DAVID KHATIB v. TOYOTA MOTOR NORTH AMERICA, INC. et al

Filing 43

MINUTES [IN CHAMBERS] Order Regarding Motion to Remand 28 and Motion for Leave to Amend 31 by Judge James V. Selna: After the Court issued its tentative ruling, Toyota submitted a Request for Hearing which the Court granted. (Dkt. Nos. 40-41. ) The Court heard oral argument on August 7, 2023. For the following reasons, the Court GRANTS the motion to amend and DENIES the motion to remand. Denying 28 MOTION to Remand Case to State Court; Granting 31 NOTICE OF MOTION AND MOTION to Amend Complaint. [SEE DOCUMENT FOR FURTHER INFORMATION.] (es)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

Case No.

8:23-cv-00943-JVS (Ex)

Title

David Khatib v. Toyota Motor North America, Inc. et al

Present: The
Honorable

August 11, 2023

James V. Selna, U.S. District Court Judge
Elsa Vargas

Not Present

Deputy Clerk

Court Reporter

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

[IN CHAMBERS] Order Regarding Motion to Remand [28] and
Motion for Leave to Amend [31]

Before the Court are two motions filed by Plaintiff David Khatib (“Khatib”): a
motion to remand and a motion for leave to amend the complaint. (Remand Mot., Dkt.
No. 28; Amend Mot., Dkt. No. 31.) Defendant Toyota Motor North America (“Toyota”)
opposed both motions (Remand Opp’n, Dkt. No. 35; Amend Opp’n, Dkt. No. 36) and
Khatib responded (Remand Reply, Dkt. No. 37; Amend Reply, Dkt. No. 38). After the
Court issued its tentative ruling, Toyota submitted a Request for Hearing which the Court
granted. (Dkt. Nos. 40–41.) The Court heard oral argument on August 7, 2023.
For the following reasons, the Court GRANTS the motion to amend and DENIES
the motion to remand.
I. BACKGROUND
The following contentions are taken from the parties’ briefings and Khatib’s
complaint. Khatib operates a taxi service in the Washington D.C. area. (Remand Mot. at
3.) In 2020, Khatib purchased a 2016 Toyota Sienna from a Virginia dealership, Toyota
of Woodbridge to use for his taxi service. On August 8, 2021, Khatib picked up a family
in the Sienna and, during the trip, his car suddenly and unexpectedly accelerated, causing
the car to crash into a concrete median and flip onto its roof. (Comp’l, Dkt. No. 1-2, Ex.
1 ¶ 16.)
On March 28, 2023, Khatib filed a products liability lawsuit in the Superior Court
of the District of Columbia. The complaint named several defendants, including a car
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

Case No.

8:23-cv-00943-JVS (Ex)

Title

David Khatib v. Toyota Motor North America, Inc. et al

August 11, 2023

dealership, Anakin, LLC dba Ourisman CDJR of Woodbridge. Khatib asserts he
mistakenly believed that Anakin was the dealership from which he purchased his Sienna.
However, he claims he now knows the correct dealership is NGD, LLC dba Toyota of
Woodbridge (NGD, LLC was converted in 2023 from LTD, Inc. dba Lustine Toyota
Scion).
Believing Anakin to have been improperly and fraudulently named because it did
not exist at the time Khatib purchased his Sienna, Toyota removed the case to federal
court and the case was transferred to this MDL pertaining to unintended acceleration in
certain Toyota models. Khatib now seeks leave to amend his complaint for the purpose
of replacing the incorrect dealership with the correct one and, following this amendment,
remand the case to state court for lack of diversity.
II. LEGAL STANDARD
A.

Amendment

The parties dispute which standard applies to Khatib’s motion for leave to amend.
Typically, courts apply the liberal standard of Rule 15 when requesting leave to amend a
pleading. Fed. R. Civ. P. 15(a)(2). However, when the proposed amendment would
destroy diversity after removal, courts apply the discretionary standard of 28 U.S.C. §
1447(e). (“[I]f after removal the plaintiff seeks to join additional defendants whose
joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit
joinder and remand the action to the State court.”).
The Court will apply the 15(a) standard in this case. For the reasons set forth
below, the Court finds that the party Khatib seeks to add does not destroy complete
diversity. Accordingly, the 15(a) standard, rather than the 1447(e) standard, applies.
B.

