Opposition — Volvo of America Corp. v. Schwarzer
Supreme Court brief1977
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Supreme Lourt ys
FiLeyp
FEB 17 j977
MICHAEL RODAK, JR., CLERK
J
IN THE
' Supreme Court of the United States
OerosnER TreRM, 1976
No. .
~~ ‘
eer |
Vorvo o-r AMERICA CORPORATION,
Petitioner,
Vs.
Tre Honoraste Wittiam 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
OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals
for the Ninth Circuit
Corcnett, Hutcuinson & Dyer,
Joserpn W. Corcnuert,
Bank of California Building
El Camino Real at Fourth Avenue
San Mateo, California 94402
Telephone: (415) 342-9000,
CARTWRIGHT, SAROYAN, MartTiIN Brown, Wricnt & KAaurMan,
& SucHERMAN, INc., Harotp C. Wricnrt,
Jay R. Martin, 2600 El Camino Real,
RanpaLt D. Morrison Palo Alto, California 94306,
160 Sansome Street, Telephone: (415) 328-2390
San Francisco, California 94104
Telephone: (415) 433-0440,
Attorneys for Real Parties in Interest Charlene P. Rosack,
indwidually, and on behalf of all others similarly situated.
PER NAU -WALSH FRINTING CO. - 532 MISSION STVVEET - SAN FRANCISCO. CA 94105
Page
ID TOM occ wicdbvicedscccésccccccccnnsewsces 1
Statutory Provisions Involved .............cecceeeeeeeees 2
ES GE TD GND ove ccvcccccasscccncecs i Ee 3
I Ge BD 6 vc cb dednccdccocrecénsscecsteasés 8
Reasons for Denying the Writ .............ccceeeeeeeeeee 10
I. The Court of Appeals properly denied Defendant’s
Petition for Writ of Mandamus, where the District
Court thoroughly considered the jurisdictional issues,
found that the court lacked jurisdiction, and based its
remand order expressly on 28 U.S.C. §1447(e) ...... 10
II. The District Court based its remand order exclusively
on grounds authorized by 28 U.S.C. §1447(c), and
Defendant’s assertions to the contrary are based on
patent distortions of the District Court’s order ...... lu
IlI. This Court in Zahn v. International Paper Co., 414
U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973) has
already determined that a class action cannot be main-
tained where only some of the class members mect
the jurisdictional minimum ....................... 21
GS bh. ccueeeb bsctcuwediedatécticcde beak cous 24
Index to Appendix
Page
1. List of Briefs on Jurisdictional Issues Filed in District
Se ek Ge PE ig coin bn ba dcne6é4s ene b60d00s0K0006 1
2. Reporter’s Transcript of Hearing, September 24, 1976 .. 2
3. Plaintiff's Memorandum in Opposition to Petition for
Writ of Mandamus and Request for Stay of Remand
GEE ‘nc cide dkons cbSébunesedessvins ecthikdes onsdad 10
Table of Authorities Cited
Cases Pages
City of Inglewood vy. City of Los Angeles, 451 F.2d 948
Se SE EEE “Sdidutisccodccesssbhscedcaueendeaes 5, 12, 21, 22
Freeman v. Gordon & Breach, Science Publishers, Ine., 398
Pa Gee GR Ss. BPGEE. ci vcckessnccedeneceseeus 23, 24
Hymer v. Chai, 407 F.2d 136 (9th Cir. 1969) ............ 24
In Re Southwestern Bell Telephone Co., 535 F.2d 859 (5th
ek annals dick o dee Sadtah cdvdthudawand coteeneedl 18, 20
Midland Mortgage Co. v. Winner, 532 F.2d 1342 (10th Cir.
SD | a405u306 60460 G0eb04dudednsoenkess deeneanens 18, 19, 21
Robertson v. Ball, 534 F.2d 63 (5th Cir. 1976) ...... 18, 19, 20
Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d
319 (1969) reh. den. 394 U.S. 1025, 89 S.Ct. 1622, 2
A. Ge COED Riddoncdccuscavcadkacnedces LReewe eee 4
Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336,
96 S.Ct. 584, 46 L.Ed.2d 542 (1976) .................
nbttededdte edoadtinadthedaed 8, 9, 10, 11, 12, 14, 17, 18, 20, 21, 25
United Pacifie/Reliance Ins. Cas. v. Lewiston, 572 F.Supp.
Se Gy Ge hv inte cuncdecdcéds Varhitiiagtins 24
Volvo Corporation of America v. Schwarzer, Opinion in
Chambers, .. U.S. ..., 97 S.Ct. 28, 50 L.Ed.2d 273
nen dtincekt ug ae-ae Gd bets banned Gen en 8
Zahn vy. International Paper Co., 414 U.S. 291, 94 S.Ct. 505,
38 L.Ed.2d 511 (1973) .......2,3, 4, 9, 13, 16, 21, 22, 23, 24, 25
Rules
Federal Rules of Civil Procedure:
ER A ae a ee SER nr Eee aan 5, 15, 16
Statutes
California Business & Professions Code, §16700 et seq. .... 3
Califormin Veliiote Code, $206 2... ccc ccc ccccccccccccces 6
United States Code, Title 28:
CE iacke dun Maen ec 2, 7, 9, 10, 11, 12, 14, 15, 17, 21, 25
DT <o0et<6benceaseudnesscaeedunetan 2, 8,9, 10, 12, 17
Other Authorities
57 Opinions California Attorney General 561 (1974) ..... 6
IN THE
Supreme Court of the United States
OcroBEer TERM, 1976
No.
VoLvo oF AMERICA CORPORATION,
Petitioner,
Vs.
THE Honoras_e 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.
OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals
for the Ninth Circuit
Real Parties in Interest, Charlene Rosack, et al.,-
respectfully, pray that this Court deny Petitioner
Volvo of America’s request that a Writ of Certiorari
issue to review the judgment and opinion of the
United States Court of Appeals for the Ninth Cir-
cuit entered in this proceeding on November 11, 1976.
QUESTIONS PRESENTED
1. Did the Court of Appeals properly deny De-
fendant’s Petition for Writ of Mandamus, where the
2
District Court fully censidered the jurisdictional
issues, found that there was no jurisdiction, and
based its Remand Order expressly upon 28 U.S.C.
§1447(c) ?
2. Did the Court of Appeals properly deny De-
fendant’s Petition for Writ of Mandamus, where the
District Court based its Remand Order exclusively
on grounds authorized by 28 U.S.C. §1447(c) ?
3. Should Defendant’s Petition for Writ of Cer-
tiorari be denied where this Court, in Zahn v. Inter-
national Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38
L.Ed.2d 511 (1973) has already determined that a
class action cannot be maintained where only some
of the class members meet the jurisdictional mini-
mum?
STATUTORY PROVISIONS INVOLVED
28 U.S.C. §1447. Procedure after removal generally
“s+ & &
(c) If at any time before final judgment it
appears that the case was removed improvidently
and without 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 State court.
The court may thereupon proceed with such case.
(d) An order remanding a case to the State
court from which it was removed is not review-
able on appeal or otherwise, except that an order
remanding 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.”
3
STATEMENT OF THE CASE
Plaintiff Charlene Rosack filed this class action in
the California State Courts alleging that Petitioner
Volvo of America (hereafter “Defendant’’), violated
the California Cartwright Act’ through a conspiracy
with its dealers to fix prices and require purchasers
of Volvo automobiles to buy only Volvo parts and
accessories. Defendant petitioned for removal to Fed-
eral Court based upon diversity of citizenship and
plaintiffs promptly moved for remand based upon
absence of the requisite amount in controversy for
each member of plaintiff’s class.’
For the next nine (9) months, the United States
District Court for the Northern District of California
studied a dozen briefs filed by both sides and heard
a half-dozen oral arguments on these jurisdictional
issues." The fundamental issue before the District
Court was whether attorneys’ fees anticipated in a
class action could be aggregated and attributed to the
named plaintiff to permit jurisdiction, even though
the individual class members’ claims upon which these
fees were based could not be aggregated under the
rules established in Zahn v. International Paper Co.,
414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973).
In the arguments before Honorable Owen E. Wood-
ruff, Jr., United States Magistrate for the Northern
California Business & Professions Code, §16700 et seq.
2Plaintiff also challenged Defendant’s claim of diversity of
citizenship, but y apd 5 ~ on this issue was not accepted
by the District Court and Defendant's subsequent appeals in-
volved solely the amount in controversy issue.
The numerous briefs and their dates are listed in the Appen-
dix hereto.
4
District of California, Plaintiff argued that no in-
dividual purchasers of Volvo automobiles could
present claims in excess of $10,000, and that neither
these individual claims nor the attorney fees based
on them could be aggregated to meet the amount in
controversy requirement. There was never any dispute
that the class members’ claims themselves were “sep
arate and distinct” and could not be aggregated under
this Court’s rule in Snyder v. Harris, 394 U.S. 332,
89 S.Ct. 1053, 22 L.Ed.2d 319 (1969) and Zahn v.
International Paper Company, 414 U.S. 291, 94 S.Ct.
905, 38 L.Ed.2d 511 (1973). Defendant argued, how-
ever, that these rules pertaining to aggregation of
claims were not relevant at this stage of the pro-
ceedings, because:
“She [Charlene Rosack] is the only party plain-
tiff in the case at this time. We cannot speculate
as to whether she will ever be found to represent
a class of Volvo purchasers, or if such class ean
ever be certified.””*
Defendant then argued that, since attorney fees could
be considered in determining the amount in contro-
versy, all the attorney fees for this suit could be at-
tributed to the named plaintiff alone, thus giving her
a claim “in excess of $10,000.’
The Magistrate accepted Defendant’s argument and
in his Order simply stated:
“There is more than $10,000 in controversy in
this litigation. Such a finding is based on the
*Defendant’s Supplemental Brief in Opposition to Plaintiff’s
Motion for Remand, May 27, 1976, p. 3.
*Id., at p. 4.
5
fact that attorneys fees can be considered in
determining whether the requisite amount in con-
troversy is present. (see cases cited in defendants’
brief) ”.®
Plaintiff then filed a Notice of Objections To The
Magistrate’s Findings And Recommendations, and
pointed out the Ninth Circuit’s rule in City of Ingle-
wood v. City of Los Angeles, 451 F.2d 948 (1972),
that an action filed as a class action must be assumed
to be a class action in determining jurisdiction and
until a contrary determination is made after a class
certification motion under Rule 23.
After further briefing by both sides, the District
Court, by Honorable William W. Schwarzer, held a
hearing on September 10, 1976 and indicated that the
Court could not accept Defendant’s argument for as-
signing all attorney fees to the named plaintiff to
satisfy the amount in controversy requirement.
