Onisko and Scholz, LLP v. B.S.D. Capital, Inc.

• Court: District Court, C.D. California
• Decided: June 24, 2025
• Docket: 2:24-cv-10314
• Status: Unknown

Opinion

1 O 2 JS-6 3

6 UNITED STATES DISTRICT COURT 7 CENTRAL DISTRICT OF CALIFORNIA 8

9 ONISKO AND SCHOLZ, LLP, on behalf of Case No.: 2:24-cv-10314-MEMF-SK themselves and all others similarly situated; 10 PAUL SCHOLZ, on behalf of themselves and ORDER GRANTING REQUEST FOR 11 all others similarly situated; CINDY JUDICIAL NOTICE [ECF NO. 12-2] and SCHOELEN, on behalf of themselves and all GRANTING MOTION TO REMAND [ECF 12 others similarly situated, NO. 12] Plaintiffs, 13 v. 14 B.S.D. CAPITAL, INC., doing business as 15 LENDISTRY, Defendant. 16 17 18

19 20 Before the Court is Plaintiffs’ Request for Judicial Notice and Motion to Remand and. ECF 21 Nos. 12, 12-2. For the reasons stated herein, the Court hereby GRANTS the Motion to Remand and 22 GRANTS the Request for Judicial Notice. 23 24 25 / / / 26 / / / 27 / / / 28 / / / 1 2 I. Factual Allegations1 3 Plaintiff Onisko and Schollz, LLP (“Onisko”) is a limited liability company located in Los 4 Angeles County. Compl. ¶ 6. Plaintiffs Paul Scholz and Cindy Schoelen (together with Onisko, 5 “Plaintiffs”) are natural persons residing in Los Angeles County. Id. ¶ 7. As part of the class action, 6 the putative class is defined as “[a]ll persons in California who submitted an application to Lendistry 7 for a grant from the Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief 8 Grant during the statute of limitations period,” and those who submitted on behalf of a business or 9 non-profit. Id. ¶¶ 224, 228. Defendant B.S.D. Capital, who does business under the name 10 “Lendistry,” has its principal place of business in Los Angeles County. Id. ¶ 8. 11 Lendistry entered into a contract on April 25, 2023, with the Governor’s Office to administer 12 the Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program 13 (“Grant Program”). Id. ¶¶ 12, 13. The Governor’s Office required that Lendistry follow all 14 applicable privacy laws in administering the Grant Program, including during the application 15 process. Id. ¶ 51. As part of the contract, Lendistry was required to establish a procedure for 16 applying to the Grant Program. Id. ¶ 15. Thus, Lendistry created a program website and application 17 verification process. Id. As part of the application process, an applicant is required to create an 18 account on the Lendistry app and verify their bank account. Id. ¶ 57. 19 Lendistry’s website allowed a third-party bank verification partner to intercept 20 communications between applicants and their financial institutions. Id. ¶ 62. This third-party partner 21 accessed the putative class members’ bank accounts without consent to repeatedly data mine their 22 accounts to monetize the obtained data in transactions with other third parties. Id. ¶ 63. 23 II. Procedural History 24 The Plaintiffs filed suit in the Los Angeles County Superior Court on October 28, 2024. See 25 Compl. The Plaintiffs bring sixteen claims under California law: (1) breach of contract; (2) 26 negligence; (3) violation of California’s Comprehensive Data Access and Fraud Act; (4) unlawful 27 1 The following factual background is derived from the allegations in Plaintiffs’ Complaint, ECF No. 1, Ex. A 28 (“Complaint” or “Compl.”), except where otherwise indicated. The Court makes no finding on the truth of 1 obtaining or use of personal information; (5) violation of California Penal Code Act section 631; (6) 2 violation of California Penal Code section 632; (7) violation of California Penal Code section 632.7; 3 (8) violation of California Penal Code section 638.51; (9) invasion of privacy: intrusion upon 4 seclusion; (10) invasion of privacy: publication of private information; (11) invasion of privacy: 5 breach of confidence; (12) violation of California Constitutional Invasion of Privacy; (13) civil 6 conspiracy; (14) violation of Cal. Civ. Code sections 1709-1711; (15) breach of implied contract; 7 and (16) violations of California Unfair Competition Law. See generally Compl. The Plaintiffs bring 8 this action on behalf of themselves and other similarly situated applicants of the Grant Program 9 using Lendistry’s website. Id. The Complaint lists no exact amount in controversy. 