Nunez v. Alibaba Group (U.S.), Inc.

• Court: District Court, S.D. California
• Decided: September 4, 2024
• Docket: 3:24-cv-00090
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ERIC NUNEZ, Case No.: 3:24-cv-090-JES -SBC

12 Plaintiff, ORDER: 13 v. (1) GRANTING MOTION TO 14 ALIBABA GROUP (U.S.), INC., et al., REMAND; and 15 Defendants. (2) DENYING AS MOOT MOTIONS 16 TO DISMISS 17 [ECF Nos. 5, 6, 10] 18

19 Before the Court are several motions filed by the parties: (1) Defendant Ali- 20 Express E-Commerce One Ptd. Ltd.’s motion to dismiss (ECF No. 5); (2) Defendant 21 Alibaba Group (U.S.), Inc.’s motion to dismiss (ECF No. 6); and (3) Plaintiff Eric 22 Nunez’s motion to remand (ECF No. 10). The respective parties filed oppositions and 23 replies to these motions. ECF Nos. 17, 19, 22-25. On March 6, 2024, the Court held a 24 hearing on the motion to remand, and vacated the hearing on the motions to dismiss. ECF 25 No. 20. After due consideration and for the reasons discussed below, the motion to 26 remand is GRANTED. Because the Court remands the case, the Court DENIES AS 27 MOOT Defendants’ motions to dismiss. 28 1 I. BACKGROUND 2 On September 23, 2020, Plaintiff Eric Nunez (“Nunez”) purchased a CHICWAY 3 s7 four-wheel electric skateboard from Defendants online. ECF No. 1-3 at ¶ 8. 4 Subsequently, on December 10, 2020, Plaintiff alleges that he was severely injured while 5 riding the skateboard when it hit a drive way bump that caused a wheel to fall off the 6 skateboard. Id. at ¶ 8. The incident caused Plaintiff to lose his balance and fall, resulting 7 in “severe injuries, including a broken clavicle.” Id. Based on this incident, Plaintiff 8 brings causes of action for: 1) negligent product liability; 2) design and manufacturing 9 defect; 3) strict product liability for failure to warn of dangerous condition; 4) breach of 10 implied warranty; and 5) breach of express warranty. Id. at ¶¶ 9-48. 11 The case was removed from state court to this Court on January 12, 2024. ECF No. 12 1. In the Notice of Removal, Defendants assert that there is subject matter jurisdiction 13 over the case through diversity jurisdiction. Id. at ¶¶ 11-42. Shortly after, Defendants 14 filed two motions to dismiss, and Plaintiff filed a motion to remand the case to state 15 court. ECF Nos. 5, 6, 10. 16 II. Motion to Remand 17 A. Legal Standard 18 Federal courts are courts of limited jurisdiction. Gunn v. Minton, 568 U.S. 251, 256 19 (2013). In a case originally brought in state court, a defendant may remove the action to 20 federal court if there is federal subject matter jurisdiction. 28 U.S.C. § 1441(a) (“Except 21 as otherwise expressly provided by Act of Congress, any civil action brought in a State 22 court of which the district courts of the United States have original jurisdiction, may be 23 removed by the defendant or the defendants, to the district court of the United States for 24 the district and division embracing the place where such action is pending.”). 25 “Consistent with the limited jurisdiction of federal courts, the removal statute is 26 strictly construed against removal jurisdiction.” Audo v. Ford Motor Co., 2018 WL 27 3323244 *1 (S.D. Cal. July, 2018) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 28 1992)). Therefore, the “burden of establishing that removal is proper” always lies with 1 the defendant. Gaus, 980 F.2d at 566. If there is any doubt as to the propriety of removal, 2 the court shall reject federal subject matter jurisdiction. Id.; see also Hansen v. Grp. 3 Health Coop., 902 F.3d 1051, 1057 (9th Cir. 2018) (“If a district court determines at any 4 time that less than a preponderance of the evidence supports the right of removal, it must 5 remand the action to the state court.”). 6 Federal subject matter jurisdiction may arise based on federal question or diversity 7 jurisdiction. 28 U.S.C. § 1331, 1332(a). In the notice of removal, Defendants state that 8 this court has federal subject matter jurisdiction over the matter based on diversity 9 jurisdiction. ECF No. 1 ¶ 11. The statute requires complete diversity between plaintiffs 10 and defendants. Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009). An 11 individual is deemed to be a citizen of the state in which he or she is domiciled. Kanter v. 12 Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). A limited liability corporation is 13 “a citizen of every state of which its owners/members are citizens.” Johnson v. Columbia 14 Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Further, to satisfy § 1332, 15 the matter in controversy must exceed the sum or value of $75,000, exclusive of interests 16 and costs. 28 U.S.C. § 1332(a). 