Defendant’s counsel then suggested a totally new
argument never raised in the briefs: Defendant’s
counsel believed u large number of plaintiffs might,
in fact, have claims in excess of $10,000, because
plaintiff’s Complaint was filed on behalf of all per-
sons “natural or legal” who purchased Volvo auto-
mobiles, and would: therefore include corporations
and other “multiple purchasers” of Volvos. The
individual damage claims of these “multiple pur-
chasers” supposedly could exceed $10,000 even though
the damage claims per car would only be a few hun-
*Magistrate’s Findi and Recomendations, Appendix to De-
tenders Petition, p. 18. }
6
dred dollars. The Court agreed to continue the
hearing to allow Volvo to submit affidavits showing”
these multiple purchasers and to allow plaintiffs to
inspect and counter such affidavits.
On Scptember 24, 1976, Volvo submitted eight (8)
Affidavits from a “sample of 20%” of the Volvo
dealers in California, and these Affidavits listed
twenty-eight (28) “multiple purchasers” who had
each allegedly purchased enough Volvo automobiles
to accumulate $10,000 in damages. The total number
of cars purchased was said to be several hundred.
When Plaintiff examined the Affidavits, however, it
became apparent that nearly every one of the twenty-
eight “multiple purchasers” was an automobile leasing
company, which under California law is considered
an “automobile dealer” and not a “purchaser at retail”
as required by Plaintiff’s Complaint.’ Of the twenty-
eight (28) “multiple purchasers”, only two (2) turned
out to be retail buyers, as required for membership
in Plaintiff’s class: Between them, they had purchased
22 cars.*
7California Vehicle Code §285; see also 57 Opinions California
Attorney General 561 (1974)
Complaint, { III, p. 2:
“Plaintiff, Charlene P. Rosack, brings this action on behalf
of herself and all other persons, natural or legal, who pur-
chased a new Volvo automobile at retail from a Volvo dealer
located in the State of California during the period in con-
troversy.” .
®See Plaintiff's Supplemental Brief in Support of Motion to
Remand, October 7, 1976, included in heguuiie hereto.
Defendant subsequently argued that other multiple purchasers
might be found because Volvo surveyed only 20% of its dealers.
However, all of the dealers in Defendant’s affidavits were large
dealers in the Los Angeles, San Francisco and San Diego areas.
It cannot be seriously expected that surveys of the rural counties
would much change the result.
——
7
Following arguments on these Affidavits, the Court
issued its Order Setting Aside The Magistrate’s Find-
ings And Recommendations And Remanding The
Action To The State Court. In a subsequent hearing,
on October 26, 1976, Judge Schwarzer denied all De-
fendant’s requests for Reconsideration or Vacation
of the Order, but granted a stay until October 29,
1976 to allow Defendant to petition for a Writ. Dur-
ing this same hearing, Defendant’s counsel questioned
the court about its Order and tried to elicit from the
court some statement that its remand order was not
based upon §1447(c), as stated in the Order, but upon
“reasons of judicial economy” and various other
grounds suggested by Defendant’s counsel.’ The
Court, however, refused to accept the bait and stated
that the case had been “improvidently removed”
(R.T, 6:23-25), that the Court’s Order was “a holding
under the statute that the matter does not belong
here” (R.T. 7:20-21), and finally:
“T will state for the record the only reasons for
remand are those set forth in the statute. Nothing
I say here is to be interpreted by anybody as
being a modification, qualification, explanation, or
any other kind of comment upon my prior order.”
(R.T. 8:15-19).
The District Court’s Remand Order was to take effect
on October 29, 1976, but on October 28, 1976 the Court
of Appeals granted Defendant another temporary
stay, to allow the Court’s full Motions Panel to con-
sider Defendant’s Petition for Writ of Mandamus.
®R.T. 7:5-14; 8:3-12. (Transcript included in Appendix hereto.)
Defendant’s Petition set off still another round of
briefing on the amount in controversy issue as well
as on the propriety of review of the Distriet Court’s
Order.” Following submission of these briefs, the
Court of Appeals denied Defendant’s Petition, and
Defendant then applied to Justice Rehnquist for a
Stay of the Remand Order."' Justice Rehnquist also
denied Defendant’s request and explained that, under
28 U.S.C. §1447(d) and this Court’s recent decision
in Thermtron Products, Inc. v. Hermansdorfer, 423
U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976), the
Court of Appeals properly denied Defendant’s Peti-
tion to review the Remand Order of the District
Court.?”
The issues raised in Defendant’s Petition to the
Court of Appeals, and in its subsequent application to
Justice Rehnquist, are virtually identical to those
raised in Defendant’s present Petition to this Court
for a Writ of Certiorari.
SUMMARY OF ARGUMENT
Defendant Volvo of America’s Petition for Writ of
Certiorari should be denied because it invites this
Court to ignore two of its recent decisions. In Therm-
See Plaintiff's Supplemental Memorandum of Points and
Authorities in Opposition to Defendant's Petition for Writ of
Mandamus, included in Appendix hereto.
"The Court of Appeals Order is included in the Appendix to
Defendant's Petition.
'2Justice Rehnquist’s Opinion In Chambers, On Application of
Stay, Volvo Corporation of America v. Schwarzer (_.. U.S. _..,
97 S.Ct. 28, 50 L.Ed.2d 273 (1976) is also included in the Ap-
pendix to Defendant’s Petition.
tron Products, Inc. v. Hermansdorfer, 423 U.S. 336,
96 S.Ct. 584, 46 L.Ed.2d 542 (1976) this Court ruled
that 28 U.S.C. §1447(d) prohibits review of remand
orders where the District Court based its remand on
28 U.S.C. §1447(c). In the present case, the District
Court not only based the remand expressly on $1447
(c), but specifically found that it did not have juris-
diction of the action because, under this Court’s rule
in Zahn v. International Paper Co., 414 U.S. 291, 94
S.Ct. 505, 38 L.Ed.2d 511 (1973), all but a few class
members would have to be dismissed for failure to
satisfy the amount in controversy requirement.
Since the District Court based its remand order on
28 U.S.C. §1447(c) and fully explained its findings
on the jurisdictional issues, there is simply no
basis for comparison of the present case with
Thermtron Products, Inc., supra, where the District
_ Court completely ignored §1447(c). Under this
Court’s rule in Thermtron, supra, the Ninth Circuit
Court of Appeals was completely correct in denying
Defendant’s Petition for Writ of Mandamus to
review the District Court’s remand order. Defendant’s
only remaining contention has also been answered by
this Court in Zahn v. International Paper Co.,
supra. Since Zahn, there is no question that a Court
cannot maintain jurisdiction over a class action where
only ‘‘some” of the class members meet the amount
in controversy requirement.
10
REASONS FOR DENYING THE WRIT
I. THE COURT OF APPEALS PROPERLY DENIED DEFEND-
ANT’S PETITION FOR WRIT OF MANDAMUS, WHERE THE
DISTRICT COURT THOROUGHLY CONSIDERED THE JURIS-
DICTIONAL ISSUES, FOUND THAT THE COURT LACKED
JURISDICTION, AND BASED ITS REMAND ORDER EX-
PRESSLY ON 28 U.S.C. §1447(c).
This Court’s recent decision in Thermtron Prod-
ucts, Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct.
584, 46 L.Ed.2d 542 (1976) established a limited ex-
ception to the general rule in 28 U.S.C. §1447(d),
which prohibits review of remand orders based on
§1447(c):
§1447. Procedure after removal generally
‘““(e) If at any time before final judgment it
appears that the case was removed improvi-
dently and without 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.
(d) An order remanding a case to the State
court from which it was removed is not review-
able on appeal or otherwise, except that an
order remanding 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.”
In Thermtron, supra, this Court held that a Court of
Appeals could review by mandamus a remand decision
of a District Court which did not even purport to
base its remand order on 28 U.S.C. §1447(c), but
which instead remanded the case because of the
11
Court’s “crowded docket”. The Court explained the
basis for its decision as follows:
“Here, respondent did not purport to proceed
on the basis that this case had been renoved
‘improvidently and without jurisdiction.’ Net-
ther the propriety of the removal nor the juris-
diction of the court was questioned by respondent
in the slightest. Section 1447(c) was not even
mentioned, Instead, the District Court’s order
was based on grounds wholly different from those
upon which § 1447(c) permits remand. The de-
termining factor was the District Court’s heavy
docket, which respondent thought would unjustly
delay plaintiffs in going to trial on the merits
of their action. 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 remov-
ability of a case from the state court under § 1441
and hence to the question whether this cause was
removed ‘improvidently and without jurisdic-
tion’ within the meaning of the statute.” (Therm-
tron, supra, at 423 U.S. 343-344). (emphasis
added )
Nowhere in the Court’s opinion is there the slightest
suggestion that the ruling may be used as an excuse
for wholesale review of remand orders which are
based upon 28 U.S.C. §1447(c). The Court, in fact,
emphasized that such was not the case:
“In so holding we neither disturb nor take issue
with the well established general rule that $1447
(d) and its predecessors were intended to forbid
review by appeal or extraordinary writ of any
order remanding a case on the grounds permitted
by the statute.” (Thermtron, supra, at 423 US.
351-352).
12
Earlier in its opinion, the Court explained in greater
detail that §1447(d) remains a complete bar to re-
view of remand orders issued pursuant to §1447(c) ;
“It is unquestioned in this case and conceded by
petitionérs that this section prohibits review of all
remand orders issued pursuant to §1447(c)
whether erroneous or not and whether review is
sought by appeal or by extraordinary writ. This
has been the established rule under § 1447(d) and
its predecessors stretching back to 1887. See, e.g.,
In re Pennsylvania Co, 137 US 451, 34 L. Ed 738,
11 S Ct 141 (1890), Exparte Matthew Addy 8.8.
Co. 256 US 417, 65 L Ed 1027, 41 S Ct 508
(1921), Employers Reinsurance Corporation v.
Bryant, 299 US 374, 81 L Ed 289, 57 S Ct 273
(1937), United States v. Rice, 327 US 742, 90 L
Ed 982, 66 S Ct 835 (1946). If a trial judge pur-
ports to remand a case on the grounds that it was
removed ‘improvidently and without jurisdic-
tion’ his order is not subject to challenge in the
Court of Appeals by appeal, by mandamus or
otherwise.” (Thermtron, supra, at 423 U.S. 343).
(Emphasis added.)
In the present case, the District Court not only
“purported” to remand the case pursuant to §1447(c),
but also thoroughly explained the reasons for its
finding that the Court lacked jurisdiction. The Court
first noted that the case must be treated as a class
action for jurisdictional purposes, citing the Ninth
Cirenit rule in City of Inglewood v. City of Los
Angeles, 451 F.2d 948 (9th Cir. 1972).% The Court
'8Order Setting Aside Magistrate's Finding and Reeommenda~
tion and Remanding Action To State Court, Appendix to De-
fendant’s Petition, p. 8.
