Darren Clevenger v. Welch Foods Inc.

• Court: District Court, C.D. California
• Decided: March 7, 2023
• Docket: 8:23-cv-00127
• Status: Unknown

Opinion

Case 8:23-cv-00127-CJC-JDE Document 21 Filed 03/07/23 Page 1 of 11 Page ID #:240

1 JS-6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SOUTHERN DIVISION 11 ) 12 DARREN CLEVENGER and DAVID ) Case No.: SACV 23-00127-CJC (JDEx) ) 13 BLOOM, individually and on behalf of ) themselves and all others similarly ) 14 situated, ) ORDER GRANTING PLAINTIFFS’ ) MOTION TO REMAND [Dkt. 14] 15 ) Plaintiffs, ) 16 ) ) 17 v. ) ) 18 WELCH FOODS INC., PIM BRANDS, ) ) 19 INC., and DOES 1 through 25, inclusive, ) ) 20 ) Defendants. ) 21 ) 22 23 I. INTRODUCTION 24 25 In this putative class action lawsuit, Plaintiffs Darren Clevenger and David Bloom 26 allege that Defendants Welch Foods Inc., PIM Brands, Inc., and unnamed Does include 27 nonfunctional “slack-fill” in boxes of their Welch’s Reduced Sugar Fruit Snacks, Fruit 28 ‘n Yogurt Snacks, and certain boxes of Welch’s Fruit Snacks in violation of California’s

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1 Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200–17210. (See Dkt. 2 1 [Notice of Removal].) Now before the Court is Plaintiffs’ motion to remand the case. 3 (Dkt. 14 [Notice of Motion and Motion to Remand Case to Orange County Superior 4 Court, hereinafter “Mot.”].) For the following reasons, Plaintiffs’ motion is 5 GRANTED.1 6 7 II. BACKGROUND 8 9 The instant action is related to a case currently pending before this Court, 10 Clevenger v. Welch Foods Inc. et al., SACV 20-01859-CJC (JDEx), which alleges 11 substantially similar claims. In that case, Plaintiffs filed a complaint in state court 12 alleging claims under the UCL and the Consumer Legal Remedies Act (“CLRA”), Cal. 13 Civ. Code §§ 1750–1784. Plaintiffs sought restitution and an injunction under the UCL, 14 and restitution and money damages under the CLRA. Defendants removed the case to 15 this Court pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. 16 §§ 1332(d)(2), (5). In December 2022, the Court granted Defendants’ Motion for 17 Judgment on the Pleadings as to Plaintiffs’ UCL claim. Pursuant to Sonner v. Premier 18 Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), the Court lacked equitable jurisdiction 19 over Plaintiffs’ UCL claim for restitution because Plaintiffs had an adequate remedy at 20 law in the form of money damages under the CLRA. And because the Ninth Circuit 21 stated in Guzman v. Polaris Indus. Inc., 49 F.4th 1308, 1314 (9th Cir. 2022), that 22 dismissal under Sonner should be without prejudice to the claims being brought in state 23 court, the Court dismissed Plaintiffs’ UCL claim “without leave to amend but without 24 prejudice to Plaintiffs bringing the claims in state court.” Clevenger, No. SACV 20- 25 01859-CJC, at 13 (C.D. Cal. Dec. 13, 2022). 26 27 1 Having read and considered the papers presented by the parties, the Court finds this matter appropriate 28 for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for March 13, 2023, at 1:30 p.m. is hereby vacated and off calendar.

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1 In response to the Court’s order, Plaintiffs filed the instant action in the Orange 2 County Superior Court, seeking restitution and injunctive relief under the UCL. (See 3 Dkt. 1 [Notice of Removal].) Defendants again removed the case to this Court under 4 CAFA. (See id.) Shortly after removal, Defendants filed a motion to dismiss (which 5 remains pending), and Plaintiffs filed the instant motion to remand. 6 7 III. LEGAL STANDARD 8 9 A civil action brought in a state court, but over which a federal court may exercise 10 original jurisdiction, may be removed by the defendant to a federal district court. See 28 11 U.S.C. § 1441(a). The burden of establishing subject matter jurisdiction falls on the 12 defendant, and the removal statute is strictly construed against removal jurisdiction. See 13 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (“Federal jurisdiction must be 14 rejected if there is any doubt as to the right of removal in the first instance.”). 15 16 Under CAFA, however, a district court has diversity jurisdiction over any class 17 action involving at least 100 class members in which there is minimal diversity—that is, 18 any one plaintiff is a citizen of a different state than any one defendant—and the amount 19 in controversy exceeds five million dollars. See 28 U.S.C. §§ 1332(d)(2), (5). There is 20 no anti-removal presumption in cases removed pursuant to CAFA, see Dart Cherokee 21 Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014), but the proponent of 22 removal still has the burden of establishing that the action is removable. See Abrego v. 23 Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006) (holding that “CAFA did not shift to 24 the plaintiff the burden of establishing that there is no removal jurisdiction in federal 25 court”). 26 // 27 // 28 //