17 Under 28 U.S.C. § 1446, a defendant removing a civil action from state to federal 18 district court must include “a short and plain statement of the grounds for removal,” 19 including as to the amount in controversy being met. 28 U.S.C. § 1446(a). Where a 20 plaintiff challenges the defendant’s allegation of jurisdiction under § 1332(a), § 1446 21 provides that “removal of the action is proper on the basis of an amount in controversy 22 asserted [in the notice of removal] if the district court finds, by the preponderance of the 23 evidence, that the amount in controversy exceeds the amount specified in section 24 1332(a).” 28 U.S.C. § 1446(c)(2)(B); see Dart Cherokee Basin Operating Co., LLC v. 25 Owens, 574 U.S. 81, 88 (2014). In Dart, the Supreme Court recognized that this 26 provision was added to § 1446 as part of the Federal Courts Jurisdiction and Venue 27 Clarification Act of 2011 to “clarify[] the procedure in order when a defendant’s 28 assertion of the amount in controversy is challenged. In such a case, both sides submit 1 proof and the court decides, by a preponderance of the evidence, whether the amount-in- 2 controversy requirement has been satisfied.” Id. Even though Dart arose under the Class 3 Action Fairness Act (“CAFA”), other courts within this circuit have applied this 4 framework to non-CAFA cases. See De Villing v. Sabert Corp., No. 5 EDCV182201JGBKKX, 2018 WL 6570868, at *2 (C.D. Cal. Dec. 11, 2018) (noting that 6 Dart interpreted 28 U.S.C.§ 1446 which applies equally to CAFA and general diversity 7 jurisdiction cases and collecting cases applying Dart to non-CAFA cases). 8 Thus, the evidence that the Court may consider here includes “evidence outside the 9 complaint, including affidavits or declarations, or other ‘summary-judgment-type 10 evidence relevant to the amount in controversy at the time of removal.’” Ibarra v. 11 Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citing Singer v. State 12 Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). Removal jurisdiction 13 therefore cannot rely on “mere speculation and conjecture, with unreasonable 14 assumptions.” Id. 15 B. Discussion 16 On the issue of remand, the parties dispute both whether the amount in controversy 17 of $75,000 is met and whether complete diversity is met. 18 i. Amount in Controversy 19 Because the parties dispute whether the amount in controversy is met, “both sides 20 submit proof and the court decides, by a preponderance of the evidence, whether the 21 amount-in-controversy requirement has been satisfied.” Dart, 574 U.S. at 88. Thus, 22 before reaching the issue of whether Defendants have met their burden of showing that 23 the amount in controversy is met, the Court will initially discuss the evidence submitted 24 by both parties and what evidence it will consider in ruling on the remand motion. The 25 evidence that the parties submit is as follows: 26 27 28 1 Plaintiff’s Evidence in his moving motion: In his initial motion, Plaintiff 2 cited to its interrogatory responses dated January 9, 20241 that detail the 3 damages as follows: past medical expenses for $16,009.04; future medical 4 expenses of $0; property damage of $1,736.66; past loss earnings of 5 $18,456.00; and future loss earnings of $0—for a total of $36,201.70. ECF 6 No. 10-1 at ¶ 7; id. Ex. E at 3-5. The Court notes that while Plaintiff 7 characterizes future medical expenses and future earning loss at $0, the 8 interrogatory responses actually ask whether “any health care provider has 9 advised [Plaintiff] that he may require future or additional treatment for any 10 injuries that you attribute to the incident” and if he will “lose income in the 11 future as a result of the incident,” and Plaintiff answered not at this time to 12 both questions. Id. Ex. D at 4; Ex. E at 4-5. Plaintiff acknowledged that this 13 figure does not include any amounts related to pain and suffering, but that it 14 is “guesswork” whether a jury would award such amounts and it is too 15 speculative for Defendants to rely on for the purpose of a motion to remand. 16 ECF No. 10 at 12. 17 18 Defendants’ Evidence in opposition: Defendants in turn cite to a settlement 19 demand letter dated May 22, 2023, where Plaintiff makes a request to settle 20 in the amount of $225,000. ECF No. 17-1, Ex 1. The settlement letter recites 21 the same damages amounts as from the interrogatories for current medical 22 expense and loss wages, but also stated the following: 23 “More significantly, Mr. Nunez suffered physical pain, mental 24 suffering, disfigurement, physical impairment, inconvenience, 25 anxiety, humiliation, emotional distress, and overall loss of enjoyment of life. 26

