simple invocation

of 28 U.S.C. §1447(c) in a remand order, even though

the grounds stated for remand are not authorized by

§1447c?

2. Is this Court’s holding in Thermtron to be con-

strued as applicable only to the unique facts of that

case, or is it to be given an interpretation consonant

with the spirit of the majority opinion? Will this court

allow Thermtron to be overruled de facto by permitting

a District Court Judge to prevent review of a remand

order simply by citing 28 U.S.C. §1447(c)?

3. Under 28 U.S.C. §$1447(c), does the District

Court have authority to remand an entire class action

case to state court notwithstanding a finding by the

Court that complete diversity exists, and that at least

some plaintiffs have claims in excess of the jurisdictional

amount?

—

Statutory Provisions Involved.

United States Code, Title 28:

Section 1447(c):

“If at any time before final judgment it appears

that the case was removed improvidently and with-

out jurisdiction, the District Court shall remand

the case, and may order the payment of just

costs. A certified copy of the Order of Remand

shall be mailed by its clerk to the clerk of the

state court. The state court may thereupon proceed

with such case.”

Section 1441 (a):

“Except as otherwise expressly provided by act

of Congress, any civil action brought in a state

court of which the District Courts of the United

States have original jurisdiction, may be removed

by the defendant or the defendants to the District

Court of the United States for the district and

division embracing the place where such action

is pending.”

Section 1332(a):

“The District Courts shall have original juris-

diction of all civil actions where the matter in

controversy exceeds the sum or value of $10,000;

exclusive of interest and costs, and is between—

(1) citizens of different states; . . .”

Statement of the Case.

This case is an individual and class action originally

brought in a state court in California, alleging violations

of the California Anti-Trust Laws. The Petitioner, Vol-

vo of America Corporation (hereinafter “Volvo”) filed

—_

a timely Petition for Removal, and the case was re-

moved to the United States District Court for the

Northern District of California. Removal was based

on 28 U.S.C. §1332(a) and §1441(a).

Subsequent io the removal, the plaintiff moved to

remand the action to State Court. The motion for

remand was referred to the Honorable Owen E. Wood-

ruff, Jr., United States Magistrate for hearing and

decision. On June 8, 1976, the Magistrate submitted

his findings and recommendations in which he con-

cluded that “there is more than $10,000 in controversy

in this litigation” and that “the diversity requisite to

federal court jurisdiction appears to be the fact.” The

Magistrate’s findings and recommendations appear in

the Appendix hereto.

Pursuant to the local court rules, the plaintiff filed

a Notice of Objections to the Magistrate’s findings

and recommendations, and the matter was heard before

the respondent District Court Judge, the Honorable

William W. Schwarzer.

The principal issue before the District Court was

whether the requisite amount in controversy was present

between the plaintiffs and defendants. Plaintiff purports

to represent a class consisting of all persons, natural

or legal, who purchased new Volvo automobiles at

retail in California since January 1, 1967. Plaintiff

seeks treble damages and attorneys’ fees, under the

authority of the applicable California statute, California

Business and Professions Code §16750. It is uncon-

troverted that statutorily authorized treble damages and

attorneys’ fees are to be included in calculating the

amount in controversy for federal jurisdictional pur-

poses. Missouri State Life Insurance Company v. Jones,

290 U.S. 199, 202, 78 L.Ed. 267, 269 (1933).

colon

No formal evidentiary hearing was held by the Dis-

trict Court to determine the existence of plaintiffs with

claims in excess of the jurisdictional amount. However,

at the Court’s request, Volvo submitted affidavits de-

tailing the existence of several class members who

would clearly have claims in excess of $10,000. These

affidavits were the result of a “spot check” of Volvo

dealers in California and the list of plaintiffs included

therein was not meant to be exhaustive.

On October 20, 1976, the District Court entered

an order setting aside the Magistrate’s findings and

recommendations and remanding the action to State

Court. A copy of the District Court’s order appears

in the Appendix. The District Court found that jurisdic-

tion existed over at least “a few members. of” the

class. However, notwithstanding that finding, the Court

remanded the entire action on the grounds that “the

action could not be maintained in this Court on behalf

of the class for which it was brought”. Remand Order,

page 7, lines 2 through 4.

In subsequent proceedings, the effective date of

the remand order was stayed by the District Court

until October 29, 1976. The express purpose of the

stay was to afford Volvo an opportunity to seek relief

from the United States Court of Appeals for the Ninth

Circuit. In staying the order, the District Court im-

plicitly ordered that no part of the file in the case,

nor a certified copy of the remand order, be transmitted

to the State Court.

On October 28, 1976, Volvo filed with the Court

of Appeals a Petition for Writ of Mandamus and/or

Prohibition, requesting the Court to issue a writ com-

manding the District Court to set aside the Order

of Remand and retain jurisdiction over the action.

—

On the same day, the Court of Appeals entered an

order staying the District Court’s Order of Remand

until November 12, 1976, or until further order of

the Court, whichever occurred first, in order to allow

a motions panel of the Court of Appeals to consider

the Petition for Writ of Mandamus. Copies of the

Petition for Writ of Mandamus and/or Prohibition,

and the order of the Court of Appeals appear in

the Appendix hereto. —

On November 11, 1976 the Court of Appeals denied

the Petition for Writ of Mandamus and/or Prohibition.

On November 12, 1976, Volvo applied to the Hon.

William Rehnquist for a stay of the remand order

pending filing of a petition for certiorari with this

Court. The application was denied on November 15,

1976. A copy of Justice Rehnquist’s Opinion on Cham-

bers appears in the Appendix hereto.

REASONS FOR GRANTING THE WRIT.

A Remand Order Based on Grounds Not Authorized

by 28 U.S.C. §1447(c) Is Reviewable. The Mere

Citation of §1447(c) Does Not Prevent Review.

The principal issue presented by this petition is wheth-

er a District Court Judge can bar review of a remand

order simply by invoking 28 U.S.C. Section 1447(c),

even though the grounds stated for remand are not

authorized by Section 1447(c). If this Court’s decision

in Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.

336, 46 L.Ed.2d 542 (1976) is to have any meaning, a

District Court Judge should not be able to circumvent

the clear purpose of Thermtron by merely invoking the

magic words “1447c.”

According to Thermtron, the only remand orders

which are immune from review are those “issued under

1447c and invoking the grounds specified therein—that

removal was improvident and without jurisdiction”

(Emphasis added) Thermtron Products, Inc. v. Her-

mansdorfer, supra, 46 L.Ed.2d at 551.

Since the District Court’s opinion herein did not

invoke the grounds authorized by Section 1447(c), but

rather was grounded on extraneous considerations

relating to class action procedures, the remand order

should not be immune from review. To construe Therm-

tron in any other manner would mean that the District

Court Judge in Kentucky, who remanded properly re-

moved cases because of his heavy docket, could continue

this practice simply by adding the citation “28 U.S.C.

Section 1447(c)” to his opinions. Surely this Court

could not have intended such a result.

onllion

This is the interpretation suggested by Justice Rehn-

quist in the In Chambers Opinion denying petitioner’s

application for a stay of the remand order (See Appen-

dix). If certiorari is denied the instant case, Justice

Rehnquist’s opinion will stand as the only interpretation

of the scope of the Thermtron ruling.

Il.

The District Court’s Remand Order Was Not Authorized

by 28 U.S.C. §1447(c), and Constituted an Act

in Excess of Its Jurisdiction.

The District Court made the finding that several

plaintiffs had claims in excess of $10,000. As noted

previously, this finding was not based on an exhaustive

survey of all potential class members, but rather on

a sampling of approximately 20% of the Volvo dealers

in the state of California. Further, the District Court

never specifically found that the named plaintiff, Char-

lene Rosack, did not have a claim in excess of $10,-

000. The court simply stated that such a finding

would not have affected the result. Remand Order,

page 6, footnote 3.

The sole ground for the District Court’s order was

that a majority of the purported class members would

not have claims in excess of $10,000:

“Accordingly, since the action could not be main-

tained in this Court on behalf of the class for

which it was brought, it must be remanded. 28

U.S.C. §1447(c).” Remand Order, page 7, lines 2

through 4.

The District Court’s use of Section 1447c is a com-

plete non sequitur. The court states that the suit must

be remanded because it “could not be maintained in

this court on behalf of the class for which it was

brought.” Then, almost as an afterthought, the court

cites 28 U.S.C. §1447(c).

Section 1447(c) authorizes remand only where an ac-

tion “was removed improvidently and without jurisdic-

tion” (Emphasis added). The District Court, having

found that jurisdiction existed over at least several

plaintiffs, was without authority to remand the entire

action to State Court.

This court in Thermtron Products, Inc. v. Hermans-

dorfer, 423 U.S. 336, 46 L.Ed.2d 542 (1976) held

that a District Court exceeds its authority in remanding

a case on grounds not permitted by §1447(c). 46 L.Ed.

2d at 550. In Thermtron, the controlling factor in

the District Court’s remand order was the Court’s heavy

docket. As this court stated,

“This consideration however is plainly irrelevant

to whether the District Court would have had

jurisdiction of the case had it been filed initially

in that court, to the removability of a case from the

state court under §1441 and hence to the question

whether this cause was removed ‘improvidently

and without jurisdiction’ within the meaning of the

statute.” Thermtron Products, Inc. v. Hermans-

dorfer, supra, 46 L.Ed.2d at 550.

In the present case, the District Court based its

remand order on considerations relating to the mainte-

nance of a class action. The District Court thus allowed

Rule 23 of the Federal Rules of Civil Procedure to

defeat properly attached federal jurisdiction. Rule 82

of the Federal Rules of Civil Procedure clearly states

that the Rules are not to be construed to affect jurisdic

tion:

—

“These Rules shall not be construed to extend

or limit the jurisdiction of the United States District

Courts or the venue of actions therein.”

The District Court’s remand order was not authorized

by the provisions of 28 U.S.C. §1447(c). The order

was therefore an act in excess of the Court’s juris-

diction, and, pursuant to the Thermtron decision, sub-

ject to review by writ of mandamus.

III.

The Court of Appeals’ Denial of the Petition for Writ

of Mandamus Was Contrary to and in Conflict

With the Applicable Decisions of This Court.

The Thermtron case clearly established the principle

that an order of remand entered by a District Court

on grounds not authorized by 28 U.S.C. §1447(c) is

subject to review by writ of mandamus:

“Section 1447(d) is not dispositive of the review-

ability of remand orders in and of itself. That

Section and Section 1447(c) must be construed to-

gether, as this Court has said of the predecessors

to these two sections in Employers’ Reinsurance

Corp. v. Bryant, 299 U.S. 374, 380-381, 81 L.Ed.

289, 57 S. Ct. 273 (1937), and Kloeb v. Armour

and Company, 311 U.S. 199, 202, 85 L.Ed. 124,

61 S. Ct. 213 (1940). These provisions, like

their predecessors, are in pari materia [and] are

to be construed accordingly rather than as distinct

enactments . . .. Employers’ Reinsurance Corp.

v. Bryant, supra, at 380, 81 L.Ed. 289, 57 S.

Ct. 273. This means that only remand orders

issued under 1447c and involving the grounds

specified therein—that removal was improvident

and without jurisdiction—are immume from review

under Section 1447d.” (Emphasis added) Therm-

tron Products, Inc. v. Hermansdorfer, supra, 46

L.Ed.2d at 551.

After holding that §1447(d) does not bar review of

remand orders not issued on grounds specified

in §1447(c), this court noted

“There remains the question whether absent the

bar of §1447(d) against appellate review, the writ

of mandamus is an appropriate remedy to require

the District Court to entertain the remanded action.