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1 IV. DISCUSSION 2 3 Plaintiffs move to remand the case based on (1) a lack of subject matter 4 jurisdiction and (2) the Court’s prior dismissal of their UCL claim for lack of equitable 5 jurisdiction. (See Mot. at 8–15.) They also seek an award of attorneys’ fees if the Court 6 remands under Section 1447(c). (See id. at 16–18.) Defendants argue that there is no 7 basis for remand under Section 1447(c) and that the Court should not remand on 8 abstention grounds because doing so “would create a massive judicial exception to 9 CAFA.” (See Dkt. 17 [Opposition to Plaintiffs’ Motion to Remand, hereinafter “Opp.”] 10 at 15, 19–23.) 11 12 A. Subject Matter Jurisdiction 13 14 Plaintiffs assert that the Court lacks subject matter jurisdiction because CAFA’s 15 five-million-dollar amount in controversy requirement is not met. “[T]he amount in 16 controversy is simply an estimate of the total amount in dispute, not a prospective 17 assessment of [the] defendant’s liability.” Lewis v. Verizon Commc’ns, Inc., 627 F.3d 18 395, 400 (9th Cir. 2010). “[I]n assessing the amount in controversy, a court must 19 ‘assume that the allegations of the complaint are true and assume that a jury will return a 20 verdict for the plaintiff on all claims made in the complaint.’” Campbell v. Vitran 21 Express, Inc., 471 F. App’x 646, 648 (9th Cir. 2012) (quoting Kenneth Rothschild Tr. v. 22 Morgan Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D. Cal. 2002)). “The 23 ultimate inquiry is what amount is put ‘in controversy’ by the plaintiff’s complaint, not 24 what a defendant will actually owe.” Muniz v. Pilot Travel Ctrs. LLC, 2007 WL 25 1302504, at *3 (E.D. Cal. May 1, 2007). 26 27 While the Complaint does not allege a specific amount in controversy, Plaintiffs do 28 not appear to dispute that they seek damages in excess of five million dollars. Instead,

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1 they argue that the amount in controversy requirement is not met because the Court’s 2 prior dismissal of the UCL claim means the current UCL claims are “nonjusticiable” in 3 federal court. (Mot. at 15.) Plaintiffs assert that because the Court cannot award 4 recovery on the UCL claims due to a lack of equitable jurisdiction, “the amount Plaintiffs 5 can recover in federal court for those claims is zero.” (Id.) But whether or not Plaintiffs’ 6 claims are ultimately found to be justiciable in federal court does not affect the amount 7 that is placed in controversy by the Complaint. Plaintiffs’ Complaint facially places more 8 than five million dollars in controversy, and any extraneous factors or defenses that could 9 ultimately hamper this Court’s ability to grant the requested relief are not relevant to 10 determining the amount in controversy. See Campbell, 471 F. App’x at 648. 11 12 Because there are at least 100 putative class members, minimal diversity, and the 13 amount in controversy exceeds five million dollars, this Court has subject matter 14 jurisdiction under CAFA. See 28 U.S.C. §§ 1332(d)(2), (5). 15 16 B. 28 U.S.C. § 1447(c) 17 18 Defendants argue that because the Court has subject matter jurisdiction and there 19 has not been a defect in removal, remand is inappropriate under Section 1447(c). (See 20 Opp. at 15.) Section 1447(c) provides that “[a] motion to remand the case on the basis of 21 any defect other than lack of subject matter jurisdiction must be made within 30 days 22 after the filing of the notice of removal under section 1446(a).” 28 U.S.C. § 1447(c). 23 Because the Court has subject matter jurisdiction, the only basis for remand under 24 Section 1447(c) would be a defect in removal, and, as the Ninth Circuit has held, “[i]t is 25 relatively clear from context that ‘defect’ refers to a failure to comply with the statutory 26 requirements for removal provided in 28 U.S.C. §§ 1441–1453.” Kamm v. ITEX Corp., 27 568 F.3d 752, 755 (9th Cir. 2009). Defendants here complied with the statutory 28 requirements of removal. Therefore, remand under Section 1447(c) is inappropriate.

