David Ehrman v. Cox Communications, Inc. et al
Filing
37
MINUTES (IN CHAMBERS) Order Granting Plaintiff's Motion to Remand to Orange County Superior Court 11 and Denying as Moot Defendant's Motion to Compel Arbitration 15 and Motion to Dismiss 16 by Judge James V. Selna: For the following reasons, the Court grants Ehrman's motion to remand and denies as moot Cox's motion to compel arbitration. [See order for further information] MD JS-6. Case Terminated. ( MD JS-6. Case Terminated ) (es)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date
Case No.
SACV 18-01125 JVS (DFMx)
Title
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
Present: The Honorable
James V. Selna
Karla J. Tunis
No Appearance
Deputy Clerk
Court Reporter
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
Not Present
Not Present
Proceedings:
(IN CHAMBERS) Order Granting Plaintiff’s Motion to Remand to
Orange County Superior Court [11] and
Denying as Moot Defendant’s Motion to Compel Arbitration [15]
and Motion to Dismiss [16]
Plaintiff David Ehrman (“Ehrman”) filed this action in Orange County Superior
Court on May 9, 2018. (Not., Docket No. 1-1, Ex. A.) Defendant Cox Communications,
Inc. (“Cox”) filed a Notice of Removal on June 22, 2018. The Court has two motions
before it.1
First, Ehrman filed a motion to remand the case to Orange County Superior Court.
(Mot., Docket No. 12.) Cox filed an opposition. (Opp’n, Docket No. 18.) Ehrman
replied. (Reply, Docket No. 22.) Cox also included a Notice of Recent Decision to
which Ehrman responded. (Not., Docket No. 29; Response, Docket No. 34.)
Second, Cox filed a motion to compel arbitration. (Mot., Docket No. 15.) Ehrman
filed an opposition. (Opp’n, Docket No. 19.) Cox replied. (Reply, Docket No. 23.)
For the following reasons, the Court grants Ehrman’s motion to remand and
denies as moot Cox’s motion to compel arbitration.
I. BACKGROUND
1
Cox also filed an alternative motion to dismiss in the even that the motion to compel arbitration
was denied. (Mot., Docket No. 16.) On August 10, 2018, Ehrman filed a second amended complaint.
(SAC, Docket No. 17.) Thus, the Court need not reach the merits of the motion to dismiss.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
This putative class action arises from Cox’s provision of Internet services to
Ehrman and other consumers in California. (Not., Docket No. 1-5, ¶ 4.) Ehrman is a
resident of California who alleges that Cox, a citizen of Delaware and Georgia, offers
consumers a variety of high-speed plans, charging prices based on different “tiers” of
Internet connection speed. (Id. ¶¶ 3, 8; Not., Docket No. 1 ¶ 14.) Cox’s advertisements
allegedly typically identify an Internet connection speed up to that which a subscriber
may expect to receive service. (Not., Docket No. 1-5 ¶ 10.) Ehrman alleges that Cox
misled him and other similarly-situated consumers by promising to deliver residential
Internet service at speeds that consumers could rarely—if ever–-achieve. (Id. ¶ 7.)
Ehrman pleads claims for fraud, violation of the False Advertising Law (“FLA”)
(Cal. Bus. & Prof. Code § 17500 et seq.), violation of the Consumers Legal Remedies
Act (“CLRA”) (Cal. Civ. Code § 1750 et seq.), violation of the Unfair Competition Law
(“UCL”) (Cal. Bus & Prof. Code § 17200 et seq.), restitution, and unjust enrichment.
(Not., Docket No. 1-1, Ex. A ¶¶ 27-62.) Ehrman brings these claims on behalf of himself
and a purported class of consumers in California who paid for Defendants’ residential
Internet services within four years from May 9, 2018, the day this action was filed. (Id. ¶
16.) After filing the present suit, Ehrman attempted to opt-out of the arbitration
provision. (Ehrman Decl., ¶ 9, Ex. 4.)
