1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 MARLON RAMOS and CRYSTAL RAMOS, No. 2:19-CV-02620 WBC CKD 13 Plaintiffs, 14 v. MEMORANDUM AND ORDER RE: MOTION TO REMAND 15 FCA LLC, a Delaware Limited Liability Company; AUTONATION 16 CHRYSLER DODGE JEEP RAM ROSEVILLE, a Business 17 Organization Form Unknown; and DOES 1 through 10, inclusive, 18 Defendant. 19
20 ----oo0oo---- 21 22 Plaintiffs Marlon and Crystal Ramos bring this action 23 against defendants FCA US LLC (“FCA”), AutoNation Chrysler Dodge 24 Jeep Ram Roseville (“AutoNation”), and Does 1 through 10, 25 alleging that defendants sold plaintiffs a defective vehicle in 26 violation of the Song-Beverly Consumer Warranty Act (the “Act”). 27 Before the court is plaintiffs’ Motion to Remand. (Docket No. 28 10.) 1 I. Relevant Allegations and Procedural Background 2 Plaintiffs are citizens of California. (Notice of 3 Removal at 6 (Docket No. 1).) In 2018, plaintiffs purchased a 4 new Jeep Grand Cherokee from defendant AutoNation. (Compl. ¶ 7 5 (Docket No. 1-4).) The purchase included defendants’ express 6 warranty under which AutoNation and FCA US undertook to preserve 7 or maintain the utility of performance of the vehicle. (Compl. ¶ 8 8.) Defendants delivered the vehicle with “serious defects and 9 nonconformities to warranty” including “various engine defects,” 10 which impaired the use, value, and safety of the vehicle. 11 (Compl. ¶¶ 9, 17.) Plaintiffs delivered the vehicle to 12 authorized FCA US LLC repair facilities for repair of the 13 nonconformities on multiple occasions, but defendants were unable 14 to conform the vehicle to the warranties. (Compl. ¶¶ 18, 19.) 15 Plaintiffs filed suit in state court alleging only a 16 violation of the Song-Beverly Consumer Warranty Act. (Notice of 17 Removal Ex. B. (Docket No. 1-4).) Defendants subsequently 18 removed the action to federal court under diversity jurisdiction. 19 (Notice of Removal (Docket No. 1).) Defendants acknowledge that 20 AutoNation is a citizen of California, such that its involvement 21 in this action would destroy complete diversity, but take the 22 position that the joinder of AutoNation was fraudulent and 23 therefore does not defeat diversity. (Notice of Removal at 6-7.) 24 II. Discussion 25 A. Motion to Remand 26 A defendant may remove “any civil action brought in a 27 State court of which the district courts . . . have original 28 jurisdiction.” 28 U.S.C. § 1441. Original jurisdiction in the 1 form of diversity jurisdiction exists where there is complete 2 diversity and the amount-in-controversy exceeds $75,000. 28 3 U.S.C. § 1332(a); Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 4 (1996). “In determining whether there is complete diversity, 5 district courts may disregard the citizenship of a non-diverse 6 defendant who has been fraudulently joined.” Grancare, LLC v. 7 Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018). 8 Defendants argue that AutoNation was fraudulently 9 joined because plaintiffs cannot establish a cause of action 10 against AutoNation. (Docket No. 18 at 11-12.) To establish 11 fraudulent joinder, defendants must therefore show that 12 AutoNation “cannot be liable on any theory.” Id. (quoting 13 Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998)). 14 The failure to state a cause of action must be “obvious according 15 to the settled rules of the state.” Morris v. Princess Cruises, 16 Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). “[I]f there is a 17 possibility that a state court would find that the complaint 18 states a cause of action against any of the resident defendants, 19 the federal court must find that the joinder was proper and 20 remand the case to the state court.” Grancare, 889 F.3d at 549 21 (quoting Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th 22 Cir. 2009)); see also Madison v. Ford Motor Co., No. 2:19-CV- 23 00853 WBS DB, 2019 WL 3562386, at *2 (E.D. Cal. Aug. 6, 2019). 24 “A defendant invoking federal court diversity jurisdiction on the 25 basis of fraudulent joinder bears a ‘heavy burden’ since there is 26 a ‘general presumption against [finding] fraudulent joinder.’” 27 Grancare, 889 F.3d at 550 (quoting Hunter, 582 F.3d at 1046). 28 Accordingly, the court now considers whether the complaint 1 possibly pleads a cause of action against AutoNation. 