1 2 3 UNITED STATES DEFENDANTS COURT 4 NORTHERN DEFENDANTS OF CALIFORNIA 5 6 LISA SHEPPARD, et al., Case No. 22-cv-03237-TLT
7 Plaintiffs, ORDER DENYING PLAINTIFFS’ 8 v. MOTION TO REMAND AND REQUEST FOR ATTORNEY’S FEES 9 COMPASS, INC., et al., Re: ECF No. 11 Defendants. 10
11 12 Before the Court is Plaintiffs Lisa and Todd Sheppard’s (“Plaintiffs”) Motion to Remand. 13 ECF No. 11. Defendants Compass, Inc. (“Defendants”) oppose. ECF No. 17. Under Civil Local 14 Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and 15 hereby DENIES Plaintiffs’ Motion to Remand. 16 I. BACKGROUND 17 Plaintiffs originally filed this action in Sonoma County Superior Court and allege, among 18 other things, breach of contract, fraud, and various California Labor Code violations. See ECF 19 No. 1, Ex. A. Defendants removed the case to this Court pursuant to the Class Action Fairness 20 Act (“CAFA”), 28 U.S.C. § 1332(d). ECF No. 1. In support of CAFA jurisdiction, Defendants 21 assert that, when aggregated, Plaintiffs’ claims exceed $5 million in damages, that more than 100 22 potential class members exist, and that there is minimal diversity between the parties. Id. 23 Plaintiffs do not dispute any of the elements for jurisdiction under CAFA. Instead, 24 Plaintiffs move to remand the action back to state court because, they argue, Defendants “delayed 25 for over one year before seeking removal; hence, the removal is time-barred. [And], Compass has 26 not met its burden of showing ‘bad faith’ on the part of Plaintiffs to explain and justify Compass’ 27 untimely removal….” ECF No. 11 at 3. In short, Plaintiffs argue Defendants failed to remove this 1 II. LEGAL STANDARD 2 For removal to be timely, a defendant wishing to remove a case to federal court must file a 3 notice of removal within 30 days of receiving “through service or otherwise [a] copy of the initial 4 pleading setting forth the claim for relief….” 28 U.S.C. § 1446(b). Formal service of process, 5 measured from the service date according to state law, is a prerequisite for triggering the 30–day 6 removal period because it “assures defendants adequate time to decide whether to remove an 7 action to federal court.” See Murphy Bros., Inc. v. Mitchetti Pipe Stringing, Inc., 526 U.S. 344, 8 347–48, 354 (1999). In Murphy Bros., the Supreme Court explained that under 28 U.S.C. § 9 1446(b), “[a]n individual or entity named as a defendant is not obliged to engage in litigation 10 unless notified of the action, and brought under a court's authority, by formal process.” Id. at 347. 11 Accordingly, the Court held “that a named defendant’s time to remove is triggered by 12 simultaneous service of the summons and complaint, or receipt of the complaint, ‘through service 13 or otherwise,’ after and apart from service of the summons, but not by mere receipt of the 14 complaint unattended by any formal service.” Id. at 347-48. 15 In California, personal service is deemed complete at the time of delivery. See CAL. CODE 16 CIV. PROC. § 415.10. A plaintiff may also serve process by mail where the mailing includes a 17 copy of the summons and complaint, two copies of a notice and acknowledgment form, and a pre- 18 paid return envelope. CAL. CODE CIV. PROC. § 415.30(a). Service by mail is complete on the date 19 the notice form is executed if it is returned to the sender. Id. at § 415.30(c); see also Star Varga v. 20 United Airlines, No. 09-02278 SI, 2009 WL 2246208, at *3 (N.D. Cal. July 24, 2009). 