Cox’s Notice of Removal identified two bases for removal to federal court: (1)
diversity jurisdiction and (2) jurisdiction under the Class Action Fairness Act (“CAFA”).
(Not., Docket No. 1 at 2.)
II. LEGAL STANDARD
A.
Remand
Under 28 U.S.C. § 1441(a), a defendant may remove a civil action from state court
to federal court so long as original jurisdiction would lie in the court to which the action
is removed. City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 163 (1997).
According to the Ninth Circuit, courts should generally “strictly construe the removal
statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.
1992). This “‘strong presumption’ against removal jurisdiction means that the defendant
always has the burden of establishing that removal is proper.” Id. (quoting Nishimoto v.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990)).
However, “no antiremoval presumption attends cases invoking CAFA, which
Congress enacted to facilitate adjudication of certain class actions in federal court.” Dart
Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014). CAFA
provides district courts with original jurisdiction over any class action in which (1) the
amount in controversy exceeds $5,000,000, exclusive of interest and costs, (2) any
plaintiff class member is a citizen of a state different from any defendant, (3) the primary
defendants are not states, state officials, or other government entities against whom the
district court may be foreclosed from ordering relief, and (4) the number of plaintiffs in
the class is at least 100. 28 U.S.C. §§ 1332(d)(2), (d)(5).
B.
Compelling Arbitration
The FAA creates a “national policy favoring arbitration.” Nitro-Lift Techs, LLC v.
Howard, 568 U.S. 17, 20 (2012). “The ‘principal purpose’ of the FAA is to ‘ensur[e] that
private arbitration agreements are enforced according to their terms.’” AT&T Mobility
LLC v. Concepcion, 563 U.S. 333, 344 (2011) citing Volt Info. Scis., Inc. v. Bd. of
Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989). The FAA states that
a written agreement to arbitrate “shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. §
2. “By its terms, the [FAA] leaves no place for the exercise of discretion by a district
court, but instead mandates that district courts shall direct the parties to proceed to
arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S. Ct. 1238, 1241, 84 L. Ed. 2d 158
(1985).
III. DISCUSSION
A.
Motion to Remand
Ehrman filed a motion to remand arguing that Cox’s removal was improper for
three reasons. First, Ehrman states that Cox’s removal papers fail to establish any facts
showing that diversity of citizenship exists among the parties. (Mot., Docket No. 12 at
1.) Second, Ehrman contends that even if the removal papers set forth a prima facie case
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
that diversity existed at some point in time, Cox failed to establish that it existed on May
9, 2018 or June 22, 2018, the dates on which the Complaint and the Notice of Removal
were filed respectively. (Id. at 3.) Third, Ehrman argues that the removal papers do not
show that Ehrman’s individual claims placed the amount in controversy above $75,000.
(Id.)
To establish citizenship for diversity purposes, a natural person must be a citizen of
the United States and be domiciled in a particular state. Kanto v. Wellesley Galleries,
Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983). While Ehrman’s Complaint states that he is a
resident of California, Ehrman disputes that Cox can remove the case on the basis of
diversity because residency and citizenship are not the same. (Mot., Docket No. 12 at 5.)
Ehrman accepts for purposes of the motion for remand that (1) Cox is a citizen of
Georgia, where it has its principal place of business, and Delaware, where it is
incorporated; (2) there are over 800,000 members of the proposed class; and (3) that tens
of millions of dollars are in controversy. (Mot., Docket No. 12 at 7–8; Not., Docket No.
1 ¶ 14.) Thus, the only issue is whether Plaintiff or other putative class members are
citizens of California (or any other state other than Georgia and Delaware) such that
minimal diversity exists. (Mot., Docket No. 12 at 8.) The Notice of Removal states:
As admitted in the Complaint, Plaintiff is a resident of California.
