Sampson v. Subaru of America, Inc.

• Court: District Court, S.D. California
• Decided: November 13, 2019
• Docket: 3:19-cv-01663
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JOHN SAMPSON; and LESLIE Case No.: 19-cv-1663-WQH-BLM SAMPSON, 12 ORDER Plaintiffs, 13 v. 14 SUBARU OF AMERICA, INC.; and 15 DOES 1 through 10, inclusive, 16 Defendants. 17

18 HAYES, Judge: 19 The matters before the Court are 1) the Motion for Leave to Amend Complaint (ECF 20 No. 11); and 2) the Motion to Remand (ECF No. 12) filed by Plaintiffs John Sampson and 21 Leslie Sampson. 22 I. BACKGROUND 23 On July 30, 2019, Plaintiffs John Sampson and Leslie Sampson initiated this action 24 by filing a Complaint against Defendant Subaru of America, Inc. (“Subaru”) and Does 1 25 through 10 in the Superior Court for the State of California, County of San Diego. (ECF 26 No. 1-3). Plaintiffs allege that Subaru manufactured or distributed a defective Subaru 27 Outback, failed to repair the vehicle, failed to provide sufficient service literature or parts 28 1 to repair facilities, breached an express warranty, and breached the implied warranty of 2 merchantability. Plaintiffs bring claims against Subaru for 1) violation of California’s 3 Song-Beverly Consumer Warranty Act, California Civil Code §§ 1790 et seq.; and 2) 4 violation of the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. §§ 2301 et seq. 5 Plaintiffs seek damages, restitution, civil penalties, attorneys’ fees, costs, interest, and other 6 relief as the Court may deem proper. On August 30, 2019, Subaru removed the action to 7 this Court based on federal question jurisdiction over the MMWA claim and supplemental 8 jurisdiction over the state law claims. (ECF No. 1). 9 On September 30, 2019, Plaintiffs filed 1) a Motion for Leave to Amend Complaint 10 (ECF No. 11); and 2) a Motion to Remand (ECF No. 12). On October 18, 2019, Subaru 11 filed Responses in Opposition to Plaintiffs’ Motions. (ECF Nos. 20, 21). On October 25, 12 2019, Plaintiffs filed Replies. (ECF Nos. 23, 24). 13 II. MOTION FOR LEAVE TO AMEND 14 Plaintiffs seek leave to amend the Complaint to 1) dismiss the MMWA claim with 15 prejudice; and 2) join Kearney Mesa Hyundai Subaru (“KMHS”) as a defendant. 16 a. MMWA Claim 17 Plaintiffs contends that the Court should allow Plaintiffs to amend the Complaint to 18 dismiss the MMWA claim with prejudice “because none of the factors militating against 19 amendment, such as undue delay, bad faith, futility, or undue prejudice to Defendant, are 20 present.” (ECF No. 11 at 2). Subaru “does not object to plaintiffs’ proposed dismissal of 21 their Magnuson-Moss claim with prejudice.” (ECF No. 20 at 2). 22 Rule 15 of the Federal Rules of Civil Procedure provides that, after the time for 23 amendment “as a matter of course” has passed, “a party may amend its pleading only with 24 the opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a). A court 25 “should freely give leave when justice so requires.” Id. District courts consider several 26 factors in deciding whether to grant a motion to amend under Rule 15(a): 27 In the absence of any apparent or declared reason – such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure 28 1 deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of 2 amendment, etc. – the leave sought should, as the rules require, be ‘freely 3 given.’