2 The Song-Beverly Consumer Warranty Act (“Song-Beverly 3 Act”) protects purchasers of “consumer goods,” defined as “any 4 new product or part thereof that is used, bought, or leased for 5 use primarily for personal, family, or household purposes, except 6 for clothing and consumables.” Cal. Civ. Code § 1791(a). 7 Plaintiffs allege both a breach of express warranty and a breach 8 of implied warranty of merchantability under the Act. Possible 9 liability under either of these theories suffices to establish 10 that joinder was not fraudulent. See Grancare, 889 F.3d at 548- 11 49. 12 Unless disclaimed by the Act, “every sale of consumer 13 goods that are sold at retail” in California is “accompanied by 14 the manufacturer's and the retail seller's implied warranty that 15 the goods are merchantable.” Cal. Civ. Code § 1792 (emphasis 16 added). Under the Act, an implied warranty of merchantability 17 guarantees that “consumer goods meet each of the following: (1) 18 Pass without objection in the trade under the contract 19 description; (2) Are fit for the ordinary purposes for which such 20 goods are used; (3) Are adequately contained, packaged, and 21 labeled; (4) Conform to the promises or affirmations of fact made 22 on the container or label.” Cal. Civ. Code § 1791.1(a). 23 Plaintiff alleges that AutoNation sold plaintiff the 24 vehicle at issue. (Compl. ¶ 7.) When delivered, the vehicle 25 allegedly had “various engine defects” that impaired the use and 26 safety of the car. (Compl. ¶¶ 9, 17.) Defendants have not 27 replaced the vehicle and have not remedied the defects. (Compl. 28 ¶¶ 21, 22.) “Vehicles subject to engine failure cannot be said 1 to be merchantable.” Cholakyan v. Mercedez-Benz USA, LLC, 796 F. 2 Supp. 2d 1220, 1244 (C.D. Cal. 2011). The allegations plausibly 3 establish that AutoNation breached the “retail seller's implied 4 warranty that the goods are merchantable,” Cal. Civ. Code § 1792, 5 because the alleged defects impaired the use of the car and 6 consequently made the vehicle not “fit for driving,” see 7 Cholakyan, 796 F. Supp. 2d at 1241. Accordingly, there is at 8 least a possibility that plaintiffs state a claim against 9 AutoNation for breach of implied warranty of merchantability. 10 Defendant argues that the complaint does not 11 specifically state that AutoNation was unable to repair the 12 vehicle. While such a deficiency, if it exists, is relevant to 13 plaintiffs’ breach of express warranty claim, see Orichian v.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 MARLON RAMOS and CRYSTAL RAMOS, No. 2:19-CV-02620 WBC CKD 13 Plaintiffs, 14 v. MEMORANDUM AND ORDER RE: MOTION TO REMAND 15 FCA LLC, a Delaware Limited Liability Company; AUTONATION 16 CHRYSLER DODGE JEEP RAM ROSEVILLE, a Business 17 Organization Form Unknown; and DOES 1 through 10, inclusive, 18 Defendant. 19
20 ----oo0oo---- 21 22 Plaintiffs Marlon and Crystal Ramos bring this action 23 against defendants FCA US LLC (“FCA”), AutoNation Chrysler Dodge 24 Jeep Ram Roseville (“AutoNation”), and Does 1 through 10, 25 alleging that defendants sold plaintiffs a defective vehicle in 26 violation of the Song-Beverly Consumer Warranty Act (the “Act”). 27 Before the court is plaintiffs’ Motion to Remand. (Docket No. 28 10.) 1 I. Relevant Allegations and Procedural Background 2 Plaintiffs are citizens of California. (Notice of 3 Removal at 6 (Docket No. 1).) In 2018, plaintiffs purchased a 4 new Jeep Grand Cherokee from defendant AutoNation. (Compl. ¶ 7 5 (Docket No. 1-4).) The purchase included defendants’ express 6 warranty under which AutoNation and FCA US undertook to preserve 7 or maintain the utility of performance of the vehicle. (Compl. ¶ 8 8.) Defendants delivered the vehicle with “serious defects and 9 nonconformities to warranty” including “various engine defects,” 10 which impaired the use, value, and safety of the vehicle. 11 (Compl. ¶¶ 9, 17.) Plaintiffs delivered the vehicle to 12 authorized FCA US LLC repair facilities for repair of the 13 nonconformities on multiple occasions, but defendants were unable 14 to conform the vehicle to the warranties. (Compl. ¶¶ 18, 19.) 15 Plaintiffs filed suit in state court alleging only a 16 violation of the Song-Beverly Consumer Warranty Act. (Notice of 17 Removal Ex. B. (Docket No. 1-4).) Defendants subsequently 18 removed the action to federal court under diversity jurisdiction. 