Woodcox, et al. v. Volkswagen Group of America, Inc., et al.

Filing 19

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 3/7/2017 GRANTING 6 Defendants' Motion to Stay and DENYING WITHOUT PREJUDICE 5 Plaintiffs' Motion to Remand. (Kirksey Smith, K)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 PAMELA WOODCOX, EUGENE WOODCOX, MICHELLE CONTRERAS, and LOUIS CONTRERAS, CIV. NO. 2:17-215 WBS DB MEMORANDUM AND ORDER RE: MOTION TO REMAND AND MOTION TO STAY Plaintiffs, v. VOLKSWAGEN GROUP OF AMERICA, INC., D/B/A VOLKSWAGEN OF AMERICA, INC.; VOLKSWAGEN AG; ROSEVILLE VOLKSWAGEN, LLC; THE NIELLO COMPANY; and DOES 1 through 50, inclusive, Defendants. ----oo0oo---Plaintiffs Pamela Woodcox, Eugene Woodcox, Michelle Contreras, and Louis Contreras brought this action in the Sacramento County Superior Court against defendants Volkswagen Group of America, Inc.; Volkswagen AG; Roseville Volkswagen, LLC; and the Niello Company for damages arising out of defendants’ alleged installation of illegal “defeat devices” in certain 28 1 1 automobiles to avoid detection and enforcement of Environmental 2 Protection Agency (“EPA”) and state vehicle emissions 3 regulations. 4 January 31, 2017. 5 Motion to Remand and defendants’ Motion to Stay this case pending 6 transfer to the Northern District of California pursuant to 28 7 U.S.C. § 1407. 8 I. Defendants removed the action to this court on Presently before the court are plaintiffs’ Factual and Procedural History 9 In 2015, the EPA and the California Air Resource Board 10 (“CARB”) issued Notices of Violation to Volkswagen Group of 11 America for alleged violations of the federal Clean Air Act 12 (“CAA”). 13 allegedly installed illegal software-based “defeat devices” in 14 certain diesel vehicles, which “reduce[] the effectiveness of the 15 emission control systems” and produce “compliant emission 16 results” only “when the vehicle was being tested for compliance 17 with EPA emissions standards.” 18 result, Volkswagen’s vehicles allegedly emitted levels of 19 pollutants up to forty times above EPA- and CARB-compliant levels 20 during normal operation. 21 (Compl. ¶¶ 73-74 (Docket No. 1-2).) Volkswagen (Id. ¶¶ 31, 68-69, 72-73.) As a (Id. ¶ 69.) Volkswagen’s actions resulted in well over 1,000 22 actions across the United States for their sale of purportedly 23 “clean diesel” vehicles containing these defeat devices. 24 Judicial Panel on Multidistrict Litigation (“JPML”) has 25 consolidated over 1,200 cases of these cases into a federal 26 multidistrict litigation in the United States District Court for 27 the Northern District of California (“MDL court”). 28 Volkswagen Clean Diesel Mktg., Sales Practices, and Prod. Liab. 2 The In re: 1 Litig., MDL No. 2672, Conditional Transfer Order 85 (J.P.M.L. 2 Feb. 21, 2017). 3 Plaintiffs filed the instant action in state court, 4 incorporating part of the consolidated consumer class action 5 complaint in the MDL court and bringing separate California state 6 law claims. 7 (1) violation of California Unfair Competition Law (“UCL”); (2) 8 violation of California False Advertising Law; (3) breach of 9 express warranty under the Song-Beverly Consumer Warranty Act; Plaintiffs allege the following causes of action: 10 (4) violation of the California Consumer Legal Remedies Act; (5) 11 fraud by concealment; and (6) negligent misrepresentation. 12 (Compl.) 13 court on the basis of federal question jurisdiction. 14 1.) 15 Defendants subsequently removed the case to federal (Docket No. On February 6, 2017, plaintiffs filed a motion to 16 remand the case to state court for lack of subject matter 17 jurisdiction, arguing that the case implicates only California 18 law. 19 anticipating transfer of this case to the MDL court, then moved 20 to stay this action. 21 February 10, 2017, the JPML issued a Conditional Transfer Order 22 (“CTO”) indicating its decision that this case should be 23 transferred to the MDL court. 