13
then examined this Court’s definitive ruling in Zahn
v. International Paper Co., 414 U.S. 291, 94 8.Ct. 505,
38 L.Ed.2d 511 (1973) and its application to a re-
moved action in the present case.’* In so doing the
Court also explained its evidentiary finding on the
amount in controversy issue:
“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.” (Order Setting Aside Magistrate’s Find-
ings And Recommendation And Remanding Ac-
tion To State Court, Appendix to Defendant’s
Petition p. 11)
The Court, finally, noted that this analysis was not
altered by the fact that attorney fees could be taken
into account in considering the amount in contro-
versy.’®
All of this discussion preceded the Court’s statement
of its conclusions:
“It thus appears to a legal certainty that tlis
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 substan-
tially different from that on whose behalf the ac-
tion was brought certified. Accordingly, since
the action could not be maintained in this Court
“Jd., pp. 9-10.
“Id., p. 11.
14
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). (Order, supra, Ap-
pendix to Petition, p. 12) (Emphasis added.)
The court’s Order thus fully reflects the months of
consideration the court devoted to the jurisdictional
issues before ordering remand pursuant to §1447(c).
It is simply fatuous for Defendant to represent to this
Court that Judge Schwarzer’s decision compares in
any way with the District Court’s in Thermtron, or
that Judge Schwarzer’s Order was a mere, wooden
“invocation” of §1447(c) designed to cover up a de-
cision based on other grounds,
Justice Rehnquist has, in fact, rejected this very
same argument made by Defendant in its application
for a stay of the Remand Order. Justice Rehnquist
stated :
“We held last Term in Thermtron Products,
Inc. v. Hermansdorfer, 423 U. S. 336 (1976),
where the District Court ordered a remand be-
cause of its crowded docket, that § 1447(d) did
not bar review of remand orders ‘issued on
grounds not authorized by § 1447e,’ 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 alleg-
edly 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 allegedly erroneous application of § 1447 (c)
would be reviewable hy Writ of Mandamus, leav-
ing the § 1447 (d) bar extant only in the case of
15
allegedly proper application of § 1447 (¢) ; a read-
ing too Pickwickian to be accepted, and contrary
to the clear language of Thermtron.” (On Appli-
cation of Stay, Appendix to Defendants’ Peti-
tion, p. 3) (Emphasis in original)
Il. THE DISTRICT COURT BASED ITS REMAND ORDER EX-
CLUSIVELY ON GROUNDS AUTHORIZED BY 28 U.S.C. §1447(c)
AND DEFENDANT'S ASSERTIONS TO THE CONTRARY ARE
BASED ON PATENT DISTORTIONS OF THE DISTRICT
COURT’S ORDER.
Defendant’s Petition to this Court is a compound of
several serious misstatements. The most fundamental
misstatement is Defendant’s assertion that Judge
Schwarzer relied on grounds “outside” §1447(¢c) in
rendering his decision. Defendant asserts:
“In the present case, the District Court based
its remand order on considerations relating to the
maintenance of a class action. The District Court
thus allowed Rule 23 of the Federal Rules of
Civil Procedure to defeat properly attached fed-
eral jurisdiction.”
» (Petition, p. 9)
Nowhere in Judge Schwarzer’s opinion does he pur-
port to base remand upon procedural considerations
relating to Rule 23, and Defendant’s misrepresenta-
tions that he did so are based entirely on quotation
out of context. In presenting its conclusions, the
Court actually stated :
“Tt 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
16
plaintiffs the vast majority of which do not sat-
isfy 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 substan-
tially different from that on whose behalf the ac-
tion 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).
(Order, supra, Appendix to Defendants’ Peti-
tion, pp. 11-12) (Emphasis added.)
In Defendant’s argument to this Court, Defendant
simply omits the first two sentences above and fastens
upon the language, “. . . since the action could not be
maintained in this Court on behalf of the class for
which it was brought ... ,” to suggest that the Court
was relying 6n unspecified procedural considerations
pertaining to maintenance of class actions under Rule
23. Every bit of the Court’s Order, however, shows
that remand was based entirely on the finding that all
but a few class members could not meet the juris-
dictional minimum and would have to be dismissed
under this Court’s rule in Zahn.
Defendant’s second, important misrepresentation
is the number of class plaintiffs who do meet the
jurisdictional requirement of $10,000.00. In its Order,
the District Court found that “only a few members of
a class estimated to have some 50,000 members meet
the jurisdictional requirements.” According to defend-
17
ant’s Petition, however, the District Court found ju-
risdiction over “several” plaintiffs (Petition, p. 8)
and by the end of the Petition, this Court is asked to
consider whether a District Court can properly re-
mand a class action “where some, but not all, mem-
bers of the class meet the federal jurisdictional re-
quirements.” (Petition, p. 12) These misstatements
might ordinarily be excused as minor exaggerations,
but in this case they are the very foundation of De-
fendant’s argument and have been used repeatedly
for nine months to delay Plaintiff’s case and to mas-
sively increase her costs of litigation.
Finally, it should be neted that Defendant has also
misrepresented Justice Rehnquist’s opinion denying
Defendant’s application for a stay. Justice Rehnquist
did not suggest that a remand order like the one in
Thermtron could be saved by the simple expedient of
adding the citation “28 USC 1447 (c)” to the Court’s
findings. What Justice Rehnquist did say is that
§1447(d) bars review of remand orders issued pur-
suant to §1447(c), whether the orders are erroneous
or not.'* Ever since the Petition to the Court of Ap-
peals, Defendant has consistently tried to ignore this
point by arguing, in effect, that anytime a court is-
sues a remand erder which Defendant thinks “is
wrong”, under the statute, the remand order must
have been based on grounds “outside of” or “not au-
thorized by” the statute.
Defendant is also incorrect in stating that, if certi-
orari is denied in this case, Justice Rehnquist’s opin-
16Q0n Application of Stay, Appendix to Defendant’s Petition,
p. 3, Note 3.
18
ion “will stand as the only interpretation of the scope
of the Thermtron ruling.” (Petition, p. 8). Several
decisions of the Cireuit Courts of Appeal have al-
ready interpreted Thermtron—and all of them prior
to Defendant’s Petition for a Writ here. (Midland
Mortgage Co. v. Winner, 532 F.2d 1342; (10th Cir.
April 6, 1976); Robertson v. Ball, 534 F.2d 63 (5th
Cir. June 23, 1976); In Re Southwestern Bell Tele-
phone Co., 535 F.2d 859 (Sth Cir. August 3, 1976))
For example, in Midland Mortggge Co. v. Winner,
supra, the District judge concluded that the case had
been improperly removed because three of plaintiff’s
five causes of action were dependent on the fourth
cause of action, which was alleged against several
Colorado defendants who, according to the District
judge, “had no right to remove from Colorado state
court.” (Midland Mortgage Co., supra, at 1343). The
Court of Appeals dismissed the Petition for Man-
damus, stating:
We are convinced that the Court was clearly
remanding the suit on grounds specified in 28
U.S.C. § 1447(c), namely that under the removal
statutes the case “was removed improvidently and
without jurisdiction,” as the removal statute says.
This being so, the order of remand “is not review-
able on appeal or otherwise. . . .” 28 U.S.C. § 1447
(d). While a narrow exception for review on
mandamus was recently recognized in Thermtron
Products, Inc. v. Hermansdorfer, 423 U.S. 336,
96 S.Ct. 584, 46 L.Ed.2d 542, 44 USLW 4085, that
opinion makes it clear to us that we have no
jurisdiction to review the order of remand in this
mandamus proceeding. We feel the Court’s rea-
—— eee
19
soning is clear, 423 U.S. at 351, 96 S.Ct. at 593,
46 L.Ed.2d at 554, 44 USLW at 4090:
(Midland Mortgage Co., supra, at p. 1344).
[emphasis added].
After quoting extensively from Thermtron, the
Court in Midland Mortgage Co., supra, went on to
say:
“We have no case like Thermtron where the
District Court remanded because of the crowded
condition of its civil docket, a ground not pro-
vided for remand in § 1447(c). Without reach-
ing or deciding whether remand was proper. in
the instant case, tt ts sufficient to say that the
Court clearly based the order of remand on
grounds provided by the statute. In these cir-
cumstances, we have no jurisdiction to review
that order and the petition for mandamus must
be dismissed.”
(Midland Mortgage Co., supra, at p. 1344) [em-
phasis added }.
The Court in Robertson v,. Ball, 584 F.2d 63 (Sth
Cir. 1976) reached identical conclusions, and for
identical reasons (p. 65):
“<“The court below expressly stated that ‘this
action was improperly removed under Section
1441(b) . . .’ becarise the action was not ‘one of
which this court would have had original juris-
diction .. .’ We have no occasion to determine
whether or not this conclusion of the district
court was well-founded, As we read Thermtron,
the express invocation by the district court
of the §1447(c) grounds for remand of a
removal under § 1441(b) robs this court of any
20
power ‘through appeal or otherwise, to review
the merits of the remand order.”
(Robertson, supra, at p. 65) [emphasis added].
Finally, the court in Jn re Southwestern Bell Tele-
phone Co., 535 F.2d 859 (5th Cir. 1976) allowed man-
damus to review the District Court’s Order of Re-
mand, but only because the District Judge there
utilized the doctrine of “judicial estoppel” as the basis
for remand, rather than investigating the jurisdic-
tional facts. Plaintiffs there discovered a document
in which defendant, Southwestern, in a prior suit, had
alleged that it was a Texas corporation rather than a
Missouri corporation as it now claimed. The District
Judge ruled that this document “estopped” South-
western from now claiming diversity of citizenship as
to the Texas plaintiffs. The Court of Appeals issued
the Writ to compel the District Court to “make a
suitable inquiry into the question of whether the par-
ties are truly diverse.” (In Re Southwestern Bell,
supra, at p. 861).
In the present case, by contrast, the District Court
conducted literally months of inquiry into both the
diversity of the parties and the amount in contro-
versy. The court even permitted Defendant Volvo
to survey its dealers in California and to submit mas-
sive affidavits on the amount in controversy. In short,
the District Court here did precisely what the District
Court in In Re Southwestern Bell did not do.
There are a growing number of such federal decisions
to which Defendant can turn if it needs further guid-
ance in interpreting this Court’s decision in Thermtron.
21
All of these decisions, as well as Justice Rehnquist’s,
show that the Court of Appeals properly refused to
review Judge Schwarzer’s Remand Order because the
order was based, in both form and substance, upon 28
U.S.C. §1447(¢c). As the Tenth Circuit stated, refer-
ring to this Court’s decision in Thermiron, ‘‘We feel
the Court’s reasoning is clear...” (Midland Mortgage
Co., supra, at 1344).
Ill. THIS COURT IN ZAHN v. INTERNATIONAL PAPER CO., 414
U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973) HAS ALREADY
DETERMINED THAT A CLASS ACTION CANNOT BE MAIN-
TAINED WHERE ONLY SOME OF THE CLASS MEMBERS
MEET THE JURISDICTIONAL MINIMUM.
