The People of the State of California v. Duque Eleazar, et al.

Filing 27

MINUTES (IN CHAMBERS) ORDER RE PLAINTIFF'S MOTION TO REMAND by Judge John A. Kronstadt 15 . For the reasons stated in this Order, the Motion is GRANTED IN PART. The action is REMANDED to the San Bernardino Superior Court. Refer to the Court's order for details. MD JS-6. Case Terminated. (pso)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

LA CV16-00340 JAK (KKx)

Title

The People of the State of California v. Eleazar Duque, et al.

Present: The Honorable

Date

May 3, 2016

JOHN A. KRONSTADT, UNITED STATES DISTRICT JUDGE

Andrea Keifer

Not Reported

Deputy Clerk

Court Reporter / Recorder

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

I.

(IN CHAMBERS) ORDER RE PLAINTIFF’S MOTION TO REMAND
(DKT. 15) JS-6

Introduction

On December 11, 2015, the State of California (“the People”) brought this action in the San Bernardino
Superior Court against Eleazar Duque (“Duque”) and California New Business Bureau, Inc. (“Business
Bureau”), a company Duque owns and manages (collectively, “Defendants”). Complaint, Dkt. 1 (Ex. A).
The Complaint alleges that Defendants engaged in unfair business practices in violation of Cal. Bus. &
Prof. Code §§ 17200 et seq. On February 25, 2016, Defendants removed this action claiming federal
question jurisdiction pursuant to 28 U.S.C. §§ 1331, 1441. Dkt. 1.
On March 28, 2016, the People moved to remand the action (“Motion”). Dkt. 15. The Motion also seeks
an award of the attorney’s fees incurred in connection with the Motion. Id. at 10. Defendants filed an
opposition to the Motion (Dkt. 25), and the People filed a reply. Dkt. 26. The matter was taken under
submission at a scheduling conference held on April 11, 2016. Dkt. 21.
For the reasons stated in this Order, the Motion is GRANTED IN PART.
II.

Factual and Procedural Background

Duque owns and manages Business Bureau, a company that provides services related to real property
title searches and business filings in San Bernardino, California. Complaint, Dkt. 1 (Ex. A ¶ 4); Dkt. 25 at
2. In September 2015, the San Bernardino Sheriff’s Department cited Defendants for violating County
Ordinance 4282 (“Ordinance”). Dkt. 1 ¶ 4; Dkt. 26 at 2. It provides in relevant part: “It shall be unlawful for
any person to engage in solicitation on County property, in any manner or for any purpose.” Dkt. 1 (Ex. A
¶ 6). The stated purpose of the Ordinance is to prevent unauthorized solicitation that “may obstruct,
interfere, or conflict with the use of such property for proper government purposes and may create a
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

LA CV16-00340 JAK (KKx)

Title

Date

May 3, 2016

The People of the State of California v. Eleazar Duque, et al.

health and/or safety hazard within, about, or upon such property.” Id.
Defendants appealed the issuance of the citation. Dkt. 1 ¶ 4. In a January 26, 2016 administrative citation
appeal order, an administrative hearing officer upheld the citations, stating: “The appellant engaged in
prohibited solicitation as defined by the ordinance. The ordinance is not unconstitutional in that it clearly
restricts, permissibly, commercial speech.” Dkt. 1 (Ex. B).
On December 11, 2015, the People brought this action in the San Bernardino Superior Court, asserting
the aforementioned claim for violation of Cal. Bus. & Prof. Code §§ 17200 et seq. Dkt. 1 (Ex. A). The
Complaint alleges that Defendants “prey upon the ignorance or vulnerability of persons either unfamiliar
with government processes, the disabled, or those whose first language is not English” and “consistently
mispresent themselves as San Bernardino County employees.” Dkt. 1 (Ex. A at 2). Defendants allegedly
do so in order to “misdirect members of the public from the County Recorder’s office into Defendants’
nearby business office, where attempts are made to charge fees that are higher than legitimate fees
charged by the County Recorder.” Id. The Complaint implies that they do so in connection with filings
made on behalf of such persons.
After Defendants failed to answer or otherwise respond to the Complaint, the Superior Court clerk
entered their default on January 20, 2015. Request for Judicial Notice (“RJN”), Dkt. 15-2 (Ex. 4). On
February 3, 2016, the San Bernardino Superior Court entered default judgment and a permanent
injunction against Defendants. Id. (Ex. 5).
On February 2, 2016, Defendants filed a motion to set aside the default. After Defendants removed this
action on February 25, 2015, the Superior Court action was stayed. A hearing regarding the status of this
removal is currently scheduled in the Superior Court for September 6, 2016.1
III.

ANALYSIS
A.

Legal Standard

An action may be removed when there is federal jurisdiction at the time of the removal. 28 U.S.C. §§
1331, 1441(a). Because federal courts are ones of limited jurisdiction, the removal statute is to be strictly
construed; any doubt about removal is to be resolved in favor of remand. Gaus v. Miles, Inc., 980 F.2d
564, 566 (9th Cir. 1992). The defendant has the burden of establishing that removal is proper, including
that there is federal jurisdiction. Id.
B.

The Positions of the Parties

1

Judicial notice is taken of the docket entries in the Superior Court that provide this information. See The People of
the State of California v. Eleazar Duque, Case No. CIVDS1518127 (Sup. Ct. Dec. 11, 2015).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

LA CV16-00340 JAK (KKx)

Title

Date

May 3, 2016

The People of the State of California v. Eleazar Duque, et al.

