The People of the State of California v. Coast Runner Industries Inc.

CourtDistrict Court, S.D. California
DecidedOctober 4, 2024
Docket3:24-cv-00971
StatusUnknown

This text of The People of the State of California v. Coast Runner Industries Inc. (The People of the State of California v. Coast Runner Industries Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The People of the State of California v. Coast Runner Industries Inc., (S.D. Cal. 2024).

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 THE PEOPLE OF THE STATE OF Case No.: 24-cv-00971-AJB-SBC CALIFORNIA, 12 Plaintiff, ORDER GRANTING PLAINTIFF’S 13 MOTION TO REMAND v. 14 (Doc. No. 10) 15 COAST RUNNER INDUSTRIES, INC.,

GHOST GUNNER, INC., and DEFENSE 16 DISTRIBUTED, 17 Defendants. 18 19 Before the Court is Plaintiff the People of the State of California’s (“Plaintiff” or 20 “the People”) motion to remand. (Doc. No. 10.) The motion is fully briefed. (See Doc. Nos. 21 10, 16, 17.) The Court, pursuant to its discretion under Civil Local Rule 7.1.d.1, determines 22 the matter is suitable for resolution without need for oral argument, submits the motion on 23 the parties’ papers, and vacates the hearing. For the following reasons, the Court GRANTS 24 Plaintiff’s motion to remand. 25 / / / 26 / / / 27 / / / 28 / / / 1 I. BACKGROUND 2 Defendants Ghost Gunner Inc., Coast Runner Industries, Inc., and Defense 3 Distributed (collectively, “Defendants”) are Texas corporations that sell products that 4 allow individuals to manufacture un-serialized, untraceable, firearms, or “ghost guns.” 5 (Doc. No. 1-8, “Compl.”, ¶¶ 1–2, 10–13, 25.) One of Defense Distributed’s products is a 6 computer numerical control (“CNC”) milling machine called the “Ghost Gunner.” (Id. ¶ 7 2.) Ghost Gunner Inc.’s website states, “The Ghost Gunner 3 aims to allow individuals to 8 manufacture their own un-serialized firearms. Un-serialized firearms are untraceable. 9 Hence, the ‘ghost gun’ name.” (Id. ¶ 2.) The product supports “a growing library of 10 firearms patterns, including the AR-15, AR-308, 1911, and Polymer80 frames.” (Id.) 11 Plaintiff alleges that Coast Runner Industries, Inc. is an alter ego of Ghost Gunner 12 and Defense Distributed. (Id. ¶¶ 6, 30.) Plaintiff contends that the “Coast Runner” product 13 is identical to the Ghost Runner 3, (id. ¶ 42), and was “designed and marketed for the 14 California market,” (id. ¶ 34). By February 14, 2023, Ghost Gunner Inc.’s website included 15 the following: “Notice: California residents ordering a Ghost Gunner CNC machine 16 consent to receiving a Coast Runner CNC machine in lieu of a Ghost Gunner.” (Id. ¶ 34.) 17 Plaintiff alleges that Defendants seek to evade California regulations that prohibit the use, 18 sale, or transfer of CNC milling machines that have the “sole or primary function of 19 manufacturing firearms,” by selling the “Coast Runner” machine to California residents. 20 (Id. ¶¶ 61, 62, 82 (citing Cal. Pen. Code § 29185(b); Cal. Civ. Code § 3273.62(a)–(b)).) 21 Ghost guns pose an imminent danger to the people of California precisely because 22 they are untraceable and largely unregulated—purchasers of Defendants’ CNC milling 23 machines can evade age requirements, background checks, and other regulations governing 24 the purchase of firearms from state-licensed firearms manufacturers. (Id. ¶ 58.) Plaintiff 25 26 1 The following facts are taken from Plaintiff’s Complaint, which the Court construes as true for the 27 limited purpose of resolving the instant motion. See Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1247 (9th Cir. 2013). 28 1 further alleges that the number of ghost guns recovered in connection with criminal activity 2 in California has increased from 26 ghost guns recovered in 2015, to 12,894 ghost guns 3 recovered in 2022. (Id. ¶ 56.) Local and federal law enforcement in Los Angeles, Oakland, 4 San Diego, and San Francisco reported that in 2020 and 2021, ghost guns accounted for 25 5 to 50 percent of firearms recovered at crime scenes. (Id.) These figures represent only the 6 recorded number of ghost guns recovered from crime scenes—Plaintiff asserts that the 7 number of ghost guns in circulation is much higher. (Id. ¶ 57.) 8 On May 3, 2024, Plaintiff filed a complaint in San Diego County Superior Court. 9 (Doc. No. 1-8.) Plaintiff, by and through the Office of County Counsel for the County of 10 San Diego, brought the action against Defendants. (Compl. at 3.) Defendants are Texas 11 corporations and Coast Runner’s and Ghost Gunner’s principal places of business are in 12 Austin, Texas. (Doc. No. 1, “Removal Notice,” at 2; Compl. ¶¶ 11–13.) Plaintiff asserts 13 two causes of action against Defendants: (1) violation of California Civil Code § 3273.62, 14 prohibiting a person who sells, offers to sell, transfers, advertises, or markets a CNC 15 milling machine from knowingly or recklessly causing another person to engage in conduct 16 that is illegal under Penal Code 29185, which proscribes anyone, other than a state licensed 17 manufacturer, to “use a [CNC] milling machine or three-dimensional printer to 18 manufacture a firearm”; and (2) violation of California’s Unfair Competition Law, Cal. 19 Bus. & Prof. Code § 17200 (“UCL”). (Compl. ¶¶ 64–86.) 20 On June 3, 2024, Defendants timely removed the case to federal court under diversity 21 jurisdiction. (Doc. No. 1.) Defendants also filed a motion to change venue, (Doc. No. 5), 22 and motion dismiss for lack of jurisdiction, (Doc. No. 6). On June 18, 2024, Plaintiff filed 23 the instant motion to remand, arguing that Defendants failed to satisfy their burden that 24 diversity jurisdiction exists, and that removal is proper. (Doc. No. 10.)2 This Order follows. 25 / / / 26 / / / 27 2 On June 25, 2024, the Court stayed briefing on Defendants’ motion to transfer, (Doc. No. 5), and 28 1 II. LEGAL STANDARD 2 “Federal courts are courts of limited jurisdiction and, as such, cannot exercise 3 jurisdiction without constitutional and statutory authorization.” Hansen v. Grp. Health 4 Coop., 902 F.3d 1051, 1056 (9th Cir. 2018) (citations omitted). “A defendant generally 5 may remove a civil action if a federal district court would have original jurisdiction over 6 the action.” Allen v. Boeing Co., 784 F.3d 625, 628 (9th Cir. 2015) (citing 28 U.S.C. § 7 1441(a)); see Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Federal courts have 8 original jurisdiction where an action presents a federal question under 28 U.S.C § 1331, or 9 diversity of citizenship under 28 U.S.C § 1332. For a federal court to exercise diversity 10 jurisdiction, there must be “complete diversity” between the parties and the amount in 11 controversy must exceed the $75,000 threshold. See 28 U.S.C. § 1332(a). 12 There is a strong presumption against removal jurisdiction, and courts strictly 13 construe the removal statute against removal jurisdiction. See Geographic Expeditions, Inc. 14 v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010). “The removing 15 defendant bears the burden of overcoming the strong presumption against removal 16 jurisdiction.” Hansen, 902 F.3d at 1057 (internal quotation marks and citations omitted); 17 see also Scott v. Breeland,

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