Polo v. Innoventions International, LLC , 833 F.3d 1193 ( 2016 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ELSA POLO, on behalf of herself and No. 14-55916
all others similarly situated,
Plaintiff-Appellant, D.C. No.
2:13-cv-00830-
v. ABC-RNB
INNOVENTIONS INTERNATIONAL,
LLC, a limited liability company, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Audrey B. Collins, District Judge, Presiding
Argued and Submitted May 4, 2016
Pasadena, California
Filed August 18, 2016
Before: RAYMOND C. FISHER, MILAN D. SMITH, JR.,
and JACQUELINE H. NGUYEN, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
2 POLO V. INNOVENTIONS INT’L
SUMMARY*
Remand
The panel reversed the district court’s dismissal of a
putative class action, based on lack of jurisdiction, and
remanded to the district court for the case to be remanded to
state court pursuant to 28 U.S.C. § 1447(c).
The panel held that the district court upon determining
that it lacked jurisdiction, should have remanded the case to
state court pursuant to 28 U.S.C. § 1447(c). Specifically, the
panel held that the rule – that a removed case in which the
plaintiff lacks Article III standing must be remanded to state
court under § 1447(c) – applies as well to a case removed
pursuant to the Class Action Fairness Act as to any other type
of removed case. The panel rejected appellee’s arguments
that § 1447(c) should not apply to this case. Finally, the
panel held that it could not say with “absolute certainty” that
remand would be futile, therefore, the district court should
have remanded to state court pursuant to § 1447(c).
COUNSEL
Christopher Law Rudd (argued), The C2 Law Group, P.C.,
Sherman Oaks, California, for Plaintiff-Appellant.
Thomas J. Peistrup (argued), Tantalo & Adler LLP, Los
Angeles, California, for Defendant-Appellee.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
POLO V. INNOVENTIONS INT’L 3
OPINION
M. SMITH, Circuit Judge:
Elsa Polo appeals the district court’s grant of summary
judgment in favor of Innoventions International, LLC
(“Innoventions”). Polo originally filed suit in state court, but
Innoventions removed the case to federal court pursuant to
the Class Action Fairness Act of 2005 (CAFA), Pub. L. No.
109-2, 119 Stat. 4 (codified in scattered sections of
28 U.S.C.). After the parties engaged in some discovery,
Innoventions moved for summary judgment, arguing that
Polo lacked Article III standing. The district court agreed, and
dismissed the case. We hold that upon determining that it
lacked jurisdiction, the district court should have remanded
the case to state court pursuant to 28 U.S.C. § 1447(c).
Accordingly, we reverse and remand to the district court.
FACTS AND PRIOR PROCEEDINGS
Elsa Polo sued Innoventions in California state court. She
alleged several causes of action, including four class claims.
The gravamen of her complaint was that Innoventions had
marketed a product called DiabeStevia with “grossly
misleading and exaggerated claims” concerning its use and
effectiveness—in particular, with the claim that it could be
used to treat diabetes. Based upon Polo’s allegation that the
classes included “hundreds of customers,” Innoventions
removed the case to federal court pursuant to the provisions
of CAFA, which provides for original jurisdiction in the
federal district courts over certain class actions. See 28 U.S.C.
§ 1332(d)(2), (d)(5)(B).
4 POLO V. INNOVENTIONS INT’L
Polo went through several rounds of pleading before
settling on a Third Amended Complaint (TAC). The TAC
alleged, among other things, that Polo had been diagnosed
with Type 2 diabetes; that Innoventions marketed
DiabeStevia as a treatment for diabetes; that relying upon
Innoventions’s claims, Polo stopped taking her prescribed
diabetes medication, and instead began treating her diabetes
with DiabeStevia; and that DiabeStevia failed to perform as
advertised, causing Polo to suffer “life threatening illness.”
Based upon these and other allegations, Polo asserted nine
different causes of action in her TAC.
Of those original nine causes of action, Polo appeals the
dismissal of only one, her class-action claim for violations of
California’s Consumers Legal Remedies Act (CLRA), Cal.
Civ. Code § 1750 et seq. That claim was predicated on a
rather more limited set of allegations, i.e., that DiabeStevia
“did not have the level of safety, quality, effectiveness or
value as promised” and that she and the class members
“would not have purchased DiabeStevia on the same
terms”—that is, for a “premium price”—“had they known the
true facts.” Polo also asserted that her counsel had mailed to
Innovations the written notice and demand required by the
CLRA. See Cal. Civ. Code § 1782(a).
