Summary
In Rafiqzada, defendant removed after the California Supreme Court had confirmed that plaintiff could maintain the claims stated in the complaint, and the district court held that removal was untimely because "the same facts that formed the basis for defendants' assertion of removal jurisdiction... were pled in the complaint... when it was filed."
Summary of this case from Pineda v. Bank of AmericaOpinion
No. C 02-3316 SI
October 28, 2002
On October 15, 2002, this Court heard argument on Plaintiffs' Ex Parte Application for an Order Remanding Action or, in the Alternative, Shortening Time on Hearing of Plaintiffs' Motion to Remand or Calendaring Motion to Remand and Continuing Defendant's Motion to Dismiss; and on defendant's Motion to Dismiss. For the reasons set out below, the motion to remand is GRANTED; the request for attorneys fees and costs is DENIED; and this action is REMANDED to the Superior Court for the County of Alameda where it was filed.
BACKGROUND
Amina Rafiqzada, the named plaintiff, filed a class action lawsuit against defendants, U.S. Bank National Association and Does 1 through 50, for recovery of overtime wages. Plaintiffs allege that defendants' failure to pay overtime violated California's overtime wage laws, and assert causes of action for (1) violation of numerous sections of the California Labor Code, (2) violation of California Business and Professions Code § 17200 and (3) the tort of conversion.
Plaintiffs' action was filed in the Superior Court of California, County of Alameda, on December 26, 2001, and served on defendants on January 9, 2002. On February 8, 2002, defendants filed a demurrer to plaintiffs' third cause of action, the conversion claim, and a motion to strike plaintiffs' claim for punitive damages. Defendants argued that plaintiffs' conversion claim was not "a viable cause of action in the unpaid overtime context." See id. at 3.
On March 27, 2002, the Alameda County Superior Court held a hearing on defendants' demurrer and motion to strike. See Declaration of Timothy M. Freudenberger in Support of U.S. Bank's Opposition to Plaintiffs' Ex Parte Application for Order Remanding Action or, in the Alternative, Shortening Time on Hearing of Plaintiffs' Motion to Remand or Calendaring Motion to Remand and Continuing Defendants' Motion to Dismiss (hereinafter "Freudenberger Decl."), ¶¶ 3-4 (July 31, 2002). Defendants' demurrer was overruled. See Freudenberger Decl., ¶ 5. Defendants filed a Petition for a Writ of Mandate with the California Court of Appeal contesting that ruling; it was denied on June 5, 2002. Defendants' petition for review by the California Supreme Court was denied on July 10, 2002.
On July 10, 2002, defendants filed a Notice of Removal, removing the action to this Court. On July 17, 2002; defendants filed a Motion to Dismiss and/or Motion to Strike the complaint. On July 26, 2002, plaintiffs filed ex parte application for an order remanding this action back to state court or, in the alternative, a motion to shorten the time for hearing plaintiffs' motion to remand and continuing defendant's motion to dismiss. Defendants have represented that if the Court dismisses or strikes plaintiffs' third cause of action, defendants will stipulate to remanding the action to state court. See Freudenberger's Decl. ¶ 6.
LEGAL STANDARD
A. Motion to remand
A motion to remand is the proper procedure for challenging an opposing party's removal. Remand to state court may be ordered either for lack of subject matter jurisdiction or for . . . any defect in removal procedure. See 28 U.S.C. § 1447 (c). The court may remand sua sponte or upon the motion of a party. A defendant who invokes the federal court's removal jurisdiction has the burden of establishing federal jurisdiction. See Emrich v. Touche Ross Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92, 97 (1921)); Salveson v. Western States Bankcard Ass'n, 525 F. Supp. 566, 571 (N.D. Cal. 1981), aff'd in part, rev'd in part, 731 F.2d 1423 (9th Cir. 1984); Schwarzer, Tashima, Wagstaffe, Federal Civil Procedure Before Trial, ¶ 2:1093 (1992).
B. Notice of removal
Only defendants can file a notice of removal. See 28 U.S.C. § 1441 (a). Defendants can file a notice of removal in cases in which the federal court could have asserted original jurisdiction. See 28 U.S.C. § 1446 (b); see City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 163; 118 S.Ct. 523, 529 (1997). Following removal, courts can determine the existence of federal jurisdiction on the face of the plaintiffs' complaint. See Louisville Nashville R.R. v. Motley, 211 U.S. 149 (1908). A "cause of action arises under federal law only when the plaintiffs well pleaded complaint raises issues of federal law." Metropolitan Life Ins. Co v. Taylor, 481 U.S. 58, 63; 107 S.Ct. 1542, 1546 (1987).
Under 28 U.S.C. § 1446 (b), defendants have filed a notice of removal in a timely manner when either of the following occurs:
(1) "[t]he notice of removal of a civil action or proceeding [is filed] . . . within thirty days after the receipt by the defendant . . . of a copy of the initial pleading setting forth the claim for relief up on which such action or proceeding is based. . . ." or
(2) "[i]f the case stated by the initial pleading is not removable, a notice of removal ma be filed within thirty days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable . . ."