19 (Notice of Removal (Docket No. 1).) Defendants acknowledge that 20 AutoNation is a citizen of California, such that its involvement 21 in this action would destroy complete diversity, but take the 22 position that the joinder of AutoNation was fraudulent and 23 therefore does not defeat diversity. (Notice of Removal at 6-7.) 24 II. Discussion 25 A. Motion to Remand 26 A defendant may remove “any civil action brought in a 27 State court of which the district courts . . . have original 28 jurisdiction.” 28 U.S.C. § 1441. Original jurisdiction in the 1 form of diversity jurisdiction exists where there is complete 2 diversity and the amount-in-controversy exceeds $75,000. 28 3 U.S.C. § 1332(a); Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 4 (1996). “In determining whether there is complete diversity, 5 district courts may disregard the citizenship of a non-diverse 6 defendant who has been fraudulently joined.” Grancare, LLC v. 7 Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018). 8 Defendants argue that AutoNation was fraudulently 9 joined because plaintiffs cannot establish a cause of action 10 against AutoNation. (Docket No. 18 at 11-12.) To establish 11 fraudulent joinder, defendants must therefore show that 12 AutoNation “cannot be liable on any theory.” Id. (quoting 13 Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998)). 14 The failure to state a cause of action must be “obvious according 15 to the settled rules of the state.” Morris v. Princess Cruises, 16 Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). “[I]f there is a 17 possibility that a state court would find that the complaint 18 states a cause of action against any of the resident defendants, 19 the federal court must find that the joinder was proper and 20 remand the case to the state court.” Grancare, 889 F.3d at 549 21 (quoting Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th 22 Cir. 2009)); see also Madison v. Ford Motor Co., No. 2:19-CV- 23 00853 WBS DB, 2019 WL 3562386, at *2 (E.D. Cal. Aug. 6, 2019). 24 “A defendant invoking federal court diversity jurisdiction on the 25 basis of fraudulent joinder bears a ‘heavy burden’ since there is 26 a ‘general presumption against [finding] fraudulent joinder.’” 27 Grancare, 889 F.3d at 550 (quoting Hunter, 582 F.3d at 1046). 28 Accordingly, the court now considers whether the complaint 1 possibly pleads a cause of action against AutoNation. 2 The Song-Beverly Consumer Warranty Act (“Song-Beverly 3 Act”) protects purchasers of “consumer goods,” defined as “any 4 new product or part thereof that is used, bought, or leased for 5 use primarily for personal, family, or household purposes, except 6 for clothing and consumables.” Cal. Civ. Code § 1791(a). 7 Plaintiffs allege both a breach of express warranty and a breach 8 of implied warranty of merchantability under the Act. Possible 9 liability under either of these theories suffices to establish 10 that joinder was not fraudulent. See Grancare, 889 F.3d at 548- 11 49. 12 Unless disclaimed by the Act, “every sale of consumer 13 goods that are sold at retail” in California is “accompanied by 14 the manufacturer's and the retail seller's implied warranty that 15 the goods are merchantable.” Cal. Civ. Code § 1792 (emphasis 16 added). Under the Act, an implied warranty of merchantability 17 guarantees that “consumer goods meet each of the following: (1) 18 Pass without objection in the trade under the contract 19 description; (2) Are fit for the ordinary purposes for which such 20 goods are used; (3) Are adequately contained, packaged, and 21 labeled; (4) Conform to the promises or affirmations of fact made 22 on the container or label.” Cal. Civ. Code § 1791.1(a). 23 Plaintiff alleges that AutoNation sold plaintiff the 24 vehicle at issue. (Compl. ¶ 7.) When delivered, the vehicle 25 allegedly had “various engine defects” that impaired the use and 26 safety of the car. (Compl. ¶¶ 9, 17.) Defendants have not 27 replaced the vehicle and have not remedied the defects. (Compl. 