The People argue that there is no federal question jurisdiction because the only cause of action advanced
in the Complaint arises under California law, i.e., Cal. Bus. & Prof. Code §§ 17200 et seq.
Defendants respond that there is federal question jurisdiction because the administrative hearing officer
held that the Ordinance was “not unconstitutional.” Dkt. 1 (Ex. B). Because the “administrative hearing
officer interpreted the ordinance as a First Amendment issue,” Defendants argue that “the application of
this statute and the necessity of its interpretation establish the existence of a federal question as an
essential element of plaintiffs’ cause of action, providing the basis for removal.” Dkt. 25 at 5. Defendants
add that the People “disguised” the federal constitutional claim through artful pleading. Dkt. 25 at 3.
C.

Application

Pursuant to 28 U.S.C. § 1331, a district court has original jurisdiction over civil actions “arising under the
Constitution, laws, or treaties of the United States.” According to “the well-pleaded complaint rule, a suit
arises under federal law for 28 U.S.C. § 1331 purposes only when the plaintiff’s statement of his own
cause of action shows that it is based upon federal law.” Hawaii ex rel. Louie v. HSBC Bank Nev., N.A.,
761 F.3d 1027, 1034 (9th Cir. 2014) (internal quotation marks omitted). Thus, the operative analysis calls
for an examination of the complaint alone. See Coleman v. Estes Express Lines, Inc., 631 F.3d 1010,
1016 (9th Cir. 2011).
The cause of action pleaded in the Complaint does not arise under federal law, but under Cal. Bus. &
Prof. Code §§ 17200 et seq. The Complaint has no allegations as to any federal statute or constitutional
provision. That an administrative hearing officer ruled that the Ordinance was “not unconstitutional” in a
separate proceeding does not show that this action arises under federal law. Although the
constitutionality of the Ordinance may be raised as an affirmative defense, that does not create federal
jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009) (an affirmative defense that
arises under federal law is not a basis for federal question jurisdiction in a removed action).
No more persuasive is Defendants’ argument that the People have “artfully pleaded” state law claims to
omit necessary federal questions. Federal question jurisdiction may arise when a “substantial, disputed
question of federal law is a necessary element of one of the well-pleaded state claims.” Id. (quoting
Franchise Tax Bd. of State of Cal. V. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 13 (1983)).
This is a “’special and small category’ of cases in which arising under jurisdiction still lies.” Gunn v.
Minton, 133 S. Ct. 1059, 1064 (2013) (citing Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S.
677, 699 (2006)).
Citing Schroeder v. Trans World Airlines, Inc., 702 F.2d 189 (9th Cir. 1983), Defendants argue that this
action turns on the interpretation of a statute that necessarily raises a question of federal law. In
Schroeder, employees filed an action in state court alleging that their employer was engaged in unlawful
business practices not authorized by the governing collective bargaining agreement. The plaintiffs
attempted to frame their action as one that arose under state law. The court considered the substance of
the claims and concluded that they arose from a dispute under the collective bargaining agreement that
was governed by federal law. Id. at 191 (“The Railway Labor Act is applicable to air carriers and terms of
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

LA CV16-00340 JAK (KKx)

Title

Date

May 3, 2016

The People of the State of California v. Eleazar Duque, et al.

employment with them. The application of this statute and the necessity of its interpretation establish the
existence of a federal question as an essential element of plaintiffs’ cause of action, providing the basis
for removal.”) (citations omitted); see also Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 471 (1998)
(“If the plaintiff thus ‘artfully pleads’ a claim, a court may uphold removal even though no federal question
appears on the face of the complaint. The artful pleading doctrine allows removal where federal law
completely preempts an asserted state-law claim . . . for a claim of that preempted character is, from its
inception, a claim that can arise only under federal, not state, law.”).
Defendants have not argued that there is any federal law that clearly preempts the relevant provisions of
the operative California statute. Nor could they do so. That an administrative hearing officer determined
that § 17200 as applied did not infringe Defendants’ rights under the First Amendment does not show that
this is one of the “special and small category of cases” in which the federal question need not expressly
appear on the face of the Complaint.
D.

Attorney’s Fees

When a motion to remand is granted, a district court has the discretion to award attorney’s fees to the
moving party. “An order remanding the case may require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1aa7(c). Attorney’s fees should
be awarded “only where the removing party lacked an objectively reasonable basis for seeking removal.”
Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).
The People seek an award of $1950 in attorney’s fees. In support of this request, they submit the
declaration of James Secord (“Secord”). He is a Deputy District Attorney in San Bernardino County. In his
declaration he states that his hourly rate is $150, which is the amount “charged by the County of San
Bernardino.” Id. ¶ 5. He then states that he spent ten hours on the Motion, including preparing a meet and
confer letter, participating in two telephonic conferences with Defendants’ counsel and researching and
drafting the Motion. Id. He adds that he intends to spend three hours in connection with attending a
hearing on the Motion. Id.2
The request for attorney’s fees is DENIED, without prejudice to its renewal. If Plaintiff elects to renew the
fee request, it must present legal authority supporting the proposition that a request for attorney’s fees by
a public entity may be based on hours worked and an hourly-rate of a public lawyer, where that lawyer
apparently does not bill the public client for work in that manner. Any such renewal shall be made by May
11, 2016. If such a renewal is filed, Defendants shall file any response within seven days of the
submission of the renewal. The renewal and any response each shall not exceed four pages.
IV.

CONCLUSION

For the reasons stated in this Order, the Motion is GRANTED IN PART. The action is REMANDED to the
San Bernardino Superior Court at its San Bernardino Courthouse located at 247 West Third Street, San
2

Because this matter has been decided without a hearing, that portion of the claim for fees does not apply.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

LA CV16-00340 JAK (KKx)

Date

Title

May 3, 2016

The People of the State of California v. Eleazar Duque, et al.

Bernardino, California 92401. However, the Court retains jurisdiction to address any renewed request for
an award of attorney’s fees.
IT IS SO ORDERED.

:
Initials of Preparer

ak

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