Defendant’s Petition for Certiorari, as its final ar-
gument, purports to offer a question deserving the at-
tention of the U. S. Supreme Court. The question is
whether a “District Court can remand a properly
removed class action where some, but not all, members
of the class meet the federal jurisdictional require-
ments.” (Petition, p. 12) This question has already
been conclusively and affirmatively answered by this
Court in Zahn v. International Paper Co., supra, and
Defendant has provided absolutely no authority and
no reason for a different answer. As to the claim that
the “lower federal courts have taken differing posi-
tions” on this issue, Defendant tries to pass off two
cases decided before Zahn as in conflict with another
decision after Zahn!"
17Defendant attempted this same ruse before the Court of
Appeals, where Defendant cited the 1972 decision of the Ninth
Cireuit in City of Inglewood v. City of Los Angeles, 451 F.2d
22
‘This Court in Zahn v. International Paper Co., 414
U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973) ex-
pressly ruled that a class action cannot be allowed to
proceed in federal court when only some of the class
members meet the jurisdictional requirement. In
Zahn, the four named plaintiffs had claims in excess
of $10,000, but none of the class members had suffi-
cient claims. The District Court refused to permit
the suit to proceed as a class action and dismissed
all the class members, using language very similar
to Judge Schwarzer’s here. This court summarized
the District Court’s ruling as follows:
“Reading Snyder v. Harris, 394 U.S. 332, 89
S.Ct. 1053, 22 L.Ed.2d 319 (1969), as precluding
maintenance of the action by any member of the
class whose separate and distinct claim did not
individually satisfy the jurisdictional amount and
concluding that it would not be feasible to define
a class of property owners each of whom had
more than a $10,000 claim, the District Cowrt
then refused to permit the suit to proceed as a
class action.”
(Zahn, supra, at 414 U.S. 292) (emphasis
added )
Both the Court of Appeals and this Court affirmed the
District Court’s decision, and in so doing, this Court
stated :
948 (9th Cir. 1972) for the proposition that a class action should
not be dismissed where some plaintiffs meet the jurisdictional
minimum and some do not. This proposition was expressly re-
jected by Zahn in 1973. Plaintiff also cited City of Inglewood,
but for a different, and still valid, proposition.
23
“None of the plaintiffs in Snyder v. Harris al-
leged 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 plaintiffs
asserting separate and distinct. claims must sat-
isfy 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 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.” 414 U.S. at
300 (emphasis supplied). (Emphasis in original)
(Zahn at 414 U.S. 300)
This language from Zahn is precisely the same lan-
guage relied on by Judge Schwarzer in his Remand
Order. (Order, Appendix to Petition p. 9)
Finally, it should be noted that Zahn has also been
interpreted to preclude any type of ‘‘pendent party
jurisdiction”, whereby jurisdiction over class mem-
bers who fail to meet the amount in controversy
requirement could be sustained, based on jurisdiction
over those members who do meet it. In Freeman v.
Gordon & Breach, Science Publishers, Inc., 398 F.
Supp. 519 (S.D.N.Y., 1975), the District Court for ~
the Southern District of N.Y. reviewed the post-Zahn
cases pertaining to ‘pendent party” jurisdiction and
stated :
“We agree with the authorities discussed supra
that whatever vitality the doctrine of pendent
24
parties may have in other contexts (7.e., federal
or admiralty claims), Zahn effectively forecloses
the invocation of pendent party or ancillary ju-
risdiction to sustain federal jurisdiction over a di-
versity claim not in excess of $10,000.”
(Freeman, supra, at p. 526)
The Ninth Circuit has, in any event, long rejected
the notion of pendent jurisdiction over parties. (Hy-
mer v. Chai, 407 F.2d, 136 (9th Cir. 1969); United
Pacific/Reliance Ins. Cas. v. Lewiston, 372 F.Supp.
700 (D. Idaho 1974).
Both Zahn and the cases interpreting it thus con-
firm that the District Court here properly analyzed
the jurisdictional issues in ordering remand of this
class action. It has been plaintiff’s position through-
out this litigation that Zahn is dispositive of Defend-
ant’s claim to federal jurisdiction. Now, as in the
first hearing before the Magistrate in the District
Court, Defendant is simply unable to produce any
authority contrary to Zahn or any reason why Zahn
should not apply. What defendant has been able to
do, with the resources so abundantly available to it, is
finance a year of litigation to prevent the prompt
application of this Court’s settled rule in Zahn.
CONCLUSION
Defendant’s Petition for Writ of Certiorari fails
to present any claims deserving the attention of this
Court. The District Court’s opinion shows beyond any
doubt that the court thoroughly considered the juris-
25
dictional issues and based its Remand Order expressly
on 28 U.S.C. §1447(c). Having done so, the Court of
Appeals was not empowered to review the District
Court’s decision. This Court’s own decision in Therm-
tron fully supports the Court of Appeals’ refusal to
review the District Court’s order. Finally, Defendant
has presented virtually no reason for this Court to re-
state its settled rule in Zahn, a rule properly applied
by the District Court in this case.
For all of these reasons, Defendant’s Petition for
Writ of Certiorari should be denied.
Dated, San Francisco, California,
February 14, 1977.
CorTcHEtTt, HUTCHINSON & Dyer,
JosEPH W. CorcHerTT,
CARTWRIGHT, SAROYAN,
MartTIN & SuCHERMAN, INc.,
Jay R. Martin,
RaNpDALL D. Morrison,
Brown, Wricut & KAUFMAN,
Haroip C. WRIGHT,
Attorneys for Real Parties in Interest
Charlene P. Rosack, individually,
and on behalf of all others simi-
larly situated.
(Appendix Follows)
APPENDIX
vr
ad
11,
12.
Appendix
BRJEFS FILED IN DISTRICT COURT
REGARDING JURISDICTIONAL ISSUES
Plaintiff’s Notice of Motion and Memorandum for
Remand, April 26, 1976;
Defendant’s Memorandum in Opposition to Mo
tion for Remand, May 7, 1976;
Plaintiff’s Memorandum in Support of Motion
to Remand, May 12, 1976;
Defendant’s Supplemental Memorandum in QO)
position to Motion to Remand, May 27, 1976;
Plaintiff's Supplemental Memorandum in Sup-
port of Motion to Remand, June 3, 1976;
Plaintiff’s Objections to Magistrate’s Findings,
June 11, 1976;
Defendant’s Reply to Plaintiff’s Objections, Av-
gust 30, 1976;
Defendant’s Supplemental Brief and Reply to
Plaintiff’s Objections, September 7, 1976;
Defendant’s Supplemental Brief and Affidavits
Regarding Amount in Controversy, September 24,
1976;
Plaintiff’s Reply Regarding Amount in Contro-
versy, October 7, 1976;
Defendant’s Supplemental Reply Regarding
Amount in Controversy, October 12, 1976;
Defendant’s Request for Reconsideration and
Memo Regarding Jurisdiction of District Court
to Stay or Modify, October 25, 1976.
\“
2 3
Reported by: Shirlev Linkerman
Appearances:
: . For the Plaintiffs:
In the United States District Court Messrs. Cotchett, Hutchinson & Dyer
. henge Bank of California Building
Northern District of California El] Camino Real at Fourth Avenue
San Mateo, California
By: Susan Illston
and
Messrs. Cartwright, Saroyan, Martin
Before: Honorable William W. Schwarzer, Judge & Sucherman, Inc. |
: 160 Sansome Street—Suite 900
San Francisco, California 94104
By: Randall D. Morrison, Esquire
Case No. 76-742-W WS
Charlene P. Rosack, Individually and |
on behalf of all others similarly situ- ’ ; For the Defendants:
ated, a Messrs. Paul, Hastings & Janofsky
aa siemens Pho 555 South Flower Street
Los Angeles, California 90071
Volvo of America Corporation, Aktie- f By: Daniel H. Williams, II11, Esquire
bolaget Volvo, Volvo Western Dis-
ibuti lay, Oct 26,19
tributing, Inc., and Does I through Tuesday, October 26, 1976
THE CLERK: Civil Case No, 76-742, Charlene
Defendants. Rosack versus Volvo of America.
Counsel, appearances, please.
| MR. WILLIAMS: Daniel Williams for Volvo.
REPORTER'S TRANSCRIPT THE COURT: You haven’t filed any more papers
Tuesday, October 26, 1976 since yesterday, have you?
MR. WILLIAMS: No, I haven't.
THE COURT: What have you filed this morning
or today, Reply to Defendants’ Request For Recon-
sideration ?
4
MR. MORRISON: That’s right, Your Honor,
there’s another motion pertaining to the Request For
Stay, which I believe counsel has filed.
MS. ILLSTON: Yes, Your Honor, I believe it
was filed yesterday.
THE COURT: We have had no shortage of
papers.
Let me ask, Mr. Williams, what do you intend to
do—I don’t mean in this court--what are your plans
in this matter? Are you going to file a writ of man-
date?
MR. WILLIAMS: Yes, sir.
THE COURT: When are you going to file it?
Have you had it all done?
MR. WILLIAMS: No, I don’t.
THE COURT: I am surprised, you had all week-
end.
You know, that is the only way you can get any-
where, if vou have any remedy at all. I don’t think
the Court of Appeals would entertain a writ of man-
date.
MR. WILLIAMS: I wonder if the Court of Ap-
peals would entertain if the Court would reconsider
the motion?
THE COURT: I am not going to reconsider the
motion. We spent a lot of time the first time. [ don’t
have any reason to believe what we have done is not
right.
MR. WILLIAMS: I will be prepared to go to the
Court of Appeals tomorrow for a writ of mandate.
1 can file the writ by the end of the week.
5
THE COURT: I will give vou a 48-hour stay. I
would think you people can turn this writ of mandate
out in a couple of hours with all the briefing you have
done in this. You just need to take what you have
done and just put it together in a little different form.
MR. WILLIAMS: I appreciate the Court’s con-
fidence in our ability. I will relay that to my secre-
tary, as far as typing, Your Honor.
THE COURT: It’s going to be short, anyway.
MR. WILLIAMS: I think the request will be.
I would appreciate it if we could get a stay until
Monday so I eould have the weekend to proofread
and work on it. I would like to present a polished
document.
THE COURT: I don’t think that is appropriate.
I will give vou a 48 hours stay, | think that is plenty
of time to prepare a writ of mandate.
I think that I do that out of an abundance of—I
don’t know what it is, consideration or kindness. I
don’t think there is any merit, I don’t think vou have
got any right to review this matter, but I think you
ought to have a chance to go to the Court of Appeals,
and I think that is enough time.
And it seems to me there isn’t anything that hasn’t
been said already that you are going to say to the
Ninth Circuit.