Defendant is informed and believes, and on that basis alleges, that
Plaintiff is a citizen of the state in which he resides, as alleged in
the Complaint.
(Not., Docket No. 1 ¶ 12.)
Ehrman argues that since an individual is not automatically domiciled in the
location where he resides, Cox has not met its burden of establishing that Ehrman is a
citizen of both the United States and California such that minimal diversity exists
between the parties. (Mot., Docket No. 12 at 8.) See Paris v. Michael Aram, Inc., 2018
WL 501560, at *1–*2 (C.D. Cal. Jan 22, 2018) (finding that diversity was not established
when notice of removal simply alleged that plaintiff was residing and working in
California during the relevant time period). Similarly, Ehrman indicates that the Notice
of Removal failed to identify any consumer within the class who was a citizen of a state
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
other than Georgia and Delaware on the relevant dates in question. (Mot., Docket No. 12
at 10.) Ehrman urges the Court not to allow Cox to “guess its way into federal court”
through a “remove first, inquire later” approach. (Reply, Docket No 22 at 1–2.) Rather,
Ehrman suggests that Cox could have taken jurisdictional discovery in state court or
conducted an investigation into the jurisdictional facts before removing the case in order
to meet the low burden of establishing that at least one putative class member is diverse
from Cox. (Id. at 3.)
Ehrman cites Harris v. Bankers Life & Cas. Co., 425 F.3d 689 (9th Cir. 2005) for
the proposition that the thirty-day removal clock does not begin ticking based simply on
an allegation of the plaintiff’s residence because such an allegation does not reveal
whether diversity of citizenship exists. (Reply, Docket No. 22 at 2.) In Harris, the Ninth
Circuit decided the question of whether “the burden lies with the defendant to investigate
the necessary jurisdictional facts within the first thirty days of receiving an indeterminate
complaint, or whether the determination be limited to the face of the initial pleading.”
425 F.3d at 693. There, the plaintiff’s state court complaint alleged the plaintiff’s past
residence—not his current citizenship. Id. The court stated:
We now conclude that notice of removability under § 1446(b) is
determined through examination of the four corners of the
applicable pleadings, not through subjective knowledge or a duty
to make further inquiry. Thus, the first thirty-day requirement is
triggered by defendant’s receipt of an “initial pleading” that
reveals a basis for removal. If no ground for removal is evident
in that pleading, the case is “not removable” at that stage. In such
case, the notice of removal may be filed within thirty days after
the defendant receives “an amended pleading, motion, order or
other paper” from which it can be ascertained from the face of the
document that removal is proper.
Id. at 694 (citing 28 U.S.C. § 1446(b)). Applying this standard, the court distinguished
between the residence pleaded in the complaint and citizenship, determining that the
initial complaint did not trigger removability. Id. at 695. In so holding, the Ninth Circuit
emphasized, “If we were to flip the burden and interpret the first paragraph of 28 U.S.C.
§ 1446(b) (the first thirty-day window) to apply to all initial pleadings unless they clearly
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
reveal that the case is not removable, defendants would be faced with an unreasonable
and unrealistic burden to determine removability within thirty days of receiving the initial
pleading.” Id. at 694.
At oral argument, counsel for Ehrman urged the court not to find that the initial
complaint’s allegation of Ehrman’s California residence is synonymous with United
States and California citizenship because a rebuttable residency-domicile presumption
would have the effect of burdening many defendants who would be forced to scramble to
remove within thirty days of receiving the initial pleading. He further emphasized that
finding a rebuttable presumption of citizenship based on residence here would effectively
create two separate standards for examining pleadings as they relate to removability
based on diversity of citizenship for CAFA cases and non-CAFA cases.