4 Foman v. Davis, 371 U.S. 178, 182 (1962); see Bowles v. Reade, 198 F.3d 752, 757-58 5 (9th Cir. 1999) (“Liberality in granting a plaintiff leave to amend is subject to the 6 qualification that the amendment not cause undue prejudice to the defendant, is not sought 7 in bad faith, and is not futile . . . . Additionally, the district court may consider the factor 8 of undue delay . . . . Undue delay by itself, however, is insufficient to justify denying a 9 motion to amend.”) (citation omitted). “Not all of the [Foman] factors merit equal weight 10 . . . . [T]he consideration of prejudice to the opposing party that carries the greatest weight.” 11 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citations 12 omitted). “The party opposing amendment bears the burden of showing prejudice.” DCD 13 Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). “Absent prejudice, or a 14 strong showing of any of the remaining Foman factors, there exists a presumption under 15 Rule 15(a) in favor of granting leave to amend.” Eminence Capital, 316 F.3d at 1052. 16 Subaru does not oppose Plaintiffs’ Motion for Leave to Amend to dismiss the 17 MMWA claim. There has been no showing that any of the Foman factors warrant deviating 18 from the “presumption under Rule 15(a) in favor of granting leave to amend.” Id. Plaintiffs’ 19 Motion for Leave to Amend the Complaint to dismiss the MMWA claim with prejudice is 20 granted. 21 b. Joinder of KMHS 22 Plaintiffs contend that KMHS is a “diversity-destroying defendant.” (ECF No. 11-1 23 at 8). Plaintiffs contend that, because they seek to add a diversity-destroying defendant, the 24 Court should analyze their request to amend the Complaint to join KMHS pursuant to 28 25 U.S.C. § 1447(e), rather than Rule 15. Plaintiffs contend that, under § 1447(e), the Court 26 should allow joinder of KMHS because KMHS is a necessary party to the adjudication of 27 this case. Plaintiffs contend that they promptly moved for joinder. Plaintiffs contend that 28 1 they allege valid claims against KMHS. Plaintiffs contend that they do not seek to join 2 KMHS “solely to defeat jurisdiction.” (Id. at 14). Plaintiffs contend that denial of the 3 request for joinder would prejudice Plaintiffs because they would be forced to file a 4 separate state court action against KMHS. 5 Defendants contend that Plaintiffs were dilatory in seeking amendment. Defendants 6 contend that KMHS is not a necessary or indispensable party. Defendants contend that 7 Plaintiffs are “seeking to join a party solely to destroy diversity of citizenship, [and] that 8 factor alone can be dispositive.” (ECF No. 20 at 5). 9 Motions for leave to amend a complaint are generally analyzed under Federal Rule 10 of Civil Procedure 15. Amendments that destroy a court’s diversity jurisdiction, however, 11 are analyzed under 28 U.S.C. § 1447(e). Section 1447(e) provides: 12 If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or 13 permit joinder and remand the action to the State court. 14 “[T]he decision regarding joinder of a diversity destroying-defendant is left to the 15 discretion of the district court.” Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 16 1998). 17 “Once a case has been properly removed, the district court has jurisdiction over it on 18 all grounds apparent from the complaint, not just those cited in the removal notice.” 19 Williams v. Costco Wholesale Corp., 471 F.3d 975, 977 (9th Cir. 2006). “Subject matter 20 jurisdiction based upon diversity of citizenship requires that no defendant have the same 21 citizenship as any plaintiff.” Tosco Corp. v. Cmtys. for a Better Env’t, 236 F.3d 495, 499 22 (9th Cir. 2001). For the purposes of determining diversity of citizenship, “like a 23 partnership, an LLC is a citizen of every state of which its owners/members are citizens.” 24 Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). A 25 corporation is a citizen of “every State and foreign state by which is has been incorporated 26 and of the State or foreign state where it has its principal place of business . . . .” 28 U.S.C. 27 28 1 § 1332(c)(1). “The natural person’s state of citizenship is [ ] determined by her state of 2 domicile.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). 3 In the Complaint and proposed Amended Complaint, Plaintiffs allege that they are 4 “residents of San Diego County, California.” (ECF No. 1-3 ¶ 2; ECF No. 11-4 ¶ 2). 5 Plaintiffs allege that Subaru “is a corporation organized and in existence under the laws of 6 the State of Delaware and registered . . . to conduct business in California.” (ECF No. 1-3 7 ¶ 4; ECF No. 11-4 ¶ 4). In the proposed Amended Complaint, Plaintiffs allege that KMHS 8 is “an unknown business entity organized and in existence under the laws of the State of 9 California.” (ECF No. 11-4 ¶ 5). Subaru does not allege any facts regarding its citizenship 10 or Plaintiffs’ citizenship in the Notice of Removal. The Court cannot determine Plaintiffs, 11 Subaru, or KMHS’s citizenship from the allegations in the Complaint, proposed Amended 12 Complaint, or Notice of Removal. The Court cannot conclude it has diversity jurisdiction 13 in this case or that KMHS would be a “diversity destroying defendant.” Newcombe, 157 14 F.3d at 691. The Court analyzes the proposed amendment joining KMHS as a defendant 15 under the general rule governing amendment of pleadings in Rule 15 rather than § 1447(e). 16 Pursuant to Rule 15, the Foman factors weigh in favor of allowing amendment. Only 17 two months elapsed between the time Plaintiffs filed the Complaint and filed the Motion 18 to Amend. This case is still in the early stages of litigation. The Parties have not filed any 19 motions, aside from the currently pending Motions. KMHS is directly related to Plaintiffs’ 20 claims, because Plaintiffs allege that KMHS sold the vehicle to Plaintiffs and serviced it. 21 There has been no showing that any of the Foman factors warrant deviating from the 22 “presumption under Rule 15(a) in favor of granting leave to amend.” Eminence Capital, 23 316 F.3d at 1052. Plaintiffs’ Motion for Leave to Amend the Complaint to add KMHS as 24 a defendant is granted. 25 III. MOTION TO REMAND 26 Plaintiffs move the Court to remand this action to state court. Plaintiffs contend that 27 dismissal of the MMWA claims divests the Court of federal question jurisdiction, and no 28 grounds exist to exercise supplemental jurisdiction over the remaining state law claims. 1 Plaintiffs further contend that removal was improper because Subaru did not meet its 2 burden of establishing the amount in controversy under the MMWA. 3 Subaru contends that the Court had federal question and supplemental jurisdiction 4 at the time of removal. Subaru contends that eliminating the basis for the court’s federal 5 question jurisdiction by amending the Complaint does not compel remand. Subaru 6 contends that the amount in controversy on the MMWA claim exceeds $50,000 as required 7 by 15 U.S.C. § 2310(d)(3)(B), because Plaintiffs seek reimbursement in the amount of 8 $42,485, incidental and consequential damages, and civil penalties of two times their actual 9 damages. Subaru contends that the Court still has supplemental jurisdiction over Plaintiffs’ 10 remaining state law claims. Subaru contends the Court should not remand the case because 11 Plaintiffs attempt “to manipulate the forum by dismissing federal claims in order to get 12 back to state court.” (ECF No. 21 at 6). 13 A court’s jurisdiction “must be analyzed on the basis of the pleading filed at the time 14 of removal without reference to subsequent amendments.” Sparta Surgical Corp. v. Nat’l 15 Ass’n of Sec. Dealers, 159 F.3d 1029, 1213 (9th Cir. 1998). “Under 28 U.S.C. § 1441, a 16 defendant may remove an action filed in state court to federal court if the federal court 17 would have original subject matter jurisdiction over the action.” Moore-Thomas v. Alaska 18 Airlines, Inc., 553 F.3d 1241, 1243 (9th Cir. 2009); see 28 U.S.C. § 1441(a). Federal 19 jurisdiction must exist at the time the complaint is filed and at the time removal is effected. 20 Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129, 1131 (9th Cir. 2002). A party 21 can challenge removal based on lack of subject matter jurisdiction through a motion to 22 remand. 28 U.S.C. § 1447. There is a “strong presumption against removal” such that the 23 removing party “always has the burden of establishing that removal is proper.” Gaus v. 24 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “The removal statute is strictly construed, 25 and any doubt about the right of removal requires resolution in favor of remand.” Moore- 26 Thomas, 553 F.3d at 1244. 27 Under 28 U.S.C. § 1331, district courts “have original jurisdiction of all civil actions 28 arising under the Constitution, laws, or treaties of the United States.” Under the MMWA, 1 a consumer “may bring suit for damages and other legal and equitable relief . . . in an 2 appropriate district court of the United States” so long as the amount in controversy is at 3 least $50,000, “computed on the basis of all claims to be determined in this suit.” 15 U.S.C. 4 § 2310(d). Federal courts have supplemental jurisdiction over state law claims that are so 5 related to the federal claims that they form part of the same case or controversy. 28 U.S.C. 6 § 1367(a). “A state law claim is part of the same case or controversy when it shares a 7 common nucleus of operative fact with the federal claims and the state and federal claims 8 would normally be tried together.” Bahrampour v. Lampert, 356 F.3d 969, 978 (9th Cir. 9 2004) (quotation omitted). 10 A district court may decline to exercise supplemental jurisdiction over a state law 11 claim if: 12 (1) the claim raises a novel or complex issue of State law,