Thus, under § 1446(b) a case that is not removable in its initial pleading may later become removable, for example if an "amended complaint fundamentally alters a case." Douglass v. Weyerhaeuser Co., 662 F. Supp. 147, 149 (C.D. Cal. 1987); see also Evett v. Consolidated Freightways Corporation, 110 F. Supp.2d 510, 512 (E.D. Tex. 2000) ("The right to remove arises when a defendant is first put on notice that all prerequisites for invoking federal jurisdiction have been met."); see also 28 U.S.C. § 1446 (b).
The removal statute is strictly construed against removal jurisdiction. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). Federal jurisdiction must not be asserted if there is any doubt as to the right of removal. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992). The public policy behind such strict construction is to encourage judicial economy. See Wenger v. Western Reserve Life Assur. Co. of Ohio, 570 F. Supp. 8, 10-11 (D.C. Tenn. 1983); see also Medical College of Wisconsin Faculty Physicians and Surgeons v. Pitsch, 776 F. Supp. 437, 441 (E.D.Wis. 1991) ("[O]ne of the main purposes of the restrictive 30-day removal window . . . is to prevent the delay and waste of resources by starting over in a new court after significant proceedings have long progressed in the state court.")
DISCUSSION
A. Defendants' removal was not timely
The Court finds that defendants' removal was not timely, and accordingly grants plaintiffs' motion to remand.
Although plaintiffs served their complaint on January 9, 2002, defendants did not remove this action until July 10, 2002, six months later. The statute is unequivocal: defendants must remove within thirty days after they first receive information of the case's removable status. See 28 U.S.C. § 1446 (b). "If the defendant does not remove the case upon the first opportunity, the defendant has waived his right to remove at a later time." Douglass, 662 F. Supp. at 149 (citing Hubbard v. Union Oil Co. of California, 601 F. Supp. 790, 795 (S.D.W. Va. 1985)).
Defendants argue that they removed as soon as they ascertained that this court could assert jurisdiction over the matter, i.e. as soon as they received the California Supreme Court's denial of their petition for review of the lower court's denial of their demurrer and motion to strike. Defendants claim that "It was not until [the California Supreme Court's] order was entered that U.S. Bank could reasonably ascertain that plaintiffs' conversion claim and request for punitive damages would not be dismissed and, consequently, the amount in controversy exceeded $75,000." Defendants' Opposition to Plaintiffs' Ex Parte Application at 5. However, the same facts that formed the basis for defendants' assertion of removal jurisdiction on July 10, 2002, were pled in the complaint on January 9, 2002, when it was filed. The cases cited by defendants support the proposition that defendants can remove a case if they receive a "motion, order, or other paper" that introduces, for the first time, facts that make the case removable. The facts alleged in this case, however, have undergone no alterations since the filing of the original complaint. Accordingly, the removal was untimely and remand is appropriate.
Having decided the notice of removal was untimely, it is not strictly necessary to reach the question of the amount in controversy. The Court observes, however, that defendants are required to prove the amount in controversy "by a preponderance of evidence" where plaintiffs have not named a specific amount in the complaint. See Sanchez v. Monumental Life Insurance Co., 102 F.3d 398, 404 (9th Cir. 1996) ("[W]e hold that in cases where a plaintiff's state court complaint does not specify a particular amount of damages, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds [$75,000].") Here, the range of the named plaintiff's compensatory damages is, by plaintiff's own account, between $3700 and $5600, and no showing as to accrued attorneys' fees has been made. Defendants have proffered no facts to demonstrate that punitive damages to the named plaintiff would approach $75,000, in light of the modest compensatory damages sought. Under the circumstances the Court is unconvinced that defendants have met their burden to demonstrate that the potential for punitive damages establishes that the amount in controversy exceeds $75,000; accordingly, this Court would lack diversity jurisdiction in any event.
B. Plaintiffs' motion for attorneys fees and costs
District courts have wide discretion regarding whether to award attorney fees in an order to remand. See Moore v. Permanente Medical Group, 981 F.2d 443, 447 (9th Cir. 1992); see also 28 U.S.C. § 1447 (c). Under the circumstances of this case, the Court does not find it appropriate to award attorneys fees and costs. Accoraingly, plaintiffs' motion for fees and costs is DENIED.
C. Defendants' motion to dismiss
Because this Court does not have jurisdiction over this action, it having been remanded to Superior Court, this Court declines to rule on defendants' motion to dismiss.
CONCLUSION
For the foregoing reasons, plaintiffs' motion is GRANTED, and this action is REMANDED to the Alameda County Superior Court. [Docket # 15]. Defendants' Motion to Dismiss and/or Motion to Strike the complaint filed by plaintiffs will not be determined in this forum. That motion should be addressed to and heard by the Alameda County Superior Court.