So, let’s see. What we will do is we will stay the
effective time of this order until the close of busi-
ness—well, let’s say the close of business on Friday,
October 29th, that is 4:30, Friday, October 29.
Until that time, we will hold the order up.
6
And, depending on the state of affairs at that time,
that is my disposition now.
[ don’t think that the plaintiffs will be unduly in-
jured by that, adversely affected.
MS. ILLSTON: Susan Illston appearing for
Plaintiff Rosack. ,
Your Honor, just so the record is clear on that, I
would like to voice our opposition to any stay order
being entered. We feel there is no merit whatever.
The seven-month delay is plenty of delay, plenty of
time.
Just so you are clear, we vociferously object to that.
THE COURT: I understand you to object. This
order will go into effect on Friday at 4:30 unless there
is some kind of an order staying further proceedings.
And I intend to entertain no further motions or
appeals or applications of any kind. And it will be
remanded as of Friday, October 29 at 4:30 p.m., un-
less there is some superseding order that is issued in
the meantime.
MR. WILLIAMS: Your Honor, so that the record
is clear, I have made a request to the Court in writing
for certification of various issues pursuant to 180
U.S.C. 1292(b), just so I have a record I have a rul-
ing on that.
THE COURT: Yes, it’s on file. And we have
given a good deal of thought to that over the weekend
and concluded we simply can’t certify.
We think the provisions in the statute are clear,
and the Supreme Court has made it clear it is not an
appealable order, and it falls outside—the way I read
the statute and the decisions, it simply says outside
7
of 180 U.S.C. 1292(b). If there is a way to have the
matter reviewed, it’s only by of writ of mandate. I
don’t think a writ of mandate wise when there is a
finding by the District Court the matter has been im-
providently removed.
That is a matter you can take before the Supreme
Court—before the Court of Appeals.
MR. WILLIAMS: Yes, Your Honor, I under-
stand what the Court is saying.
If I might point something out to the Court with-
out belaboring the point, it’s not my understanding
that the Court ruled that the matter is improvidently
removed, I looked up the meaning of improvidently,
and I think that means wrongfully or without legal
basis. I have a case to cite that. And inasmuch as I
think the Court found there were some plaintiffs who
could not set forth the requisite amount of jurisdic-
tional—is it my understanding of the Court ruling
this was improvidently removed and without jurisdic-
tion?
THE COURT: Well, I think the ruling speaks
for itself. I am not going to get into a debate as to
what my words meant.
I think that order will have to stand on its own
bottom. And vou can interpret it any way you see fit.
It certainly is a holding under the statute that the
matter does not belong here.
MR. WILLIAMS: Well, just so——
THE COURT: For the reasons specified in the
statute.
MR. WILLIAMS: I understand that, Your Honor,
and I am not trying to argue with the Court.
8
THE COURT: I understand.
MR. WILLIAMS: It is my understanding of the
Court’s ruling, just so we have a clear record, so I am
not faced with assertions by the plaintiffs that the
matter was improvidently reraoved and so found to
be by the Court, it is my understanding of the Court’s
ruling what the Court found was that the vast ma-
jority of the plaintiffs could not meet the jurisdic-
tional amount requirement, and for reasons of
judicial economy, and for other reasons, had to be sent
back to the State Court, even though there were plain-
tiffs who could meet the jurisdictional amount require-
ment.
clear record.
I will state for the record the only reasons for re-
moval are those set forth in the statute. Nothing I
sav here is to be interpreted by anybody as being a
modification, qualification, explanation, or any other
kind of comment upon my prior order.
That will have to stand or fall on its own bottom.
MR. WILLIAMS: Our request for certification
then is denied?
THE COURT: It is denied.
MR. WILLIAMS: Thank you very much, Your
Honor.
THE COURT: Is that all we have before us?
MR. WILLIAMS: I don’t think we have anything
further. We got the stay, and the certification has
been denied, and the reconsideration has been.
THE COURT: I will say, in any event, it was a
very interesting question,
THE COURT: I agree with you we should have a
9
MR. WILLIAMS: We appreciate it.
MR. MORRISON: Thank you, Your Honor.
MS. ILLSTON: Thank you very much, Your
Honor.
CERTIFICATE OF REPORTER
I, the undersigned Official Reporter of the United
States District Court for the Northern District of
California, 450 Golden Gate, San Francisco, Califor-
nia, do hereby certify:
That the foregoing transcript, Pages No. 1 through
9, inclusive, constitute a true, full and correct tran-
script of my shorthand notes taken as such Official
Reporter of the proceedings hereinbefore entitled, and
reduced to typewriting to the best of my ability.
(Signed) Shirley 8. Linkerman
10
Jay R. Martin, Esq.
Randall D. Morrison, Esq.
Cartwright, Saroyan, Martin
& Sucherman, Ine.
160 Sansome Street, Suite 900
San Francisco, California 94104
Telephone: (415) 433-0440
Attorneys for Plaintiff,
Charlene P. Rosack
United States Court of Appeals
for the Ninth Circuit
United States District Court—Northern District
of California
Case No. C-76-0742 WWS
Volvo of America Corporation, )
Petitioner,
vs.
The Honorable William W. Schwarzer, Judge,
United States District Court for the North-
ern District of California,
Respondent.
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. ;
[Filed Nov. 3, 1976]
11
MEMORANDUM IN OPPOSITION TO
DEFENDANT'S PETITION FOR WRIT
OF MANDAMUS AND REQUEST
FOR STAY OF REMAND ORDER.
INTRODUCTION
Plaintiff submits this memorandum to more fully
develop points which were only hastily sketched in
the memorandum submitted October 28, 1976. Plain-
tiff received defendant’s petition only a few hours
before submitting its own response, and did not have
time to prepare a thorough, polished document for
the court’s review. Plaintiff also regrets that a de-
cision to stay the District Court’s order was made
within a few hours after defendant’s petition was re-
ceived and before plaintiff’s opposition papers could
be delivered to the court.
ARGUMENT AND AUTHORITIES
I. Thermtron Prevents Review of the District Court’s
Order by Extraordinary Writ or Otherwise, Since
the Court’s Order of Remand Was Based On 28
U.S.C. 1447(¢).
Plaintiff’s previous briefs in opposition to the Pe-
tition for Writ of Mandamus and to defendant’s
earlier Request for Reconsideration of the District
Court’s order contain a full discussion of Thermtron
Products, Inc. v. Hermansdorfer, 96 S.Ct. 584, 46
L.Ed.2d 542 (1976). (See plaintiff’s Memorandum
in Opposition to Motion to Certify Interlocutory Ap-
peal, pp. 2-4; plaintiff’s Opposition to Writ of Man-
damus, pp. 1-4.) At this point, both plaintiff and
12
defendant agree that Thermtron expressly prohibits re-
view of remand orders based on Section 1447(c). The
Thermtron court stated :
“It is unquestioned in this case and conceded by
petitioners that this section prohibits review of all
remand orders issued pursuant to §1447(c)
whether erroneous or not and whether review is
sought by appeal or by extraordinary writ. This
has been the established rule under §1447(d) and
its predecessors stretching back to 1887. See, e.g.,
In re Pennsylvania Co., 137 U.S. 451, 11 S.Ct. 141,
34 L.Ed. 738 (1890) ; Ex parte Mathew Addy S.S.
Co., 256 U.S. 417, 41 S.Ct. 508, 65 L.Ed. 1027
(1921); Employers Reimsurance Corporation v.
Bryant, 299 U.S. 374, 57 S.Ct. 273, 81 L.Ed. 289
(1937) ; United States v. Rice, 327 U.S. 742, 66
S.Ct. 835, 90 L.Ed. 982 (1946). If a trial judge
purports to remand a case on the ground that
it was removed “improvidently and without ju-
risdiction,” his order is not subject to challenge
in the Court of Appeals by appeal, by mandamus
or otherwise.” (Emphasis added.) (Thermtron,
supra, at 589.)
Two points now deserve further emphasis. The first
is the vast difference between Thermtron, where the
District Court totally ignored §1447(c), and the pres-
ent case, where the District Court thoroughly ana-
lyzed the jurisdictional issues and based its remand
order expressly on $1447(c). The second point is the
special care the Thermtron court took in limiting
its rule and trying to avoid the very interpretation of
its decision which defendant offers here.
First of all, it is clear that the Supreme Court in
Thermtron based its decision that mandamus was
13
appropriate on the fact that the District Court had
remanded the case solely on the basis of the court’s
own “crowded calendar” and without purporting in
any way to base its remand on lack of jurisdiction
under Seetion 1447(c). Indeed, the District Court
there expressly conceded in its memorandum opinion
that the petitioners had a right to remove the action.
(See Thermtron, supra, at 548.) The District Court
there incorrectly decided that petitioner’s right to re-
moval had to be “balanced against plaintiff’s right to
a forum of their choice and their right to a speedy
decision. .. .” (Thermtron, supra, at 547-548.)
These facts in Thermtron could not be farther from
the facts in the present case, where the District Court
entertained over a dozen briefs and seven months
of argument on the jurisdictional issues before ex-
plicitly finding that jurisdiction was lacking and bhas-
ing its order of remand on that ground. The court’s
finding of lack of jurisdiction and the court’s reliance
on 28 U.S.C. 1447(c) are fully obvious in the follow-
ing passage from the order:
“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 substan-
tially different from that on whose behalf the ac-
tion 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
14
must be remanded. 28 U.S.C. §1447(c). See, Kin-
sey v. General Motors Acceptance Corp., 350 F.
Supp. 36 (D.N.D. 1973).” (Emphasis added.)
(Order, pp. 6-7.)
In the hearing which followed Judge Schwarzer’s
remand order, defendant’s counsel tried to lure the
court into saying that its order was based upon “rea-
sons of judicial economy” rather than upon “improvi-
dent removal” and “lack of jurisdiction”. (See state-
ments made by Mr. Williams, defense counsel, at pp.
6-7 of the Reporter’s Transcript of Hearing, Exhibit
B hereto.) In so doing, defense counsel was obviously
trying to entice the court into stating that its order
was based upon something other than §1447(c). De-
fense counsel hoped to then suggest to the Ninth Cir-
cuit that the District Court had “gone outside the
statute” and relied upon “reasons of economy” or
some other reasons, which would make this case ap-
pear similar to Thermtron.
Defendant’s attempt to extract from Judge
Schwarzer some such interpretation of his order was
completely unsuccessful. The court clearly stated that
the case had been “improvidently removed” (R.T. 6:
23-25) and that the court’s order is “a holding under
the statute that the matter does not belong here”
(R.T. 7:20-21). The court thus refused to accept de-
fendant’s bait to reinterpret its own order, and the
court stated flatly :
“T will state for the record the only reasons
for removal are those set forth in the statute.
Nothing I say here is to be interpreted by any-
15
body as being a modification, qualification, ex-
planation, or any other kind of comment upon
my prior order.”
