Pestarino v. Ford Motor Company ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 ANDREW PESTARINO, Case No. 19-cv-07890-BLF 9 Plaintiff, ORDER VACATING MAY 28, 2020 10 v. HEARING ON MOTION TO REMAND; AND DENYING MOTION TO 11 FORD MOTOR COMPANY, et al., REMAND 12 Defendants. [Re: ECF 11] 13 14 Plaintiff Andrew Pestarino (“Pestarino”) sues Defendant Ford Motor Company (“Ford”) 15 for breach of express and implied warranties under California’s Song Beverly Consumer Warranty 16 Act, Cal. Civ. Code § 1790, et seq. (“the Song Beverly Act”). Ford removed the action from the 17 Santa Clara County Superior Court on diversity grounds, and Pestarino now moves to remand 18 based on his assertion that Ford cannot show that the amount in controversy exceeds $75,000. 19 The Court finds the motion to be suitable for decision without oral argument. See Civ. 20 L.R. 7-1(b). Accordingly, the hearing on the motion to remand, currently scheduled for May 28, 21 2020 at 9:00 a.m., is VACATED.1 The motion is DENIED for the reasons discussed below. 22 I. BACKGROUND 23 Pestarino alleges the following facts in the operative first amended complaint (“FAC”). 24 See FAC, ECF 1-6. On or about May 20, 2017, Pestarino purchased a new 2017 Ford F-250 (the 25 “Vehicle”). FAC ¶¶ 5-6. As part of the purchase transaction, Pestarino received the following 26 express and implied warranties: (1) “the Vehicle and its components would be free from all 27 1 defects in material and workmanship,” (2) “the Vehicle would pass without objection in the trade 2 under the contract description,” (3) “the Vehicle would be fit for the ordinary purposes for which 3 it was intended,” (4) “the Vehicle would conform to the promises and affirmations of fact made,” 4 (5) “Defendants, and each of them, would perform any repairs, alignments, adjustments, and/or 5 replacements of any parts necessary to ensure that the Vehicle was free from any defects in 6 material and workmanship,” (6) “Defendants, and each of them, would maintain the utility of the 7 Vehicle for Three (3) years or 36,000 miles and would conform the Vehicle to the applicable 8 express warranties.” Id. ¶ 8. 9 Pestarino “has delivered the Vehicle to the Manufacturer’s authorized service and repair 10 facilities, agents and/or dealers, including Seller, on at least Four (4) separate occasions resulting 11 in the Vehicle being out of service by reason of repair of nonconformities.” FAC ¶ 10. The 12 Vehicle’s defects and malfunctions included “Recall 18S45 Engine Block Heater Wire Assembly 13 Water Intrusion Inspection, Code 19S11 for Disable Engine Block Heater Cord, Engine Block 14 Heater Cord failure, water pump failure and check engine light.” Id. ¶ 11. Each time Pestarino 15 delivered the nonconforming Vehicle to a Manufacturer authorized service and repair facility, 16 Ford represented to him that the repairs would conform to the aforementioned warranties. Id. ¶ 17 13. However, Ford or its representatives failed to conform the Vehicle to the applicable 18 warranties because the defects would “continue to exist even after a reasonable number of 19 attempts to repair” the Vehicle. Id. 20 On October 22, 2019, Pestarino filed the complaint in this action in the Santa Clara County 21 Superior Court. See Compl., ECF 1-4. He filed the FAC on November 25, 2019, asserting two 22 claims against Ford: (1) Breach of Implied Warranty of Merchantability under the Song-Beverly 23 Act, and (2) Breach of Express Warranty under the Song-Beverly Act. See FAC, ECF 1-6. On 24 December 2, 2019, Ford removed the action to federal district court on diversity grounds. See 25 Notice of Removal, ECF 1. Pestarino now seeks remand. 26 II. LEGAL STANDARD 27 “Except as otherwise expressly provided by Act of Congress, any civil action brought in a 1 removed by the defendant or the defendants, to the district court of the United States for the 2 district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). “A 3 defendant may remove an action to federal court based on federal question jurisdiction or diversity 4 jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. 5 § 1441(a)). 6 Where removal is based on diversity jurisdiction, “a defendant’s notice of removal need 7 include only a plausible allegation that the amount in controversy exceeds the jurisdictional 8 threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014). “[T]he 9 defendant’s amount-in-controversy allegation should be accepted when not contested by the 10 plaintiff or questioned by the court.” Id. at 87. “[W]hen a defendant’s assertion of the amount in 11 controversy is challenged . . . both sides submit proof and the court decides, by a preponderance of 12 the evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at 88. “In 13 assessing the amount in controversy, [the Court] may consider allegations in the complaint and in 14 the notice of removal, as well as summary-judgment-type evidence relevant to the amount in 15 controversy.” Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 416 (9th Cir. 2018). “[T]he 16 removing defendant bears the burden of establishing, by a preponderance of the evidence, that the 17 amount in controversy exceeds the jurisdictional threshold.” Id. (quotation marks and citation 18 omitted). 19 “If at any time before final judgment it appears that the district court lacks subject matter 20 jurisdiction, the case shall be remanded.” 28 U.S.C.A. § 1447. 21 III. DISCUSSION 22 As noted above, Ford removed this action based on diversity of citizenship. District courts 23 have diversity jurisdiction over civil actions between citizens of different states where the amount 24 in controversy exceeds $75,000, exclusive of interest and costs. See 28 U.S.C. § 1332. Ford’s 25 notice of removal states that Plaintiff is a citizen and resident of California, while Ford is a citizen 26 of Delaware and Michigan, and thus there is complete diversity of citizenship. See Notice of 27 Removal ¶¶ 21-22, ECF 1. Ford’s notice of removal also states that the amount in controversy 1 Pestarino does not dispute that there is complete diversity of citizenship between the 2 parties. However, he challenges Ford’s assertion regarding the amount in controversy. He also 3 asks this Court to “veto” the exercise of diversity jurisdiction even if the amount in controversy 4 requirement is satisfied. Pestarino offers only a partial case citation for the proposition that the 5 Court may choose to remand the case despite the existence of diversity jurisdiction: “Garble, 6 supra, at 313.” Motion at 5, ECF 11. The Court is unable to locate a case with that title. 7 Pestarino may have intended to cite Grable & Sons Metal Prod., Inc. v. Darue Eng’g & Mfg., 545 8 U.S. 308, 313 (2005), in which the Supreme Court considered a district court’s authority to “veto” 9 the exercise of federal question jurisdiction where removal is based on a federal issue embedded in 10 a state law claim. The Supreme Court held that “even when the state action discloses a contested 11 and substantial federal question, the exercise of federal jurisdiction is subject to a possible veto,” 12 because “the federal issue will ultimately qualify for a federal forum only if federal jurisdiction is 13 consistent with congressional judgment about the sound division of labor between state and 14 federal courts governing the application of § 1331.” Grable, 545 U.S. at 313-14. Nothing in 15 Grable, which addresses a narrow set of circumstances in which a district court may decline to 16 exercise federal question jurisdiction under 28 U.S.C. § 1331, suggests that a district court may 17 decline to exercise diversity jurisdiction when the removing party satisfies the statutory 18 requirements of 28 U.S.C. § 1332. 19 Pestarino’s motion to remand therefore turns solely on his assertion that Ford cannot 20 satisfy the amount in controversy requirement of § 1332. Under the authorities set forth above, 21 Ford has the burden to show by a preponderance of the evidence that the jurisdictional threshold of 22 $75,000 is satisfied. In making this showing, Ford may rely on allegations in the FAC and in the 23 notice of removal, and evidence submitted to the Court. See Chavez., 888 F.3d at 416. “The 24 amount in controversy may include damages (compensatory, punitive, or otherwise) and the cost 25 of complying with an injunction, as well as attorneys’ fees awarded under fee shifting statutes.” 26 Id. Additionally, while recognizing that district courts have split on the issue, this Court has held 27 that the amount in controversy includes the maximum recoverable civil penalties. See Verastegui 1 Ford points to the following allegations in the FAC: “The amount in controversy exceeds 2 TWENTY-FIVE THOUSAND DOLLARS ($25,000.00), exclusive of interest and costs, for 3 which Plaintiff seeks judgment against Defendants, together with equitable relief.” FAC ¶ 14. 4 “In addition, Plaintiff seeks damages from Defendants, and each of them, for incidental, 5 consequential, exemplary, and actual damages including interest, costs, and actual attorneys’ 6 fees.” Id. ¶ 14. “The failure of Defendants, and each of them, to refund the price paid and 7 payable or to replace the Vehicle was intentional and justifies an award of a Civil Penalty in an 8 amount not to exceed two times Plaintiff’s actual damages.” FAC ¶ 32. 