21 III. DICUSSCION 22 A. Defendants’ Notice of Removal is Timely 23 The parties dispute whether Defendants removed this action in a timely manner. Plaintiffs 24 contend that the time to remove began on May 14, 2021, when Defendants’ counsel “sent an 25 email…confirming [Defendants]’ receipt of the complaint and providing notice of representation 26 for the four Compass defendants.” ECF No. 11 at 2. Defendants argue that “Plaintiffs served 27 Defendants with the Summons and FAC on May 3, 2022, and did not serve Defendants with the 1 It is undisputed that Defendants were formally served on May 3, 2022. ECF No. 11-1, ¶ 2 23; ECF No. 17 at 3, 5-6, 10-11; ECF No. 18 at 4. Therefore, Defendants had until June 2, 2022, 3 to remove the case from state to federal court. Because Defendants filed their notice of removal 4 within 30 days of May 3, 2022, removal is timely. See ECF No. 1; see also Quality Loan Serv. 5 Corp. v. 24702 Pallas Way, 635 F.3d 1128, 1132-33 (9th Cir. 2011) (“actual notice of the action is 6 insufficient; rather, the defendant must be ‘notified of the action, and brought under a court's 7 authority, by formal process,’ before the removal period begins to run). Finally, because Plaintiffs 8 emailed, not mailed, Defendants’ counsel notice and acknowledgment forms without a summons, 9 Plaintiffs did not satisfy the requirements for proper service by mail under California Code of 10 Civil Procedure section 415.30(a). ECF No. 11, Ex. 8. 11 B. Waiver of Right to Remove 12 Plaintiffs next contend that Defendants waived their right to remove because they 13 “sandbagged the Plaintiffs by representing that Compass would mediate, with the first mediation 14 scheduled for January 2022 and then a second mediation with a different mediator to settle the 15 case on a class-wide basis in March 2022, only to abort the mediation sessions and convincing 16 Plaintiffs to pay a cancellation fee for the first mediation, even though Compass unilaterally 17 canceled both mediations.” ECF No. 11 at 2. A defendant sued in state court “may waive the 18 right to remove to federal court where, after it is apparent that the case is removable, the defendant 19 takes actions in state court that manifest his or her intent to have the matter adjudicated there, and 20 to abandon his or her right to a federal forum.” Resolution Trust Corp. v. Bayside Developers, 43 21 F.3d 1230, 1240 (9th Cir. 1994). “A waiver of the right of removal must be clear and 22 unequivocal.” Id. (internal quotation marks and citation omitted). 23 Here, Defendants’ alleged waiver was not clear or unequivocal. Defendants informed 24 Plaintiffs of their intent to remove the case to federal court upon service. See ECF No. 11, Ex. 7. 25 In addition, it is unclear whether Defendants ever appeared in the state court action. For example, 26 Plaintiffs filed two status reports in state court. However, neither report is signed by Defendants’ 27 counsel. See ECF No. 11, Ex. 10, 15; ECF No. 18 at 3-4. “Waiver will not occur…when the 1 || that court.” Oster v. Std. Life Ins. Co., No. 09-cv-00851-SBA, 2009 WL 1260174, at *1 (N.D. 2 || Cal. May 6, 2009). 3 C. Plaintiffs’ Request for Fees 4 Plaintiffs request $3,750 in fees their counsel incurred in preparing, briefing, and filing the 5 || present motion to remand. ECF No. 11 at 9. Defendants do not take issue with counsel’s hourly 6 || rates, or the total time spent on this matter. The point of contention is whether Defendants had an 7 objectively reasonable basis for removal. 8 The award of fees and costs is left to the discretion of the district court, Lussier v. Dollar 9 Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008), and the fees provision of the removal 10 statute does not create a presumption either in favor of, or against, an award of fees. Martin v.
