Serop J. Beylerian v. Hillstone Restaurant Group, Inc.

• Court: District Court, C.D. California
• Decided: May 10, 2021
• Docket: 2:20-cv-11580
• Status: Unknown

Opinion

O 1 JS-6 2 3 4 5 6 7

8 United States District Court 9 Central District of California

11 SEROP J. BEYLERIAN and AVEDIS Case № 2:20-CV-11580-ODW (RAOx) SHANLIAN, on behalf of themselves and 12 others similarly situated, ORDER GRANTING MOTION TO 13 Plaintiffs, REMAND [15] AND 14 v. DENYING MOTION TO DISMISS 15 [27], MOTION TO STRIKE [28], HILLSTONE RESTAURANT GROUP, INC., a Delaware corporation; and DOES AND MOTION FOR RELIEF [38] 16 1 through 10, inclusive, 17 Defendants. 18 19 I. INTRODUCTION 20 Plaintiffs Serop J. Beylerian and Avedis Shanlian initiated this putative class 21 action in state court against Defendant Hillstone Restaurant Group, Inc. (“Hillstone”). 22 (Notice of Removal (“Notice”) Ex. A (“Compl.”), ECF No. 1.) Hillstone removed the 23 action based on alleged diversity jurisdiction. (Notice ¶ 3.) Plaintiffs now move to 24 remand on the grounds that Hillstone has not met its burden to establish an amount in 25 controversy exceeding $75,000. (Mot. to Remand (“Motion” or “Mot.”), ECF 26 No. 15.) For the reasons below, the Court GRANTS1 the Motion. 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 Plaintiffs are patrons of Hillstone’s restaurants, namely South Beverly Grill in 3 Beverly Hills, California and Houston’s in Pasadena, California. (Compl. ¶¶ 40–41.) 4 Plaintiffs allege that Hillstone raised the cost of take-out food items at its restaurants 5 and “added a 10% to 15% . . . ‘service and packaging fee’ to its takeout sales” during 6 the COVID-19 state of emergency. (Id. ¶¶ 6, 30–32.) As a result, Beylerian and 7 Shanlian claim they were unlawfully overcharged $22.30 at South Beverly Grill and 8 $23.50 at Houston’s, respectively. (See Compl. ¶¶ 39–41, Exs. A–B; Mot. 5–6.) 9 Based on these allegations, Plaintiffs commenced this putative class action 10 against Hillstone for: (1) violation of California’s Unfair Competition Law (“UCL”), 11 California Business & Professions Code section 17200, et seq.; (2) negligence; and 12 (3) unjust enrichment. (See Compl. ¶¶ 54–90.)2 Plaintiffs seek relief in the form of 13 monetary damages, punitive damages, disgorgement, restitution, injunctive relief, 14 declaratory relief, and attorney fees and costs. (Id., Prayer.) Hillstone removed the 15 action to this Court, asserting diversity jurisdiction under 28 U.S.C. § 1332(a). (See 16 Notice ¶¶ 3–4.) Plaintiffs now move to remand. (See generally Mot.) 17 III. LEGAL STANDARD 18 Federal courts are courts of limited jurisdiction, having subject-matter 19 jurisdiction only over matters authorized by the Constitution and Congress. 20 U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v. Guardian Life Ins. Co. of Am., 21 511 U.S. 375, 377 (1994). A suit filed in a state court may be removed to federal 22 court if the federal court would have had original jurisdiction over the suit. 28 U.S.C. 23 § 1441(a). Federal courts have original jurisdiction where an action presents a federal 24 question under 28 U.S.C. § 1331, or diversity of citizenship under 28 U.S.C. § 1332. 25 Diversity jurisdiction requires complete diversity of citizenship among the adverse 26 27 2 Although Plaintiffs have filed a First Amended Complaint (“FAC”), (ECF No. 22), the Court looks 28 to the face of the complaint at the time of removal to determine whether diversity jurisdiction is satisfied, Miller v. Grgurich, 763 F.2d 372, 373 (9th Cir. 1985). 1 parties and an amount in controversy exceeding $75,000, exclusive of interests and 2 costs. 28 U.S.C. § 1332(a). 3 When a defendant removes based on diversity jurisdiction, the “notice of 4 removal need include only a plausible allegation that the amount in controversy 5 exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co., LLC v. 6 Owens, 574 U.S. 81, 89 (2014). Where, as here, a defendant’s amount in controversy 7 assertion is challenged, “[e]vidence establishing the amount is required” and “the 8 court decides, by a preponderance of the evidence, whether the amount-in-controversy 9 requirement has been satisfied.” Id. at 88–89. 10 Courts strictly construe the removal statute against removal jurisdiction, and 11 “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal 12 in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The 13 party seeking removal bears the burden of establishing federal jurisdiction. Id. 14 IV. DISCUSSION 15 Hillstone invokes diversity jurisdiction under 28 U.S.C. § 1332(a) as the basis 16 for removal.3 (Notice ¶¶ 3–4.) For this reason, the traditional diversity jurisdiction 17 requirements of § 1332(a) apply. See ARCO Env’t Remediation, L.L.C. v. Dep’t of 18 Health & Env’t Quality of Mont., 213 F.3d 1108, 1117 (9th Cir. 2000) (explaining that 19 a notice of removal must include all grounds for removal and may not be amended to 20 add an additional basis for removal after thirty days have passed). The parties do not 21 dispute complete diversity.4 (Notice ¶ 4; see Reply 3 n.3, ECF No. 21.) Accordingly, 22 the only issue before the Court is whether the amount in controversy exceeds $75,000. 23 24