10 Lendistry removed the action to this Court on November 27, 2024, under the jurisdiction of 11 the Class Action Fairness Act (“CAFA”). See ECF No. 1 (“NOR”). The Plaintiffs filed the instant 12 Motion to Remand on December 6, 2024. ECF No. 12 (“Motion” or “Mot.”). With the Motion, they 13 also filed a Request for Judicial Notice. ECF No. 12-2 (“RJN”). Lendistry filed their opposition on 14 December 20, 2024. ECF No. 21 (“Opposition” or “Opp’n”). The Plaintiffs filed their reply on 15 December 27, 2024. ECF No. 22 (“Reply”). 16 On January 3, 2025, Lendistry filed a Motion to Dismiss. ECF No. 23. The Motion to 17 Dismiss is fully briefed. ECF Nos. 30 (opposition), 32 (reply). 18 On May 30, 2025, the Magistrate Judge assigned to this case granted the Plaintiffs’ Motion to 19 Compel Jurisdictional Discovery subject to a temporary protective order. ECF No. 40. The 20 protective order was issued on June 2, 2025. ECF No. 43. On June 6, 2025, the Plaintiffs filed a 21 supplement to the Motion. ECF No. 44 (“Supp.”). 22 On June 18, 2025, the Court deemed this matter appropriate for resolution without oral 23 argument and vacated the hearing. ECF No. 45; see also C.D. Cal. L.R. 7-15 24 III. Applicable Law 25 A. Class Action Fairness Act 26 “Federal courts are courts of limited jurisdiction. They possess only the power authorized by 27 Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) 28 (citations omitted). For class actions, district courts may exercise jurisdiction of the civil suit if the 1 (1) amount in controversy exceeds the sum or value of $5 million; (2) the parties are minimally 2 diverse; and (3) the number of all proposed plaintiff classes aggregated is 100 or more. See 28 3 U.S.C. §§ 1332(d)(2), (5)(b). A defendant may file to remove an action originally filed in state court 4 to federal court. See 28 U.S.C. § 1446. In order to file a removal, the case must meet the 5 aforementioned requirements. 6 When the complaint does not specify the amount in controversy, the party requesting 7 removal bears the burden of showing, by a preponderance of the evidence, that the aggregate amount 8 in controversy exceeds the sum of $5 million. Greene v. Harley-Davidson, Inc., 965 F.3d 767, 771– 9 72 (9th Cir. 2020). A defendant is permitted to make reasonable assumptions, founded on the 10 allegations of the complaint, that rely on a chain of reasoning in order to assess the amount in 11 controversy. Arias v. Residence Inn by Marriott, 936 F.3d 920, 925 (9th Cir. 2019). The reasoning 12 should not be “‘akin to conjecture, speculation, or stargazing.’” Ibarra v. Manheim Invs., Inc., 775 13 F.3d 1193, 1197 (9th Cir. 2015). Parties are allowed to submit evidence outside the complaint, such 14 as declarations or affidavits, at the time of removal to establish the amount in controversy. Id. When 15 plaintiffs, in their motion to remand, challenge defendant’s amount in controversy stated in their 16 removal, both sides submit proof, and the Court then decides where the preponderance lies. Id. 17 CAFA requires only minimum diversity of the parties. 28 U.S.C. § 1332(d)(2)(A). Minimum 18 diversity can be established when any member of the plaintiff class is a citizen of a state different 19 from any defendant. Id. The citizenship of the proposed class of plaintiffs is determined based on the 20 complaint by the date that the case became removable. Broadway Grill, Inc. v. Visa Inc., 856 F.3d 21 1274, 1277 (9th Cir. 2017). Defendants, as the moving party for removal, bear the burden of 22 establishing minimum diversity with at least one member of the plaintiff class. Sanchez v. 23 Ameriflight, LLC, 724 F. App’x 524, 526 (9th Cir. 2018). An allegation of minimum diversity may 24 be based on information and belief. Carolina Cas. Ins. Co. v. Team Equip., Inc., 741 F.3d 1082, 25 1087 (9th Cir. 2014). However, a defendant cannot “establish removal jurisdiction by mere 26 speculation and conjecture.” Ibarra, 775 F.3d at 1197. Jurisdictional allegations are sufficient in the 27 absence of factual or applied challenge. Ehrman v. Cox Commc’ns, Inc., 932 F.3d 1223, 1227 (9th 28 Cir. 2019). 