28 ¶¶ 21, 22.) “Vehicles subject to engine failure cannot be said 1 to be merchantable.” Cholakyan v. Mercedez-Benz USA, LLC, 796 F. 2 Supp. 2d 1220, 1244 (C.D. Cal. 2011). The allegations plausibly 3 establish that AutoNation breached the “retail seller's implied 4 warranty that the goods are merchantable,” Cal. Civ. Code § 1792, 5 because the alleged defects impaired the use of the car and 6 consequently made the vehicle not “fit for driving,” see 7 Cholakyan, 796 F. Supp. 2d at 1241. Accordingly, there is at 8 least a possibility that plaintiffs state a claim against 9 AutoNation for breach of implied warranty of merchantability. 10 Defendant argues that the complaint does not 11 specifically state that AutoNation was unable to repair the 12 vehicle. While such a deficiency, if it exists, is relevant to 13 plaintiffs’ breach of express warranty claim, see Orichian v. BMW 14 of North America, LLC, 226 Cal.App.4th 1322, at 1333-1334 (2014) 15 (requiring allegations of seller’s failure to repair defect), it 16 is not relevant to plaintiff’s claim for breach of implied 17 warranty of merchantability, see Cholakyan, 796 F. Supp. 2d at 18 1241-44. Defendant has therefore failed to show that AutoNation 19 “cannot be liable on any theory.” See Grancare, 889 F. 3d at 20 548. Because there is a possibility that plaintiffs state a 21 claim against AutoNation, plaintiffs’ joinder of AutoNation was 22 not fraudulent.1 Accordingly, considering that both AutoNation 23 1 Aside from allegations of a deficient complaint, 24 defendants contend that plaintiffs’ joinder of AutoNation is fraudulent because plaintiff seeks the same remedies from both 25 defendants and because FCA may indemnify AutoNation. (Opp. to Mot. to Remand at 9.) Neither of these arguments go to the 26 possibility of the complaint stating a cause of action and 27 therefore are not reasons for the court to find fraud. Further, although defendants moved to compel 28 arbitration (Docket No. 20), the court must still remand this 1 and plaintiffs are citizens of California, the parties are not 2 completely diverse, and this court does not have original 3 jurisdiction over the action. The court will therefore remand 4 this action. 5 B. Dismissal of AutoNation under Rule 21 6 A court “may cure jurisdictional defects by dismissing 7 dispensable nondiverse parties under Federal Rule of Civil 8 Procedure 21.” Madison, 2019 WL 3562386, at *4 (citing Newman- 9 Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832-33 (1989)). 10 Defendants ask the court to exercise its discretion under Rule 21 11 and drop AutoNation as a party to preserve complete diversity. 12 (Opp. to Mot. to Remand at 14.) 13 The court declined to exercise that discretion under 14 nearly identical circumstances in Madison v. Ford Motor Co., No. 15 2:19-CV-00853 WBS DB, 2019 WL 3562386 (E.D. Cal. Aug. 6, 2019). 16 In Madison, plaintiffs sued defendants Ford Motor Company and its 17 in-state representative Elk Grove Ford in state court alleging 18 various state law claims arising from the sale of a vehicle. Id. 19 at *1. Defendants removed the action under diversity 20 jurisdiction and argued that Elk Grove Ford was fraudulently 21 joined. Id. at *2. This court found that plaintiffs’ joinder 22 was not fraudulent. Id. at *4. Defendants then asked the court 23 action. A court can compel arbitration under the Federal 24 Arbitration Act (FAA) “only when the federal district court would have jurisdiction over a suit on the underlying dispute.” Moses 25 H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 n.32 (1983). The FAA “does not create any independent federal- 26 question jurisdiction under 28 U.S.C. § 1331.” Id. Accordingly, 27 absent “an independent basis for federal jurisdiction,” the court cannot enforce the FAA. Id. 28 1 to sever Elk Grove Ford under Rule 21. Id. This court declined 2 to do so because severance “would defeat the purpose of 3 permissive joinder” –- convenience and efficiency –- and because 4 accepting defendants’ argument would constitute “an improper end- 5 run around [the court’s] rejection of the fraudulent misjoinder 6 doctrine.” Id. at *4 (quoting Hampton v. Insys Therapeutics, 7 Inc., 319 F. Supp. 3d 1204, 1214 (D. Nev. 2018)). 8 For the same reasons, the court declines to sever 9 AutoNation. Here, “the claims against both defendants are 10 sufficiently intertwined, factually and legally, such that 11 severance would be inconvenient and inefficient.” See Madison, 12 2019 WL 3562386, at *4. Accordingly, the court declines to 13 exercise its discretion under Rule 21. 