The answer is in the affirmative.” (Emphasis add-

ed) Thermtron Products, Inc. v. Hermansdorfer,

supra, 46 L.Ed.2d at 554.

In denying the Petition for Writ of Mandamus in

the present case, the Court of Appeals acted in conflict

with the Thermtron decision. Certiorari is therefore

appropriate and is the only method available to peti-

tioner to protect its statutory right to litigate this matter

in federal court.

IV.

This Case Raises the Issue of the Proper Standard for

Removal Jurisdiction Over Class Actions. This

Is an Important Question of Federal Law Which

Has Not Been, but Should Be, Settled by This

Court.

This court, since the advent of Rule 23 of the

Federal Rules of Civil Procedure, has been called upon

to decide numerous and significant issues involving

class action suits. See, for example, Snyder v. Harris,

U.S. 332, 22 L.Ed.2d 319, 89 S.Ct. 1053 (1969);

Zahn v. International Paper Corporation, 414 U.S.

—

291, 38 L.Ed.2d 511, 94 S.Ct. 505 (1971); Eisen

v. Carlisle and Jacquelin, 417 U.S. 156, 40 L.Ed.2d

732, 94 S.Ct. 2140 (1974).

This case raises an important question regarding

the effect of class action procedures on federal juris-

diction in the removal context, a question which has

not yet been settled by this court. The issue presented

is whether a District Court can remand a properly re-

moved class action where some, but not all, members

of the class meet the federal jurisdictional requirements.

It is an issue of substantial importance, and one on

which lower federal courts have taken differing positions.

Compare, for example, City of Inglewood v. City of Los

Angeles, 451 F.2d 948 (9th Cir. 1972) and Knapp v.

Bankers Securities Corporation, 17 FRD 245 (E.D. Pa.

1954) with Kinsey v. General Motors Acceptance Corp.,

359 F.Supp. 36 (D.N.D. 1973).

Conclusion.

For these reasons, a Writ of Certiorari should issue

to review the judgment and opinion of the Ninth Circuit.

Respectfully submitted,

PAUL, HASTINGS & JANOFSKY,

DANIEL H. WILLIAMS, ITI,

Douc_as C. Conroy,

ROBERT S. SPAN,

Attorneys for Petitioner

Volvo of America Corporation.

APPENDIX.

On Application of Stay.

Supreme Court of the United States.

Volvo Corporation of America, Applicant, v. William

W. Schwarzer, Judge, United States District Court for

the Northern District of California (Charlene P. Ros-

ack, etc., et al., Real Parties in Interest). No. A-395.

[November 15, 1976].

Mr. Justice Rehnquist, Circuit Justice.

Applicant seeks a stay of an order of the District

Court for the Northern District of California remanding

this case to the California state courts. Because I

believe, for the reasons outlined below, that the order

of the District Court is not subject to review, the

application will be denied.

This state law antitrust action was originally brought

by Charlene Rosack in the California Superior Court

for San Mateo County seeking damages individually

and on behalf of a class of persons who purchased

new Volvo automobiles from California Volvo dealers

during the years 1967-1976. Defendants removed the

action to the Federal District Court pursuant to 28

U. S. C. § 1441 (a), alleging that the action was

within the original diversity jurisdiction of this Court

as prescribed in 28 U. S. C. § 1332. Plaintiff moved

to remand the action to state court on the ground,

inter alia, that the amount in controversy did not

exceed $10,000 as required by § 1332. The District

Court granted the motion. Its action was premised

on the belief that the case “must be treated as a

class action for the purpose of determining jurisdictional

issues,” whereas here “it appears that only a few mem-

bers of a class estimated to have some 50,000 members

meet the jurisdictional requirement.” The District Court

accordingly held:

“It thus appears to a legal certainty that this

Court does not have jurisdiction of this action.

It is a class action brought on behalf of a class

of plaintiffs the vast majority of which do not

satisfy the amount in controversy requirement with

respect to their separate and distinct claims. Under

Zahn, all of those plaintiffs would have to be

dismissed and, if feasible, a class substantially

different from that on whose behalf the action

was brought certified. Accordingly, since the action

could not be maintained in this Court on behalf

of the class for which it was brought, it must

be remanded. 28 U. S. C. § 1447 (c).”

Applicant attacks this conclusion, contending that

since the District Court specifically found that jurisdic-

tion existed over “a few members of” the class, the

court’s order remanding the entire action was not au-

thorized by 28 U. S. C. § 1447 (c). The flaw in

this argument is that, while the District Court may

have been wrong in its analysis, it clearly stated, citing

to § 1447 (c), that it considered itself without jurisdic-

tion. The District Court therefore thought it was acting

in accordance with § 1447 (c), which allows a remand

where an action is “removed improvidently and without

jurisdiction.” Review of this order, therefore, is pre-

sumptively barred by the operation of 28 U. S. C.

§ 1447 (d): |

“An order remanding a case to the State court

from which it was removed is not reviewable

'The Ninth Circuit denied the petition for a Writ of Manda-

mus and/or Prohibition on November 11, 1976.

otion

on appeal or otherwise, except that an order re-

manding a case to the State court from which

it was removed pursuant to section 1443 of this

title shall be reviewable by appeal or otherwise.”

We held last Term in Thermtron Products, Inc.

v. Hermansdorfer, 423 U. S. 336 (1976), where the

District Court ordered a remand because of its crowded

docket, that § 1447 (d) did not bar review of remand

orders “issued on grounds not authorized by § 1447c,”

id., at 343. But the District Court here did base

its order on § 1447(c). Thermtron is of no help

to applicant as the remand was explicitly based on

an allegedly erroneous finding that the court “does

not have jurisdiction of this action,” see 423 U. S.,

at 343-344. Applicant’s position would mean that any

2In Thermtron, the District Court acknowledged that the

defendant had a “right” to remove the acti to

28 U. S. C. § 1441, but that this right had to be “balanced

against the plaintiffs’ right to a forum of their choice

— =

Since I do not believe four Members of this Court

would find the order of the District Court subject

to review, the application for a stay is denied.

Order.

United States Court of Appeals, for the Ninth Cir-

cuit.

Charlene P. Rosack, individually and on behalf of

all others similarly situated, Plaintiffs-Appellees, vs.

Volvo of America Corporation, Aktiebolaget Volvo,

Volvo Western Distributing, Inc., and Does I through

L, Defendants-Appellants. No. 76-3296.

Filed: November 11, 1976.

Before: WRIGHT and KENNEDY, Circuit Judges.

Upon due consideration of the petition for writ of

mandamus and the opposition thereto, the petition is

denied. This dissolves this Court’s order of October

28, 1976 staying the district court’s order of remand

to state court.

/s/ Eugene A. Wright

/s/ Anthony M. Kennedy

onfiine

Order.

United States Court of Appeals, for the Ninth Cir-

cuit.

Charlene P. Rosack, individually and on behalf of

all others similarly situated, Plaintiffs-Appellees, vs.

Volvo of America Corporation; Aktiebolaget Volvo,

Volvo Western Distributing, Inc., and Does I through

L, Defendants-Appellants. No. 76-3296.

Filed: October 28, 1976.

Before: SNEED, Circuit Judge.

In order to allow a regular motions panel of this

Court to consider the petition for writ of mandamus,

the district court’s order of October 20, 1976 is stayed

until November 12, 1976, or until further order of

this Court, whichever occurs first.

/s/ Joseph T. Sneed

—

Order Setting Aside Magistrate’s Findings and Recom-

mendation and Remanding Action to State Court.

United States District Court, Northern District of

California.

Charlene P. Rosack, individually and on behalf of

all others similarly situated, Plaintiffs, v. Volvo of

America Corporation, Aktiebolaget Volvo, Volvo West-

ern Distributing, Inc., and Does I through L, Defend-

ants. No. C-76-0742 WWS.

Filed: Oct. 20, 1976.

This state law antitrust action was originally brought

in the California Superior Court for San Mateo County.

The complaint seeks damages on behalf of a named

plaintiff and a class of persons who purchased new

Volvo automobiles from California Volvo dealers in

the period between 1967 and 1976. The complaint

alleges that defendants have engaged in an unlawful

conspiracy to fix the resale price of new Volvo automo-

biles, parts and accessories and the resale profit on

used automobiles sold by Volvo dealers contrary to

the provisions of California’s Cartwright Act, Cal. Bus.

& Prof. Code § 16700 et seq. The prayer for relief

seeks treble damages and attorney’s fees in accordance

with § 16750 of that Act, but does not request damages

in a specified amount. Named as defendants in the

complaint are Voivo of America Corporation (“Vol-

vo”), subsidiary and parent corporations of Volvo,

and a series of Doe defendants who are identified

only as parties owned, dominated and controlled by

each other, and who are acting as agents for and

conspiring with each other.

Defendants removed the action to this Court pursuant

to 28 U.S.C. § 1441(a), alleging that the action was

—

within the original diversity jurisdiction of this Court

as prescribed in 28 U.S.C. § 1332.’ Plaintiffs moved

to remand the action to state court on the grounds

that complete diversity of citizenship was lacking and

that the amount in controversy did not exceed $10,000

as required by § 1332. The motion was referred to

a United States Magistrate who recommended that the

motion be denied. The relevant findings of the Magis-

trate were: (1) that since the Doe defendants could

not be used to defeat diversity, complete diversity of

citizenship was present among the parties; and (2)

that since attorney’s fees can be considered in determin-

ing the amount in controversy, more than $10,000

was in controversy among the parties. Plaintiffs now

challenge these findings on appeal from the Magistrate’s

findings and recommendation.

I. DIVERSITY OF CITIZENSHIP.

Plaintiffs seek to defeat diversity by relying on the

Doe defendants, who, they contend, are California citi-

zens. The difficulty with this contention is that the

complaint does not allege the Does’ citizenship. The

Does are identified in paragraph XII of the complaint

as being owned, dominated, and controlled by other

Does, and as agents for and conspirators with other

Does. They are all alleged to be part of the combination

and conspiracy described in the complaint, but are

not referred to again in the remainder of the complaint.

While the complaint does refer to conspiratorial activi-

128 U.S.C. § 1332(a)(1) provides:

“(a) The district courts shall have original jurisdiction

of all civil actions where the matter in controversy exceeds

the sum or value of $10,000, exclusive of interest and

costs, and is between—

(1) citizens of different states;”.

enlition

ties of Volvo dealers, defined in paragraph XIII as

being Volvo retail dealers in California, no Doe defend-

aut is identified as a Volvo dealer. Without a proper

allegation of the identity, status and citizenship of

any Doe, plaintiffs’ contention that there are Doe de-

fendants who are California citizens and thus destroy

diversity must be rejected. Grigg v. Southern Pacific

Co., 246 F.2d 613, 620 (9th Cir. 1957); Molnar

v. National Broadcasting Co., 231 F.2d 684 (9th Cir.

1956); see also 2A Moore’s Federal Practice § 8.10

(2d ed. 1974). Accordingly, we adopt the Magistrate’s

finding on this issue.

Il. AMOUNT IN CONTROVERSY.

Plaintiffs also challenge the Magistrate’s finding that

more than $10,000 is in controversy in this litigation.

Plaintiffs brought this action as a class action in the

state court. While the action has not yet been certified

as a class action in this Court pursuant to Rule 23,

Fed. R. Civ. P., it must be treated as a class action

for the purpose of determining jurisdictional issues.

City of Inglewood v. City of Los Angeles, 451 F.2d

948, 951-52 (9th Cir. 1972). Defendants have not

argued that the class as pleaded by plaintiffs is a

sham designed to defeat federal jurisdiction nor have

they challenged the treatment of this action as a bona

fide class action at this stage of the proceedings.