24 No. 12-3).) 25 and then moved to vacate the CTO pursuant to J.P.M.L. Rule 7.1. 26 II. 27 28 (Mot. to Remand (Docket No. 5-2).) Defendants, (Mot. to Stay (Docket No. 6-1).) On (Oswell Decl., Ex. B at 2 (Docket Plaintiffs filed a notice of opposition to the CTO Discussion A. Order of Pending Motions As an initial matter, the court must determine which 3 1 motion--plaintiffs’ motion to remand or defendants’ motion to 2 stay--to entertain first. 3 preliminary matter that should be resolved before all others. 4 Smith v. Mail Boxes, Etc., 191 F. Supp. 2d 1155, 1157 (E.D. Cal. 5 2002) (“[J]urisdictional issues should be resolved before the 6 court determines if a stay is appropriate.”). 7 approach changes when deference to an MDL court will further “the 8 uniformity, consistency, and predictability in litigation that 9 underlies the MDL system.” Generally, jurisdiction is a However, the Conroy v. Fresh Del Monte Produce 10 Inc., 325 F. Supp. 2d 1049, 1053 (N.D. Cal. 2004). 11 can resolve a motion to remand when “the motion raises issues 12 likely to arise in other actions pending in [the consolidated 13 action].” 14 Supp. 2d 1352, 1354 (J.P.M.L. 2005) (“[M]otions to remand . . . 15 can be presented to and decided by the transferee judge.”). 16 The MDL court Id.; see also In re Vioxx Prods. Liab. Litig., 360 F. Several courts, including this one, have applied the 17 Conroy methodology when considering simultaneous motions to 18 remand and stay in the MDL context. 19 Volkswagen Grp. of Am., Inc., Civ. No. 16-cv-27-GFVT, 2016 WL 20 3040492, at *2-6 (E.D. Ky. May 25, 2016); Leeson v. Merck & Co., 21 Inc., Civ. No. 2:05-2240 WBS PAN, 2006 WL 3230047, at *2-4 (E.D. 22 Cal. Jan. 27, 2006). 23 merits of the motion to remand” and consider it in full if “this 24 preliminary assessment suggests that removal was improper.” 25 Conroy, 325 F. Supp. 2d at 1053. 26 issue appears factually or legally difficult, the court should 27 determine whether identical or similar jurisdictional issues have 28 been raised in other cases that have been or may be transferred See, e.g., Beshear v. “First, the court should [scrutinize] the Second, “if the jurisdictional 4 1 to the MDL proceeding.” 2 both difficult and similar or identical to those in cases 3 transferred or likely to be transferred, the court should stay 4 the action.” 5 1044, 1048-49 (E.D. Wis. 2001). 6 Id. “[I]f the jurisdictional issue is Id.; see also Meyers v. Bayer AG, 143 F. Supp. 2d Applying this methodology, the court finds that a stay 7 is proper. First, in light of the defendants’ subject matter 8 jurisdiction arguments, “removal was not plainly improper.” 9 Leeson, 2006 WL 3230047, at *3. See Defendants removed this case to 10 federal court, arguing plaintiffs’ state law claims necessarily 11 require the resolution of substantial federal law issues. 12 Federal question jurisdiction exists over state law claims “if a 13 federal issue is: (1) necessarily raised, (2) actually disputed, 14 (3) substantial, and (4) capable of resolution in federal court 15 without disrupting the federal-state balance approved by 16 Congress.” 17 Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 18 308, 314 (2008)). 19 Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013) (citing “When a claim can be supported by alternative and 20 independent theories--one of which is a state law theory and one 21 of which is a federal law theory--federal question jurisdiction 22 does not attach because federal law is not a necessary element of 23 the claim.” Rains v. Criterion Sys., Inc., 80 F.3d 339, 346 (9th 24 Cir. 1996). Some of plaintiffs’ claims do not necessarily raise 25 federal law questions. 