9 Ford reads these allegations to mean that Pestarino seeks damages in excess of $25,000, 10 and a civil penalty of up to twice that damages amount. Ford argues that based on these 11 allegations alone, the amount in controversy exceeds $75,000. Other district courts within the 12 Ninth Circuit have found identical allegations, made by the same law firm that represents 13 Pestarino here, sufficient to satisfy the amount in controversy requirement. See, e.g., Bernstein v. 14 BMW of N. Am., LLC, No. 18-CV-01801-JSC, 2018 WL 2210683, at *2 (N.D. Cal. May 15, 15 2018). Some district courts have held that allegations of damages exceeding $25,000, along with 16 allegations of statutory penalties of two times the damages, make entitlement to removal so 17 obvious as to bar later removal based on more concrete damages evidence. See, e.g., McDonald v. 18 BMW of N. Am., LLC, No. 3:17-CV-2011-CAB-BLM, 2017 WL 5843385, at *2 (S.D. Cal. Nov. 19 28, 2017) (“Knowledge of the purchase price of Plaintiff’s vehicle may have helped BMW 20 determine the total amount at stake, but it was not necessary to determine that more than $75,000 21 is in controversy. . . . [BMW] could have multiplied $25,001 (the minimum amount of damages 22 alleged in the complaint) by three to determine that Plaintiff seeks, at a minimum, in excess of 23 $75,000.”). This Court finds those decisions persuasive and concludes that Ford has demonstrated 24 that the amount in controversy is satisfied based on the allegations of the FAC. 25 Pestarino argues in his reply that Bernstein was decided incorrectly, citing district court 26 decisions in which the maximum civil penalty was not considered in determining the amount in 27 controversy. See, e.g., Chavez v. FCA US LLC, No. 2:19-cv-06003-ODW (GJSx), 2020 WL 1 might be imposed.”). As discussed above, this Court has recognized that district courts are split 2 on the issue and it has taken the approach that the maximum civil penalty may be considered to 3 determine whether the amount in controversy exceeds the jurisdictional threshold. 4 Pestarino appears to concede that inclusion of the maximum civil penalty in the amount in 5 controversy is fatal to his remand motion, stating that “[m]ost vehicles, including the most 6 modestly priced vehicles, are over $25,000.00 with financing,” and therefore “with the inclusion 7 of a civil penalty of up to two times Plaintiff’s actual damages to the amount in controversy, any 8 Song-Beverly lawsuit that even alleges a willful violation by a manufacturer could be removed.” 9 Motion at 7, ECF 11. This Court agrees that where a plaintiff expressly alleges potential 10 entitlement to the maximum civil penalty available under the Song Beverly Act, as Pestarino does 11 here, the amount in controversy requirement likely will be satisfied. 12 In addition to highlighting the relevant allegations of the FAC, Ford presents evidence 13 supporting a finding that the amount in controversy requirement is satisfied. Ford points to a 14 declaration of counsel experienced in litigating similar cases, who states that “it is not uncommon, 15 and in fact quite regular, for attorney’s fee and cost awards (or resolutions through informal 16 discussions with opposing counsel) to exceed $100,000.” Hugret Decl. ¶ 5, ECF 1-1. Pestarino 17 seeks an award of attorneys’ fees under the Song Beverly Act, which provides that a prevailing 18 “buyer shall be allowed by the court to recover as part of the judgment a sum equal to the 19 aggregate amount of costs and expenses, including attorney’s fees based on actual time expended, 20 determined by the court to have been reasonably incurred by the buyer in connection with the 21 commencement and prosecution of such action.” Cal. Civ. Code § 1794(d). “[A] court must 22 include future attorneys’ fees recoverable by statute or contract when assessing whether the 23 amount-in-controversy requirement is met.” Fritsch v. Swift Transportation Co. of Arizona, LLC, 24 899 F.3d 785, 794 (9th Cir. 2018). Ford additionally presents evidence that the Vehicle purchase 25 price was $86,310.36. See Nusser Decl. ¶ 3 & Exh. A, ECF 13-1. Pestarino seeks “replacement 26 or restitution, at Plaintiff’s election, according to proof.” FAC Prayer, ECF 1-4. 27 Pestarino’s reply does not address Ford’s evidence regarding attorneys’ fees. He does 1 he has actually paid or will actually pay the total purchase price of the Subject Vehicle.” Reply at 2 1, ECF 16. Pestarino also argues that Ford “provides no indication as to how many miles Plaintiff 3 drove the car prior to the first repair visit,” asserting without any citation to authority that 4 || “Plaintiffs actual damages will be reduced by an amount to be determined after the mileage offset 5 is applied.” Reply at 3. Those arguments are entitled to little or no weight, as they are not 6 supported by citation to legal authority. However, even setting aside Ford’s evidence regarding 7 the Vehicle purchase price, the Court concludes that Ford has met its burden of proving, by a 8 || preponderance of evidence, that the amount in controversy exceeds the jurisdictional threshold 9 || based on the evidence regarding attorneys’ fees and the facial allegations of the FAC. 10 Accordingly, the motion to remand is DENIED. 11 IV. ORDER 12 (1) The hearing on the motion to remand, currently scheduled for May 28, 2020 at 9:00 13 a.m., is VACATED; 14 (2) The motion to remand is DENIED; and 3 15 (3) This order terminates ECF 11. 16 17 |) Dated: April 17, 2020 han an 18 hom fw M BETH LABSON FREEMAN 19 United States District Judge 20 21 22 23 24 25 26 27 28