1 REQUEST FOR JUDICIAL NOTICE (ECF NO. 12-2) 2 I. Applicable Law 3 A court may judicially notice facts that “(1) [are] generally known within the trial court’s 4 territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy 5 cannot reasonably be questioned.” Fed. R. Evid. 201(b). A court “must take judicial notice if a party 6 requests it and the court is supplied with the necessary information.” Fed. R. Evid. 201(c)(2). Once a 7 fact is judicially noticed, the court “must instruct the jury to accept the noticed fact as conclusive.” 8 Fed. R. Evid. 201(f). 9 II. Discussion 10 The Plaintiffs ask this Court to judicially notice Exhibit D and Appendix A. ECF Nos. 7, 10. 11 The Plaintiffs argue that these Exhibits are judicially noticeable because they are webpages or 12 documents on the California Secretary of State’s website (Appendix A) and public records or 13 government documents available from government websites (Exhibit D). See RJN. Lendistry does 14 not object to any of these Exhibits. 15 The Court takes judicial notice of Exhibit D and Appendix A and the facts contained therein. 16 The Court finds that it is undisputed that Exhibit D and Appendix A satisfy Federal Rule of 17 Evidence 201(b) and that they are public documents available through the websites of government 18 agencies. See City of Sausalito v. O’Neill, 386 F.3d 1186, 1223 n.2 (9th Cir. 2004) (recognizing that 19 courts may take judicial notice of a state agency record that is not subject to reasonable dispute). 20 Therefore, the Court will take notice of Exhibit D and Appendix A, including the facts therein. 21 As such, the Court GRANTS the Request for Judicial Notice. 22 MOTION TO REMAND (ECF NO. 12) 23 I. Discussion 24 Lendistry argues that removal is appropriate under CAFA. See generally NOR. The Plaintiffs 25 respond that Lendistry has not proved minimum diversity and has not shown the amount in 26 controversy requirement is met. See generally Mot. For the reasons explained below, the Court finds 27 that removal was not proper. Accordingly, the Court GRANTS the Motion. 28 / / / 1 A. Removal Under CAFA Was Improper. 2 i. Lendistry has properly asserted that the amount in controversy is reasonably met. 3 4 As the party seeking removal, Lendistry bears the burden to show, by a preponderance of 5 evidence, that the amount in controversy exceeds $5 million based on the allegations in the 6 Complaint. Greene, 965 F.3d at 771–72. If the Complaint is silent on the total amount in 7 controversy, as is the case here, then Lendistry is allowed to make reasonable assumptions. Arias, 8 936 F.3d at 925. These assumptions cannot amount to speculation or conjecture and should be based 9 on allegations in the Complaint. Ibarra, 775 F.3d at 1197. 10 The Court finds that each plaintiff requests statutory damages of $5,000 for count six and 11 count seven of the “Causes of Action.” Compl. ¶¶ 445, 436. Lendistry points out that the Plaintiffs 12 believe the putative class consists of “thousands of California businesses and California residents.” 13 NOR ¶ 15. Lendistry alleges that while “thousands” means more than 1,000, even if Lendistry 14 calculated the total number of the putative class as 2,000 and multiplied that number by the damages 15 sought by each member of the putative class for only the CIPA violations, the calculated amount in 16 controversy would far exceed $5 million. NOR at 8. The Court finds that even if the total number of 17 the putative class was 1,000, and only count six and count seven were included in determining the 18 amount in controversy, it would still exceed the $5 million minimum ($5,000 statutory damages x 19 two counts x 1,000 putative class members = $10 million). 20 In the Motion, the Plaintiffs argue that Lendistry’s amount in controversy calculation is 21 incorrect because the size of the putative class is not defined and the evidence given to the 22 Governor’s Office lists fifty-eight recipients.2 Mot. at 14. Lendistry argues that this argument is 23 incorrect. In particular, Lendistry insists that removal is determined by the four corners of the 24 Complaint. Opp’n at 8; see Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005). 25 The Complaint clearly states that the putative class consists of “thousands of California businesses 26