27 1 These responses were dated 3 days before the Notice of Remand was filed in this Court on January 12, 28 1 The time following the injury became very stressful for Mr. Nunez. He was out of work for several months. He stayed with his sister so 2 that she could help him as he healed but had to sleep on her couch. 3 His sleeping position was unorthodox as he was on a couch and also had to prop his arm up on a pillow to accommodate his right shoulder 4 and broken clavicle. As a result he developed back pain during that 5 period of time. 6 Taking care of himself was very difficult as his dominant arm was 7 taken away from him as it healed. He was showering with a shopping bag around his neck as he was instructed by the doctors to avoid 8 getting the injury area and sling wet. 9 Prior to this injury incident Mr. Nunez had worked as an electronic 10 technician for 30 years for companies including Qualcomm, AA Electronics, General Atomics, and of course at the time of the injury 11 he was working for Centurum. After missing three months of work, 12 when Mr. Nunez returned to work he was “coincidentally” laid off. The lay off came at a very bad time as he would lose his health 13 insurance through his employer. Mr. Nunez had a difficult time 14 getting follow up medical treatment after losing his health insurance. 15 Living in Encinitas, California Mr. Nunez enjoyed spending his 16 leisure time outdoors and spends his time at the beach, bamboo stick twirling on the beach, tiding his skateboards around the beach areas , 17 and taking beach walks. Following the injury he was cautious and 18 avoided nearly all activity and was isolated. 19 As evidenced in the medical records, the pain in the shoulder area lingered for more than a year in a half. Mr. Nunez also has a 20 significant scar where the surgery was performed on his clavicle.” 21 In addition, Defendants argue the complaint also includes various allegations 22 regarding the severity of Plaintiff’s pain and suffering. See ECF No. 1-3 at 23 ¶ s8 (“As a result of the ensuing fall, Plaintiff suffered severe injuries, 24 including a broken clavicle, for which Plaintiff continues to seek medical 25 treatment.”); ¶ 44 (“As a direct result of the conduct of the Defendants, 26 Plaintiff has suffered and will continue to suffer serious and permanent 27 physical, and emotional injuries, has expended and will continue to expend 28 1 large sums of money for medical care and treatment, and have otherwise 2 been physically injured.”). 3 4 Plaintiff’s Evidence in his reply motion: In his reply motion, Plaintiff 5 submits a declaration from his counsel regarding a new settlement offer that 6 was sent to Defendants on February 22, 2024,2 which now demands 7 $34,465.04 in special damages (calculated from the medical expenses and 8 lost wage numbers recited above) and an additional $34,465.04 in general 9 damages, for a total demand of $68,930.08. ECF No. 19, Ex. J. 10 * * * 11 “A settlement letter is relevant evidence of the amount in controversy if it appears 12 to reflect a reasonable estimate of the plaintiff’s claim.” Cohn v. Petsmart, Inc., 281 F.3d 13 837, 840 (9th Cir. 2002). While the settlement offer is not itself determinative, it may be 14 considered by the Court. Id. Courts within this circuit interpreting Cohn have focused on 15 whether the settlement demand reflects “a reasonable estimate” in determining how much 16 weight, if any, to give to the settlement demand. See Owens v. Westwood Coll. Inc., No. 17 CV13-4334-CAS-FFMX, 2013 WL 4083624, at *4 (C.D. Cal. Aug. 12, 2013) (rejecting 18 consideration of settlement demands with “an arbitrary settlement figure, with no 19 showing of how that figure was calculated”). In determining what constitutes a 20 “reasonable estimate,” courts consider whether the demand is supported by an “itemized 21 accounting of damages.” Maranon v. Blazin Wings, Inc., No. 217CV02704GMNPAL, 22 2018 WL 11444971, at *2 (D. Nev. Sept. 24, 2018). 23 Where a plaintiff takes subsequent steps to disavow a damages estimate however, 24 “the estimate, standing alone, is insufficient to show that the requisite amount has been 25 met.” Vitale v. Celadon Trucking Servs., Inc., No. CV16-8535 PSG (GJSX), 2017 WL 26