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1 2 3 UNITED STATES DEFENDANTS COURT 4 NORTHERN DEFENDANTS OF CALIFORNIA 5 6 LISA SHEPPARD, et al., Case No. 22-cv-03237-TLT
7 Plaintiffs, ORDER DENYING PLAINTIFFS’ 8 v. MOTION TO REMAND AND REQUEST FOR ATTORNEY’S FEES 9 COMPASS, INC., et al., Re: ECF No. 11 Defendants. 10
11 12 Before the Court is Plaintiffs Lisa and Todd Sheppard’s (“Plaintiffs”) Motion to Remand. 13 ECF No. 11. Defendants Compass, Inc. (“Defendants”) oppose. ECF No. 17. Under Civil Local 14 Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and 15 hereby DENIES Plaintiffs’ Motion to Remand. 16 I. BACKGROUND 17 Plaintiffs originally filed this action in Sonoma County Superior Court and allege, among 18 other things, breach of contract, fraud, and various California Labor Code violations. See ECF 19 No. 1, Ex. A. Defendants removed the case to this Court pursuant to the Class Action Fairness 20 Act (“CAFA”), 28 U.S.C. § 1332(d). ECF No. 1. In support of CAFA jurisdiction, Defendants 21 assert that, when aggregated, Plaintiffs’ claims exceed $5 million in damages, that more than 100 22 potential class members exist, and that there is minimal diversity between the parties. Id. 23 Plaintiffs do not dispute any of the elements for jurisdiction under CAFA. Instead, 24 Plaintiffs move to remand the action back to state court because, they argue, Defendants “delayed 25 for over one year before seeking removal; hence, the removal is time-barred. [And], Compass has 26 not met its burden of showing ‘bad faith’ on the part of Plaintiffs to explain and justify Compass’ 27 untimely removal….” ECF No. 11 at 3. In short, Plaintiffs argue Defendants failed to remove this 1 II. LEGAL STANDARD 2 For removal to be timely, a defendant wishing to remove a case to federal court must file a 3 notice of removal within 30 days of receiving “through service or otherwise [a] copy of the initial 4 pleading setting forth the claim for relief….” 28 U.S.C. § 1446(b). Formal service of process, 5 measured from the service date according to state law, is a prerequisite for triggering the 30–day 6 removal period because it “assures defendants adequate time to decide whether to remove an 7 action to federal court.” See Murphy Bros., Inc. v. Mitchetti Pipe Stringing, Inc., 526 U.S. 344, 8 347–48, 354 (1999). In Murphy Bros., the Supreme Court explained that under 28 U.S.C. § 9 1446(b), “[a]n individual or entity named as a defendant is not obliged to engage in litigation 10 unless notified of the action, and brought under a court's authority, by formal process.” Id. at 347. 11 Accordingly, the Court held “that a named defendant’s time to remove is triggered by 12 simultaneous service of the summons and complaint, or receipt of the complaint, ‘through service 13 or otherwise,’ after and apart from service of the summons, but not by mere receipt of the 14 complaint unattended by any formal service.” Id. at 347-48. 15 In California, personal service is deemed complete at the time of delivery. See CAL. CODE 16 CIV. PROC. § 415.10. A plaintiff may also serve process by mail where the mailing includes a 17 copy of the summons and complaint, two copies of a notice and acknowledgment form, and a pre- 18 paid return envelope. CAL. CODE CIV. PROC. § 415.30(a). Service by mail is complete on the date 19 the notice form is executed if it is returned to the sender. Id. at § 415.30(c); see also Star Varga v. 20 United Airlines, No. 09-02278 SI, 2009 WL 2246208, at *3 (N.D. Cal. July 24, 2009). 21 III. DICUSSCION 22 A. Defendants’ Notice of Removal is Timely 23 The parties dispute whether Defendants removed this action in a timely manner. Plaintiffs 24 contend that the time to remove began on May 14, 2021, when Defendants’ counsel “sent an 25 email…confirming [Defendants]’ receipt of the complaint and providing notice of representation 26 for the four Compass defendants.” ECF No. 11 at 2. Defendants argue that “Plaintiffs served 27 Defendants with the Summons and FAC on May 3, 2022, and did not serve Defendants with the 1 It is undisputed that Defendants were formally served on May 3, 2022. ECF No. 11-1, ¶ 2 23; ECF No. 17 at 3, 5-6, 10-11; ECF No. 18 at 4. Therefore, Defendants had until June 2, 2022, 3 to remove the case from state to federal court. Because Defendants