25 3 As Plaintiffs correctly note, Hillstone does not rely on the Class Action Fairness Act, 28 U.S.C. § 1332(d) (“CAFA”) in its Notice of Removal. (Mot. 1; see Notice ¶¶ 3–4; Opp’n 6, ECF No. 19.) 26 4 As complete diversity is not in dispute, the Court DENIES Plaintiffs’ request for judicial notice because the proffered documents do not affect the disposition of the Motion. (See Req. Judicial 27 Notice, ECF No. 15-3); see also Bichindaritz v. Univ. of Wash., 550 F. App’x 412, 413 (9th Cir. 28 2013) (denying request for judicial notice because “the subject of [the] notice [wa]s unnecessary to the resolution of the issues”). 1 Hillstone asserts that the amount in controversy is met in two ways. First, 2 Hillstone contends that Plaintiffs’ request for disgorgement of “ill-gotten” surcharge 3 fees exceeds $75,000 across its California restaurants. (Opp’n 10–13; Decl. of R. 4 Scott Ashby (“Ashby Decl.”) ¶ 11, ECF No. 19-2.) Second, Hillstone claims the cost 5 of compliance with Plaintiffs’ requested injunction requiring Hillstone to 6 “permanently cease” the alleged price gouging also exceeds $75,000.5 (Opp’n 14–19; 7 Ashby Decl. ¶ 12.) Plaintiffs argue that neither of Hillstone’s contentions has merit. 8 (See Mot. 10, 16.) Plaintiffs are correct. 9 A. Disgorgement 10 Plaintiffs seek disgorgement of “ill-gotten gains” that Hillstone acquired 11 through its alleged increased food prices and 10–15% surcharge fees. (Compl., Prayer 12 ¶ 5.) Hillstone asserts that disgorgement of the surcharge profits meets the 13 jurisdictional minimum because, when aggregated across its California restaurants, 14 “the actual fees recovered . . . are well above” $75,000. (Opp’n 11.) Hillstone 15 supports this vague statement with only the conclusory assertion of R. Scott Ashby, 16 Hillstone’s Executive Vice President, that Hillstone’s California locations “collect[] 17 [surcharge] fees of, on average, slightly under $200,000 per month.” (Ashby Decl. 18 ¶ 11.) Hillstone does not substantiate this figure with any records or financial 19 statements, and expressly declines to provide specific numbers. (See id.; Opp’n 11 20 n.1.) Without corroborating support, Ashby’s declaration is speculative and 21 self-serving, and falls short of the type of evidence required to establish the 22 jurisdictional amount on removal. See Dart Cherokee, 574 U.S. at 88–89; Farley v. 23 Dolgen Cal., LLC, No. 2:16-CV-02501-KJM (EFBx), 2017 WL 3406096, at *5 24 25 5 Hillstone does not argue or provide evidence in its opposition regarding Plaintiffs’ other categories 26 of damages, including attorney fees or punitive damages; thus, any such arguments are waived. See Heraldez v. Bayview Loan Servicing, LLC, No. CV 16-1978-R, 2016 WL 10834101, at *2 (C.D. Cal. 27 Dec. 15, 2016) (“Failure to oppose constitutes waiver or abandonment of the issue.”), aff’d 719 F. 28 App’x 663 (9th Cir. 2018). Alternatively, Hillstone has failed to show these damages satisfy the amount in controversy by a preponderance of the evidence. See Dart Cherokee, 574 U.S. at 88–89. 1 (E.D. Cal. Aug. 9, 2017) (“Without corroborating documents, [the] declaration . . . is 2 speculative and self-serving.”). 3 Regardless, Hillstone may not aggregate disgorgement of its surcharge fees 4 under traditional diversity jurisdiction. To determine the amount in controversy in 5 diversity class actions, courts examine “only the claims of named class plaintiffs.” 6 Gibson v. Chrysler Corp., 261 F.3d 927, 941 (9th Cir. 2001). Under traditional 7 diversity jurisdiction, the “anti-aggregation rule” applies such that “separate and 8 distinct claims of two or more plaintiffs cannot be aggregated in order to satisfy the 9 jurisdictional amount requirement.” Snyder v. Harris, 394 U.S. 332, 335 (1969). 10 Aggregation of multiple claims is “permissible only . . . in cases in which two or more 11 plaintiffs unite to enforce a single title or right in which they have a common and 12 undivided interest.” Gibson, 261 F.3d at 943. Likewise, in the disgorgement context, 13 “the total disgorgement amount requested cannot be used to satisfy the jurisdictional 14 amount requirement” if “the consolidated plaintiffs have no common and undivided 15 interest.” In re Ford Motor Co./Citibank (S.D.), N.A., 264 F.3d 952, 962 (9th Cir. 16 2001) (finding that defendants could not aggregate disgorgement because plaintiffs’ 17 claims arose from individual purchases); see also Bakken v. State Farm Ins. Co., 87 F. 18 App’x 674, 674–75 (9th Cir. 2004) (finding aggregation of disgorgement improper 19 where plaintiffs’ claims arose from deductions on individual insurance policies). 