Plaintiff Rosack alleges that her claims “are typical

of those to be asserted for the other members of

the plaintiff class”, that the “rights of plaintiff and

the class members involve common questions of law

and fact which predominate over any question affecting

only individual members of the class,” and that a

class action is superior to other methods of adjudication

uifien

of the controversy. (Complaint para. VII and VIII.)

Plaintiff individually and each member of the class

seek treble damages, attorneys’ fees and costs.

It is plain, therefore, that this is a class action

falling within Rule 23(b)(3). The Supreme Court

has held only recently that to meet the jurisdictional

requirement in a Rule 23(b)(3) class action, each

plaintiff's claim must satisfy the jurisdictional amount.

Zahn v. International Paper Co., 414 U.S. 291 (1973).

In that case, the Supreme Court reaffirmed the historic

rule that the “matter in controversy” requirement of

Section 1332 must be satisfied by each member of

the plaintiff class having a separate and distinct claim;

plaintiffs whose claims fall short cannot satisfy the

requirement by aggregation of claims:

“None of the plaintiffs in Snyder v. Harris

alleged a claim exceeding $10,000, but there is

no doubt that the rationale of that case controls

this one. As previously indicated, Snyder invoked

the well-established rule that each of several plain-

tiffs asserting separate and distinct claims must

satisfy the jurisdictional amount requirement if

his claim is to survive a motion to dismiss. This

rule plainly mandates not only that there may

be no aggregation and that the entire case must

be dismissed where none of the plaintiffs claims

more than $10,000 but also requires that any

plaintiff without the jurisdictional amount must

be dismissed from the case, even though others

allege jurisdictionally sufficient claims.” 414 U.S.

at 300 (emphasis supplied ).

See, also, Snyder v. Harris, 394 U.S. 332 (1969),

and United States v. Southern Pacific Transportation

antiiies

Sakis sbeeniin ee , Nos. 74-333 and 75-1080, filed

September 10, 1976, at slip opinion p. 8, n. 11 (9th

Cir. 1976).

The Zahn principle is settled beyond dispute. The

questions that arise concern the manner of its applica-

tion. In the usual case, Zahn would simply require

that members of a class whose claims fall short of

the jurisdictional requirement must be dismissed:

“Each plaintiff in a Rule 23(b)(3) class action

must satisfy the jurisdictional amount, and any

plaintiff who does not must be dismissed from

the case—‘one plaintiff may not ride in another’s

coattails. 469 F.2d at 1035.’ ” 414 U.S. at 301.

But in Zahn the Supreme Court upheld the dismissal

of an entire Rule 23(b)(3) class action entered on

a finding that “to a legal certainty” “not every individual

owner in the class had suffered . . . damages in

excess of $10,000.” Thus, even though some of the

class members had been able to meet the jurisdictional

test, the District Court nonetheless dismissed the entire

action on the ground that “it would not be feasible

to define a class of property owners each of whom

had more than a $10,000 claim .. .” (414 US.

at 292)

Here we are confronted with the application of Zahn

in the context of a removed action. While plaintiffs

have not alleged any specific amount of damage claimed

in the complaint, they contend on this motion that

the damage claims of the individual plaintiffs resulting

from the alleged price fixing could not exceed “a

few dollars” in the case of parts and a “few hundred

dollars” in the case of automobiles. Defendants respond

that some plaintiffs were multiple purchasers of Volvos

=— =

and their claims, if they had any, might therefore

well exceed $10,000. Viewing the record on this motion

in the light most favorable to defendants, it appears

that only a few members of a class estimated to have

some 50,000 members meet the jurisdictional require-

ment.”

That conclusion is not altered by the fact that at-

torneys’ fees which may be awarded to prevailing plain-

tiffs may be taken into account. Cal. Bus. & Prof.

Code, § 16750. See, Missouri State Life Ins. Co. v.

Jones, 290 U.S. 199, 202 (1933); Stokes v. Reeves,

245 F.2d 700, 702 (9th Cir. 1937). Attorneys fees

would be awarded as a part of the separate and distinct

damage recovery of each plaintiff. It appears to the

Court as a legal certainty that reasonable attorneys

fees when added to the damages claimed by the bulk

of the plaintiffs of “a few hundred dollars” each—even

after trebling—would not result in individual claims

in excess of $10,000. See, Georgia Ass’n of Ind. Ins.

Ag. Inc. v. Travelers Indem. Co., 341 F.Supp. 841,

843-844 (N.D. Ga. 1970).°

It thus appears to a legal certainty that this Court

does not have jurisdiction of this action. It is a class

action brought on behalf of a class of plaintiffs the

vast majority of which do not satisfy the amount in

controversy requirement with respect to their separate

and distinct claims. Under Zahn, all of those plaintiffs

2The Court may look at the entire record to determine

whether jurisdictional defects are cured. See Wright, Federal

Courts (2d Ed. 1970) 291; Lonnquist v. J. C. Penney Co.,

421 F.2d 597, 599 (10th Cir. 1970).

8While the allocation of attorneys fees to each prevailing

class member’s recovery is undoubtedly sound, the result would

not be altered under Zahn if the entire amount were allocated

to the named plaintiff, resulting in one more claim likely to

exceed $10,000.

—12—

would have to be dismissed and, if feasible, a class

substantially different from that on whose behalf the

action was brought certified. Accordingly, since the

action could not be maintained in this Court on behalf

of the class for which it was brought, it must be

remanded. 28 U.S.C. § 1447(c). See, Kinsey v. General

Motors Acceptance Corp., 359 F.Supp. 36 (D.N.D.

1973).*

Even if there were reason to doubt the correctness

of this disposition, any doubt should be resolved in

favor of remand to spare the parties proceedings which

might later be nullified should jurisdiction be found

to be lacking. See, Williams v. Tri-County Community

Center, 232 F.Supp. 286, 288 (S.D. Miss. 1971),

Affd, 452 F.2d 221 (Sth Cir. 1971); Lowe v. Trans

World Airlines, Inc., 396 F.Supp. 9, 12 (S.D.N.Y.

1975); Fernandez v. Reynolds Metals Co., 384 F.

Supp. 1281, 1283 (S.D. Tex. 1974); Wood v. Home

Insurance Co., 305 F.Supp. 937, 938 (C.D. Cal. 1969).

Accordingly, the Magistrate’s recommendation of

June 8, 1976, is hereby set aside and the action re-

manded to the Superior Court in and for San Mateo

County, each party to bear its own costs.

IT IS SO ORDERED.

Dated: October 19, 1976.

/s/ William W. Schwarzer

William W. Schwarzer

United States District Judge

428 U.S.C. § 1441(c) would permit, but not require,

the Court to retain jurisdiction of claims properly removed

when joined with claims not otherwise removable. That pro-

vision does not appear applicable to a class action and most

likely does not contemplate the division of a single class of

— =

Magistrate’s Findings and Recommendations.

United States District Court, Northern District of

California.

Charlene P. Rosack, individually and on behalf of

all others similarly situated, Plaintiffs, vs. Volvo of

America Corporation, et al, Defendants. No. C-76-

742 OJC.

Lodged: 6-8-76.

Plaintiff has moved the Court for an Order to remand

this case to the Superior Court for San Mateo County.

Following oral argument and after considering the files

and pleadings in the case, together with the memoranda

of points and authorities, I find that:

(a) There is more than $10,000 in controversy

in this litigation. Such a finding is based on the fact

that attorney’s fees can be considered in determining

whether the requisite amount in controversy is present.

(See cases cited in Defendant’s Brief)

(b) With respect to diversity of citizenship, plain-

tiffs counsel during the course of oral argument con-

ceded that when Volvo Western merged with Volvo

of America Corporation the California corporation

ceased to exist as a separate entity. Such is the import

of California Corporations Code Section 4116, and

is supported by the case of Asher vs. Pacific Power

& Light Co., 249 F.Supp. 671 (No. Dist. Cal. 1965);

see also Hoefferle Truck Sales vs. Divco-Wayne, 523

plaintiffs into remandable and non-remandable subclasses. More-

over, to apply it here to justify retention of jurisdiction would

simply open the door to a subsequent and inevitable dismissal

of the bulk of the class members for lack of jurisdiction

on the motion of the very party that invoked the jurisdiction

of this Court in the first place. We are confident that this

is not the result contemplated by the authors of Section 1441(c).

undies

F.2d 543 (7th Cir. 1975). This narrows the claim

of lack of diversity to reliance on Doe Defendants

as they appear in paragraph XII of the original com-

plaint. The parties cite cases in their briefs to argue

for their respective positions.

Quoting from Moore’s Federal Practice Volume 2A,

Page 1664, and cases cited therein:

‘6% * ob

Some plaintiffs have attempted to invoke di-

versity jurisdiction in cases where they have joined

some unknown or fictitious persons as ‘John Doe’

defendants. Conceivably the joinder of an actual

person as a ‘John Doe’ defendant may be justi-

fiable under unusual circumstances. But certainly,

as a general proposition, the practice, even though

permitted under state law, is unwarranted in di-

versity cases brought originally in the federal

courts, for at least the following reasons: the dis-

trict courts are courts of limited jurisdiction; a

plaintiff who invokes district court jurisdiction has

the duty to aver the facts requisite to that jurisdic-

tion; under general diversity principles, previously

discussed, the citizenship of each plaintiff must

be diverse from that of each defendant and plain-

tiffs averments must so show. This cannot be

truthfully shown as to fictitious persons; and usual-

ly not as to an actual but unknown person for

if, in truth, his citizenship can be affirmatively

alleged his name can usually be ascertained. Sound

authority supports the general proposition that the

‘John Doe’ practice is unwarranted in diversity

cases; and the action is subject to dismissal unless

the John Does are eliminated or their citizenship

affirmatively alleged. Where, however, the John

Does are dismissed and there is complete diversity

between the remaining parties, the pleading defect

has not been regarded as reversible error. (foot-

notes omitted )

* * *”

From the foregoing, I find that plaintiff cannot rely

on the Doe Defendants to defeat diversity. The plead-

ings simply do not establish California defendants, leav-

ing only the non-resident corporate defendant. Thus

the diversity requisite to federal court jurisdiction ap-

pears to be the fact.

In view of the foregoing, I recommend that the

Court enter its Order denying plaintiff's motion to

remand the case to the State Court.

Dated: June 8, 1976.

Respectfully submitted,

/s/ Owen E. Woodruff, Jr.

Owen E. Woodruff, Jr.

United States Magistrate

IT IS SO ORDERED.

Dated:

United States District Judge

— =

Petition for Writ of Mandamus and/or Petition

for Writ of Prohibition.

United States Court of Appeals, for the Ninth Cir-

cuit.

Volvo of America Corporation, Petitioner, vs. The

Honorable William W. Schwarzer, Judge, United States

District Court for the Northern District of California,

Respondent. Charlene P. Rosick, individually and on

behalf of all others similarly situated, Real Party in

Interest. No. 76-3296.

Filed: October 28, 1976.

Pursuant to 28 U.S.C. § 1651 and Rule 21, Federal

Rules of Appellate Procedure, petitioner VOLVO OF

AMERICA CORPORATION hereby requests this

Court to issue a writ of mandamus and/or writ of

prohibition directed to respondent, The Honorable WIL-

LIAM W. SCHWARZER, Judge, United States District

Court for the Northern District of California, command-

ing respondent to set aside the order of remand and

retain jurisdiction of civil action No. 76-742-WWS in

the United States District Court for the Northern Dis-

trict of California.

