Salvador Correa v. Ford Motor Company

• Court: District Court, C.D. California
• Decided: July 17, 2023
• Docket: 2:23-cv-02389
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SALVADOR CORREA, Case No. 2:23-cv-02389-AB-PD

11 Plaintiff, ORDER DENYING MOTION TO 12 v. REMAND [Dkt. No. 13]

13 FORD MOTOR COMPANY, a Delaware Corporation, and DOES 1 14 through 10 inclusive,

15 Defendant. 16 17 Before the Court is Plaintiff Salvador Correa’s (“Plaintiff”) Motion to Remand. 18 (“Motion,” Dkt. No. 13.) Defendant Ford Motor Company (“Defendant”) filed an 19 opposition (“Opp’n,” Dkt. No. 14.) Plaintiff did not file a reply. For the following 20 reasons, the Court DENIES Plaintiff’s Motion. 21 I. BACKGROUND 22 On December 30, 2022, Plaintiff filed this action in Los Angeles County 23 Superior Court alleging that Defendants Ford Motor Company, South Bay Ford 24 Lincoln (“South Bay”), and unnamed Defendants DOES 1-10 violated the Song- 25 Beverly Consumer Warranty Act, Cal. Civ. Code § 1790; committed fraudulent 26 concealment; and provided negligent repair on Plaintiff’s 2019 Ford F150 27 (“Vehicle.”) See Complaint (“Compl.,” Dkt. No. 1-3, pp. 94-109.) Plaintiff is a 28 resident of California. Compl. ¶ 2. Defendant Ford is a corporation incorporated in the 1 State of Delaware who has its principal place of business in the State of Michigan. Id. 2 ¶ 4. Defendant South Bay is a business entity that resides in California. Id. ¶ 5. On 3 March 6, 2023, Plaintiff dismissed Defendant South Bay. (See Defendant’s Notice of 4 Removal (“NOR”), Dkt. No. 1.) On March 30, 2023, Defendant removed the case to 5 this Court based on diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, and 6 1446. Id. 7 II. LEGAL STANDARD 8 A defendant may remove a civil action filed in state court to federal district 9 court when the federal court has original jurisdiction over the action. 28 U.S.C. § 10 1441(a). “The burden of establishing jurisdiction falls on the party invoking the 11 removal statute, which is strictly construed against removal.” Sullivan v. First 12 Affiliated Sec., Inc., 813 F.2d 1368, 1371 (9th Cir. 1987) (internal citations omitted); 13 see also Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). “The ‘strong 14 presumption’ against removal jurisdiction means that the defendant always has the 15 burden of establishing that removal is proper.” Gaus v. Miles, Inc., 980 F.2d 564, 566 16 (9th Cir. 1992). If any doubt exists as to the right of removal, federal jurisdiction must 17 be rejected. Id. at 566–67; see also Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 18 (9th Cir. 2009) (citing Id. at 566) (“[T]he court resolves all ambiguity in favor of 19 remand to state court.”) 20 For an action based on diversity of citizenship, as here, the parties must be 21 citizens of different states and the dispute must involve an amount in controversy over 22 $75,000.00. 28 U.S.C. § 1332(a)(1). 23 III. DISCUSSION 24 Here, the parties do not dispute the complete diversity between Plaintiff and 25 Defendant. The only issue that is disputed is whether the requisite amount in 26 controversy for federal jurisdiction has been satisfied. 27 A. Legal Standard for Calculating the Amount in Controversy 28 The amount in controversy required for diversity jurisdiction is a sum greater 1 than $75,000, not including interest and costs. 28 U.S. Code § 1332. In assessing 2 whether the amount in controversy is met, courts first look at whether “on its face” a 3 complaint meets the federal jurisdictional threshold. Guglielmino v. McKee Foods 4 Corp., 506 F.3d 696, 699 (9th Cir. 2007). If the complaint alleges an amount that 5 meets the threshold, the amount in controversy is “presumptively satisfied unless it 6 appears to a ‘legal certainty’ that plaintiff cannot actually recover that amount.” 7 Guglielmino at 699. However, where the amount in controversy is unclear in the 8 complaint, “we apply a preponderance of the evidence standard.” Guglielmino at 699. 9 In a case removed from state court, the burden of proving the amount in controversy is 10 placed on the removing defendant. See Abrego Abrego v. The Dow Chemical Co., 443 11 F.3d 676 (9th Cir. 2006). 