Both the order and the court’s statements leave no
doubt that remand was based upon the statute, 28
U.S.C. 1447(c).
Finally, it should be noted that the Supreme Court
in Thermtron was aware that its decision offered
a temptation to all those seeking an excuse for a re-
view of orders of remand. The Court was therefore
careful to limit its ruling. For example, the Court
noted that the District Court and the Court of Ap-
peals there had not even suggested that the “case was
not removable under Section 1441 or that it had been
improvidently removed from the state court for want
of jurisdiction or otherwise.” (Thermtron, supra, at
551.) Plainly, it would have made a crucial difference
if the District Court there, like the Court here, found
the case improvidently removed for lack of jurisdic-
tion. The Thermtron court later stated:
“In so holding we neither disturb nor take issue
with the well-established general rule that §1447
(d) and its predecessors were intended to forbid
review by appeal or extraordinary writ of any
order remanding a case on the grounds permitted
by the statute.” (Thermtron, supra, at 554.)
Every bit of the court’s language in Thermtron dem-
onstrates that it was not intended to allow wholesale
review of remand orders where the District Court, as
in the present case, has given long and thorough
16
consideration to the jurisdictional questions and re-
manded the case expressly on that basis.
II. Defendant’s Assertion That the Court Went
“Outside the Statute” In Ordering Remand Is
Based On Verbal Confusion and Logical Error.
The record of hearings, the briefs, the Court’s order
of remand, and the transcript of the hearing all dem-
onstrate that the order was founded upon 28 U.S.C.
1447(c). The only reason defendants are tempted to
argue otherwise is their own confusion of terms. Es-
' sentially, defendant’s argument is this: the court
found jurisdiction over some plaintiffs (defendants
say “several”, while the Court said “a few”). Defend-
ants then assert that, since the Court “found jurisdic-
tion” in some sense, the Court must have gone outside
the statute to order remand. The error should be ob-
vious. Kven if the Court did find jurisdiction over a
few plaintiffs, this finding is not equivalent to find-
ing “jurisdiction” per se or finding jurisdiction over
the class action which was before the Court. In fact,
the Court expressiy ruled that it did not have juris-
diction of the action. (Court’s Order, 6:19-20.) In so
doing, the Court based its remand order on the very
grounds specified in the statute and did not go “out-
side the statute”.
Defendant’s whole argument thus rests upon the
mistaken belief that finding jurisdiction over a few
plaintiffs, if any, is coextensive with finding jurisdic-
tion over the action. This error is obvious in several
passages in defendant’s brief (see, for example, 11:
17
26-28, 14:19-25). It is only by leaving out the Court’s
crucial finding of no jurisdiction that defendant can
then leap to the conclusion that the Court relied on
“extraneous factors” beyond the statute, as in the fol-
lowing passage from defendant’s brief:
“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 U.S.C. 1447(¢) does not
authorize such a ground for an order of remand.
In essence, the respondent has allowed extrane-
ous factors, such as expedition of the Rule 23
class action, to defeat federal jurisdiction which
had properly attached upon removal.” (Empha-
sis added.) (Defendant’s Petition for Writ of
Mandamus, 14:19-25.)
Defendant here ignores the fact that the Court found
jurisdiction lacking and that 28 U.S.C. 1447(c) does
authorize remand on that basis. Defendant’s argu-
ment really amounts to saying that any time a court
issues a remand order which defendant thinks “is
wrong” under the statute, this means the court must
have “gone outside the statute”. Such an argument
is totally fallacious and is nothing more than verbal
hijinks. -
Ill. The District Court Correctly Remanded a Class
Action Where All, Or Nearly All, the Class
Members Did Not Meet the Jurisdictional Min-
imum, Where the Named Plaintiff Herself Did
Not Meet the Jurisdictional Minimum, and
Where It Would Be Pure Speculation To Say
18
Whether Any Plaintiffs Could Be Found To
Meet the Jurisdictional Minimum.
The Court’s order shows that Zahn v. International
Paper Co., 414 U.S. 291 (1973), requires that each
plaintiff satisfy the jurisdictional amount requirement
in a class action where, as here, the individual plain-
tiffs’ claims are separate and distinct. Zahn also re-
quires that “. . . any plaintiff without the jurisdic-
tional amount must be dismissed from the case, even
though others allege jurisdictionally sufficient claims.”
(414 U.S., at 300, cited at page 4, Court’s Order.) In
Zahn, the Supreme Court affirmed the District Court’s
refusal to allow the case to proceed as a class action
after the District Court had concluded that “It would
not be feasible to define a class of property owners
each of whom have more than a $10,000 claim... .”
(Emphasis added.) (Zahn, supra, at 507.) The Su-
preme Court in Zahn thus affirmed dismissal of the
class action, by affirming dismissal of all the class
members when they failed to meet the jurisdictional
minimum. The only plaintiffs who were not dismissed
were the four named plaintiffs, each of whom had
a claim in excess of the jurisdictional amount.
It is obvious from Zahn that a court cannot main-
tain jurisdiction over an entire class action where
only a few of the plaintiffs (there, the named plain-
tiffs) meet the jurisdictional minimum. If this is
what defendant suggests in the present case, defend-
ant’s argument is completely contrary to Zahn, where
the court expressly dismissed all the other class mem-
bers. Indeed, the argument for dismissal in the pres-
19
ent case is even stronger than in Zahn, because here
not even the named plaintiff has a claim which meets
the jurisdictional minimum. Ms. Rosack would her-
self have to be dismissed from this action, because she
purchased only one Volvo automobile and could not
possibly have a claim in excess of $10,000 for price-
fixing on that single automobile. Ms. Rosack is not
one of the “multiple purchasers” upon whom defend-
ant hoped to rest jurisdiction here.' Since the named
plaintiff here does not meet the jurisdictional mini-
mum and would have to be dismissed along with the
other class members, defendant can take no comfort
from the possibility’ ‘that the named plaintiffs in Zahn
might have been allowed to continue the suit indi-
vidually.
Defendant offered the “multiple purchaser” theory to the Dis-
trict Court by submitting affidavits purportedly showing some 28
multiple purchasers of Volvos, each of whom was supposed to have
a damage claim in excess of $10,000 when the price-fixing dam-
ages per car were added to treble damages and to that. plaintiff’s
portion of the anticipated attorneys’ fees. Nearly every one of
these purported purchasers, however, turned out to be a leasing
company, which in California is considered an automobile “dealer”
rather than a “retail purchaser” as required by plaintiff’s com-
plaint. Henee, the court could find, at most, that only “a few”
purchasers met the jurisdictional minimum (Court’s Order, pp.
6-7).
2In Zahn the named plaintiffs commenced the action in federal
court and met the jurisdictional minimum. The present case is a
removed action where the named plaintiff does not meet the mini-
mum and would not want to continue individually.
Defendant’s bootstrap argument regarding this named plaintiff
is completely frivolous. Defendant states that “{t]he court never
specifically found that the named plaintiff, Charlene Rosack, did
not have a claim in excess of $10,000,” but the very passage de
fendant quotes shows that the Court knew she did not have such a
claim and could not have one unless all the attorneys’ fees were
assigned to her, a move the Court had just rejected.
20
The fact that the named plaintiff here fails to meet
the jurisdictional minimum has also been held suffi-
cient basis to dismiss the entire class action. (Kinsey
v. General Motors Acceptance Corp., 359 F.Supp. 36
(D.N.D. 1973).) In Kinsey, the court reviewed nu-
merous cases where the named plaintiff did not have
a damage claim in excess of $10,000 but other class
members purportedly did have such claims. After ex-
amining these cases, including the Ninth Circuit
decision in City of Inglewood v. City of Los Angeles,
451 F.2d 948 (9th Cir. 1972), the court concluded:
“The above cases illustrate that if the representa-
tive plaintiff cannot meet the jurisdictional re-
quirement, the class action must be dismissed, un-
less he falls within a situation where aggregation
is permissible.” (Kinsey, supra, at 40.)
Kinsey thus allows complete dismissal of the entire
class action and eliminates defendant’s claim that the
Court could retain jurisdiction based on a few class
members who might qualify.
Kinsey cuts the last thread upon which defendant
has tried to hang jurisdiction—the mere possibility
that somewhere, somehow, a few class members might
be found who have claims in excess of $10,000, even
though the named plaintiff and the overwhelming ma-
jority of the 50,000 class members do not. In its
order, the Court stated that, even viewing the record
most favorably to defendants, only “a few” members
of the class estimated at 50,000 could meet the juris-
dictional minimum. (Court’s Order, 6:1-4.) It would
have heen pure speculation for the Court to retain
jurisdiction in the hope that some such individuals
21
would later step forward. In any event, the Court
had no choice but to remand the action since Zahn
required dismissal of the named plaintiff and nearly
all the class members, and Kinsey required dismissal
of the entire class action.
IV. Regardless Of Whether Defendant Thinks the
District Court’s Order Erroneous, the Order
Was Based Upon 28 U.S.C. §1447 and Is Not
Reviewable. There Was No “Abuse Of Discre-
tion”.
The Supreme Court in Thermtron stated:
“It is unquestioned in this case and conceded
by petitioners that this section prohibits review
of all remand orders issued pursuant to §1447(¢)
whether erroneous or not, and whether review is
sought by appeal or by extraordinary wr''.” (Em-
phasis added.) (Thermtron, supra, at 549.)
The absolute maximum that defendant could possibly
claim here is that the Court’s Order of Remand, based
upon Zahn, was erroneous. Any suggestion that the
Court’s order was based upon something else is pat-
ently false. Even if the Court had erred, which plain-
tiff absolutely denies, the Supreme Court’s own lan-
guage in Thermtron still requires rejection of de-
fendant’s request for mandamus here. The court in
Thermtron stated flatly that “error” was not enough.
Other courts have explicitly required that the party
seeking mandamus show “abuse of discretion”. For
example, in Pfizer, Inc. v. Lord, 55 F.2d 612 (1975),
the court stated:
“The traditional use of the writ [of mandamus]
in aid of appellate jurisdiction has been to confine
a lower court to a lawful exercise of its pre-
scribed jurisdiction. Thus, ‘[t]he writ is appro-
priate issued ... when there is a “usurpation of
judicial power” or a clear abuse of discretion.’
Schlagenhauf v. Holder, 379 U.S. 104, 110, 85
S.Ct. 234, 238, 13 L.Ed.2d 152 (1974) ; River Val-
ley, Inc. v. Dubuque Cty., 507 F.2d 582, 585 (8th
Cir. 1974). However, mandamus is not to be used
when the most that can be claimed is that the
district judge may have erred in ruling on a
question clearly within his jurisdiction. Wall v.
United States, 389 U.S. 90, 104, 88 S.Ct. 269, 19
L.Ed.2d 305 (1967).” (Pfizer, supra, at 614.)