PRELIMINARY STATEMENT

1. This case involves an action originally brought

in state court, alleging violations of the California

antitrust laws. Petitioner removed on the basis of di-

versity jurisdiction.

2. Petitioner contends that respondent’s order of

remand was an act in excess of the district court’s

jurisdiction in that it was not authorized by 28 U.S.C.

1447(c). Petitioner believes that its right to litigate

this case in federal court has wrongfully, erroneously

and without proper authority been deprived by respond-

ent. Under the recent Supreme Court decision on

Thermtron Products, Inc. v. Hermansdorfer, .... U.S.

....» 46 L. Ed.2d 542 (1976), respondent’s wrongful

denial of federal jurisdiction is reversable by this court

by writ of mandate.

STATEMENT OF FACTS

1. On March 12, 1976, an action was commenced

by Charlene P. Rosack, individually and on behalf

of all others similarly situated, plaintiffs, against Volvo

of America Corporation, Aktiebolaget Volvo, Volvo

Western Distributing, Inc. and Does I through L, de-

fendants, in the Superior Court of the State of Califor-

nia, County of San Mateo, alleging violations of the

California antitrust statutes. A copy of the original

complaint is attached hereto as Exhibit “A” and made

a part hereof.

2. The summons and complaint were served on

defendant Volvo of America Corporation (hereinafter

Volvo) on March 31, 1976. No other defendants have

been served.

3. On April 14, 1976, Volvo filed a petition and

bond for removal in the United States District Court

for the Northern District of California, removing said

action to said court. A copy of the petition for removal

is attached hereto as Exhibit “B” and made a part

hereof.

4. On April 30, 1976, plaintiffs filed a notice

of motion and motion to remand tise action to state

court.

eniiiiins

5. The motion for remand was referred to the

Honorable Owen E. Woodruff, Jr., United States Magis-

trate, for hearing and decision. On June 8, 1976,

the Magistrate submitted his findings and recommenda-

tions, in which he concluded that “There is more

then $10,000 in controversy in this litigation” and

that “The diversity requisite to federal court jurisdiction

appears to be the fact.” The Magistrate’s findings and

recommendations are attached hereto as Exhibit “C”

and made a part hereof.

6. Following the Magistrate’s ruling, Volvo on June

14, 1976 filed its answer and affirmative defenses.

7. On or about June 12, 1976, plaintiffs, pursuant

to Local Rule 505 of the Northern District of Cali-

fornia filed a notice of objections to the Magistrate’s

findings and recommendations. Plaintiffs contended that

neither the requisite diversity nor amount in controversy

were present. Numerous briefs have been filed by

both sides on the issues presented by the motion to

remand, and petitioner will not burden this Court by

attaching copies of all these briefs.

8. On October 20, 1976, the respondent entered

an order setting aside the Magistrate’s findings and

recommendations and remanding the action to state

court. A copy of said order is attached hereto as

Exhibit “D” and made a part hereof. In subsequent

proceedings, the effective date of this order was stayed

by respondent until 4:30 p.m. on October 29, 1976.

The express purpose of the stay was to afford petitioner

an opportunity to seek relief from this Court.

9. Plaintiff's complaint alleges that the defendants,

including petitioner, have engaged in an international

combination and conspiracy to fix the prices of new

anfiiine

Volvo automobiles, parts and accessories offered for

sale in the State of California from January, 1967

until the date of filing of the complaint. Plaintiffs

also allege that defendants acted in restraint of trade

through the use of tying arrangements in connection

with the sale of parts and accessories for Volvo automo-

biles. Plaintiff Charlene P. Rosack purports to represent

a class of all retail purchasers of Volvos in California

during the period in controversy. Plaintiffs seek actual

damages, treble damages and attorneys’ fees, pursuant

to California Business and Professions Code § 16750.

No action has been stated under the federal antitrust

laws

10. Petitioner, the only defendant that has been

served, has denied the allegations.

11. In the original motion for remand, plaintiff

advanced several theories as basis for her contention

that requisite diversity was not present. Plaintiff claimed

that the existence of the Doe defendants could be

relied on to defeat diversity, and the fact that defendant

Volvo Western Distributing, Inc. had been a California

corporation defeated diversity jurisdiction. However, the

Magistrate and the respondent both ciearly found that

the Doe defendants could not be relied upon to defeat

federal jurisdiction, and that since Volvo Western dis-

tributing, Inc. had ceased to exist as a separate corpo-

rate entity prior to the filing of complaint, there was

complete diversity between plaintiffs and defendants.

12. The primary issue in the remand proceedings,

and the only issue still in contention between the parties,

is whether or not the jurisdictional amount in contro-

versy is present. The respondent in his order of remand,

found that at least several plaintiffs, possibly including

—20—

the named plaintiff, met the amount in controversy

requirement by having potential claims against defend-

ant in excess of $10,000. However, notwithstanding

that finding, respondent ordered the entire action re-

manded to state court.

Ill

STATEMENT OF ISSUES PRESENTED

A. DOES 28 U.S.C. § 1447(c) PERMIT RE-

MAND OF AN ACTION IN WHICH COM-

PLETE DIVERSITY EXISTS, AND WHERE

THE DISTRICT COURT HAS FOUND THAT

FEDERAL JURISDICTION EXISTS AS TO

SOME OF THE PLAINTIFFS?

B. IN AN ACTION REMOVED FROM

STATE COURT PURSUANT TO THE ORIG-

INAL JURISDICTION OF THE DISTRICT

COURT, UNDER 28 U.S.C. § 1332, WHERE

THERE IS COMPLETE DIVERSITY AND

SOME PLAINTIFFS HAVE CLAIMS IN EX-

CESS OF THE JURISDICTIONAL AMOUNT,

DOES THE DISTRICT COURT HAVE ADUD-

THORITY TO REMAND THE ENTIRE AC-

TION TO STATE COURT?

C. UNDER 28 U.S.C. § 1447(c), DOES THE

DISTRICT COURT HAVE DISCRETION TO

REMAND AN ENTIRE CLASS ACTION CASE

TO STATE COURT NOTWITHSTANDING A

FINDING BY THE COURT THAT AT LEAST

SOME PLAINTIFFS HAVE CLAIMS IN EX-

CESS OF THE JURISDICTIONAL AMOUNT?

D. DOES 28 USC. § 1441(c) REQUIRE

THE DISTRICT COURT TO RETAIN JURIS-

DICTION OF CLAIMS PROPERLY RE-

MOVED WHEN JOINED WITH CLAIMS NOT

OTHERWISE REMOVABLE?

E. WHERE FEDERAL JURISDICTION EX-

ISTS AS TO CERTAIN MEMBERS OF A

CLASS, CAN THE COURT REMAND TO

STATE COURT THE CLAIMS OF THOSE

CLASS MEMBERS OVER WHICH THE

COURT HAS JURISDICTION ALONG WITH

THE CLAIMS OF CLASS MEMBERS OVER

WHOM THE COURT HAS NO JURISDIC-

TION?

F. IN A CLASS ACTION WHERE PLAIN-

TIFFS CLAIM ATTORNEYS FEES PUR-

SUANT TO STATE STATUTE AS AN ELE-

MENT OF DAMAGES, DOES THE POTEN-

TIAL AWARD OF ATTORNEYS’ FEES

CREATE A “COMMON FUND” SO THAT AG-

GREGATION OF SUCH FEES IS PERMIS-

SIBLE IN DETERMINING THE EXISTENCE

OF FEDERAL JURISDICTION?

G. IN A CLASS ACTION WHERE PLAIN-

TIFFS CLAIM TREBLE DAMAGES PUR-

SUANT TO A STATE STATUTE AS AN ELE-

MENT OF DAMAGES, DOES THE POTEN-

TIAL AWARD OF TREBLE DAMAGES

CREATE A “COMMON FUND” SO THAT

AGGREGATION OF SUCH DAMAGES IS

PERMISSIBLE IN DETERMINING THE ExX-

ISTENCE OF FEDERAL JURISDICTION?

H. FOR PURPOSES OF DETERMINING

THE EXISTENCE OF FEDERAL JURISDIC-

TION, SHOULD AN ACTION BROUGHT BY

_—- =

A PLAINTIFF “INDIVIDUALLY AND ON BE-

HALF OF ALL OTHERS SIMILARLY SITU-

ATED” BE TREATED SOLELY AS A CLASS

ACTION PRIOR TO THE DETERMINATION

OF THE EXISTENCE OF ANY CLASS PUR-

SUANT TO RULE 23, FEDERAL RULES OF

CIVIL PROCEDURE?

I. IF THE DISTRICT COURT ASSUMES

JURISDICTION OVER CERTAIN CLASS

MEMBERS WHO, IN A DIVERSITY CASE,

CAN STATE CLAIMS FOR AN AMOUNT IN

CONTROVERSY EXCEEDING $10,000, DOES

THE DISTRICT COURT AUTOMATICALLY,

OR MAY THE DISTRICT COURT IN ITS DIS-

CRETION, ASSUME ANCILLARY JURISDIC-

TION OVER THE CLAIMS OF THE REMAIN-

ING CLASS MEMBERS WHO CANNOT

STATE A CLAIM FOR AN AMOUNT IN CON-

TROVERSY IN EXCESS OF $10,000?

J. IN AN ACTION REMOVED FROM

STATE COURT PURSUANT TO THE ORIG-

INAL JURISDICTION OF THE DISTRICT

COURT UNDER 28 U.S.C. 1332, WHERE

SOME PLAINTIFFS HAVE CLAIMS IN EX-

CESS OF THE JURISDICTIONAL AMOUNT,

AND DIVERSITY EXISTS, CAN THE DIS-

TRICT COURT REMAND TO STATE COURT

THE CLAIMS OF THOSE PLAINTIFFS WITH

A CLAIM FOR AN AMOUNT IN CONTRO-

VERSY IN EXCESS OF $10,000?

K. IN AN ACTION REMOVED FROM

STATE COURT PURSUANT TO THE ORIG-:

INAL JURISDICTION OF THE DISTRICT

—

COURT UNDER 28 U.S.C. 1332, WHERE

SOME PLAINTIFFS HAVE CLAIMS IN EX-

CESS OF THE JURISDICTIONAL AMOUNT,

CAN THE DISTRICT COURT REMAND TO

THE STATE COURT THE CLAIMS OF SAID

PLAINTIFFS ON THE SOLE GROUND THAT

SAID CLAIMS HAVE BEEN JOINED IN A

PURPORTED CLASS ACTION WHERE THE

REMAINDER OF THE PURPORTED CLASS

MEMBERS CANNOT STATE CLAIMS IN EX-

CESS OF THE JURISDICTIONAL AMOUNT

IN CONTROVERSY?

RELIEF SOUGHT

Petitioner seeks a writ of mandamus or in the alter-

native a writ of prohibition commanding respondent

to set side the order of remand entered on October

20, 1976 in civil action No. 76-742-WWS, entitled

Charlene P. Rosack, individually and on behalf of

all others similarly situated, plaintiffs, vs. Volvo of

America Corporation, Aktiebolaget Volvo, Volvo West-

ern Distributing, Inc., and Does I through L, defend-

ants, and further commanding respondent to retain

jurisdiction of said case, and further prohibiting re-

spondent from remanding said case to the state court.

Petitioner has also filed concurrently herewith an emer-

gency motion for a stay of said remand order pending

the decision by this Court on petitioner’s application

for said writs.

nen

STATEMENT OF THE REASONS

WHY THE WRIT SHOULD ISSUE

A. THIS COURT HAS AUTHORITY, BY

WRIT OF MANDAMUS, TO REVIEW THE

REMAND ORDER ENTERED BY THE DIS-

TRICT COURT.