12 The amount in controversy for purposes of diversity jurisdiction “includes 13 damages (compensatory, punitive, or otherwise), the costs of complying with an 14 injunction, and attorneys’ fees awarded under fee-shifting statutes or contract.” 15 Fritsch v. Swift Transportation Company of Arizona, LLC, 899 F.3d 785, 793 (9th Cir. 16 2018). 17 B. The Parties’ Arguments 18 Plaintiff’s Complaint states that he is entitled to actual damages, restitution, 19 consequential and incidental damages, diminution in value, a civil penalty of two 20 times Plaintiff’s actual damages, prejudgment interest, punitive damages, attorneys’ 21 fees, and other relief deemed appropriate by the Court. Compl. at Prayer for Relief. 22 The Complaint alleges that Plaintiff’s damages are “not less than $25,001.00,” see 23 Compl. ¶ 23, but does not allege a more specific amount of damages. 24 In the Notice of Removal, Defendant calculates the amount in controversy to be 25 $25,053.26 in actual damages, $50,106.52 as a two-times civil penalty, and $100,000 26 in attorney fees. NOR ¶¶ 18-19. 27 In the Motion, Plaintiff contends that Defendant’s calculation of the amount in 28 controversy is not supported by evidence and is too speculative to meet its burden. 1 Regarding actual damages of $25,053.26 plus $50,106.52 as a two-times civil penalty, 2 Plaintiff argues that Defendant should look at “essential facts about the purchase price 3 and use” of the Vehicle instead of just the lease agreement. Motion 9:3-4. 4 Additionally, Plaintiff argues that Defendant’s calculation of attorney’s fees and 5 failure to include the statutory mileage offset further makes their damages calculation 6 speculative. Id. at 10:1-4, 15:13-16. 7 In its opposition, Defendant argues that its calculation of the amount in 8 controversy is adequately supported. Furthermore, Defendant argues that Plaintiff’s 9 claim for punitive damages in connection with its fraudulent concealment claims put 10 in issue ten times the actual damages of $25,487.21 and civil penalty of $50,974.42, 11 putting another $764,616.00 in controversy, for a total amount in controversy of 12 $841,077.93. (Decl. Samantha M. Geraghty, Dkt. 14, Ex. 1 ¶ 10.) 13 All of Plaintiff’s arguments fall short. 14 C. Application 15 To resolve this Motion, the Court will determine whether all of the remedies 16 Plaintiff seeks put more than $75,000 in issue. 17 1. Damages Recoverable Under the Song-Beverly Act 18 Plaintiff seeks to recover damages for Defendant’s alleged violations of §§ 19 1793(d), 1793(b), and 1793(a)(3) of the Song-Beverly Act. Compl. ¶¶ 34-47. 20 According to the Song-Beverly Act, Plaintiff can recover actual damages and other 21 equitable relief, a “civil penalty which shall not exceed two times the amount of actual 22 damages,” and a “sum equal to the aggregate amount of costs and expenses, including 23 attorney’s fees.” Cal. Civ. Code §§ 1794(a), 1794(d), and 1794(e). Actual damages 24 under the Song-Beverly Act are equal to “the actual price paid or payable by the 25 buyer” plus any incidental damages pursuant to § 1794, minus “any collateral charges 26 such as sales or use tax, license fees, registration fees, and other official fees” and the 27 “amount directly attributable to use by the buyer prior to the time the buyer first 28 delivered the vehicle to the manufacturer or distributor.” Cal Civ. Code § 1 1793.2(d)(2)(B) – (C). 2 Here, Plaintiff’s actual damages, based on the representations made by their 3 counsel, equals $25,487.21, which represents the amount of $9,470.01 due at signing, 4 thirty-five monthly payments of $433.95, and a disposition fee of $395. (Decl. 5 Geraghty, Ex. 1 ¶ 10; see also Dkt. 1, Ex. A at 15.) Using this number, the two-times 6 civil penalty would total $50,974.42. The actual damages plus the two-times civil 7 penalty alone equals $76,461.63, which exceeds the minimum amount required for 8 diversity jurisdiction. But Plaintiff contends that Defendant’s calculation improperly 9 fails to account for a statutory mileage offset, which would reduce Plaintiff’s actual 10 damages. Motion 10:1-4. However, a statutory mileage offset need not be considered 11 when calculating the amount in controversy, as the “amount in controversy is 12 established by what the plaintiff demands, not by any reductions that a defendant 13 might achieve through its defenses” Selinger v. Ford Motor Co., 2023 WL 2813510, 14 at *8 (C.D. Cal. Apr. 5, 2023) (quoting In Re: Ford Motor Co. DPS6 Powershift 15 Transmission Products Liab. Litig., 2018 WL 59059, at *4 (C.D. Cal. Sept. 10, 2018). 