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1 2 But that does not mean the Court is without power to remand the case. Under 3 Ninth Circuit precedent, the significance of Section 1447(c) is simply that if remand is 4 based “on a ground enumerated in § 1447(c), [the Ninth Circuit] would lack jurisdiction 5 to review whether the district court’s application of that ground was correct.” Atl. Nat. 6 Tr. LLC v. Mt. Hawley Ins. Co., 621 F.3d 931, 935 (9th Cir. 2010). However, there are 7 circumstances under which remand is appropriate, despite the presence of subject matter 8 jurisdiction and lack of any removal defect. See Guthrie v. Transamerica Life Ins. Co., 9 561 F. Supp. 3d 869, 880 (N.D. Cal. 2021); see also Kamm, 568 F.3d at 756 (explaining 10 that while a forum selection clause “does not render removal ‘defective’” under 1447(c), 11 it is a valid ground for remand “similar to other grounds for not exercising jurisdiction 12 over a case, such as abstention in favor of state court jurisdiction . . . and related 13 abstention cases, or a refusal to exercise supplemental jurisdiction”). 14 15 C. Lack of Equitable Jurisdiction 16 17 Separate and apart from the question of subject matter jurisdiction, a court must 18 also determine whether it has equitable jurisdiction over a claim. See Schlesinger v. 19 Councilman, 420 U.S. 738, 753–54 (1975) (explaining that in addition to its “holding that 20 the District Court had subject-matter jurisdiction, assuming the requisite jurisdictional 21 amount,” “[t]here remains the question of equitable jurisdiction”); see also Guzman, 49 22 F.4th at 1314 (“Equitable jurisdiction is distinct from subject matter jurisdiction, although 23 both are required for a federal court to hear the merits of an equitable claim.”). While 24 subject matter jurisdiction deals with “whether the claim falls within the limited 25 jurisdiction conferred on the federal courts” by Congress, equitable jurisdiction refers to a 26 court’s power to entertain claims and award remedies that are equitable in nature. See id. 27 at 754 (explaining that equitable jurisdiction is concerned with “whether consistently 28 with the principles governing equitable relief the court may exercise its remedial

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1 powers”); see also Yuba Consol. Gold Fields v. Kilkeary, 206 F.2d 884, 887 (9th Cir. 2 1953) (“Reference to ‘equity jurisdiction’ does not relate to the power of the court to hear 3 and determine a controversy but relates to whether it ought to assume the jurisdiction and 4 decide the cause.”). 5 6 The purposes of CAFA, concerns of federalism, and the interests of justice would 7 best be served by remanding this case due to a lack of equitable jurisdiction. While 8 generally “[f]ederal courts have a strict duty to exercise the jurisdiction that is conferred 9 upon them by Congress,” they also “have the power to dismiss or remand cases based on 10 abstention principles . . . where the relief being sought is equitable or otherwise 11 discretionary.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). “Federal 12 courts abstain out of deference to the paramount interests of another sovereign, and the 13 concern is with principles of comity and federalism.” Id. at 723. A court deciding 14 whether to exercise federal jurisdiction has a “duty” to take the role and authority of the 15 States into account and to consider “obligations of comity, and respect for the appropriate 16 balance between state and federal interests.” Id. 17 18 While the particular procedural posture before the Court has not been addressed 19 post-Guzman, under binding Supreme Court precedent, when a removed suit seeks relief 20 that is “beyond the equitable jurisdiction of the federal court” but “may be granted by the 21 state court,” “the suit is remanded to the state court.” Twist v. Prairie Oil & Gas Co., 274 22 U.S. 684, 690 (1927), cited with approval in Guthrie, 561 F. Supp. 3d at 878–79; see also 23 Cates v. Allen, 149 U.S. 451, 460–61 (1893) (explaining that although the court had 24 subject matter jurisdiction based on diversity, “the nature of the controversy was such 25 that the suit was not properly cognizable in the circuit court” and therefore the lower 26 “court was not compelled to dismiss the case, but might have remanded it”), cited with 27 approval in Guthrie, 561 F. Supp. 3d at 878–79. This clearly counsels in favor of 28 remanding the case. Further, the idea that the Ninth Circuit intended for Guzman to leave