The Supreme Court of the United States has recently

held that an order of remand entered by a district

court on grounds not authorized by 28 U.S.C. § 1447

Thermtron Products, Inc. v. Hermansdorfer, ....

USS. ......, 46 L. Ed.2d 542 (1976).

In Thermtron, the district court remanded a case

on grounds other than those authorized by 28 U.S.C.

§ 1447(c). Section 1447(c) authorizes remand only

where a case is removed “improvidently and without

jurisdiction.” The district court in Thermtron found

that federal jurisdiction over the case existed, but re-

manded the case to state court because of the federal

court’s crowded docket. The defendant sought a writ

of mandate from the Sixth Circuit Court of Appeals.

The application for writ was denied on the grounds

that 28 U.S.C. 1447 (d) precluded review of any

order of remand.

The Supreme Court, however, held that the bar

against review in Section 1447(d) is applicable only

to remand orders properly issued on grounds authorized

by 1447(c):

“Section 1447(d) is not dispositive of the review-

ability of remand orders in and of itself. That

section and section 1447(c) must be construed

together, as this court has said of the predecessors

to these two sections in Employers Reinsurance

Corp. v. Bryant, 299 U.S. 374, 380-381, 81 L.

Ed. 289, 57 S. Ct. 273 (1937), and Kloeb vy.

Armour & Company, 311 U.S. 199, 202, 85

L. Ed. 124, 61 S. Ct. 213 (1940). These provi-

sions, like their predecessors, ‘are in pari materia

[andj are to be construed accordingly rather than

as distinct enactments . . .. Employers Reinsurance

Corp. v. Bryant, supra, at 380, 81 L. Ed. 289,

57 S. Ct. 273. This means that only remand

orders issued under 1447(c) and invoking the

grounds specified therein—that removal was im-

provident and without jurisdiction—are immune

from review under section 1447(d).” (emphasis

added).

Thermtron Products, Inc. v. Herr ‘nsdorfer, 46

L. Ed.2d at 551.

The remand order issued by respondent herein clearly

shows that respondent found that jurisdiction existed

as to at least several plaintiffs. Therefore, the remand

of the entire action was improper and based on grounds

not authorized by section 1447(c).

B. WHERE FEDERAL JURISDICTION EX-

ISTS AS TO SOME PLAINTIFFS IN A PUR-

PORTED CLASS ACTION DISMISSAL OR RE-

MAND OF THE ENTIRE ACTION IS

IMPROPER.

The Supreme Court has held that in cases where

only one plaintiff meets the jurisdictional requirements

for federal court, that plaintiff's claim is properly before

the court, and the claims of other plaintiffs who do

—26—

not meet the jurisdictional requirement should be dis-

missed. In Zahn v. International Paper Company, 414

U.S. 291, 38 L. Ed.2d 511 (1973), the named plaintiffs

in a purported class action each had claims satisfying

the $10,000 requirement. However, they sought to rep-

resent a class where unnamed plaintiffs would not

have sufficient claims. The issue presented was not

whether the entire case should be dismissed for lack

of federal jurisdiction, but only whether the suit should

proceed as a class action. The Supreme Court held

that the claims of the unnamed plaintiffs could not

be aggregated with the claims of the named plaintiffs

and therefore affirmed the lower court’s ruling denying

class certification. However, it is clear that federal

jurisdiction still existed as to those plaintiffs who had

claims in excess of $10,000:

“As previously indicated, Snyder invoked the well

established rule that each of several plaintiffs as-

serting separate and distinct claims must satisfy

the jurisdictional ammount requirement if his claim

was to survive a motion to dismiss. This rule

clearly mandates not only that there may be no

aggregation and that the entire case must be dis-

missed where none of the plaintiffs claims more

than $10,000 but also requires that any plaintiff

without the jurisdictional amount must be dis-

missed from the case, even though others allege

jurisdictionally sufficient claims.

“This follows inescapably from the court’s heavy

reliance on Clark v. Paul Gray, Inc., supra, where

only one of several plaintiffs had a sufficiently

large claim and all other plaintiffs were dismissed

from the suit. Moreover the court cited with ap-

proval the decision in Alvarez v. Pan American

—- =

Life Insurance Company, 375 F.2d 992 (C.A.5),

cert. den., 389 U.S. 827, 19 L. Ed.2d 82, 88

S. Ct. 74 (1967), which was decided after the

1966 amendments to rule 23 and which involved

a class action with only one member of the class

having a claim sufficient to satisfy section 1332.

Only that claim was held within the jurisdiction

of the district court.” (emphasis added).

Zahn v. International Paper Company, supra,

414 US. at 300, 301, 38 L. Ed.2d at 518,

519. '

The result in Zahn was that the lower court struck

all references in the complaint to persons other than

the four plaintiffs who met the jurisdictional require-

ment. (Zahn v. International Paper Company, 469

F.2d 1033, 1034 (C.A.2, 1972).) Thus, it is clear

that the district court found, and the Supreme Court

implicitly upheld the determination that the district

court had original jurisdiction over those plaintiffs with

claims in excess of $10,000.

In the present case, the district court made the

finding that several plaintiffs had claims in excess of

$10,000. Further, the court never specifically found

that the named plaintiff, Charlene Rosack, did not

have a claim in excess of $10,000. As reflected in

the court’s remand order, page 6, footnote 3, “The

result [remand] would not be altered under Zahn

if the entire amount were allocated to the named plain-

tiff, resulting in one more claim likely to exceed $10,-

000.”

The sole ground for the respondent’s remand order

was that a majority of the purported class plaintiffs

would not have claims in excess of $10,000. However,

—28—

28 U.S.C. 1447(c) does not authorize such a ground

for an order of remand. In essence, the respondent

has allowed extraneous factors, such as expedition of

the Rule 23 class action, to defeat federal jurisdiction

which had properly attached upon removal.

Zahn clearly established that in a case where some

plaintiffs meet the jurisdictional requirement, federal

jurisdiction is present, at least as to those plaintiffs.

Can this jurisdiction be defeated by the procedural

device of a class action? Jt must be remembered that

a class action is merely a procedural device for the

efficient and economical litigation of numerous indi-

vidual action. That principle is implicit in the court’s

rule in Zahn which require each plaintiff to satisfy

the jurisdictional amount requirement.

The issue presented can be made clearer through

an example. Suppose that Prestige Optics, which was

shown in petitioner’s affidavits in the district court

to have purchased ten new Volvos in the period in

controversy, had brought an individual action against

Volvo making allegations identical to those in the in-

stant case. Petitioner would clearly have had the right

to remove such an action to federal court. The situation

would be similar for the other multiple purchasers

of Volvos. However, because the potential claim of

Prestige Optics has been joined by plaintiff in her

class action with claims not meeting the jurisdictional

requirements, petitioner, under the respondent’s ruling,

would be deprived of its right to litigate in federal

court. Thus, petitioner may be substantially prejudiced

by plaintiff's use of the class action procedure. Such

a result is not contemplated under the terms of 28

U.S.C. 1447(c).

—29—

C. PETITIONER HAD A RIGHT TO RE-

MOVE THIS CASE TO FEDERAL COURT,

AND WILL BE SUBSTANTIALLY PREJU-

DICED AND IRREPARABLY INJURED IF

THAT RIGHT IS DEFEATED BY AN IMPROP-

ER REMAND ORDER.

Congress has established the policy, through 28 U.S.C.

1441 that in any action over which the district court

would have original jurisdiction, a defendant has a

right to have his case litigated in federal court. This

right is equal to the right of plaintiffs to make the

initial choice of which forum in which to bring the

action:

“While the plaintiffs had a right to chose initially

the state court as the forum for this action, the

defendants have a subsequent equal right to resort

herein to the federal court by compliance with

the removal statute, transferring indirectly original

jurisdiction from the state to the federal court.”

Garland v. Humble Oil & Refining Company,

306 F. Supp. 608, 610 (E.D. Tenn. 1969).

In Gentle v. Lamb-Weston, Inc., 302 F. Supp. 161,

165, (N.D. Maine 1969), the court stated:

“While the plaintiff, in good faith, may proceed

in the state courts . . . it is equally true that

the federal courts should not . . . prevent a removal

to a federal court where one has that right, and

should be equally vigilant to protect the right

to proceed in the federal court as to permit the

state courts in proper cases to retain their own

jurisdiction.”

Respondent’s remand order will deprive petitioner

of its right to litigate in federal court. The instant

case involves numerous questions of antitrust law,

and although brought under the California antitrust

statute, federal antitrust decisions and authority will

be controlling. (See Chicago Title Insurance v. Great

Western Financial Corp., 69 C.2d 305, 70 Cal. Rptr.

849 (1968).) Petitioner, a foreign corporation, would

be faced with a situation of litigating complex questions

of antitrust law in a state court.

CONCLUSION

For the reasons set forth above, it is respectfully

requested that this Court grant petitioner’s application

for writ of mandamus and/or prohibition.

Respectfully submitted,

PAUL, HASTINGS & JANOFSKY

/s/ By Robert S. Span

ROBERT S. SPAN

Attorneys for Petitioner

Volvo of America Corporation

—

Class Action Complaint for Damages. 3

(Cartwright Act, Bus. & Prof. Code § 16700 et seq.)

Superior Court of the State of Calif

Ps geswing ornia, County

Charlene P. Rosack, individually, and on behalf of

all others similarly situated, Plaintiffs, vs. Volvo of

America Corporation, Aktiebolaget Volvo, Volvo West-

ern Distributing, Inc., and Does I through L, Defend-

ants. No. 200471.

Filed: March 12, 1976.

Plaintiffs allege:

FIRST CAUSE OF ACTION

| Plaintiff, CHARLENE P. ROSACK, is, and at all

times material herein was, a resident of the State of

California, County of San Francisco.

Plaintiff, CHARLENE P. ROSACK, purchased a

new Volvo automobile at retail from a Volvo dealer

located in the State of California in August of 1972.

Ill

Plaintiff, CHARLENE P. ROSACK, brings this ac-

tion on behalf of herself and all other persons, natural

or legal, who purchased a new Volvo automobile at

retail from a Volvo dealer located in the State of

California during the period in controversy.

Plaintiffs had no knowledge of the combination

and conspiracy alleged herein, or of any facts which

might have led to the discovery thereof, prior to the

last year.

ils

Plaintiff and the members of the plaintiff class could

not have discovered the conspiracy at an earlier date

by the exercise of due diligence because of deceptive

practices and techniques of secrecy employed by defend-

ants AKTIEBOLAGET VOLVO, VOLVO OF AMER-

ICA CORPORATION and VOLVO WESTERN DIS-

TRIBUTING, INC. to avoid detection and fraudulently

to conceal such combination and conspiracy.

Plaintiff, CHARLENE P. ROSACK, is in a position

similar to that of other members of the plaintiff class,

which is so numerous that joinder of all parties is

impracticable.

Vil

The rights of plaintiff and the class members involve

common questions of faw and fact which predominate

over any questions affecting only individual members

of the class; and this class action is superior to other

methods for the fair and efficient adjudication of the

controversy herein described.

Vill

The claims of plaintiff are typical of those to be

asserted for the other members of the plaintiff class,

and said plaintiff will fairly and adequately protect

the interests of the class. Individual actions by class

members are not feasible since the average claim for

each class member would not be in an amount sufficient

to justify individual prosecution.

AKTIEBOLAGET VOLVO (hereinafter referred to

as “A B Volvo”), Gothenburg, Sweden, is made a

- =

defendant herein. A B Volvo is an alien corporation.