27 2 Notably, this settlement demand was sent one day after Defendants’ filed their opposition to this 28 1 626356, at *3-4 (C.D. Cal. Feb. 15, 2017). Courts so holding have relied on the statement 2 in Cohn that the plaintiff there “could have argued that the demand was inflated and not 3 an honest assessment of damages, but he made no attempt to disavow his letter or offer 4 contrary evidence.” Cohn, 281 F.3d at 840. Thus, courts within this circuit have found 5 disavowals of settlement demands as evidence that the demand does not reflect a 6 “reasonable estimate” and have given little to no weight to such demands. See, e.g., 7 Walker v. CorePower Yoga, LLC, No. 12CV0004-WHQ-DHB, 2013 WL 2338675, *7 8 (S.D. Cal. May 28, 2013) (plaintiff’s disavowal of demand meant demand did not “reflect 9 a reasonable estimate of [] claim, and it is insufficient to establish” amount); Graybill v. 10 Khudaverdian, No. SACV1501627CJCJCGX, 2015 WL 7295378, at *1 (C.D. Cal. Nov. 11 17, 2015) (disavowal from plaintiff regarding settlement amount as inflated was “relevant 12 to the determination of whether a demand is a credible estimate of the amount in 13 controversy”); Leon v. Gordon Trucking, Inc., 76 F. Supp. 3d 1055, 1071–72 (C.D. Cal. 14 2014) (finding demand “facially insufficient” in light of disavowal and defendant’s 15 failure to adduce further evidence that it was reasonable or accurate); Briest v. Knot 16 Standard LLC, No. CV2002519CJCPVCX, 2020 WL 2572457, at *3 (C.D. Cal. May 20, 17 2020) (rejecting demand as “reasonable estimate” where plaintiff disavowed amount and 18 finding demand to not be “relevant evidence of the amount in controversy”). 19 With this background in mind, the Court turns to the evidence in this case. First, 20 there are two separate settlement demands that have been mentioned in the briefing—the 21 original settlement demand dated May 22, 2023, referenced in the opposition motion and 22 the settlement demand dated February 22, 2024, referenced in the reply motion. With 23 regard to the settlement demand dated February 22, 2024, the Court exercises its 24 discretion not to consider the new evidence that was only submitted in reply. See Atigeo 25 LLC v. Offshore Ltd., D., No. C13-1694-JLR, 2014 WL 239096, at *8 (W.D. Wash. Jan. 26 22, 2014) (“[W]hen new evidence or issues are raised on reply, courts have discretion to 27 either strike the reply declarations and portions of the reply brief that present new 28 1 material or consider the new material after affording the nonmoving party an opportunity 2 to respond.”). 3 With regard to the settlement demand letter dated May 22, 2023, Plaintiff has now 4 disavowed this demand, stating that “Plaintiffs settlement demand of $225,000 does not 5 reflect Plaintiffs assessment of the value of the case. Rather, the settlement demand was 6 intended to initiate settlement discussions between the parties in an attempt to resolve the 7 litigation. The settlement demand identifies the special damages incurred by Plaintiff Eric 8 Nunez in the amount of $34,465.04. The settlement demand thereafter demands payment 9 of $225,000. The settlement demand was never intended to reflect a reasonable estimate 10 of the value of the case.” ECF No. 19-1 at ¶ 2. The Court finds that this constitutes a clear 11 disavowal of this settlement demand. While the demand does quantify the source of the 12 special damages with actual calculations and includes a laundry list of other alleged 13 sources of pain and suffering damages, it includes no explanation whatsoever of how 14 those other general damages should be valued at the remaining $190,534.96 demanded. 15 Without any further explanation, the Court cannot find that this settlement demand 16 “standing alone” constitutes a “reasonable estimate” under Cohn, in light of Plaintiff’s 17 disavowal. Thus, the Court does not grant it great weight in the remand calculation. 18 In its opposition and during oral argument, Defendants cited to cases standing for 19 the proposition that the amount in controversy should be determined by the operative 20 complaint at the time of removal and therefore, post-remand declarations or stipulations 21 that limit the requested damages cannot divest the Court of jurisdiction. ECF No. 17 at 9 22 (citing cases). At first glance, this proposition might stand to conflict with the cases cited 23 above that permit a Plaintiff to expressly disavow a settlement demand, even after a case 24 has been removed and Plaintiff only does so in response to a motion to remand. However, 25 such disavowals only effect the Court’s consideration of one piece of evidence—the 26 settlement demand. It does not force the Court to accept a post-remand stipulation by the 27 Plaintiff limiting the damages he seeks, that might be made purposefully to avoid federal 28 court jurisdiction. In other words, while a Court may decline to give much weight to a 1 settlement demand after Plaintiff’s disavowal, it still remains free to consider other 2 evidence and arguments that Defendants may raise and Defendants are not prohibited 3 from doing so. 4 Here however, the issue for Defendants is that they present the Court with little 5 other evidence other than the May 22, 2023, settlement demand to substantiate that the 6 amount in controversy exceeds $75,000. The parties are not in dispute with regard with 7 what the special damages are, and that amount is well-supported by itemized calculations. 