27 2 The Plaintiffs also argue that Lendistry failed to meet the CAFA jurisdictional requirements of having more than 100 putative class members. See generally Mot. However, the Complaint defines the putative class as 28 “thousands of California businesses and California residents.” Compl. ¶ 233. Plaintiffs do not engage with 1 and California residents.” Compl. ¶ 233. Lendistry points out that the evidence that the Plaintiffs rely 2 on of fifty-eight grant recipients are only recipients of the grant, not the grant applicants that the 3 Complaint defines as the putative class. Opp’n at 6. The Plaintiffs do not engage any more with this 4 argument in either the Reply or the Supplement, and as such, the Court will not address the 5 Plaintiffs’ amount in controversy objections further. 6 Taking the allegations in the Complaint at the time of the removal and Lendistry’s 7 calculations, the Court concludes that Lendistry, by a preponderance of the evidence, has established 8 that the amount in controversy exceeds $5 million. 9 ii. Lendistry has failed to satisfy the minimum diversity requirement. 10 Lendistry argues that minimum diversity exists using the class definition that the Plaintiffs 11 provide in their Complaint, since it defines the class as all persons or businesses “in California” who 12 applied for the grant and that it necessarily includes people who applied for the grant who were in 13 California but are not citizens of California. NOR at 6. The Plaintiffs respond that Lendistry’s notice 14 of removal is defective because Lendistry did not put forth any facts to allege any class member’s 15 citizenship to prove there is at least one diverse class member. Mot. at 9. They contend that 16 Lendistry relies only on the class definition, even though the Complaint, as a whole, alleges that all 17 putative class members and Plaintiffs are California citizens. Id. 18 The Court finds that Lendistry has failed to show that there is minimum diversity by a 19 preponderance of the evidence. The Complaint defines the putative class as “all persons in California 20 who submitted an application to Lendistry for a grant.” Compl. ¶ 224. The “Natural Persons 21 Subclass” of the main putative class is defined as “all Natural Persons who submitted on behalf of a 22 business or nonprofit an application to Lendistry for a grant.” Id. ¶ 228. While the class definitions 23 themselves do not define or specify the citizenship of the putative class, the Complaint does allege 24 that “Plaintiffs, all putative class members, and Defendant itself are citizens of this state.” Id. ¶ 4. In 25 light of the Plaintiffs’ explicit allegation that all parties, including the members of the putative class, 26 are California citizens, the Court finds Lendistry’s argument that the Plaintiffs’ class definition 27 necessarily includes non-Californians unavailing and not founded on the Complaint. Lendistry cites 28 Broadway to support their contention that a defendant is allowed to use class definitions to establish 1 | minimum diversity. Opp’n at 6; see Broadway Grill, Inc., 856 F.3d at 1279 (holding that minimum 2 || diversity was established based on the allegations in the complaint because it defined the putative 3 || class as all California merchants, not just merchants who were California citizens). The Plaintiffs 4 | argue that Broadway and similar cases Lendistry used to support its class definition argument do not 5 || apply because none of the cases Lendistry cited have the Plaintiffs’ citizenship affirmatively alleged 6 || in the complaint, as is alleged in the Plaintiffs’ Complaint.? Compl. § 4 (“Plaintiffs, all putative class 7 || members, and Defendant itself are citizens of this state.”). Additionally, the Plaintiffs argue that after 8 | the minimum diversity was challenged by the Plaintiffs in the Motion, it was Lendistry’s burden to 9 || provide facts to support their minimum diversity allegations at least in their Opposition, which 10 | Lendistry did not do. Reply at 4; see NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 614 (9th Cir. 11 | 2016) (“[A]t the pleading stage, allegations of jurisdictional fact need not be proven unless 12 || challenged”). For these reasons, the Court finds that Lendistry has not met its burden to establish 13 || minimum diversity for the removal, and therefore that removal was improper. 14 CONCLUSION 15 For the foregoing reasons, the Court ORDERS as follows: 16 1. The Court GRANTS the Plaintiffs’ Request for Judicial Notice. 17 2. The Court GRANTS the Plaintiffs’ Motion to Remand. 18 3. The case is REMANDED to the Los Angeles County Superior Court forthwith. 19 4. Lendistry’s Motion to Dismiss is DENIED AS MOOT. 20 21 IT IS SO ORDERED. 2 Af 23 Dated: June 24, 2025 4 MAAME EWUSI-MENSAH FRIMPONG 25 United States District Judge 26 a > The Plaintiffs have the same argument about Lendistry’s reliance on Brinkley v. Monterey Fin. Servs., Inc., 28 | 873 F.3d 1118 (9th Cir. 2017) to establish Lendistry’s use of class definitions, but Brinkley also does not affirmatively allege the citizenship of the putative class in their complaint.