Cox instead urges the Court to find that removal is proper because Ehrman alleged
his own residence and “home” in California such that there is sufficient evidence to deem
him a citizen of California. (Opp’n, Docket No. 18 at 1.) Ehrman alleges that he and his
family use the Internet service in California, his Venue Affidavit submitted with the
Complaint states: “For years, continuing to the present day, I have purchased Internet
Services from Cox . . . . and received Internet services at my home in Orange County,
California,” and a number of Ehrman’s bills establish that he received Cox services at the
same California address from 2015-2018. (Not., Docket No. 1-1 at 20 ¶3; Wilson Decl.,
Docket Nos. 15-6, 15-7, 15-9, 15-10, 15-12, 15-14. ) Cox indicates that in the absence of
evidence to the contrary, Ehrman should be treated as a citizen of his state of residence
for federal diversity purposes, particularly in light of the extensive billing records that
show Ehrman has received Internet services at the California address he considers
“home” for years. (Opp’n, Docket No. 18 at 9.) See NewGen, LLC v. Safe Cig, LLC,
840 F.3d 606, 614 (9th Cir. 2016) (“[T]he place where a person lives is taken to be his
domicile until facts adduced establish the contrary.”) (citing Anderson v. Watts, 138 U.S.
694, 706 (1891)); Zavala v. Deutsche Bank Tr. Co. Americas, No. C 13-1040 LB, 2013
WL 3474760, at *3 (N.D. Cal. July 10, 2013) (“[T]he complaint indicates that [plaintiff]
resides in California. A party’s residence is ‘prima facie’ evidence of domicile. In the
absence of evidence to the contrary, [plaintiff] is a California citizen for diversity
purposes.”) (citing State Farm Mut. Auto Ins. Co. v. Dyer, 19 F.3d 514, 520 (10th
Cir.1994)).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
Cox acknowledges that courts are split as to whether residence can establish
domicile or citizenship. “While the Ninth Circuit has not squarely addressed the issue of
whether residence equates to domicile, other courts have treated a person’s residence as
prima facie evidence of his domicile.” Ervin v. Ballard Marine Constr., Inc., No.
16-CV-02931-WHO, 2016 WL 4239710, at *3 (N.D. Cal. Aug. 11, 2016). The Ninth
Circuit has stated that it rejects the Seventh Circuit’s position that “evidence of residency
can never establish citizenship.” Mondragon v. Capital One Auto Fin., 736 F.3d 880, 886
(9th Cir. 2013). Nonetheless, the Ninth Circuit also instructs, “A person’s state of
citizenship is established by domicile, not simply residence, and a residential address in
California does not guarantee that the person’s legal domicile was in California.” King v.
Great American Chicken Corp., Inc., 903 F.3d 875, 879 (2018). See Mondragon, 736
F.3d at 884 (“That a purchaser may have a residential address in California does not
mean that person is a citizen of California.”) (emphasis added).
In Mondragon, the Ninth Circuit examined whether a plaintiff seeking remand
based on the “local controversy exception” of CAFA met his evidentiary burden to prove
the exception applied. Id. at 883. The court rejected the plaintiff’s argument that
allegations that a class of people with residential addresses in California—without
more—provided a proper inference of domicile in California for more than two-thirds of
the class such that the local controversy exception would apply. Id. at 881–82. The court
acknowledged that their “holding may result in some degree of inefficiency by requiring
evidentiary proof of propositions that appear likely on their face” because it appeared
likely that the vast majority of a class of consumers who purchased and registered cars in
California were California citizens. Id. at 883–84. Despite this potential for inefficiency,
the Ninth Circuit asserted that “[a] jurisdictional finding of fact should be based on more
than guesswork,” even if that guesswork may be “sensible.” Id. at 884. See King 903
F.3d at 880 (rejecting a reasonable impression that greater than two-thirds of employees
with last-known residences in California identified as class members were California
citizens because in the absence of evidence to support that factual finding, the impression
was based on “guesswork”).