During the period in controversy and continuing there-

after to and including the date of filing of this com-

plaint, A B Volvo was the parent company and owner

of 100% of the capital stock of, and dominated and

controlled the operations, management and policies of,

defendants VOLVO OF AMERICA CORPORATION

and VOLVO WESTERN DISTRIBUTING, INC. In

addition, A B Volvo manufactures the Volvo auto-

mobiles sold and distributed by other defendants.

VOLVO OF AMERICA CORPORATION (here-

after referred to as “Volvo of America”) is made

a defendant herein. Volvo of America is a corporation

organized and existing under the laws of the State

of Delaware, with its national headquarters in Rock-

leigh, New Jersey. Volvo of America is, and at all

times material hereto was, licensed to do and doing

business in California, and in San Mateo County. Dur-

ing the period in controversy and continuing thereafter

. to and including the date of filing of this complaint,

Volvo of America was wholly owned by A B Volvo

and was not an independent subsidiary. A B Volvo

dominated and controlled the operations, management

and policies of Volvo of America. Volvo of America

is and at all times material hereto was the importer

and national distributor of Volvo automobiles, parts

and accessories in the United States. Volvo of America

sells Volvo automobiles, parts and accessories to region-

al distributors for resale in all 50 states, including

the State of California.

anil

VOLVO WESTERN DISTRIBUTING, INC., (here-

inafter “VWD”) is made a defendant herein. VWD

was a corporation organized and existing under the

laws of the State of California with its principal place

of business in the State of California and regional

offices in San Mateo County; and at all times material

herein maintained and conducted a substantial amount

of business in San Mateo County. From at least Janu-

ary, 1967, and continuing thereafter-to and including

the date of filing of this complaint, VWWD was a wholly

owned subsidiary of Volvo of America, which, with

A B Volvo, dominated and controlled the operations,

management and policies of VWD. VWD at all times

material hereto was the distributor of Volvo automobiles,

parts and accessories in the “Western Region” of the

United States comprising Alaska, Arizona, California,

Hawaii, Idaho, Montana, Nevada, Oregon, Utah and

Washington. VWD purchases Volvo automobiles, parts

and accessories for resale from Volvo of America.

XII

The true names or capacities, whether individual,

corporate, associate or otherwise, of the defendants

DOES I through L are unknown to plaintiffs who

therefore sue them by such fictitious names, and plain-

tiffs will amend this complaint to show their true

names and capacities when they have been ascertained.

Plaintiffs are informed and believe and thereon allege

that each of the fictitiously named defendants is in-

debted to plaintiffs as hereinafter alleged, and that

DOES I through V were owned, dominated and con-

trolled by DOES VI through X; DOES XI through

XV acted as agents for and in conspiring with DOES

XVI through XX; and that all of them were part

of the combination and conspiracy hereinafter alleged.

XIII

Defendant A B Volvo manufactures Volvo automo-

biles, parts and accessories therefor, in Sweden, The

exclusive importer for said Volvo automobiles, parts

and accessories is defendant Volvo of America Corpora-

tion. Defendant Volvo of America Corporation in turn

distributes and sells the imported Volvo automobiles,

parts and accessories to various wholly owned regional

distributing corporations. VWD is the wholly owned

regional distributor for the “Western Region” of the

United States, including California. VWD sells Volvo

automobiles, parts and accessories to retail Volvo deal-

ers in California, for retail sale by such dealers to

the consuming public of which the plaintiff, and the

class represented by plaintiff, are members. (All refer-

ences to “Volvo dealers” shall hereinafter mean retail

Volvo dealers in California unless the context dictates

otherwise. )

XIV

Beginning at least as early as January, 1967, and

continuing thereafter until the filing date of this com-

plaint, defendants A B Volvo, Volvo of America and

VWD in combination with the Volvo dealers have

engaged in unlawful combination and conspiracy to

establish, maintain, control, fix, peg and stabilize the

resale price of new Volvo automobiles, parts and acces-

sories, and the resale profit on used automobiles, sold

by Volvo dealers in violation of the Cartwright Act

(Bus. & Prof. Code § 16700 et seq.).

= =

The aforesaid combination and conspiracy consisted

of a continuing agreement and concert of action among

defendants A B Volvo, Volvo of America and VWD,

together with the Volvo dealers, the substantial terms

of which were that said defendants, and each of them,

would, by devices and practices, require, ensure and

maintain compliance by and cooperation of Volvo deal-

ers with including, but not limited to, the following

practices:

(a) Volvo dealers would sell and advertise for sale

Volvo automobiles, parts and accessories at prices fixed

by defendants A B Volvo, Volvo of America and

VWD, and each of them;

(b) Volvo dealers would only advertise the suggested

retail prices fixed by defendants when prices were

included in dealer advertisements for new Volvos;

through automobile brokers or discount houses; and

(d) Volvo dealers would refrain from selling, adver-

tising, and otherwise soliciting customers for Volvo

automobiles outside the respective marketing areas of

said dealers as designated by defendants A B Volvo,

Volvo of America and VWD, and each of them.

XVI

The unlawful combination and conspiracy hereinbe-

fore alleged has had the following effects, among others:

(a) Volvo dealer prices of Volvo automobiles, parts

and accessories have been established, controlled, fixed,

maintained, pegged and stabilized at noncompetitive

and artificial levels;

—

(b) Price competition among Volvo dealers in the

sale and distribution of Volvo automobiles, parts and

accessories has been suppressed and eliminated;

nity of buying Volvo automobiles, parts and accessories

manufactured and/or distributed by defendants A B

Volvo, Volvo of America and VWD at competitive

prices;

(d) Automobile brokers and discount houses have

been generally unable to purchase Volvo automobiles,

parts and accessories;

(e) Volvo dealers have been prevented from selling

Volvo automobiles, parts and accessories at prices,

to purchasers, and into territories, of their own choice;

and

(f) Competition generally in the sale of Volvo auto-

mobiles, parts and accessories has been restrained, re-

stricted, suppressed, limited, controlled, prevented, and

eliminated.

XVII

As a direct result of the unlawful conduct of defend-

ants A B Volvo, Volvo of America and VWD in

combination with the Volvo dealers alleged herein,

plaintiff and other members of the plaintiffs class

have been unable to purchase at retail new Volvo

automobiles, parts and accessories at prices determined

by free and open competition, and, at all times material

herein, the retail prices of new Volvo automobiles,

parts and accessories purchased by plaintiff and other

members of plaintiff's class were higher than they would

have been absent the unlawful acts, combination and

conspiracy herein alleged.

XVIII

Plaintiff, and other members of plaintiff’s class, have

been injured in their business and property by reason

of these violations in an amount presently unknown.

Plaintiffs pray leave to amend according to proof.

‘WHEREFORE, plaintiff, individually, and each and

every member of the plaintiff class, prays judgment

against defendants, and each of them, as hereinafter

set forth.

SECOND CAUSE OF ACTION

Plaintiffs hereby incorporate and reallege Paragraphs

I through XVIII of the First Cause of Action.

Defendants A B Volvo, Volvo of America and VWD,

and each of them, in combination with Volvo dealers

further acted in restraint of trade through tying arrange-

ments, requiring Volvo dealers to purchase parts and

accessories for Volvo automobiles from these defendants

thereby preventing competition in manufacturing, mar-

keting, transportation, sale or purchase of said parts

and accessories.

Ill

Plaintiff, and members of plaintiff's class, were there-

by required to buy Volvo parts and accessories as

a condition of buying Volvo automobiles. Defendants

A B Volvo, Volvo of America, VWD, and each of

them, combined and conspired by continuing agreement

and concert of action to sell to plaintiff, and members

of plaintiff's class, only those parts and accessories

provided by these defendants, and at resale prices estab-

lished, controlled, fixed, maintained, pegged and stabi-

lized by them.

_ =

The unlawful combination and conspiracy herein-

before alleged has had the followin, cffects, among

others:

(a) Volvo dealer retail prices of parts and accessories

for Volvo automobiles have been fixed, maintained,

pegged and stabilized at noncompetitive and artificial

levels;

(b) Price competition among Volvo dealers in the

sale of parts and accessories for Volvo automobiles

has been suppressed and eliminated;

competing products suitable for Volvo automobiles man-

ufactured and distributed by others, and the beneficial

impact upon price inherent in increased competition;

and

(d) Competition generally in the sale of parts and

accessories for Volvo automobiles has been restrained,

restricted, suppressed, limited, controlled, prevented and

eliminated. |

Plaintiff, and other members of plaintiff's class, have

been injured in their business and property by reason

of these violations in an amount presently unknown.

Plaintiffs pray leave to amend according to proof.

WHEREFORE, plaintiff, individually, and each and

every member of the plaintiff class, pray judgment

against defendants, and each of them, in accordance

with the provisions of Section 16750 of the Business

and Professions Code, as follows:

1. For three times the damages sustained;

2. For reasonable attorney’s fees;

3. For costs of suit incurred herein; and

— =

4. For such other and further relief as the Court

deems just and proper.

DATED: March 10, 1976.

COTCHETT, HUTCHINSON & DYER

BROWN, WRIGHT & KAUFMAN

CARTWRIGHT, SAROYAN, MARTIN

& SUCHERMAN

/s/ By Harold C. Wright

HAROLD C. WRIGHT

Attorneys for Plaintiffs

VERIFICATION

I am an attorney at law admitted to practice before

all courts of the State of California and have my

office in Santa Clara County, California, and am one

of the attorneys for the plaintiff in the above entitled

action; that plaintiff is unable to make the verification

because plaintiffs are absent from said county and

for that reason affiant makes this verification on plain-

tiffs behalf; that I have read the foregoing CLASS

ACTION COMPLAINT FOR DAMAGES and am

informed and believe the matters therein to be true

and on that ground allege that the matters stated

therein are true.

I declare under penalty of perjury, that the foregoing

is true and correct.

Executed on March 10, 1976, at San Mateo, Cali-

fornia.

/s/ Harold C. Wright

HAROLD C. WRIGHT

—_—

Notice of Filing of Petition and Bond for Removal.

United States District Court, Northern District of

California.

Charlene P. Rosack, individually, and on behalf of

all others similarly situated, Plaintiffs, vs. Volvo of

America Corporation, Aktiebolaget Volvo, Volvo West-

ern Distributing, Inc., and Does I through L, Defend-

ants. Case No. C76 742 OJC.

Filed: April 14, 1976.

TO PLAINTIFF AND TO HER ATTORNEYS OF

RECORD:

PLEASE TAKE NOTICE that on April 14, 1976,

a Petition and Bond for Removal, true copies of which

are attached to the copy of this Notice served upon

you, were filed in the United States District Court

for the Northern District of California.

Dated: April 14, 1976.

PAUL, HASTINGS & JANOFSKY

DAVID B. HARRIMAN

/s/ By David B. Harriman

Attorneys for Petitioner and

Defendant, Volvo of America

Corporation

anbiiiien

Petition for Removal of Civil Action.

United States District Court, Northern District of

California.

Charlene P. Rosack, individually, and on behalf of

all others similarly situated, Plaintiffs, vs. Volvo of

America Corporation, Aktiebolaget Volvo, Volvo

Western Distributing, Inc., and Does I through L,

Defendants. Anti-trust Case No. C76-742 OJC.