8 To account for the remaining $40,345.96, Defendants point to statements made in the 9 settlement demand and complaint generally speaking to Plaintiff’s pain and suffering. 10 While no one can realistically claim that no value should be assigned to pain and 11 suffering, the problem facing the Court is that no party has presented any evidence on 12 how the Court should value it and on a motion to remand, the burden of establishing that 13 removal is proper lies with Defendants. Gaus, 980 F.2d at 566. Establishing the amount 14 in controversy cannot rest on “mere speculation and conjecture.” Ibarra, 775 F.3d at 15 1197; see also Lopez v. Walmart, Inc., No. 220CV01228GMNVCF, 2021 WL 3566414, 16 at *3 (D. Nev. Mar. 22, 2021) (finding amount in controversy not met where Defendant 17 only proved $48,454.13 in medical expenses but failed to “provide specific calculations 18 for the other forms of requested relief—attorney’s fees, pain and suffering, and punitive 19 damages”). This, coupled with the “strong presumption” against removal jurisdiction, 20 requires the Court to find here that Defendants have not met their burden to establish the 21 jurisdictional amount. Gaus, 980 F.2d at 566. Thus, the motion to remand is GRANTED 22 on this ground. 23 Having found that remand must be granted because the amount in controversy has 24 not been sufficiently established, the Court declines to reach the other issue raised in 25 Plaintiff’s motion to support remand—whether complete diversity is present because 26 Defendant Alibaba Group (U.S.), Inc. was fraudently joined. 27 // 28 // 1 III. REQUEST FOR FEES 2 In Plaintiff’s motion to remand, he also requests that the Court grant him 3 reasonable attorneys’ fees that have been incurred as a result of the removal. ECF No. 10 4 at 17-18. In total, Plaintiff seeks $11,375.00 in fees. 5 28 U.S.C. § 1447(c) provides that “[a]n order remanding the case may require 6 payment of just costs and any actual expenses, including attorney fees, incurred as a 7 result of the removal.” However, absent unusual circumstances, a court may award costs 8 and attorneys’ fees under this section “only where the removing party lacked an 9 objectively reasonable basis for seeking removal.” Martin v. Franklin Capital Corp., 546 10 U.S. 132, 141 (2005). Thus, where an objectively reasonable basis for removal existed at 11 the time of removal, attorneys’ fees may not be granted. See Lussier v. Dollar Tree 12 Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008) (removal will not be deemed objectively 13 unreasonable “solely because the removing party’s arguments lack merit, or else 14 attorney’s fees would always be awarded whenever remand is granted”). 15 The Court does not find such objectively unreasonable basis for removal here. At 16 that time, Defendants at the very least had a settlement demand supporting its belief that 17 the amount in controversy was met and it was not until after removal that Plaintiff then 18 disavowed the demand. Further, while the Court finds that Defendants failed to meet their 19 burden to establish the amount in controversy, it was not objectively unreasonable to 20 believe that such an amount could potentially be met based on the allegations. See De 21 Paredes v. Walmart Inc., No. 220CV08297RGKAFM, 2020 WL 6799074, at *3 (C.D. 22 Cal. Nov. 17, 2020) (denying attorneys’ fees where even though the Court ultimately 23 disagreed with the defendant’s valuation, the basis for seeking removal was still 24 reasonable). 25 IV. MOTIONS TO DISMISS 26 Also pending before the Court are Defendant Ali-Express E-Commerce One Ptd. 27 Ltd.’s motion to dismiss and Defendant Alibaba Group (U.S.), Inc.’s motion to dismiss. 28 ECF Nos. 5, 6. Because the Court grants Plaintiff’s motion to remand and finds that 1 Defendants have not sufficiently shown that there is federal subject matter jurisdiction 2 || over the case, the Court reserves these motions for decision in front of the court with 3 || proper jurisdiction. Accordingly, both motions are DENIED AS MOOT. 4 Vv. CONCLUSION 5 After due consideration and for the reasons discussed above, the Court GRANTS 6 || Plaintiff's Motion to Remand and DENIES AS MOOT Defendants’ motions to dismiss. 7 IT IS SO ORDERED. 8 9 Dated: September 4, 2024 “| ie SS smmeo ot 10 Honorable James E. Simmons Jr. il United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28