Hyok Byom Kwon et al v. Mercedes-Benz USA, LLC et al

Filing 16

MINUTE ORDER (IN CHAMBERS) ORDER REMANDING CASE TO STATE COURT by Judge David O. Carter. For the reasons set forth above, the Court hereby REMANDS this case to the Superior Court of Orange County, California. Case number 30-2024-01398742-CU-BC-NJC. SEE DOCUMENT FOR FURTHER INFORMATION. Case Terminated. Made JS-6. (twdb)

JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:24-cv-02023-DOC-KES

Date: November 22, 2024

Title: Hyok Byom Kwon et al. v. Mercedes-Benz USA, LLC et al.
PRESENT:
THE HONORABLE DAVID O. CARTER, JUDGE
Karlen Dubon
Courtroom Clerk

Not Present
Court Reporter

ATTORNEYS PRESENT FOR
PLAINTIFF:
None Present

ATTORNEYS PRESENT FOR
DEFENDANT:
None Present

PROCEEDINGS (IN CHAMBERS): ORDER REMANDING CASE TO
STATE COURT
On the Court’s own motion, the Court hereby REMANDS this case to the Superior
Court of California, County of Orange.
I.

Background

Plaintiffs sued Defendants in Orange County Superior Court for alleged violations
of California’s Song-Beverly Act connected to their purchase of a Mercedes-Benz
vehicle. See generally Complaint (“Compl.”) (Dkt. 1-2).
Plaintiffs originally filed suit in the Superior Court of California, County of
Orange, on May 10, 2024. See Notice of Removal (“Notice”) (Dkt. 1), at 2. On
September 18, 2024, Defendant Mercedez-Benz USA removed the action to this Court,
asserting diversity jurisdiction. Id.
II.

Legal Standard

“If at any time before final judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). Removal of a case

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:24-cv-02023-DOC-KES

Date: November 22, 2024
Page 2

from state court to federal court is governed by 28 U.S.C. § 1441, which provides in
relevant part that “any civil action brought in a State court of which the district courts of
the United States have original jurisdiction, may be removed . . . to the district court of
the United States for the district and division embracing the place where such action is
pending.” 28 U.S.C. § 1441. This statute “is strictly construed against removal
jurisdiction,” and the party seeking removal “bears the burden of establishing federal
jurisdiction.” Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988)
(emphasis added) (citations omitted).
Federal diversity jurisdiction requires that the parties be citizens of different states
and that the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a). For diversity
jurisdiction purposes, a corporation is “deemed to be a citizen of every State and foreign
state by which it has been incorporated and of the State or foreign state where it has its
principal place of business.” 28 U.S.C. § 1332(c)(1). The presence of any single plaintiff
from the same state as any single defendant destroys “complete diversity” and strips the
federal courts of original jurisdiction over the matter. Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546, 553 (2005).
Generally, a removing defendant must prove by a preponderance of the evidence
that the amount in controversy satisfies the jurisdictional threshold. Guglielmino v.
McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2008). If the complaint affirmatively
alleges an amount in controversy greater than $75,000, the jurisdictional requirement is
“presumptively satisfied.” Id. In that situation, a plaintiff who then tries to defeat removal
must prove to a “legal certainty” that a recovery of more than $75,000 is impossible. St.
Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938); Crum v. Circus
Enters., 231 F.3d 1129, 1131 (9th Cir. 2000). This framework applies equally to
situations where the complaint leaves the amount in controversy unclear or ambiguous.
See Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992); Sanchez v. Monumental Life
Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996).
A removing defendant “may not meet [its] burden by simply reciting some
‘magical incantation’ to the effect that ‘the matter in controversy exceeds the sum of
[$75,000],’ but instead, must set forth in the removal petition the underlying facts
supporting its assertion that the amount in controversy exceeds [$75,000].” Richmond v.
Allstate Ins. Co., 897 F. Supp. 447, 450 (S.D. Cal. 1995) (quoting Gaus, 980 F.2d at
567). If the plaintiff has not clearly or unambiguously alleged $75,000 in its complaint or
has affirmatively alleged an amount less than $75,000 in its complaint, the burden lies
with the defendant to show by a preponderance of the evidence that the jurisdictional