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1 courts “stuck in a perpetual loop of (1) plaintiff’s re-filing in state court, followed by 2 (2) removal by defendants and then (3) dismissal by this Court” is supported by “[n]either 3 law nor logic.” Guthrie, 561 F. Supp. 3d at 880 (citing Machlan v. Procter & Gamble 4 Co., 77 F. Supp. 3d 954, 960 (N.D. Cal. 2015)). 5 6 To distinguish the Ninth Circuit’s holding in Guzman, Defendants argue that 7 [t]he Ninth Circuit’s statement regarding the dismissal of equitable claims 8 needing to be made “without prejudice” so that they could be adjudicated in 9 state court appears to be directed towards avoiding a potential situation where the defendant could rely on the federal court dismissal of the 10 equitable claims as res judicata in a subsequent state court action even 11 though the dismissal was merely jurisdictional. . . . [T]he scenario discussed in Guzman appears to presuppose a situation where subject matter 12 jurisdiction in federal court would no longer be appropriate, such as where 13 the plaintiff’s claims no longer meet CAFA’s requirements.

14 (Opp. at 18.) In other words, according to Defendants, the unspoken concern in Guzman 15 was one of res judicata, and the unspoken presumption was that the plaintiff could bring 16 his equitable claims in state court only if the claims were altered to ensure that they no 17 longer met CAFA’s jurisdictional requirements. (See id. at 22.) Where in the text of the 18 opinion Defendants glean these specific presumptions—which conveniently support their 19 argument—is unclear. 20

21 Moreover, Guzman stated that “[t]he possibility that federal and state courts would 22 reach different results on the same claim is itself a consequence of Sonner’s rule” 23 regarding a federal court’s exercise of equitable jurisdiction. Guzman, 49 at 1315 24 (emphasis added). The court went on to state that “where federal law bars us from 25 considering the merits of state-law claims, we also lack authority to prevent state courts 26 from doing so.” Id. Put simply, the Guzman court recognized that under Sonner “the 27 same claim” might have to be adjudicated in state and federal court—i.e., one claim over 28

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1 which the federal court has subject matter jurisdiction but not equitable jurisdiction, and 2 one claim over which the federal court has subject matter jurisdiction and equitable 3 jurisdiction. Thus, beyond simply being void of support for Defendants’ position that a 4 claim brought in state court would need to be modified so as to deprive the federal court 5 of subject matter jurisdiction, Guzman all but explicitly states the opposite.2 6 7 Defendants engage in a significant amount of handwringing over the idea that 8 remand would create “an end run around CAFA.” (Opp. at 20.) None of their arguments 9 in this regard are persuasive. First, Defendants are incorrect that remanding Plaintiffs’ 10 claim would “preclude all future defendants in California class actions brought under the 11 UCL meeting CAFA’s jurisdictional requirements from being able to remove those 12 claims to federal court,” (id. at 21), because when a plaintiff lacks an adequate remedy at 13 law, the federal court would have equitable jurisdiction over the claims. But even if 14 Defendants were correct, the alternative is that all future plaintiffs in California class 15 actions brought under the UCL meeting CAFA’s jurisdictional requirements who have an 16 adequate remedy at law would be precluded from ever having those claims heard by a 17 court of competent jurisdiction. As between the two scenarios, it is hard to believe that 18 permanently extinguishing what might otherwise be a valid claim is the preferable course 19 of action. Second, while Defendants argue that granting remand would “create a massive 20 exception to CAFA,” (id.), nothing in CAFA “has to do with equitable jurisdiction,” and 21 “Congress did not purport to alter traditional equitable rules” through its enactment. 22 Guthrie, 561 F. Supp. 3d at 879.3 23 2 As Plaintiffs point out, the Ninth Circuit considered this scenario during oral argument on Guzman. 24 (Dkt. 18 [Reply in Support of Notice of Motion and Motion to Remand Case, hereinafter “Reply”] at 4– 5.) The panel expressed deep skepticism regarding defense counsel’s assertion that CAFA could be 25 used to remove an otherwise viable state court claim to federal court and, as Judge Friedland put it, “kill those claims, permanently.” (Id. [citing Paul Guzman v. Polaris Industries, Inc., U.S. Ct. of Appeals for 26 the Ninth Cir., at 30:40–31:50, https://www.ca9.uscourts.gov/media/video/?20220509/21-55520/ (last 27 visited Mar. 6, 2023)]; see also id. [“[T]here has to be some way, if there is a claim that can only be litigated in state court, that CAFA doesn’t mean it’s gone.”].) 28 3 Defendants argue that Guthrie is “distinguishable because Plaintiffs are still pursuing their CLRA damages claims,” whereas there the plaintiff “did not possess a pending CLRA claim for damages based