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 “strictly construe the removal statute
against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

Case No.

8:23-cv-00943-JVS (Ex)

Title

David Khatib v. Toyota Motor North America, Inc. et al

August 11, 2023

Doubts as to removability should be resolved in favor of remanding the case to the state
court. Id. This “‘strong presumption’ against removal jurisdiction means that the
defendant always has the burden of establishing that removal is proper.” Id. (quoting
Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990)).
III. DISCUSSION
The Court will begin by addressing Khatib’s motion for leave to amend, followed
by the motion to remand, because determination of the latter depends on the former.
A.

Motion for Leave to Amend

Khatib seeks leave to amend his complaint to substitute dealership defendants.
(Amend Mot. at 5–6.) Under Rule 15(a), courts “should freely give leave when justice so
requires,” applying the policy of amendment “liberally.” Fed. R. Civ. P. 15(a)(2);
Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). In the
absence of an “apparent or declared reason,” such as undue delay, bad faith, dilatory
motive, repeated failure to cure deficiencies by prior amendments, prejudice to the
opposing party, or futility of amendment, it is an abuse of discretion for a district court to
refuse to grant leave to amend a complaint. Foman v. Davis, 371 U.S. 178, 182 (1962);
Moore v. Kayport Package Express, Inc., 885 F.2d 531, 538 (9th Cir. 1989). The
consideration of prejudice to the opposing party “carries the greatest weight.” Eminence
Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). “Although there is a
general rule that parties are allowed to amend their pleadings, it does not extend to cases
in which any amendment would be an exercise in futility, or where the amended
complaint would also be subject to dismissal.” Steckman v. Hart Brewing, 143 F.3d
1293, 1298 (9th Cir. 1998) (internal citations omitted).
Considering these factors, the Court concludes that the amendment is proper. First,
there is no evidence of undue delay. See Foman, 371 U.S. at 182. This case was filed in
superior court approximately on March 28, 2023 and Toyota removed it to federal court
on May 8, 2023. (See Dkt. No. 1-2, Ex. 1.) The case was conditionally transferred to the
MDL on May 22, 2023 and assigned to this Court on June 7, 2023. (See Dkt. Nos. 18,
21.) Khatib filed his motion to remand on June 9, 2023 and his motion for leave to
amend on June 16, 2023 following a meet and confer with opposing counsel. (See Dkt.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

Case No.

8:23-cv-00943-JVS (Ex)

Title

David Khatib v. Toyota Motor North America, Inc. et al

August 11, 2023

Nos. 28, 31.)
Second, the Court finds no evidence of bad faith or dilatory motive in Khatib’s
seeking to amend his complaint, or his failure to name the proper dealership in his
original complaint. See Foman, 371 U.S. at 182. Khatib’s counsel attested under the
penalty of perjury that Anakin was mistakenly named, Anakin is located next door to
Toyota of Woodbridge (the correct dealership), and that automobile dealerships are
routinely named in automobile products liability cases.1 (Kristensen Decl., Dkt. No. 28-1
¶¶ 4–5.) Toyota contends that Khatib “has not explained why in his initial complaint he
failed to name the entity that actually sold him his vehicle and instead sued an entirely
unrelated entity, despite this information being in his knowledge and possession.”
(Amend Opp’n at 8.) Toyota further argues that Khatib’s adding a dealership “as a
matter of course” and the lack of factual allegations as to the dealership indicate that
Khatib’s motive is merely to destroy diversity. (Id. at 7–8.) The Court is not persuaded.
Naming a dealership in automobile products liability cases is, indeed, a common type of
defendant because they exist in the chain of distribution and can therefore be held jointly
and severally liable for product defects. See, e.g., Weakley v. Burnham Corp., 871 A.2d
1167, 1177 (D.C. 2005) (“Non-manufacturing sellers in the distribution chain are strictly
liable.”); Loomis v. Amazon.com LLC, 63 Cal. App. 5th 466, 466 (Cal. Ct. App. 2021)
(concluding that entities which are “integral part[s] of the overall . . . enterprise” can be
held strictly liable in a products liability suit). As such, the lack of specific factual
allegations against the dealership in the “Introduction” and “Statement of Facts” sections
does not indicate a bad-faith motive. Furthermore, there is no evidence of dilatory
motive. As discussed above, Khatib has been diligent in seeking amendment and
remand. Accordingly, the Court finds no bad faith or dilatory motive in this case.
Third, this is the first amendment requested in this case, weighing in favor of
granting the motion. See Foman, 371 U.S. at 182. Fourth, Toyota will not be prejudiced
because, as set forth below, permitting amendment does not destroy diversity, leaving the
case in Toyota’s preferred venue. See id.; Ernst v. ZogSports Holdings, LLC, No. 189043, 2019 WL 1423776, at *3 (C.D. Cal. Feb. 26, 2019). Finally, permitting
amendment would not be futile. See Foman, 371 U.S. at 182. As noted above, non1