26 defendants violated the UCL by violating federal and state 27 emissions laws. 28 does not necessarily, turn on federal law issues. Plaintiffs allege, for example, that (Compl. ¶ 90.) Thus, the UCL claim may, but 5 However, it is 1 not plainly clear from the Complaint that there are theories for 2 each claim that do not necessarily require resolution of a 3 federal law issue. 4 Additionally, the entire action arose out of the EPA’s 5 notice of violation by defendants for their use of “defeat 6 devices.” 7 defendants sold vehicles exceeding emissions standards using 8 “defeat devices”--a term defined by federal law--which is a 9 substantial issue in this litigation. (Id. ¶¶ 1-2.) The Complaint repeatedly alleges that See 40 C.F.R. § 10 1045.115(g) (“A defeat device is an auxiliary emission control 11 device that reduces the effectiveness of emission controls under 12 conditions that the engine may reasonably be expected to 13 encounter during normal operation and use.”). 14 specifically incorporates many portions of the amended 15 consolidated consumer class action complaint in the MDL court, 16 further complicating this jurisdictional issue. 17 1.) 18 this issue would not disrupt the federal-state balance approved 19 by Congress because Congress desires uniform application of 20 environmental regulations and the CAA. 21 3040492, at *5. The Complaint also (See Compl. ¶ Lastly, defendants argue that allowing the court to hear 22 See Beshear, 2016 WL Plaintiffs argue that no federal issue is “actually 23 disputed” because Volkswagen’s CEO admitted to the use of 24 software that defeats emissions tests while testifying before 25 Congress. 26 alleged factual scenario has led to litigation across the 27 country. 28 issue, with outcomes on both sides. This argument is weakened by the fact that the same Many courts across the country have evaluated this 6 Compare id. at *4 (finding 1 there may be disputed federal issues and thus a stay is proper 2 under Conroy), with Springsted v. Valenti Motors, Inc., 2016 WL 3 2977235, at *3 (D. Conn. May 20, 2016) (finding it is unclear 4 whether there is an actual dispute and thus remand is proper). 5 It is unclear at this juncture to what extent 6 plaintiffs’ claims depend on allegations of fraud and 7 misrepresentations rather than a disputed issue of federal law. 8 See Beshear, 2016 WL 3040492, at *4. 9 assessment is only a limited inquiry, defendants’ federal 10 question jurisdiction arguments are not clearly baseless. 11 Leeson, 2006 WL 3230047, at *3. Since this preliminary See 12 Second, the jurisdictional issue here is similar to 13 jurisdictional issues in cases already transferred to the MDL 14 court. 15 contain the precise jurisdictional question at issue here-- 16 whether plaintiffs’ state law claims for relief are based upon a 17 disputed issue of federal law. 18 Grp. of Am., Inc., Civ. No. 2:16-cv-668-KOB, 2016 WL 3483166 19 (N.D. Ala. June 27, 2016). 20 transfer order for 41 actions, noted that 40 cases had pending 21 motions for remand. 22 Furthermore, several related cases in California district courts 23 have been stayed and subsequently transferred while motions for 24 remand were pending on the same issue of federal question 25 jurisdiction. 26 Civ. No. 2:16-1942 JAM CKD (E.D. Cal. Aug. 26, 2016), ECF No. 5; 27 Alvarado v. Lasher Auto Grp., Civ. No. 2:16-979 (June 14, 2016), 28 ECF No. 12; Wilke v. Volkswagen of Downtown L.A., Civ. No. 2:16- Several cases already transferred to the MDL court See, e.g., Hess v. Volkswagen For example, the JPML, in its final (Hogberg Decl., Ex. M (Docket No. 6-15).) See, e.g., Ackers v. Volkswagen Grp. of Am., Inc., 7 1 3087 DOC SP (C.D. Cal. June 6, 2016), ECF No. 18. 2 Further, this case shares “common question[s] of fact” 3 with other cases already transferred to the MDL court. 28 U.S.C. 4 § 1407(a). 5 are private consumers. 6 related to the defendants’ alleged use of “defeat devices.” 