The Pfizer court also noted that the mere fact that
the court allegedly erred on “jurisdictional questions”
does not amount to a usurpation of power making
mandamus appropriate. The court stated:
“Tt is true that this petition ... challenges what
can fairly be called a jurisdictional ruling. But
that difference alone is not enough to make a per-
emptory writ appropriate ... The challenged
assumption or denial of jurisdiction must be so
plainly wrong as to indicate failure to compre-
hend or refusal to be guided by unambiguous
provisions of a statute or settled common law
doctrine. If a rational and substantial legal argu-
ment can be made in support of the questioned
jurisdictional ruling, the case is not appropriate
for mandamus.” (Emphasis added.) (Pfizer,
supra, at 615.)
Given these well-established rules, there is abso-
lutely no basis for defendant’s claim here that a writ
of mandamus issue. Even given the benefit of every
doubt, the most defendant can claim here is error, not
23
abuse of discretion. For this reason, as well as the
fact that the Court based its remand order expressly
on §1447(c), no review is permitted by mandamus or
otherwise.
CONCLUSION
The District Court here thoroughly considered
every jurisdictional issue and remanded the case after
it found jurisdiction lacking. The Court relied ex-
pressly on §1447(c) in its Order of Remand. The
Court’s order is therefore final and non-reviewable
under Thermtron. The District Court also correctly
ruled on the jurisdictional questions, finding Zahn
dispositive. Defendant has no credible argument to
the contrary and has simply invented another chal-
lenge to further delay remand to the State Court
which should have jurisdiction here.
Dated: November 3, 1976.
Cartwright, Saroyan, Martin
& Sucherman, Ine.
/s/ Randall D. Morrison
Randall D. Morrison
Attorneys for Plaintiffs
CERTIFICATE OF SERVICE BY MATL
I, Jennifer Werner, declare under penalty of per-
jury:
That I am a citizen of the U.S.A., over the age of
18 years and not a party to or interested in the
within entitled cause; that I am an employee of Cart-
wright, Saroyan, Martin & Sucherman, Ine., and my
business address is 160 Sansome Street, Suite 900, San
Francisco, California 94104.
24
That I served by mail the following document:
MEMORANDUM IN OPPOSITION TO DE-
FENDANT’S PETITION FOR WRIT OF
MANDAMUS AND REQUEST FOR STAY OF
REMAND ORDER
in the following manner:
I enclosed a true copy of said document in an en-
velope, addressed as follows:
Robert S. Span, Esq.
Paul, Hastings & Janofsky
Twentv-Second Floor
555 South Flower Street
Los Angeles, CA 90071
Brown, Wright & Kaufman
2500 El] Camino Real, Suite 411
Palo Alto, CA 94306
Joseph W. Cotchett, Esq.
Susan Illston, Esq.
Cotchett, Hutchinson & Dyer
Bank of California Building
Fl Camino Real at Fourth Avenue
San Mateo, CA 94402
I sealed said envelope and deposited it so sealed and
addressed on the 3rd day of November, 1976, with the
said document enclosed therein and with the postage
thereon fully prepaid, in the United States Post Of-
fice, in the City and County of San Francisco, State
of California.
Exeeuted on November 3, 1976, in San Francisco,
California.
/s/ Jennifer Werner
Jennifer Werner
Jay R. Martin, Esq.
Randall D. Morrison, Esq.
Cartwright, Saroyan, Martin
& Sucherman, Inc.
160 Sansome Street, Suite 900
San Francisco, CA 94104
Telephone: (415) 433-0440
Attorneys for Plaintiff
United States District Court
Northern District of California
No. C-76-742 OJC
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. }
SUPPLEMENTAL BRIEF IN SUPPORT OF
PLAINTIFF’S MOTION TO REMAND
[Filed Oct. 7, 1976]
INTRODUCTION
In the previous hearing, plaintiff established that
defendant’s theory of aggregating attorney’s fees to
satisfy the amount in controversy was untenable. This
26
theory was a last minute attempt to create federal
jurisdiction when it was otherwise lacking. The same
is true for defendant’s present attempt to conjure
up plaintiffs whose damage claims would exceed
$10,000.00. Instead of showing a credible number of
such plaintiffs and a reasonable liklihood that they
could meet the $10,000.00 minimum, defendants’ ef-
forts have produced a grand total of two retail pur-
chasers of Volvo automobiles, required by plaintiff’s
complaint, and even these two purchasers do not have
claims in excess of $10,000.00. Defendants’ affidavits
therefore fail to show that any of the class plaintiffs
here can satisfy the amount required for federal
jurisdiction.
ARGUMENT AND AUTHORITIES
I
Nearly all of the Volvo purchasers listed in defend-
ants’ affidavits are auto leasing companies which are
“dealers” under California law and not retail pur-
chasers as required by plaintiff’s compjaint
Paragraph III of plaintiff’s first cause of action
states:
“Plaintiff, Charlene P. Rosack, brings this action
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.”
Nowhere in the complaint does plaintiff purport to
represent wholesale purchasers of any sort—whether
leasing companies, discount houses or other non-retail
27
purchasers. Yet, these are precisely the types of pur-
chasers defendant offers here.
Of the 28 auto purchasers listed in defendants’ 9
affidavits, the overwhelming majority are auto leasing
companies, which under California law are considered
auto “dealers”. Vehicle Code §285 defines a dealer as
follows:
“ ‘Dealer’ is a person not otherwise expressly ex-
cluded by Section 286 who:
“(a) For commission, money, or other thing of
value, sells, exchanges, buys or offers for sale,
negotiates or attempts to negotiate, a sale or ex-
change of an interest in, a vehicle subject to reg-
istration under this code, or induces or attempts
to induce any person to buy or exchange an inter-
est in a vehicle and, who receives or expects to
receive a commission, money, brokerage fees,
profit, or any other thing of value, from either
the seller or purchaser of said vehicle, or
“(b) Is engaged wholly or in part in the busi-
ness of selling vehicles or buying or taking in
trade, vehicles for the purpose of resale, selling,
or offering for sale, or consigned to be sold, or
otherwise dealing in vehicles, whether or not such
vehicles are owned by such person.”
This provision has been interpreted in a recent and
thorough California Attorney General’s opinion which
expressly considered the question whether automobile
leasing companies are dealers under California law.
The opinion focused on the language, “a sale or ex-
change of an interest in...” in Vehicle Code 6285,
and concluded that leasing companies were dealers:
28
“The Legislature .. . expressly provided that a
dealer is a person who ‘negotiates or attempts to
negotiate, a sale or exchange of an interest in, a
vehicle . . .” (§285) (emphasis added) and thus
broadened that which a person must ‘sell’ in order
to qualify as a ‘dealer’ to include not only title,
which is what a sale is commonly construed to
convey, but an ‘interest’ which is generally viewed
as something less than title or full ownership. .. .”
“By defining a dealer to be a person who nego-
tiates or attempts to negotiate a sale or exchange
of an ‘interest’ in a vehicle, therefore, the Legis-
lature has indicated by the very language they
choose (sic) to utilize that a dealer can be a per-
son who not only ‘sells’ a vehicle, and thus trans-
fers title as well as possession for consideration,
but also a person who ‘sells’ an interest in a ve-
hicle, that is, one who transfers something less
than title for consideration, thus creating what
amounts to a bailment or a lease of the motor
vehicle.” (emphasis added)
The opinion goes on to conclude,
“Thus, it is our opinion that the Legislature in-
tended leasing companies to be “dealers” under
section 285. This interpretation is reinforced by
section 285(b) which states that a dealer is a per-
son who ‘is engaged wholly or in part in the busi-
ness of selling vehicles or buying or taking in
trade, ... or otherwise dealing in vehicles’ (em-
phasis added), that is one who otherwise “traffics,
transacts business or trades” in vehicles.” (57
Opn. CA Atty General 561 [1974].
Since auto leasing companies in California are
“dealers”, they are obviously not “retail purchasers”
29
and do not fit the description of the class members
given in plaintiff's complaint. The court can, of
course, take judicial notice of the commonly known
fact that leasing companies do not pay the “retail”
price or the cars they purchase. This analysis
eliminates 23 out of 27 buyers listed by defendant.
(Twenty-one of the purchasers are leasing companies
by name and two others are leasing divisions of banks,
Wells Fargo and Security Pacific Bank, listed in de-
fendant’s Exhibit “E”, Page -2-). Of the remaining
five (5) parties, two (2) are not purchasers at all, but
lessees of Volvos (National University of San Diego
and D.L. Glaze Company of San Francisco). A third
alleged purchaser, Nationwide Auto Sales (defend-
ant’s Exhibit “E”, Page -1-) is obviously a dealer, but
plaintiffs were unable to verify its status since there
was no answer at the number listed for it in Los
Angeles. This leaves a total of two (2) “retail pur-
chasers” of Volvo automobiles. (See Morrison Affi-
davit attached hereto. )
II
The federal court would not have jurisdiction over
either of these two purchasers, because their dam-
age claims would not exceed $10,000.00
The damages to be considered for jurisdiction pur-
poses are those alleged by plaintiffs in good faith. As
the court stated in Beckerman v. Sands, 384 F.Supp.
1296 (S.D.N.Y., 1974):
“Defendants dispute the amount of provable
actual damages, but because there is no indica-
tion that the [plaintiffs’] allegation is made in
30
bad faith, we accept arguendo plaintiffs’ compu-
tation as a proper basis on which to calculate the
jurisdictional amount.” (Beckerman, supra, at
1299)
Defendant, Volvo, after denying that there are
any damages in their Answer to plaintiff’s Com-
plaint, have now submitted gross profit margins, based
on suggested retail prices and then argues therefrom
that the damages per class member create federal
jurisdiction.
The fallacy of defendant’s presentation can be
clearly outlined as follows:
1. Gross profit figures for the highest sticker price
are given.
2. No evidence of average net profit of Volvo deal-
ers is given.
3. No breakdown of expenses which must be de-
ducted from gross profits to arrive at a reasonable net
profit is provided.
It is submitted that Volvo dealers in business to
make money cannot consistently discount auto prices
below their break even point. To determine this break
even point, and the margin available to them for
reducing their prices, one must know their net profit
figure. The gross profit (sales prices less cost of auto)
is a meaningless figure.
As set out in the Affidavit of Harold Wright, from
gross profit must be deducted dealer’s preparation and
shipping charges, salesman’s commissions (four and
one-half percent [444%] of sale price for Northern
31
California union members) rent, advertising, salaries
and all of the rest of the costs attendant to operating
any business.
Volvo has compounded their deception to the court,
by providing it with maximum gross profit figures.