On summary judgment, the district court found
undisputed that Polo does not have diabetes, and that she had
stopped taking her diabetes medication at least five months
before she purchased and used DiabeStevia. Thus, the district
court reasoned, Polo “cannot have been injured in the manner
in which she alleges—that she became severely ill with
diabetes symptoms in response to discontinuing her
prescriptions in reliance on DiabeStevia.” With respect to
Polo’s CLRA claim, the district court found that Innoventions
POLO V. INNOVENTIONS INT’L 5
had undisputedly refunded Polo her entire purchase price,
including tax and shipping. As a result, the district court held
that Polo lacked Article III standing for all of her claims,
granted summary judgment in favor of Innoventions, and
dismissed the case. This appeal followed.
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review the district court’s decision not to remand de novo.
See ARCO Envtl. Remediation, L.L.C. v. Dep’t of Health &
Envtl. Quality, 213 F.3d 1108, 1111 (9th Cir. 2000); see also
Ah Quin v. Cty. of Kauai Dep’t of Transp., 733 F.3d 267, 270
(9th Cir. 2013) (reviewing grant of summary judgment).
ANALYSIS
On appeal, Polo does not dispute that she lacked Article
III standing. Instead, she argues that upon making that
determination, the district court was required to remand the
case to state court, pursuant to 28 U.S.C. § 1447(c).
Innoventions disagrees. Its primary argument is that
§ 1447(c) does not apply in the context of this case. Even if
it does, Innoventions insists, the district court was permitted
to dismiss this case because remand to the California courts
would have been “futile.” See Bell v. City of Kellogg,
922 F.2d 1418, 1425 (9th Cir. 1991). We address each of
Innoventions’ arguments in turn.
I. Removal without Jurisdiction
It is axiomatic that federal courts are courts of limited
jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994). We are limited, by Congress and
6 POLO V. INNOVENTIONS INT’L
by the Constitution, in the subject matter of cases we may
adjudicate. Id. State courts, by contrast, are not so limited.
See Tafflin v. Levitt, 493 U.S. 455, 458–60 (1990). As a
result, federal and state courts frequently have concurrent
jurisdiction over a given case. See, e.g., id. (concerning
federal claims); Colo. River Water Conservation Dist. v.
United States, 424 U.S. 800, 809 (1976) (concerning state-
law claims with diverse parties). When this is so, a plaintiff
may choose the court system in which she files suit—she is,
as the old maxim declares, “master of [her] case.” See, e.g.,
Emrich v. Touche Ross & Co., 846 F.2d 1190, 1196 (9th Cir.
1988).
The availability of removal is an important check on the
plaintiff’s mastery. Removal permits a defendant to bring to
federal court a suit initially filed in state court—if the federal
court could have exercised original jurisdiction in the first
instance. 28 U.S.C. § 1441(a), (b).1 Removal is a powerful
tool: It operates largely automatically in that once a defendant
has filed the appropriate notice of removal in the federal
district court removal is a fait accompli. §§ 1446(a), 1447(a),
(b). If the removal suffers from procedural defects, the
plaintiff is responsible for bringing those defects to the
attention of the district court in a timely motion to remand.
§ 1447(c); Kelton Arms Condo. Owners Ass’n, Inc. v.
Homestead Ins. Co., 346 F.3d 1190, 1192 (9th Cir. 2003).
Generally, procedural defects not so raised are waived. See
Lively v. Wild Oats Mkts., Inc., 456 F.3d 933, 942 (9th Cir.
2006).
Defects of subject-matter jurisdiction, however, are
another matter. In an ordinary removal case, “[i]f at any time
1
But see 28 U.S.C. § 1441(b)(2).
POLO V. INNOVENTIONS INT’L 7
before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.”
§ 1447(c) (emphasis added). No motion, timely or otherwise,
is necessary: ultimate responsibility to ensure jurisdiction lies
with the district court. Kelton Arms, 346 F.3d at 1192.
Moreover, the district court generally must remand the case
to state court, rather than dismiss it. Bruns v. Nat’l Credit
Union Admin., 122 F.3d 1251, 1257 (9th Cir. 1997). Remand
is the correct remedy because a failure of federal subject-
matter jurisdiction means only that the federal courts have no
power to adjudicate the matter. State courts are not bound by
the constraints of Article III. ASARCO Inc. v. Kadish,
490 U.S. 605, 617 (1989).
The rule that a removed case in which the plaintiff lacks
Article III standing must be remanded to state court under
§ 1447(c) applies as well to a case removed pursuant to
CAFA as to any other type of removed case. § 1453(c)(1)
(“Section 1447 shall apply to any removal of a case under
[CAFA], except . . . section 1447(d) . . . .”); see also Me.