20 Here, Plaintiffs’ claims are “separate and distinct” and do not share “a common 21 and undivided interest.” Gibson, 261 F.3d at 943. Beylerian sues for $22.30 on a 22 single purchase at South Beverly Grill, and Shanlian sues for $23.50 on a separate 23 transaction at Houston’s. (See Compl. ¶¶ 39–41, Exs. A–B; Mot. 5–6.) The claims 24 thus arise from unrelated, individually cognizable transactions. See, e.g., In re Ford, 25 264 F.3d at 959 (finding aggregation improper based on absence of “common and 26 undivided interest . . . [where] each plaintiff charged purchases and accrued rebates 27 individually, not as a group”). Therefore, the anti-aggregation rule applies and 28 Hillstone may not aggregate the total surcharge profits of all its California restaurants 1 to calculate the disgorgement for amount in controversy. Bakken, 87 F. App’x at 675 2 (emphasis added) (citing In re Ford, 264 F.3d at 962) (“[D]isgorgement . . . may be 3 counted toward the amount-in-controversy only to the extent of the value of [the] 4 individual’s claim.”); see also Matoff v. Brinker Rest. Corp., 439 F. Supp. 2d 1035, 5 1038–39 (C.D. Cal. 2006) (“Disgorgement of profits is available under the UCL only 6 to the extent that it is restitutionary.”). 7 As Hillstone’s disgorgement argument relies entirely on aggregation of its total 8 surcharge profits, (see Opp’n 10–13), Hillstone fails to establish that disgorgement 9 satisfies the jurisdictional amount requirement. 10 B. Injunctive Relief 11 Hillstone next argues that the cost to Hillstone of complying with Plaintiffs’ 12 requested injunction to “permanently cease” the alleged price gouging exceeds 13 $75,000. (Opp’n 14; see Compl. ¶ 67.) Hillstone contends compliance with the 14 requested injunction will require it to create new menus and reduce prices across all its 15 California restaurants, thereby causing lost revenue and possibly closure of restaurant 16 locations. (Opp’n 15–19.) 17 First, Hillstone’s argument here suffers from the same evidentiary deficiency as 18 above. Hillstone again relies solely on Ashby’s declaration, which provides that if 19 Hillstone decides to continue the take-out food program, it would need to “recreate its 20 menus,” and “the combined costs of the[] changes across Hillstone’s operational 21 California locations [would] easily exceed $75,000.” (Ashby Decl. ¶ 12.) Equally 22 speculative and conclusory, Ashby states that if Hillstone decides to close locations, it 23 would incur significant costs, including the value of lost inventory and continuing rent 24 obligations. (Id. ¶ 13 (“[I]f on-premises dining remains prohibited . . . and if those 25 restaurants [are subject to an injunction], Hillstone may decide to stop funding 26 losses . . . .” (emphases added)).) As above, however, Hillstone does not substantiate 27 any of these speculative costs. (See id. ¶¶ 12–13.) Ashby’s speculative and 28 1 self-serving declaration again falls short. See Dart Cherokee, 574 U.S. at 88–89; 2 Farley, 2017 WL 3406096, at *5.6 3 Moreover, similar to disgorgement, Hillstone may not aggregate the cost of 4 injunctive compliance. Hillstone invokes the “either viewpoint” rule, which provides 5 that the amount in controversy is the total pecuniary result to either party. (See 6 Opp’n 14); In re Ford, 264 F.3d at 958. Under that rule, where a plaintiff’s recovery 7 is less than $75,000, the court may look to “the potential cost to the defendant of 8 complying with the injunction.” In re Ford, 264 F.3d at 958. However, in class 9 actions, use of this rule is effectively “the same as aggregation.” Kanter v. Warner- 10 Lambert Co., 265 F.3d 853, 859 (9th Cir. 2001) (quoting Snow v. Ford Motor Co., 11 561 F.2d 787, 790 (9th Cir. 1977)). And aggregation remains unavailable in 12 traditional diversity class actions where jurisdiction is premised on 28 U.S.C. 13 § 1332(a).7 Pagel v. Dairy Farmers of Am., Inc., 986 F. Supp. 2d. 1151, 1159 14 (C.D. Cal. 2013) (first citing Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1122 15 (9th Cir. 2013); and then citing In re Ford, 264 F.3d at 958–59) (“The ‘either 16 viewpoint’ rule is not used in diversity class actions because it would subvert the 17 anti-aggregation rule.”). 18 As discussed above, the anti-aggregation rule applies here because Plaintiffs’ 19 claims are “separate and distinct,” and do not share a “common and undivided” 20 interest. See Snyder, 394 U.S. at 335; Kanter, 265 F.3d at 859. Therefore, Hillstone 21 cannot aggregate the total cost of injunctive compliance to satisfy the amount in 22 controversy. See Snow, 561 F.2d at 790; see also Reisfelt v. Topco Assocs., LLC, 23 No. 8:20-CV-01283-JWH (ADSx), 2020 WL 6742879, at *3 (C.D. Cal. Nov. 16, 24 2020) (finding that Snow and Kanter foreclosed defendant’s argument that its total 25 cost of compliance could satisfy the amount in controversy in diversity class action). 26