7 Finally, there are many cases brought by California consumers 8 under California state law. 9 979, ECF No. 12. Plaintiffs here, like plaintiffs in the MDL action, The cases all involve the key question See, e.g., Alvarado, Civ. No. 2:16- Consequently, “identical or similar 10 jurisdictional issues have been raised in other cases that have 11 been or may be transferred to the MDL proceeding.” 12 F. Supp. 2d at 1053. 13 Conroy, 325 Because jurisdiction is a threshold issue and the MDL 14 court has many consumer actions bringing state law claims with 15 pending motions to remand, the MDL court will necessarily need to 16 rule on the motions to remand. 17 that the court should rule upon defendants’ motion to stay. 18 19 B. The Conroy methodology suggests Motion to Stay The power to stay proceedings “is incidental to the 20 power inherent in every court to control the disposition of the 21 causes on its docket with economy of time and effort for itself, 22 for counsel, and for litigants.” 23 248, 254 (1936). 24 are particularly appropriate when the parties contest issues that 25 are “likely to arise in other actions pending” in the 26 consolidated proceedings. 27 evaluating whether to stay proceedings, the court is concerned 28 with balancing competing interests and should consider: “(1) Landis v. N. Am. Co., 299 U.S. Moreover, a stay and deference to the MDL court Conroy, 325 F. Supp. 2d at 1053. 8 In 1 potential prejudice to the non-moving party; (2) hardship and 2 inequity to the moving party if the action is not stayed; and (3) 3 the judicial resources that would be saved by avoiding 4 duplicative litigation if the cases are in fact consolidated.” 5 Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 6 1997); see also Landis, 299 U.S. at 254-55; CMAX, Inc. v. Hall, 7 300 F.2d 265, 268 (9th Cir. 1962). 8 First, as to prejudice to plaintiffs, plaintiffs argue 9 that a stay will place their case in a “procedural limbo” in the 10 MDL court with hundreds of other cases where they will be 11 unfairly prejudiced by a delay in proceedings. 12 8:11-18 (Docket No. 14).) 13 that there are several other cases consolidated in the MDL court 14 from other federal California district courts that have pending 15 motions to remand on the exact same issue. 16 likely be able to have their motion to remand heard at the same 17 time as the other California plaintiffs’ motions. 18 (Pls.’ Opp’n This argument is weakened by the fact Plaintiffs would The court is mindful that there may be some delay or 19 inconvenience to plaintiffs if a stay is granted. “But if this 20 case is transferred to the MDL, the efficiencies gained through 21 the MDL will benefit all parties.” 22 Am., Inc., Case No. 16-cv-0754 (WMW/TNL), 2016 WL 3004631, at *2 23 (D. Minn. May 24, 2016). 24 plaintiffs from seeking remand in the MDL court, and plaintiffs 25 may very well benefit from the perspectives of plaintiffs’ 26 counsel in other cases with pending motions to remand. 27 may also be brief if the JPML grants plaintiffs’ motion to vacate 28 the conditional transfer of this case to the MDL court. Lessard v. Volkwagen Grp. of Granting a stay will not preclude 9 The stay Further, 1 other courts have stayed cases pending transfer to an MDL court 2 when “plaintiffs have not demonstrated any prejudice in the event 3 of a stay except the slight delay in deciding the remand motion.” 4 See, e.g., Med. Soc’y of N.Y. v. Conn. Gen. Corp., 187 F. Supp. 5 2d 89, 92 (S.D.N.Y. 2001). 6 Second, the potential hardship and inequity to 7 defendants weighs heavily in favor of a stay. If this court 8 considers and denies plaintiffs’ motion to remand, plaintiffs may 9 have a second chance before the MDL court if the case is 10 subsequently transferred because the MDL court will necessarily 11 need to address motions to remand in the several cases already 12 transferred. 13 same motion repeatedly brought by the same plaintiff[s].” 14 Leeson, 2006 WL 3230047, at *4. 