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:24-cv-02023-DOC-KES

Date: November 22, 2024
Page 3

minimum is satisfied. Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka,
599 F.3d 1102, 1106-07 (9th Cir. 2010); Guglielmino, 506 F.3d at 699.
While the defendant must “set forth the underlying facts supporting its assertion
that the amount in controversy exceeds the statutory minimum,” the standard is not so
taxing so as to require the defendant to “research, state, and prove the plaintiff’s claims
for damages.” Coleman v. Estes Express Lines, Inc., 730 F. Supp. 2d 1141, 1148 (C.D.
Cal. 2010) (emphases added). In short, the defendant must show that it is “more likely
than not” that the amount in controversy exceeds the statutory minimum. Id. Summary
judgment-type evidence may be used to substantiate this showing. Matheson v.
Progressive Specialty Ins. Co., 319 F.3d 1089, 1090–91 (9th Cir. 2003); Singer v. State
Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). For example, defendants
may make mathematical calculations using reasonable averages of hourly, monthly, and
annual incomes of comparable employees when assessing the amount in controversy in a
wrongful termination suit. Coleman, 730 F. Supp. 2d. at 1148–49.
If the court lacks subject matter jurisdiction, any action it takes is ultra vires and
void. See Gonzalez v. Crosby, 545 U.S. 524, 534 (2005); Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 94, 101–02 (1998). The lack of subject matter jurisdiction may be
raised at any time by either the parties or the court. Fed. R. Civ. P. 12(h)(3). If subject
matter jurisdiction is found to be lacking, the court must dismiss the action, id., or
remand pursuant to 28 U.S.C. § 1447(c). A court may raise the question of subject matter
jurisdiction sua sponte. See Snell v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002).
III.

Discussion

Here, Plaintiffs do not expressly allege an amount in controversy over $75,000.
See Notice at 2. Accordingly, Defendant must show by a preponderance of the evidence
that the jurisdictional minimum is satisfied. See Geographic Expeditions, Inc., 599 F.3d
at 1106-07; Guglielmino, 506 F.3d at 699.
Defendant argues that the Court has diversity jurisdiction. Notice at 2. Defendant
argues that the amount in controversy requirement is met based on the sale price of the
vehicle at issue here. Notice at 3. However, the Retail Installment Sales Contract that
Defendant cites states a total sale price of $68,347.25 including finance charges and
credit costs. Notice of Removal, Exhibit E (Dkt. 1-6). This total sale price is below the
required amount in controversy. Defendants do not cite to other evidence to meet the
amount in controversy and, thus, fail to meet their burden. While Plaintiffs might have

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:24-cv-02023-DOC-KES

Date: November 22, 2024
Page 4

suffered more than $75,000 in damages as a result of Defendant’s conduct and product,
the record currently before the Court does not support that conclusion.
Further, the Court will not include speculative civil penalties or attorneys’ fees to
meet the amount in controversy requirement. See Galt G/S v. JSS Scandinavia, 142 F.3d
1150, 1156 (9th Cir. 1998) (“We hold that where an underlying statute authorizes an
award of attorneys’ fees, either with mandatory or discretionary language, such fees may
be included in the amount in controversy.”) (emphasis added).
The Court’s decision not to include speculative awards in the amount in
controversy is reinforced by the fact that Congress has not raised the amount in
controversy since 1996—nearly three decades ago. 1 See The Federal Courts Improvement
Act of 1996, 110 Stat. 3850. Since then, the inflation rate is nearly 100% (i.e., prices have
almost doubled). Thus, adjusted for inflation, the amount in controversy should be around
$150,000. Stated conversely, a case worth $75,000 in 1996 is worth only $37,500 in
today’s dollars. Because inflation has plainly decreased the “real” value of the amount in
controversy, more and more cases are able to meet the jurisdictional threshold and can be
brought in federal court. As federal diversity jurisdiction expands, state court jurisdiction
to decide purely state law issues and develop state law correspondingly decreases. Thus,
the federal jurisdictional creep is incompatible with the most basic principles of
federalism.
Federalism is not the only loser in Congress’s failure to increase the amount in
controversy. When a case is improperly removed, as happened here, ultimate resolution is
delayed. Moreover, if a court does not immediately remand a case sua sponte, a plaintiff
may move to remand. Because cases subject to motion to remand are typically small
dollar cases, this increased motion work can quickly cause attorneys’ fees to outrun any
potential recovery and places an immense burden on a plaintiff’s lawyer working on
contingency. In this respect, the current low jurisdictional threshold reduces access to
justice. Therefore, the Court respectfully encourages Congress to reconsider the amount
in controversy minimum.
Accordingly, the Court finds that Defendant has not shown by a preponderance of
the evidence that the amount in controversy exceeds $75,000. Thus, the Court finds that it
lacks diversity jurisdiction over this matter.
For reference, in 1996, the minimum wage was $4.75 per hour, and only 16% of Americans had cell phones.
Indeed, the current amount-in-controversy is older than both of my law clerks.

1

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:24-cv-02023-DOC-KES

IV.

Date: November 22, 2024
Page 5

Disposition

For the reasons set forth above, the Court hereby REMANDS this case to the
Superior Court of Orange County, California.
The Clerk shall serve this minute order on the parties.
MINUTES FORM 11
CIVIL-GEN

Initials of Deputy Clerk: kdu