16 But even if the mileage offset were considered, the amount in controversy still 17 exceeds $75,000, given the other forms of recovery plaintiff seeks, as discussed next. 18 A prevailing Plaintiff is entitled to reasonable attorney’s fees under the Song- 19 Beverly Act. Cal. Civ. Code § 1794(d). Defendant’s counsel estimated attorney fees to 20 be $100,000 “when litigated through trial,” based on Defendant’s counsel’s own 21 experience litigating similar cases. (NOR ¶ 18; Decl. Elizabeth M. McNulty, Dkt. 1, 22 Ex. 1 ¶ 5.) Since these fees are authorized by statute, it is proper to include them in 23 the amount in controversy calculation. See Kroske v. U.S. Bank Corp., 432 F.3d 976, 24 980 (9th Cir. 2005). Further, the attorney’s fees need not be calculated with certainty, 25 as a removal notice only needs to “plausibly allege, not detail proof of, the amount in 26 controversy.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 83 27 (2014). 28 1 2. Punitive Damages 2 In addition to the damages recoverable under the Song-Beverly Act, Plaintiff 3 seeks to recover punitive damages for Defendant’s alleged fraudulent concealment- 4 inducement. Compl. ¶¶ 53-68. In assessing whether punitive damages may be 5 included in the amount in controversy calculation, Courts in this circuit have held that 6 the amount in controversy “includes any result of the litigation, excluding interests 7 and costs, that ‘entails a payment’ by the defendant,” which “includes damages 8 (compensatory, punitive, or otherwise), the costs of complying with an injunction, and 9 attorneys’ fees awarded.” Fritsch at 785 (internal quotations omitted) (emphasis 10 added). Thus, Defendant may include punitive damages in the amount in controversy 11 calculation. 12 Defendant’s counsel stated that in a conversation with Plaintiff’s counsel, 13 Plaintiff’s counsel stated that Plaintiff wants a “ten times multiplier for punitive 14 damages.” (Decl. Geraghty, Ex. 1 ¶ 10.) Defendant’s counsel calculates this amount to 15 be ten times the actual damages of $25,487.21 plus the two times civil penalty of 16 $50,974.42, totaling $764,616.00 in punitive damages. This calculation is improper 17 for two reasons. First, Defendant’s counsel incorrectly includes the two times civil 18 penalty in the punitive damage calculation. Punitive damages are properly understood 19 as a multiple only of the amount of compensatory damages. See State Farm Mut. 20 Auto. Ins. Co. v. Campbell, 538 U.S. 408, 424-426 (2003) (discussing punitive 21 damages as a multiplier of compensatory damages). Second, the Supreme Court 22 cautions against using multipliers that are higher than single digits and states that “an 23 award of more than four times the amount of compensatory damages might be close to 24 the line of constitutional impropriety.” Id. at 425. Therefore, a multiplier of four times 25 the amount of actual damages, excluding the two times civil penalty, is appropriate to 26 calculate punitive damages for purposes of the amount in controversy. This 27 calculation yields $101,948.84 in punitive damages. 28 Based on the foregoing, the amount in controversy, excluding attorney fees, is 1 | approximately $178,410.47—$76,461.63 in Song Beverly damages and $101,948.84 2 | in punitive damages. The Court therefore concludes that Defendant has met its burden 3 || to show by a preponderance of the evidence that the amount in controversy exceeds 4 || $75,000 as required for diversity jurisdiction. 5 IV. CONCLUSION 6 For the foregoing reasons, the Court DENIES Plaintiff's Motion to Remand. 7 8 IT IS SO ORDERED. be 10 | Dated: July 17, 2023 11 HONORABLE ANDRE BIROTTE JR. UNITED STATES DISTRICT COURT JUDGE

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