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1 2 In sum, the Court will not adopt a formalistic approach that loses sight of the intent 3 of CAFA, the equities involved, or the principles of federalism, in favor of rewarding 4 forum shopping and jurisdictional gamesmanship. CAFA was enacted to curb perceived 5 abuses from the litigation of large multi-state class actions in state courts, because such 6 cases often have significant interstate commerce and national policy implications and 7 thus are more properly litigated in federal court. See S. Rep. No. 109-14, at 74 (2005). It 8 was not intended to encourage gamesmanship or to extinguish claims which could 9 properly be litigated only in state court. Remand is also consistent with the 10 commonsense notion that a defendant should not be able to avail itself of federal 11 jurisdiction only to turn around and argue that jurisdiction does not exist in order to have 12 the case dismissed. Defendants removed the Complaint knowing full-well that this Court 13 lacked jurisdiction to adjudicate the claims that Plaintiffs asserted. Far from 14 “undermin[ing] Congress’s intent behind CAFA,” (Opp. at 22), this attempt to 15 circumvent state-court judicial powers and prevent Plaintiffs’ UCL claim from ever being 16 heard is a clear misuse of CAFA.4 17 on the same underlying conduct underpinning his UCL claim” and therefore “had no avenue to redress 18 the underlying alleged harm if the claims were not remanded.” (Opp. at 20.) Defendants do not explain the relevance of this distinction, and the Court does not find it to be persuasive support for Defendants’ 19 argument that remand is improper. 20 4 Defendants cite numerous cases in support of their assertion that remand is inappropriate when the 21 district court lacks equitable jurisdiction, (see Opp. at 13–15), but none of those cases dealt with a procedural posture resembling the one currently before the Court—i.e., a motion to remand an equitable 22 claim removed under CAFA that was previously dismissed without prejudice to refiling it in state court due to a lack of equitable jurisdiction. Instead, they dealt with motions to remand only an equitable 23 claim while retaining non-equitable claims. See Kim v. Walmart, Inc., 2023 WL 196919, at *5–6 (C.D. 24 Cal. Jan. 13, 2023); Hooks v. Dignity Health, 2022 WL 17968833, at *8–9 (C.D. Cal. Dec. 27, 2022); Treinish v. iFit Inc., 2022 WL 5027083, at *8–12 (C.D. Cal. Oct. 3, 2022). “[P]iecemeal remand in 25 diversity cases is inappropriate,” Utne v. Home Depot U.S.A., Inc., 2022 WL 1443339, at *3 (N.D. Cal. May 6, 2022), and thus the courts in those cases declined to remand only the claims for equitable relief. 26 See Kim, 2023 WL 196919, at *3 (“Lack of equitable jurisdiction over some claims cannot serve as a 27 basis for remanding a case in its entirety.”); Travonne Hooks, 2022 WL 17968833, at *3 (denying remand but dismissing claims for equitable relief without prejudice pursuant to Guzman); Treinish, 2022 28 WL 5027083, at *4 (denying motion to remand brought solely under 1447(c) but stating that the parties “might be wise to stipulate to a remand and avoid briefing [a] motion to dismiss the UCL claim”). All

-10- Case 8:23-cv-00127-CJC-JDE Document 21 Filed 03/07/23 Page 11o0f11 Page ID #:250 21}V. CONCLUSION 4 For the foregoing reasons, Plaintiffs’ motion to remand is GRANTED.° The case 5 |}is hereby REMANDED to the Orange County Superior Court. 7 g DATED: — March 7, 2023 Ko fe 9 a 10 CORMAC J. CARNEY 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 || of those cases dealt with situations similar to the one previously confronted by this Court in the related 36 || when it dismissed—rather than remanded—Plaintiffs’ UCL claim without prejudice while retaining jurisdiction over the CLRA claim. oT Plaintiffs seek an award of attorneys’ fees if the Court remands under Section 1447(c). (See Mot. at 28 || 16-18.) Because the Court is remanding on other grounds, there is no basis for an award of fees. Accordingly, Plaintiffs’ request is DENIED. -11-