TO THE UNITED STATES DISTRICT COURT FOR

THE NORTHERN DISTRICT OF CALIFOR-

NIA:

The petition for removal of this suit from the Superior

Court of the State of California for the County of

San Mateo to the United States District Court for

the Northern District of California, respectfully shows

to this honorable Court:

1. This suit is one which may be removed to this

Court by petitioner herein since the action is one

in which this Court has original jurisdiction pursuant

to Title 28, U.S. Code Section 1332, as it is a civil

action wherein the matter in controversy exceeds the

sum or value of $10,000, exclusive of interest and

costs, and is between citizens of different states. Accord-

ingly, by virtue of provisions of Title 28, U.S. Code

Section 1441(a), this action may be removed to this ,

Court.

2. Petitioner is the sole defendant served in a civil

action- brought against it in the Superior Court of

the State of California for the County of San Mateo

entitled Charlene P. Rosack, individually and on

behalf of all others similarly situated, Plaintiffs, vs.

Volvo of America Corporation, Aktiebolaget Volvo,

43.

Volvo Western Distributing, Inc., and Does I through

L, Defendants, San Mateo Superior Court Case No.

200471.

3. The summons and complaint in the aforesaid

action was served on petitioner Volvo of America Cor-

poration’s authorized agent for service on March 31,

1976. A purported service of process was attempted

on petitioner on March 15, 1976, which service has

been challenged by petitioner on a motion to quash

in the Superior Court for the County of San Mateo.

No summons or complaint have been served on defend-

ants Volvo Western Distributing, Inc. or Aktiebolaget

Volvo. Defendants Does I through L are fictitious

defendants. Attached hereto are copies of all pleadings

and orders purportedly served on petitioner in said

action.

4. At the time this suit was commenced, plaintiff

was a resident of the State of California.

5. At the time this suit was commenced, petitioner

was and still is a corporation organized and existing

under and by virtue of the laws of the State of Delaware,

with its principal place of business located in the State

of New Jersey. Defendant Aktiebolaget Volvo was and

still is an alien corporation located in Gothenburg,

Sweden. Defendant Volvo Western Distributing, Inc.

ceased to exist as a separate corporate entity and

was dissolved on December 31, 1975.

6. None of the defendants is a citizen of the State

of California.

7. This petition is filed within thirty days after

service of the summons and complaint on petitioner

herein. The time for filing this petition under the

statutes of the United States has not expired.

8. Petitioner files and presents herewith a bond

with good and sufficient surety in the sum of $250.00

—44—

as provided by Title 28, U.S. Code Section 1446(d),

that it will pay all costs and disbursements incurred

by reasor of the removal proceedings hereby brought

should it be determined that this suit is not removable

or is improperly removed.

WHEREFORE, petitioner prays that said action No.

200471 be removed from the Superior Court of the

State of California for the County of San Mateo to

this Court.

Dated: April 13, 1976.

PAUL, HASTINGS & JANOFSKY

DAVID B. HARRIMAN

/s/ By David B. Harriman

David B. Harriman

Attorneys for Petitioner

Volvo of America Corporation

VERIFICATION

State of California, County of Los Angeles—ss

DAVID B. HARRIMAN, being first duly sworn,

deposes and says that he is one of the attorneys for

petitioner herein, that he has read the foregoing Petition

for Removal and he is informed and believes the matters

therein to be true and on that ground alleges that

the matters stated therein are true.

Subscribed and sworn to before me on April 13,

1976.

/s/ David B. Harriman

David B. Harriman

/s/ Roslyn E. Klaus

Notary Public in and for said

County and State

—_— =

Magistrate’s Findings and Recommendations.

United States District Court, Northern District of

California.

Charlene P. Rosack, individually and on behalf of

all others similarly situated, Plaintiffs, vs. Volvo of

America Corporation, et al, Defendants. No. C-76-

742 OJC.

Plaintiff has moved the Court for an Order to remand

this case to the Superior Court for San Mateo County.

Following oral argument and after considering the files

and pleadings in the case, together with the memoranda

of points and authorities, | find that:

(a) There is more than $10,000 in controversy

in this litigation. Such a finding is based on the fact

that attorney’s fees can be considered in determining

whether the requisite amount in controversy is present.

(See cases cited in Defendant’s Brief )

(b) With respect to diversity of citizenship, plain-

tiffs counsel during the course of oral argument con-

ceded that when Volvo Western merged with Volvo

of America Corporation the California corporation

ceased to exist as a separate entity. Such is the import

of California Corporations Code Section 4116, and

is supported by the case of Asher vs. Pacific Power

& Light Co., 249 F.Supp. 671 (No. Dist. Cal. 1965);

see also Hoefferle Truck Sales vs. Divco-Wayne, 523

F.2d 543 (7th Cir. 1975). This narrows the claim °

of lack of diversity to reliance on Doe Defendants

as they appear in paragraph XII of the original com-

plaint. The parties cite cases in their briefs to argue

for their respective positions.

—46— —47—

Quoting from Moore’s Federal Practice Volume 2A, From the foregoing, I find that plaintiff cannot rely

Page 1664, and cases cited therein: on the Doe Defendants to defeat diversity. The plead-

“e x * ings simply do not establish California defendants, leav-

Some plaintiffs have attempted to invoke di- ing Only the non-resident corporate defendant. Thus

versity jurisdiction in cases where they have joined the diversity requisite to federal court jurisdiction ap-

some unknown or fictitious persons as ‘John Doe’ pears to be the fact.

defendants. Conceivably the joinder of an actual In view of the foregoing, I recommend that the

person as a ‘John Doe’ defendant may be jus- Court enter its Order denying plaintiff's motion to

tifiable under unusual circumstances. But certainly, remand the case to the State Court.

as a general proposition, the practice, even though

- i “iia Dated: June 8, 1976.

permitted under state law, is unwarranted in di-

versity cases brought originally in the federal Respectfully submitted,

courts, for at least the following reasons: the dis- /s/ Owen E. Woodruff, Jr.

trict courts are courts of limited jurisdiction; a Owen E. Woodruff, Jr.

plaintiff who invokes district court jurisdiction has United States Magistrate

the duty to aver the facts requisite to that jurisdic-

tion; under general diversity principles, previously IT IS SO ORDERED.

discussed, the citizenship of each plaintiff must

be diverse from that of each defendant and plain-

tiffs averments must so show. This cannot be United States District Judge

truthfully shown as to fictitious persons; and usual-

ly not as to an actual but unknown person for

if, in truth, his citizenship can be affirmatively

alleged his name can usually be ascertained. Sound

authority supports the general proposition that the |

‘John Doe’ practice is unwarranted in diversity

cases and the action is subject to dismissal unless

the John Does are eliminated or their citizenship af-

firmatively alleged. Where, however, the John Does

are dismissed and there is complete diversity be-

tween the remaining parties, the pleading defect

has not been regarded as reversible error. (foot-

notes omitted )

Dated: seniniadian

* * *”

—

Order Setting Aside Magistrate’s Findings and

Recommendation and Remanding Action to State Court.

United States District Court, Northern District of

California.

Charlene P. Rosack, individually and on behalf of

all others similarly situated, Plaintiffs, v. Volvo of

America Corporation, Aktiebolaget Volvo, Volvo West-

ern Distributing, Inc., and Does I through L, Defend-

ants. No. C-76-0742 WWS.

Filed: Oct. 20, 1976.

This state law antitrust action was originally brought

in the California Superior Court for San Mateo County.

The complaint seeks damages on behalf of a named

plaintiff and a class of persons who purchased new

Volvo automobiles from California Volo dealers in

the period between 1967 and 1976. The complaint

alleges that defendants have engaged in an unlawful

conspiracy to fix the resale price of new Volvo auto-

mobiles, parts and accessories and the resale profit

on used automobiles sold by Volvo dealers contrary

to the provisions of California’s Cartwright Act, Cal.

Bus. & Prof. Code § 16700 et seq. The prayer for

relief seeks treble damages and attorney’s fees in accord-

ance with § 16750 of that Act, but does not request

damages in a specified amount. Named as defendants

in the complaint are Volvo of America Corporation

(“Volvo”), subsidiary and parent corporations of Vol-

vo, and a series of Doe defendants who are identified

only as parties owned, dominated and controlled by

each other, and who are acting as agents for and

conspiring with each other.

Defendants removed the action to this Court pur-

suant to 28 U.S.C. § 1441(a), alleging that the action

was within the original diversity jurisdiction of this

Court as prescribed in 28 U.S.C. § 1332.’ Plaintiffs

moved to remand the action to state court on the

grounds that complete diversity of citizenship was lack-

ing and that the amount in controversy did not exceed

$10,000 as required by § 1332. The motion was re-

ferred to a United States Magistrate who recommended

that the motion be denied. The relevant findings of

the Magistrate were: (1) that since the Doe defendants

could not be used to defeat diversity, complete diversity

of citizenship was present among the parties; and (2)

that since attorney’s fees can be considered in determin-

ing the amount in controversy, more than $10,000

was in controversy among the parties. Plaintiffs now

challenge these findings on appeal from the Magis-

trate’s findings and recommendation.

I. DIVERSITY OF CITIZENSHIP.

Plaintiffs seek to defeat diversity by relying on the

Doe defendants, who, they contend, are California citi-

zens. The difficulty with this contention is that the

complaint does not allege the Does’ citizenship. The

Does are identified in paragraph XII of the complaint

as being owned, dominated, and controlled by other

Does, and as agents for and conspirators with other

Does. They are all alleged to be part of the combina-

tion and conspiracy described in the complaint, but

are not referred to again in the remainder of the

complaint. While the complaint does refer to conspira-

128 U.S.C. § 1332(a)(1) provides:

“(a) The district courts shall have original jurisdiction

of all civil actions where the matter in controversy exceeds

the sum or value of $10,000, exclusive of interest and

costs, and is between—

(1) citizens of different states;”

oniiiien

torial activities of Volvo dealers, defined in paragraph

XIII as being Volvo retail dealers in California, no

Doe defendant is identified as a Volvo dealer. Without

a proper allegation of the identity, status and citizen-

ship of any Doe, plaintiffs’ contention that there are

Doe defendants who are California citizens and thus

destroy diversity must be rejected. Grigg v. Southern

Pacific Co., 246 F.2d 613, 620 (9th Cir. 1957);

Molnar v. National Broadcasting Co., 231 F.2d 684

(9th Cir. 1956); see also 2A Moore’s Federal Practice

§ 8.10 (2d ed. 1974). Accordingly, we adopt the

Magistrate’s finding on this issue.

Il. AMOUNT IN CONTROVERSY.

Plaintiffs also challenge the Magistrate’s finding that

more than $10,000 is in controversy in this litigation.

Plaintiffs brought this action as a class action in the

state court. While the action has not yet been certified

as a class action in this Court pursuant to Rule 23,

Fed. R. Civ. P., it must be treated as a class action

for the purpose of determining jurisdictional issues.

City of Inglewood vy. City of Los Angeles, 451 F.2d

948, 951-52 (9th Cir. 1972). Defendants have not

argued that the class as pleaded by plaintiffs is a

sham designed to defeat federal jurisdiction nor have

they challenged the treatment of this action as a bona

fide class action at this stage of the proceedings.

Plaintiff Rosack alleges that her claims “are typical

of those to be asserted for the other members of

the plaintiff class”, that the “rights of plaintiff and

the class members involve common questions of law

and fact which predominate over any question affecting

only individual members of the class,” and that a

class action is superior to other methods of adjudication

—5i—

of the controversy. (Complaint para. VII and VIII.)

Plaintiff individually and each member of the class

seek treble damages, attorneys’ fees and costs.

It is plain, therefore, that this is a class action

falling within Rule 23(b)(3). The Supreme Court

has held only recently that to meet the jurisdictional

requirement in a Rule 23(b)(3) class action, each

plaintiff's claim must satisfy the jurisdictional amount.