6 As Hillstone fails to sufficiently support its cost of injunctive compliance, the Court does not reach 27 Hillstone’s objections to Plaintiffs’ evidence on the issue. (See Def.’s Objs., ECF No. 20.) 28 7 In contrast, aggregation is expressly contemplated when jurisdiction is premised on CAFA. See 28 U.S.C. § 1332(d)(6). 1 In sum, Hillstone fails to meet its burden to establish that the amount in 2 || controversy exceeds $75,000. The Court therefore GRANTS Plaintiffs’ Motion to 3 || Remand. 4 V. CONCLUSION 5 For the reasons discussed above, the Court GRANTS Plaintiffs’ Motion to 6 || Remand. (ECF No. 15.) In light of the Court’s conclusion that it lacks subject matter 7 || jurisdiction, the pending Motion to Dismiss (ECF No. 27), Motion to Strike (ECF 8 | No. 28), and Motion for Relief (ECF No. 38) are not for this Court to decide and are 9 || therefore DENIED without prejudice. 10 The Court REMANDS this action to the Superior Court of California, County 11 || of Los Angeles, Stanley Mosk Courthouse, 111 North Hill Street, Los Angeles, 12 | California, 90012. All dates and deadlines are VACATED. The Clerk of the Court 13 || shall close this case. 14 15 IT IS SO ORDERED. 16 17 May 10, 2021 NN 18 “Soe OP 19 GEA: Sa

0 OTIS D. GHT, II UNITED STATES.DISTRICT JUDGE

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