At the hearing, the Court suggested that Anakin was a sham defendant for diversity purposes.
Given that Anakin was mistakenly named, and is thus being disregarded for that reason, the Court need
not consider the sham defendant issue.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

Case No.

8:23-cv-00943-JVS (Ex)

Title

David Khatib v. Toyota Motor North America, Inc. et al

August 11, 2023

manufacturing sellers in the distribution chain may be held strictly liable in product
defects cases. See Weakley, 871 A.2d at 1177; Loomis, 63 Cal. App. 5th at 466. Should
Toyota of Woodbridge wish to contest the sufficiency of the factual allegations against it,
it may do so. However, that issue is not presently before this Court.
For these reasons, the Court GRANTS Khatib’s motion for leave to amend.
B.

Motion to Remand

Having found that Khatib may amend his complaint to substitute the incorrect
automobile dealership for the correct one, the Court now examines whether such
amendment would destroy complete diversity and require remand. The Court finds it
does not.
Federal courts must have jurisdiction over every case they hear, including those
coming before a court in a multi-district litigation. See Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 94 (1998) (“Without jurisdiction, the court cannot proceed at all in
any cause”) (quoting Ex parte McCardle, 7 Wall. 506, 514 (1868)). Because there are no
federal causes of action in this case, the Court may only obtain jurisdiction if there is
complete diversity and the amount in controversy exceeds $75,000. See 28 U.S.C. §
1332(c). It is undisputed that Khatib is a Virginia resident. (See Comp’l ¶ 4.) Thus, if
the party to be named is not a citizen of Virginia, then diversity is not destroyed and the
Court maintains jurisdiction.
Khatib seeks to add NGL, LLC, dba Toyota of Woodbridge. Normally, the
citizenship of a corporation is both the place of incorporation and its principle place of
business. See 28 U.S.C. § 1332(c)(1). However, an LLC, or limited liability company, is
“treated like a partnership for the purpose of establishing citizenship under diversity
jurisdiction.” TPS Utilicom Srvs., Inc. v. AT&T Corp., 223 F. Supp. 2d 1089, 1101
(C.D. Cal. 2002) (citing Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir.1998)).
Under the rules for partnerships, the citizenship of each member of the partnership must
be considered.” Id. (collecting cases). NGD, LLC is composed of one member trust,
Burton M. Lustine Inter Vivos Trust. (Declaration of Steven Noble (“Noble Decl.”), Dkt.
No. 40-1 ¶ 6.) The trust has two trustees, one of whom is a citizen of Maryland and the
other a citizen of Illinois. (Id. ¶ 7.) Because a “trust has the citizenship of its . . .
trustees,” NGD LLC is deemed to be a citizen of both Maryland and Illinois. Johnson v.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

Case No.

8:23-cv-00943-JVS (Ex)

Title

David Khatib v. Toyota Motor North America, Inc. et al

August 11, 2023

Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Accordingly, there
is complete diversity among the parties, leaving federal jurisdiction intact.
The Court therefore DENIES Khatib’s motion to remand.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS the motion to amend and DENIES
the motion to remand.
IT IS SO ORDERED.

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