15 determines that defendants improperly removed this case but the 16 MDL court holds removal was proper in the other California cases, 17 defendants will be stuck with a decision in this case that is 18 inconsistent with the majority of other similar cases involving 19 purely California state law claims. 20 Case No. 13-cv-2466-JST, 2013 WL 3889159, at *2 (N.D. Cal. July 21 26, 2013) (“On the other hand, Defendants would face the risk of 22 unnecessary proceedings and inconsistent rulings on recurring 23 questions of law and fact if the case is not stayed.”). 24 defendants would not be able to appeal an order granting remand. 25 Kunzi v. Pan Am. World Airways, Inc., 833 F.2d 1291, 1293 (9th 26 Cir. 1987) (“Remand orders . . . are immune from appellate review 27 . . . even if the district court’s jurisdictional decision was 28 erroneous.”). “[Defendants] should not have to defend against the See Conversely, if this court 10 See A.D. v. Pfizer, Inc., Yet 1 Denying a stay will also require defendants to 2 potentially respond to any other pretrial matters raised by 3 plaintiffs that the MDL court could decide. 4 adjudicated by this court increases the risk of inconsistent 5 rulings and prejudices defendants’ ability to defend themselves 6 in the actions with similar allegations and issues. 7 2013 WL 3889159, at *2. 8 9 Each pretrial matter See Pfizer, Third, judicial economy weighs in favor of a stay. The goal of the MDL court is to coordinate pretrial management of 10 actions with common facts. 11 JPML’s decision to consolidate this action in the MDL court 12 increases efficiency and consistency, especially “when the 13 pending motions raise issues likely to be raised in other cases.” 14 Manual for Complex Litigation (Fourth) § 22.35; see Meyers, 143 15 F. Supp. 2d at 1053 (“[J]udicial economy clearly favors a stay” 16 when the “other cases present the same or a similar issue.”). 17 28 U.S.C. § 1407. A stay pending the There are a vast number of cases already consolidated 18 in the MDL court, including cases with pending motions to remand 19 based on lack of federal question jurisdiction. 20 court has cases from many different states, which implicates 21 different state laws, there are several cases before the MDL 22 court that concern the precise issue here--whether California 23 state law claims against defendants necessarily require the 24 resolution of a federal law issue. 25 resolution by the MDL court prevents repetitive decisions and the 26 use of excessive and unnecessary judicial resources. 27 980 F. Supp. at 1360-61. 28 over the multidistrict litigation for well over a year and While the MDL Granting a stay pending See Rivers, Finally, the MDL court has presided 11 1 already established a procedure for many aspects of the MDL, 2 including the filing and briefing of motions for remand. 3 Hogberg Decl., Ex. C (Docket No. 14-4).) 4 procedures and the MDL court’s extensive knowledge of the 5 underlying facts favor granting a stay. 6 (See The already-set If this case is transferred to the MDL court, the MDL 7 court will potentially be in a better position to address 8 plaintiffs’ motion to remand and any other pretrial matters. 9 “Given the fact that hundreds of similar cases have been 10 transferred already, and the likelihood of many more cases being 11 in a similar procedural posture, the interests of judicial 12 economy and the threat of inconsistent rulings outweighs any 13 potential prejudice to the [plaintiffs].” 14 3040492, at *8. 15 motion to stay the proceedings pending transfer of this action to 16 the MDL court. 17 18 Beshear, 2016 WL Accordingly, the court will grant defendants’ IT IS THEREFORE ORDERED that defendants’ Motion to stay be, and the same hereby is, GRANTED. 19 IT IS FURTHER ORDERED that plaintiffs’ Motion to remand 20 be, and the same hereby is, DENIED WITHOUT PREJUDICE. 21 Dated: March 7, 2017 22 23 24 25 26 27 28 12

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