Ehrman contends that since the Ninth Circuit was unwilling to adopt the residencydomicile presumption for purposes of a CAFA exception, which involves an evidentiary
burden, it would be even less willing to adopt such that rebuttable presumption with
respect to a CAFA removal, which involves a jurisdictional question. (Reply, Docket
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SACV 18-01125 JVS (DFMx)
Title
Date
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
No. 22 at 8.) Cf. Mason v. Lockwood, Andrews & Newnam, P.C., 842 F.3d 383, 392–93
(6th Cir. 2016), cert. denied sub nom. Lockwood, Andrews & Newman, P.C. v. Mason,
137 S. Ct. 2242, 198 L. Ed. 2d 678 (2017) (finding the residency-domicile presumption
appropriate in the non-jurisdictional context of remand for CAFA local controversy
exception, but not in the context of diversity jurisdiction removals because removal
relates to federal courts’ limited jurisdiction).
Cox has provided the Court with a Notice of Recent Decision regarding Jimenez v.
Charter Commc’ns Inc., No. CV186480DOCRAOX, 2018 WL 5118492 (C.D. Cal. Oct.
19, 2018), which Ehrman agrees “concern[s] the same issues regarding jurisdiction and
remand,” and which reaches a contrary result.2 (Not., Docket No. 29; Response, Docket
No. 34.) In Jimenez, which contained nearly identical factual allegations in the
underlying complaint, the court stated:
The Court adopts this position [that a person’s residence is prima
facie evidence of the person’s domicile] where, as here, Plaintiff
has admitted she is a California resident and is bringing claims on
behalf of a putative class of California consumers. In the absence
of evidence to the contrary, Plaintiff is considered a citizen of
California for federal diversity purposes. Accordingly, based on
Plaintiff’s own admissions, Defendants properly removed the
class action under CAFA.
Id. at *8–*9. Ehrman disputes this outcome, stating that “Ehrman has no obligation to
admit or deny facts in connection with a facial attack on Cox’s inadequate removal
pleading” and indicating that a rebuttable presumption of continuing domicile should
only come into play after the domicile has already been definitively established. (Reply,
Docket No. 22 at 6.) See Mondragon, 736 F.3d at 885.
The court in Jimenez cites Harris for the proposition that there is a general
presumption against removal. 2018 WL 5118492 at *2 (citing Harris, 425 F.3d at 698).
2
Ehrman’s response to the Notice of Recent Decision informs the Court that plaintiffs in
Jimenez have filed a petition to appeal with the Ninth Circuit, which currently remains pending.
(Response, Docket No. 34.)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date
Case No.
SACV 18-01125 JVS (DFMx)
Title
December 13, 2018
David Ehrman v. Cox Communications, Inc. et al
The decision then states that this anti-removal presumption does not apply in CAFA
cases. Id. (citing Dart, 135 S. Ct. at 554). While the Jimenez court does not further
discuss Harris, the citation suggests that perhaps courts should not be concerned about
creating separate standards for removal for CAFA and non-CAFA cases since differing
presumptions already exist. In the absence of instruction from the Ninth Circuit,
however, this Court declines to find that the complaint alone created a rebuttable
residency-domicile presumption of removability. While both parties at oral argument
acknowledged the likelihood minimal diversity exists in this case—even going so far as
to consider it “inconceivable” that there would not be diversity between the parties—the
Court finds that Cox’s reliance on the residency allegation in the complaint still
amounted to mere sensible guesswork such that it is insufficient for establishing minimal
diversity. Although Cox has a low burden of proving that just one of the putative class
members is a citizen of a state other than Delaware or Georgia, it is nonetheless a burden
that has not been met. Accordingly, the Court grants Ehrman’s motion to remand.
B.
Motion to Compel Arbitration
Because the Court grants the motion to remand, the Court denies as moot the
motion to compel arbitration.
IV. CONCLUSION
For the foregoing reasons, the Court grants Ehrman’s motion to remand for lack of
subject matter jurisdiction and denies as moot Cox’s motion to compel arbitration.
IT IS SO ORDERED.
:
Initials of Preparer
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