13 (2) the claim substantially predominates over the claim or claims over which 14 the district court has original jurisdiction,

15 (3) the district court has dismissed all claims over which it has original 16 jurisdiction, or

17 (4) in exceptional circumstances, there are other compelling reasons for 18 declining jurisdiction.

19 28 U.S.C. § 1367(c). 20 Even assuming that Subaru properly removed this action on the basis of federal 21 question jurisdiction, the federal claim has been dismissed.1 The remaining claims are 22 based on violations of California law. The Court, therefore, has discretion to decline to 23 exercise supplemental jurisdiction over the state law claims. Id. This case is in the early 24 stages. Plaintiffs’ Motion for Leave to Amend was the first noticed motion in this case. See 25 Baddie v. Berkeley Farms, 64 F.3d 487, 491 (9th Cir. 1995) (holding that plaintiff was 26 27 28 1 ||entitled to file an amended complaint dismissing federal claim and move for remand, 2 ||stating that “[i]f the defendant rejects the plaintiff’s offer to litigate in state court and 3 || removes the action, the plaintiff must then choose between federal claims and a state forum. 4 || Plaintiffs in this case chose the state forum’). The Court declines to exercise supplemental 5 || jurisdiction over Plaintiffs’ state law claims under § 1367(c). Plaintiffs’ Motion to Remand 6 granted. 7 |TV. CONCLUSION 8 IT IS HEREBY ORDERED that Plaintiffs’ Motion for Leave to Amend Complaint 9 (ECF No. 11) is GRANTED. Plaintiff's claim for violation of the Magnuson-Moss 10 || Warranty Act is DISMISSED WITH PREJUDICE. Plaintiffs’ Motion to Remand (ECF 11 ||No. 12) is GRANTED. This action is REMANDED to the Superior Court for the State of 12 || California, County of San Diego, where it was originally filed under case number 37-2019- 13 ||00039617-CU-BC-CTL. 14 || Dated: November 13, 2019 Nitta Ze. A a 15 Hon, William Q. Hayes 16 United States District Court 17 18 19 20 21 22 23 24 25 26 27 28