Attached as Exhibit “A” is Volvo’s “Dealer Average
Gross Profit Objective On New Volvo Retail Sales”
prepared by Volvo setting out far more realistic fig-
ures as to what the alleged true gross profit Volvo
dealers strive for. For the year 1974, the difference
between gross profit figures as presented to the court
by defendant in his Affidavit (defendant’s Exhibit
“G’’) and that expected by Volvo (Exhibit “A”’) is up
to $800.00 per auto. Based on the foregoing with a
true average gross profit for the period 1969 to 1974
of approximately $675.00 per auto and then deducting
the foregoing expenses to arrive at a net profit, it is
respectfully submitted that a reasonable estimate of
damages for the price fixing alleged herein would be
$100.00 to $200.00 per auto.
Plaintiff, of course, offers these estimates strictly
for the purpose of providing a reasonable measure of
damages in determining the amount in controversy.
Plaintiff obviously cannot, at this point, stipulate to
these or any other figures as binding on the ultimate
damages to be proven in the case. It is ridiculous for
defendants to suggest that Plaintiff make such a stip-
ulation at this point.
Using plaintiff’s figures, (as the rule stated in
Beckerman, supra, requires,) even the two (2) pur-
chasers remaining in defendants’ list would not meet
32
the $10,000.00 jurisdictional minimum. The buyer with
twelve (12) cars, at approximately $200.00 damages
per car, would have $2,400.00 in damages, which when
trebled would amount of $7,200.00. With the reason-
able attorney’s fee of twenty-five percent (25%), the
total would only reach $9,000.00. The other buyer,
with ten (10) cars, would be far short of the
$10,000.00 mark. The fact is, that only two (2) of the
purchasers listed by defendant even fit the description
of plaintiffs’ class members and these two (2) fail to
meet the minimum required for federal jurisdiction.
Defendant’s Affidavits do not even begin to provide
information upon which a court could rely in finding
federal jurisdiction. The court is required to deter-
mine to a legal certainty that the asserted claims reach
the minimum, and if the court believes the amount is
“really less” than that claimed, it must deny jurisdic-
tion. (Kavit v. A. C. Stamm & Co. [1974, 2nd Cir]
491 F.2d 1179.)
III
Defendant has been unable to produce any qualified
class members with claims in excess of $10,000.00,
assuming even if defendant were able to locate a
few such persons, Zahn v. International Paper
Company would prevent the court from exercising
jurisdiction over the class and would require dis-
missal of virtually all the other class members.
Zahn v. International Paper Company, 414 U.S.
291; 38 L.Ed.2d 511 (1973) has haunted defendants
- since the first arguments on remand and is still the
case which should finally be dispositive. In Zahn, the
33
United States Supreme Court considered class action
claims by plaintiff owners of lakefront property which
had allegedly been polluted by the defendant paper
company. The suit was brought as a diversity action,
and the District Court found that only the named
plaintiffs satisfied the $10,000.00 jurisdictional re-
quirement. The District Court was convinced “to a
legal certainty” that the other class members did not
have claims in excess of $10,000.00. The Supreme
Court summarized the District Court’s conclusions as
follows:
“Reading Snyder v. Harris, 394 U.S. 332, 89 S.
Ct. 1053, 22 L.Ed.2d 319 (1969), as precluding
maintenance of the action by any member of the
elass whose separate and distinct claim did not
individually satisfy the jurisdic ional amount and
concluding that it would not be feasible to define
a class of property owners each of whom had
more than a $10,000.00 claim, the District Court
then refused to permit the suit to proceed as a
class action.”
(Zahn, supra, at 507) (Emphasis Added)
The Supreme Court then affirmed the District Court’s
judgment in its entirety, stating:
“As previously indicated, Snyder invoked the
well-established rule that each of several plaintiffs
asserting separate and distinct claims must sat-
isfy 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 dis-
missed where none of the plaintiffs claims more |.
than $10,000 but also requires that any plaintiff
34
without the jurisdictional amount must be dis-
missed from the case, even though others allege
jurisdictionally sufficient claims.”
In Zahn, dismissal was necessary because it was the
plaintiffs who had alleged federal jurisdiction and
who failed to show that the class members met the
jurisdictional minimum. In the present case, how-
ever, plaintiffs have always maintained that Federal
Court does not have jurisdiction, and that the court
should therefore remand the case to State Court,
which would have jurisdiction over the class members.
Here, there is no need to go through further motions
in attempting to certify the class, only to have the
court then dismiss the class action for lack of juris-
diction. Instead, the court should remand the case to
State Court, which will have jurisdiction. As a prac-
tical matter, however, it will not even be necessary
for the court to rely on Zahn, because defendants have
completely failed to show that any of the class
members here will have claims over $10,000.00. Zahn
would only be important only if defendants had been
able to find a few plaintiffs who did qualify.
CONCLUSION
Defendant has offered its final, novel theory for
creating federal jurisdiction in this case. This theory
fails, because twenty-six (26) out of twenty-eight
(28) of the named parties do not fit the description
of retail purchasers required for plaintiffs’ class,
and even the two (2) which remain fail to meet the
jurisdictional minimum. The fact is, that despite a
great deal of ingenuity on the part of defendants’
counsel, there is simply no factual or legal basis for
satisfying the amount in controversy requirement in
this case. Even if defendants were able to conjure up
a few plaintiffs who met both the class description
and the jurisdictional minimum, the class action
would ultimately have to be dismissed for lack of
jurisdiction. It is plainly time for this case to be re-
turned to the State Court which does have jurisdic-
tion over the class plaintiff has pled in her Complaint.
Dated: October 7, 1976.
Respectfully submitted,
Cartwright, Saroyan, Martin
& Sucherman, Ine,
/s/ Jay R. Martin
Jay R. Martin
Attorneys for Plaintiffs
AFFIDAVIT OF RANDALL D. Morrison
State of California
County of San Francisco—ss:
I, RANDALL D. MORRISON, say:
1. I am one of the attorneys for the plaintiffs
herein.
2. That I conducted an investigation by telephone
inquiry to verify the status of the Volvo purchasers
listed in defendant’s Affidavits.
3. Twenty-one (21) of the twenty-eight (28) pur-
chasers liste’ are identified by name as automobile
leasing companies,
4. Two (2) of the alleged purchasers were not
identified as auto lessors, but were in fact leasing
divisions of banks:
a. Wells Fargo Bank of San Diego;
b. Security Pacific Bank.
(Both listed in defendant’s Exhibit “D”)
37
5. In addition to confirming the status of Security
Pacific Bank, above, as an auto lessor, Mr. Robert
Sproule of Security Pacific Bank, explained that only
a few of the cars acquired by the Bank for leasing
were ever purchased. Nearly all these automobiles,
well over one hundred, were never purchased at all,
but were in fact, leased directly by the Volvo dealer
to the customer, with the lease subsequently assigned
by the dealer to the Bank. Mr. Sproule stated that
Security Pacific, Wells Fargo and numerous other
banks had similar leasing arrangements with dozens
of Volvo dealers.
6. Nationwide Auto Sales listed in defendant’s
Exhibit “E”, is by name an auto dealer, but I was
unable to verify its status because there was no
answer at the number listed for this company in
Los Angeles.
7. Two (2) of the alleged purchasers listed in
defendant’s Affidavits are, according to information
from their employees, lessees of automobiles not pur-
chasers, These are:
a. D. L. Glaze Company of San Francisco,
(defendant’s Exhibit “H’’)
b. National University of San Diego,
(defendant’s Exhibit “D”)
38
8. Two (2) of the purchasers listed in defendant’s
Affidavits are actual, retail purchasers of Volvo auto-
mobiles:
a. First Federal Savings & Loan of Santa Mon-
ica, twelve (12) cars (defendant’s Exhibit
6s“ A”)
b. Prestige Optics of San Francisco, ten (10)
cars (defendant’s Exhibit “H’’)
The above facts are true and correct to the best of
my information and knowledge.
Dated: October 7, 1976.
/s/ Randall D. Morrison
Randall D. Morrison
Subscribed and sworn to before me on this 7th day
of October, 1976.
/s8/ Linda M. Caputa
Linda M. Caputa, Notary Public
in and for said State and County.
(Seal) Linda M. Coputa
Notary Public—California
City and County of San Francisco
My Commission Expires June 7,
1980
39
Exhibit A
1969 1970 1971 1972 1973 1974
Annex Motors $550 $460 $500 $675 $700 $ 850
Autocar Europe 500 481 725 ° °
Daly City Datsun-Volvo ° ° 550 * ° ad
Dewey Eastman 550 575 ° 675 © ad
Hanford Motors e 500 e ® e °
Ken Keegan Imported Cars 550 500 500 675 650 800
Ken Keegan Volvo ° ° ° a 650 800
Kendall Motor Co. ° 475 500 ad ° ad
Park Motors © 600 e ° e °
Peninsula European ° 450 475 675 650 850
Premier Volvo 550 475 475 e ° 900
Royal Motor Sales 550 480 500 675 750 900
Royal Volvo © 500 550 675 650 800
Seandia Motors * -450 550 675 #750 850
Ed Barwick Plymouth ° 400 530 675 e 800
Carlson Motors 550 480 530 ° ad ad
Ray Cokeley Motors 550 400 600 .$75 750 1000
Continental Volvo | 550 500 550 675 - 750 850
Hayward Auto Imports 550 480 500 675 750 914
John’s Motor Sales a 500 530 ° 750 °
Lester G. Lawrence ° 550 550 675 750 900
H. W. McKevitt Co. 550 500 550 675 750 900
Walt Martin Motors 550 500 530 ° ° e
Ogden Imports ° 500 530 675 600 800
Pierotti Motors 550 450 530 675 750 850
Torvick Sales Company 550 400 550 675 e 900
Turner Motors S 550 600 ° 750 950
Winter Motors Company ° 600 600 ° 750 900
DEALER AVERAGE GROSS PROFIT OBJECTIVE ON
NEW VOLVO RETAIL SALES
*Information not available.
40
CERTIFICATE OF SERVICE BY Mat.
I, LINDA M. CAPUTA, declare under penalty of
perjury:
That I am a citizen of the U.S.A., over the age of
18 years and not a party to or interested in the within
entitled cause; that I am an employee of Cartwright,
Saroyan, Martin & Sucherman, Inc., and my business
address is 160 Sansome Street, Suite 900, San Fran-
cisco, California 94104.
That I served by mail the following document:
SUPPLEMENTAL BRIEF IN SUPPORT OF
PLAINTIFF’S MOTION TO REMAND
in the following manner:
I enclosed a true copy of said document in an
envelope, addressed as follows:
PAUL, HASTINGS & JANOFSKY
DANIEL H. WILLIAMS, ITI, ESQ.
ROBERT S. SPAN, ESQ.
595 South Flower Street, 22nd FI.
Los Angeles, California 90071
I sealed said envelope and deposited it so sealed
and addressed on the 7th day of October, 1976, with
the said document enclosed therein and with the
postage thereon fully prepaid, in the United States
Post Office, in the City and County of San Francisco,
State of California.
Executed on October 7, 1976, in San Francisco,
California.
/s/ Linda M, Caputa
Linda M. Caputa
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.