14 C. Attorney’s Fees 15 Plaintiffs request an award of attorney’s fees and 16 costs pursuant to 28 U.S.C. § 1447(c). (Mot. to Remand at 7.) 17 “An order remanding the case may require payment of just costs 18 and any actual expenses, including attorney fees, incurred as a 19 result of the removal.” 28 U.S.C. § 1447(c). The standard for 20 awarding fees turns on the “reasonableness of the attempted 21 removal.” See Moore v. Permanente Med. Grp., 981 F.2d 443, 446– 22 47 (9th Cir. 1992). “Absent unusual circumstances, courts may 23 award attorney’s fees under § 1447(c) only where the removing 24 party lacked an objectively reasonable basis for seeking removal. 25 Conversely, when an objectively reasonable basis exists, fees 26 should be denied.” Martin v. Franklin Capital Corp., 546 U.S. 27 132, 141, 126 S. Ct. 704, 711, 163 L. Ed. 2d 547 (2005). “The 28 objective reasonableness of removal is measured at the time of 1 removal.” Cent. Valley Med. Grp., Inc. v. Indep. Physician 2 Assocs. Med. Grp., Inc., No. CIV. 1:19-00404-LJO-SKO, 2019 WL 3 3337891, at *6 (E.D. Cal. July 25, 2019) (quoting Pope v. Wells 4 Fargo Bank, N.A., No. CIV. 2:10-2807-WBS-KJM, 2010 WL 8388301, at 5 *5 (E.D. Cal. Nov. 29, 2010). 6 At the time of removal, there was no objectively 7 reasonable basis for defendants to seek removal. The law was 8 clear that defendants had to show that plaintiffs “fail[ed] to 9 state a cause of action against [AutoNation], and [that] the 10 failure [was] obvious according to the settled rules of the 11 state.’” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 12 (9th Cir. 2001) (quoting McCabe v. Gen. Foods Corp., 811 F.2d 13 1336, 1339 (9th Cir. 1987)); see also Grancare, 889 F.3d 543, 552 14 (“[T]he degree of clarity in the relevant law at the time of 15 removal is a relevant factor in determining whether a defendant's 16 decision to remove was reasonable.”) Defendants did not have 17 reason to believe the alleged failure was “obvious.” Defendants 18 do not offer any authority suggesting that similar allegations of 19 a sale of a defective vehicle were insufficient to state a claim 20 under the Song-Beverly Act. Cf. Gardner v. UICI, 508 F.3d 559, 21 562 (9th Cir. 2007) (finding case law supporting removal to 22 suggest that removal was not “objectively unreasonable”). 23 Further, as discussed above, this court and other California 24 district courts have rejected the fraudulent-defendant removal 25 strategy in very similar circumstances over and over again. See 26 Madison, 2019 WL 3562386, at *4; Wittinger v. Ford Motor Co., No. 27 2:18-CV-03214-WBS-EFB, 2019 WL 1993983, at *2 (E.D. Cal. May 6, 28 2019) (remanding and granting attorney’s fees); Cavale v. Ford 1 Motor Co., No. 1:18-CV-00680-LJO-BAM, 2018 WL 3811727, at *3 2 (E.D. Cal. Aug. 9, 2018); Levine v. Ford Motor Co., No. 2:18-CV- 3 09995-SVW-JEM, 2019 WL 990437, at *1 n.1 (C.D. Cal. Feb. 28, 4 2019) (collecting cases). 5 Moreover, defendants do not satisfy the objective 6 reasonability standard because a majority of defendants’ 7 reasoning relies on matters unrelated to plaintiffs’ complaint. 8 For example, in its notice of removal, defendants state that it 9 is FCA’s “belie[f] [that] Plaintiffs have no intention of 10 prosecuting” their claim against AutoNation (Notice of Removal J 11 26) and that “FCA’s counsel’s vast litigation experience in 12 opposing these types of cases has been that individual 13 dealerships have not been regularly sued” (Id. at 7 27). Both 14 arguments constitute FCA counsel’s subjective appreciation of the 15 circumstances and do not satisfy the objective reasonability 16 standard. The court will therefore order payment to plaintiffs 17 of attorney’s fees associated with defendants’ removal. 18 IT IS THEREFORE ORDERED that plaintiffs’ Motion to 19 Remand (Docket No. 10) be, and the same hereby is, GRANTED; 20 IT IS FURTHER ORDERED that plaintiffs’ request for an 21 award of attorneys’ fees and expenses is GRANTED in the sum of 22 $3,420.00; and 23 This action is HEREBY REMANDED to the Superior Court of 24 the State of California, in and for the County of Placer. 25 Dated: February 19, 2020 . blew A bh be WILLIAM B. SHUBB 27 UNITED STATES DISTRICT JUDGE 28