filed their notice of removal 4 within 30 days of May 3, 2022, removal is timely. See ECF No. 1; see also Quality Loan Serv. 5 Corp. v. 24702 Pallas Way, 635 F.3d 1128, 1132-33 (9th Cir. 2011) (“actual notice of the action is 6 insufficient; rather, the defendant must be ‘notified of the action, and brought under a court's 7 authority, by formal process,’ before the removal period begins to run). Finally, because Plaintiffs 8 emailed, not mailed, Defendants’ counsel notice and acknowledgment forms without a summons, 9 Plaintiffs did not satisfy the requirements for proper service by mail under California Code of 10 Civil Procedure section 415.30(a). ECF No. 11, Ex. 8. 11 B. Waiver of Right to Remove 12 Plaintiffs next contend that Defendants waived their right to remove because they 13 “sandbagged the Plaintiffs by representing that Compass would mediate, with the first mediation 14 scheduled for January 2022 and then a second mediation with a different mediator to settle the 15 case on a class-wide basis in March 2022, only to abort the mediation sessions and convincing 16 Plaintiffs to pay a cancellation fee for the first mediation, even though Compass unilaterally 17 canceled both mediations.” ECF No. 11 at 2. A defendant sued in state court “may waive the 18 right to remove to federal court where, after it is apparent that the case is removable, the defendant 19 takes actions in state court that manifest his or her intent to have the matter adjudicated there, and 20 to abandon his or her right to a federal forum.” Resolution Trust Corp. v. Bayside Developers, 43 21 F.3d 1230, 1240 (9th Cir. 1994). “A waiver of the right of removal must be clear and 22 unequivocal.” Id. (internal quotation marks and citation omitted). 23 Here, Defendants’ alleged waiver was not clear or unequivocal. Defendants informed 24 Plaintiffs of their intent to remove the case to federal court upon service. See ECF No. 11, Ex. 7. 25 In addition, it is unclear whether Defendants ever appeared in the state court action. For example, 26 Plaintiffs filed two status reports in state court. However, neither report is signed by Defendants’ 27 counsel. See ECF No. 11, Ex. 10, 15; ECF No. 18 at 3-4. “Waiver will not occur…when the 1 || that court.” Oster v. Std. Life Ins. Co., No. 09-cv-00851-SBA, 2009 WL 1260174, at *1 (N.D. 2 || Cal. May 6, 2009). 3 C. Plaintiffs’ Request for Fees 4 Plaintiffs request $3,750 in fees their counsel incurred in preparing, briefing, and filing the 5 || present motion to remand. ECF No. 11 at 9. Defendants do not take issue with counsel’s hourly 6 || rates, or the total time spent on this matter. The point of contention is whether Defendants had an 7 objectively reasonable basis for removal. 8 The award of fees and costs is left to the discretion of the district court, Lussier v. Dollar 9 Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008), and the fees provision of the removal 10 statute does not create a presumption either in favor of, or against, an award of fees. Martin v. 11 Franklin Capital Corp., 546 U.S. 132, 138-39 (2005). Nonetheless, “[a]bsent unusual 12 || circumstances, courts may award attorney’s fees under § 1447(c) only where the removing party = 13 || lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively 14 || reasonable basis exists, fees should be denied.” Jd. at 141. The objective reasonableness of 5 15 || removal may depend on the clarity of the applicable law and whether such law “clearly foreclosed 2 16 || the defendant’s basis of removal.” Lussier, 518 F.3d at 1066-67. Ultimately, “the standard for 17 awarding fees should turn on the reasonableness of the removal.” Martin, 546 U.S. at 141. 5 18 For the reasons discussed above, Defendants’ removal was objectively reasonable because 19 || there is authority from the Supreme Court, Ninth Circuit, and California district courts supporting 20 || their position. Because the Court holds that removal was timely and denies the Motion to 21 Remand, the Court also DENIES Plaintiffs’ request for fees. 22 || IV. CONCLUSION 23 For the reasons above, the Court DENIES Plaintiffs’ Motion to Remand. Accordingly, the 24 Motion to Remand hearing set for November 15, 2022, is VACATED. 25 IT IS SO ORDERED. 26 Dated: November 3, 2022
28 TRINA L. PSON United States Defendants Judge