Zahn v. International Paper Co., 414 U.S. 291 (1973).

In that case, the Supreme Court reaffirmed the historic

rule that the “matter in controversy” requirement of

Section 1332 must be satisfied by each member of

the plaintiff class having a separate and distinct claim;

plaintiffs whose claims fall short cannot satisfy the

requirement by aggregation of claims:

“None of the plaintiffs in Snyder v. Harris

alleged a claim exceeding $10,000, but there is

no doubt that the rationale of that case controls

this one. As previously indicated, Snyder invoked

the well-established rule that each of several plain-

tiffs asserting separate and distinct claims must

satisfy the jurisdictional amount requirement if

his claim is to survive a motion to dismiss. This

rule plainly mandates not only that there may

be no aggregation and that the entire case must

be dismissed where none of the plaintiffs claims

more than $10,000 but also requires that any

plaintiff without the jurisdictional amount must

be dismissed from the case, even though others

allege jurisdictionally sufficient claims.” 414 U.S.

at 300 (emphasis supplied).

See, also, Snyder v. Harris, 394 U.S. 332 (1969),

and United States v. Southern Pacific Transportation

Co., .... F.2d ...., Nos. 74-333 and 75-1080, filed

September 10, 1976, at slip opinion p. 8, n. 11 (9th

Cir. 1976).

The Zahn principle is settled beyond dispute. The

questions that arise concern the manner of its applica-

tion. In the usual case, Zahn would simply require

that members of a class whose claims fall short of

the jurisdictional requirement must be dismissed:

“Each plaintiff in a Rule 23(b)(3) class action

must satisfy the jurisdictional amount, and any

plaintiff who does not must be dismissed from

the case—‘one plaintiff may not ride in another’s

coattails. 469 F.2d at 1035.’” 414 US. at 301.

But in Zahn the Supreme Court upheld the dismissal

of an entire Rule 23(b)(3) class action entered on

a finding that “to a legal certainty” “not every individual

owner in the class had suffered . . . damages in

excess of $10,000.” Thus, even though some of the

class members had been able to meet the jurisdictional

test, the District Court nonetheless dismissed the entire

action on the ground that “it would not be feasible

to define a class of property owners each of whom

had more than a $10,000 claim .. .” (414 US.

at 292).

Here we are confronted with the application of Zahn

in the context of a removed action. While plaintiffs

have not alleged any specific amount of damage claimed

in the complaint, they contend on this motion that

the damage claims of the individual plaintiffs resulting

from the alleged price fixing could not exceed “a

few dollars” in the case of parts and a “few hundred

dollars” in the case of automobiles. Defendants respond

that some plaintiffs were multiple purchasers of Volvos

and their claims, if they had any, might therefore

aniiiiinn

well exceed $10,000. Viewing the record on this motion

in the light most favorable to defendants, it appears

that only a few members of a class estimated to have

some 50,000 members meet the jurisdictional require-

ment.”

That conclusion is not altered by the fact that attor-

neys’ fees which may be awarded to prevailing plaintiffs

may be taken into account. Cal. Bus. & Prof. Code,

§ 16750. See, Missouri State Life Ins. Co. v. Jones,

290 U.S. 199, 202 (1933); Stokes v. Reeves, 245

F.2d 700, 702 (9th Cir. 1937). Attorneys fees would

be awarded as a part of the separate and distinct

damage recovery of each plaintiff. It appears to the

Court as a legal certainty that reasonable attorneys

fees when added to the damages claimed by the bulk

of the plaintiffs of “a few hundred dollars” each—even

after trebling—would not result in individual claims

in excess of $10,000. See, Georgia Ass’n of Ind. Ins.

Ag. Inc. v. Travelers Indem. Co., 341 F.Supp. 841,

843-844 (N.D. Ga. 1970).*

It thus appears to a legal certainty that this Court

does not have jurisdiction of this action. It is a class

action brought on behalf of a class of plaintiffs the

vast majority of which do not satisfy the amount in

controversy requirement with respect to their separate

and distinct claims. Under Zahn, all of those plaintiffs

would have to be dismissed and, if feasible, a class

*The Court may look at the entire record to determine

whether jurisdictional defects are cured. See Wright, Federal

Courts (ad Ed. 1970) 291; Lonnquist v. J. C. Penney Co.,

421 F.2d 597, 599 (10th Cir. 1970).

®While the allocation of attorneys fees to each prevailing

class member’s recovery is undoubtedly sound, the result would

not be altered undet Zahn if the entire amount were allocated

to the named plaintiff, resulting in one more claim likely to

exceed $10,000.

auiifins

substantially different from that on whose behalf the

action was brought certified. Accordingly, since the

action could not be maintained in this Court on behalf

of the class for which it was brought, it must be

remanded. 28 U.S.C. § 1447(c). See, Kinsey v. General

Motors Acceptance Corp., 359 F.Supp. 36 (D.N.D.

1973).*

Even if there were reason to doubt the correctness

of this disposition, any doubt should be resolved in

favor of remand to spare the parties proceedings which

might later be nullified should jurisdiction be found

to be lacking. See, Williams v. Tri-County Community

Center, 232 F.Supp. 286, 288 (S.D. Miss. 1971),

Affd, 452 F.2d 221 (Sth Cir. 1971); Lowe v. Trans

World Airlines, Inc., 396 F.Supp. 9, 12 (S.D.N.Y.

1975); Fernandez v. Reynolds Metals Co., 384 F.Supp.

1281, 1283 (S.D. Tex. 1974); Wood v. Home Insur-

ance Co., 305 F.Supp. 937, 938 (C.D. Cal. 1969).

Accordingly, the Magistrate’s recommendation of

June 8, 1976, is hereby set aside and the action re-

manded to the Superior Court in and for San Mateo

County, each party to bear its own costs.

IT IS SO ORDERED.

Dated: October 19, 1976.

/s/ William W. Schwarzer

William W. Schwarzer

United States District Judge

428 U.S.C. § 1441(c) would permit, but not require, the

Court to retain jurisdiction of claims properly removed when

joined with claims not otherwise removable. That provision

does not appear applicable to a class action and most likely

does not contemplate the division of a single class of plaintiffs

into remandable and non-remandable subclasses. Moreover, to

— =

Supplemental Memorandum of Points and Authorities

in Support of Petition for Writ of Mandamus and/

or Prohibition.

United States Court of Appeals, for the Ninth Cir-

cuit.

Volvo of America Corporation, Petitioner, vs. The

Honorable William W. Schwarzer, Judge, United States

District Court for the Northern District of California,

Respondent. Charlene P. Rosack, individually and on

behalf of all others similarly situated, Real Parties

in Interest. No. 76-3296.

In addition to the authorities cited in the Petition

for Writ of Mandamus and/or Petition for Writ of

Prohibition, filed by Volvo of America Corporation

(Volvo), petitioner respectfully requests that the Court

consider the following authorities:

THE NINTH CIRCUIT HAS STATED THAT IN A

CLASS ACTION WHERE SOME PLAINTIFFS

CAN MEET THE JURISDICTIONAL RE-

QUIREMENTS AND SOME CANNOT, FEDER-

AL JURISDICTION IS PRESENT.

The issue before this Court is virtually identical

to the issue presented in the case of City of Inglewood

v. City of Los Angeles, 451 F.2d 948 (9th Cir. 1972).

In Inglewood, this court dealt with the question of

federal jurisdiction over a class action in the context

of a motion to dismiss an action originally brought

apply it here to justify retention of jurisdiction would simply

open the door to a subsequent and inevitable dismissal of

the bulk of the class members for lack of jurisdiction on

the motion of the very party that invoked the jurisdiction

of this Court in the first place. We are confident that this

is not the result contemplated by the authors of Section 1441(c).

aii

in the federal court. The instant case involves removal,

but the basic issue of whether federal jurisdiction exists

is the same.

In Inglewood, this court was confronted with a situa-

tion “in which some plaintiffs probably can meet the

jurisdictional requirements, and some probably cannot.”

451 F.2d at 952. This court stated the appropriate

rule to be applied in such a situation as follows:

“When faced with a class action where the plead-

ings satisfy the jurisdictional amount requirements

for some indeterminate number of class members,

and do not satisfy them for the rest of the mem-

bers, it seems to us the better practice not to

dismiss the entire action at the pleading stage.

See Town of East Haven v. Eastern Airlines,

Inc., 282 F. Supp. 507, 516 (D. Conn. 1968).

Rather, the court should decide for the individual

plaintiffs which can recover and which cannot.

Once these matters are resolved, the court can

begin seeking a more substantial showing from

the plaintiffs as to the type of proof they will

be able to present. Whenever appropriate, the

court can dismiss the complaints as to those parties

who are clearly shown to be unable to meet the

requirements of jurisdictional amount.” (emphasis

added) City of Inglewood, supra, at 953-954.

Other courts have recognized this principle. For ex-

ample, in Knapp v. Bankers Securities Corporation,

17 FRD 245 (E.D. Pa. 1954), in a shareholders

suit for direct declaration of dividends, the court found

the class action there to be “spurious” and disallowed

aggregation to reach the federal jurisdictional amount.

—_S Ta

However, the court denied a motion to dismiss the

action because it found that some plaintiffs had claims

in excess of the jurisdictional amount:

“However, in the present case it appears that

the amount claimed by some of the plaintiffs

is certainly in excess of [the jurisdictional amount |

with the result that this complaint cannot be dis-

missed on jurisdictional grounds.” (emphasis

added) 17 FRD at 247.

In the instant case, the District Court found that

the jurisdictional amount existed as to some plaintiffs.

Having found such jurisdiction, the Court’s order of

remand was an act in excess of its jurisdiction and

contrary to the provisions of 28 U.S.C. 1447(c).

THE DISTRICT COURT BASED ITS REMAND OR-

DER ON PROCEDURAL GROUNDS NOT AU-

THORIZED BY 28 U.S.C. 1447(c).

The Supreme Court in Thermtron Products, Inc.

v. Hermansdorfer, .... U.S. ...., 46 L.Ed.2d 542 (1976),

held that an order of remand must be based on the

grounds authorized by 28 U.S.C. 1447(c). An order

not so grounded is reviewable by writ of mandamus.

The District Court has allowed procedural considera-

tions, not authorized by Section 1447(c), to defeat

properly attached federal jurisdiction. The basis for

the District Court’s order of remand was that a majority

of the potential class members would not meet federal

jurisdictional requirements. In essence, the Court used

Rule 23 of the Federal Rules of Civil Procedure to

defeat jurisdiction.

—_~ =

In a different context, the Third Circuit held that

“a mistaken idea of procedure” is not proper ground

for remand.

Bankers Securities Corp. v. Insurance Equities

Corp., 85 F.2d 855, 859 (1936); see also

cases cited therein.

Further, Rule 82 of the Federal Rules of Civil

Procedure clearly states that the rules are not to be

construed to affect jurisdiction:

“These rules shall not be construed to extend

or limit the jurisdiction of the United States district

courts or the venue of actions therein.”

Ill

CONCLUSION

As has been shown, the District Court found that

federal jurisdiction existed in the instant case but then

remanded on grounds not authorized by the applicable

statvie. It is respectfully submitted therefore that the

writ of mandamus and/or prohibition should issue

directing the respondent Court to vacate its remand

order and maintain jurisdiction over the action.

DATED: November 3, 1976.

Respectfully submitted,

PAUL, HASTINGS & JANOFSKY

DANIEL H. WILLIAMS, III

DOUGLAS C. CONROY

ROBERT S. SPAN

/s/ By Robert S. Span

ROBERT S. SPAN

Attorneys for Petitioner

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