Ass’n of Interdependent Neighborhoods v. Comm’r, Me.
Dep’t of Human Servs., 876 F.2d 1051, 1053–54 (1st Cir.
1989). Despite this straightforward proposition, Innoventions
argues that § 1447(c) should not apply to this case for three
reasons.
First, Innoventions relies on general maxims in our
precedents, such as “a putative class action, once properly
removed, stays removed.” See United Steel, Paper &
Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv.
Workers Int’l Union v. Shell Oil Co., 602 F.3d 1087, 1091
(9th Cir. 2010). Taken at face value, the stated maxim proves
too much: It squarely contradicts the statutory language,
which provides for remand of CAFA actions on (mostly) the
8 POLO V. INNOVENTIONS INT’L
same terms as any other case removed to federal court. See
§ 1453(c)(1). In context, the quoted statement in United Steel
applies only to “post-filing developments,” such as a failure
of Rule 23 class certification that might defeat CAFA
eligibility. See 602 F.3d at 1091–92 & n.3. Our primary
concern in that case was thwarting “jurisdictional ping-pong
game[s]” in which parties lob a case back and forth between
federal and state courts as post-filing developments occur.
See id. at 1090. But when federal jurisdiction is absent from
the commencement of a case, a putative class action is not
“properly removed”—and therefore need not “stay[]
removed.” See id. at 1091, 1092 n.3. This case lacked a
named plaintiff with Article III standing, and therefore was
not properly removed. Moreover, after remand of this appeal,
Polo’s lack of Article III standing will be law of the case.2
Thus, there is no danger of a jurisdictional ping-pong game
in this case: this rally has concluded.
Second, Innoventions argues that the failure of a claim on
the merits does not divest a court of jurisdiction. While this
is generally true, see Bell v. Hood, 327 U.S. 678, 682 (1946),
the point is irrelevant here. The district court expressly
determined that Polo’s claims failed for lack of standing. The
district court’s factual determinations—that Polo did not have
diabetes and that Innoventions did not cause her to stop
taking her diabetes medication—could have served as a basis
for judgment on the merits of some of her other claims, such
as her claim for personal injury. However, as we shall
presently explain, Polo’s CLRA claim is independent of those
facts. See infra Part II. According to the district court, that
2
See Morris v. Am. Nat’l Can Corp., 988 F.2d 50, 52 (8th Cir. 1993)
(holding that the law-of-the-case doctrine applies just as readily to an issue
that was waived as to an issue that was formally presented to the court).
POLO V. INNOVENTIONS INT’L 9
claim was rendered “moot” when Innoventions refunded Polo
the money she spent on DiabeStevia. It rendered no judgment
on the merits of that claim.
Finally, Innoventions argues that because Polo’s lack of
injury was established as part of the summary-judgment
process, it was established at final judgment, rather than
“before final judgment” as required by § 1447(c). What the
statute requires is remand “[i]f at any time before final
judgment it appears that the district court lacks subject matter
jurisdiction”—and the district court necessarily must have
determined that it lacked subject-matter jurisdiction before
entering judgment to that effect.3 Therefore, this case falls
within the purview of § 1447(c).
II. The Futility Doctrine and the CLRA
Innoventions also argues that despite the literal words of
§ 1447(c), a district court may dismiss a removed case
without remanding it back to state court if remand would be
futile. This argument finds some support in our precedents.
See Bell v. City of Kellogg, 922 F.2d 1418, 1425 (9th Cir.
1991). However, the Bell rule has been questioned, and may
no longer be good law. Importantly here, even if it remains
good law, remand would not be futile under the Bell standard.
In International Primate Protection League v.
Administrators of Tulane Educational Fund, decided a few
months after we decided Bell, the Supreme Court declined to
apply a futility exception to the remand rule. 500 U.S. 72,
3
Indeed, the record shows that the district court made its determination
on May 1, 2014, but entered judgment almost two weeks later on May 12,
2014.
10 POLO V. INNOVENTIONS INT’L
88–89 (1991). Although the Court did not reject the futility
doctrine outright, it did take note of “the literal words of
§ 1447(c), which, on their face, give no discretion to dismiss
rather than remand an action.” Id. at 89 (quotation marks and
alteration omitted). In the wake of International Primate, a
number of other circuits have expressly rejected the futility
doctrine. See Hill v. Vanderbilt Capital Advisors, LLC,
702 F.3d 1220, 1225–26 (10th Cir. 2012) (collecting cases).
But Polo has not argued that Bell is no longer controlling law,
and we decline to so hold sua sponte. Cf. Miller v. Gammie,
335 F.3d 889, 899 (9th Cir. 2003) (considering when a panel
may overrule prior circuit authority).
Even applying the Bell rule, however, a district court must
have “absolute certainty” that a state court would “simply
dismiss[] the action on remand.” 922 F.2d at 1425 (quotation
marks omitted). In other words, only when the eventual
outcome of a case after remand is so clear as to be
foreordained have we held that a district court may dismiss
it—to “prevent[] any further waste of valuable judicial time
and resources.” Id. It is far from clear that a state court would
dismiss Polo’s CLRA claim.
A plaintiff who purchased goods in light of deceptive
practices has standing to sue pursuant to the CLRA if she
alleges (a) that she purchased a product from the defendant,
and (b) that “the purchase would not have been made but for
the misrepresentation.” Kwikset Corp. v. Superior Court,
246 P.3d 877, 890 (Cal. 2011); see also Hinojos v. Kohl’s
Corp., 718 F.3d 1098, 1108 (9th Cir. 2013). The injury Polo
asserts with respect to her CLRA claim fits these
requirements:
POLO V. INNOVENTIONS INT’L 11
Plaintiff and California Class members
suffered injuries caused by Defendants’
misrepresentations about DiabeStevia
because: (a) Plaintiff and the California Class
members would not have purchased
DiabeStevia on the same terms had they
known the true facts; (b) Plaintiff and the
California Class paid a premium price due to
the false and misleading advertising of
DiabeStevia; and (c) DiabeStevia did not have
the level of safety, quality, effectiveness or
value as promised.
Polo’s standing to bring her CLRA claim does not depend
upon her allegation that taking DiabeStevia made her diabetes
worse. Indeed, with respect to Polo’s CLRA claim, when
Polo ceased taking her diabetes medication—or whether she
had diabetes at all4—is irrelevant. What matters are her
allegations that she thought she had diabetes; that
Innoventions marketed DiabeStevia as a treatment for
diabetes; and that but for that marketing, she would not have
bought DiabeStevia.
Were that the end of the allegations, Polo would likely
have standing under Article III. See Hinojos, 718 F.3d at
1104 n.3. But the district court held that because Innoventions
fully compensated Polo for “her entire purchase price,” her
4
Whether or not Polo actually had or has diabetes is unclear. Polo was
at one point in time diagnosed with diabetes and prescribed diabetes
medication. Some time later—the timeline is vague—she was told either
that her symptoms had been brought under control or that she was no
longer diabetic.
12 POLO V. INNOVENTIONS INT’L
CLRA claim is moot.5 Under California law, however, that
sort of “picking off” of class plaintiffs is ineffective: “[O]nce
a person has been the victim of a proscribed practice under
the CLRA and makes a demand on behalf of a class,
remedying the plaintiff’s individual complaint does not
disqualify her as class representative.” Meyer v. Sprint
Spectrum, L.P., 200 P.3d 295, 300 (Cal. 2009). Instead, to
defeat a class action based on practices proscribed under the
CLRA, the defendant “must adequately notify the members
of the class and provide an opportunity for an appropriate
remedy for the defective goods or services.” Id. (citing Cal.
Civ. Code § 1782(c)).
Polo made a demand on behalf of a class on April 6,
2012. Innoventions refunded Polo’s purchase price on May
11, 2012, but does not contend that it provided the notice and
remedy to class members required by the CLRA. See Cal.
Civ. Code § 1782(c); Meyer, 200 P.3d at 300. Thus, Polo
likely retains standing under California law. At a minimum,
we cannot say with “absolute certainty” that remand would be
futile. Therefore, the district court should have remanded this
case to state court pursuant to 28 U.S.C. § 1447(c).
CONCLUSION
The district court’s judgment dismissing this case is
REVERSED and REMANDED.
5
This conclusion is questionable, see Chen v. Allstate Ins. Co., 819 F.3d
1136, 1141–43 (2016), but Polo expressly waived any argument to the
contrary on appeal. See supra note 2 and accompanying text.