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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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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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

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automobiles to avoid detection and enforcement of Environmental

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Protection Agency (“EPA”) and state vehicle emissions

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regulations.

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January 31, 2017.

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Motion to Remand and defendants’ Motion to Stay this case pending

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transfer to the Northern District of California pursuant to 28

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U.S.C. § 1407.

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I.

Defendants removed the action to this court on
Presently before the court are plaintiffs’

Factual and Procedural History

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In 2015, the EPA and the California Air Resource Board

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(“CARB”) issued Notices of Violation to Volkswagen Group of

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America for alleged violations of the federal Clean Air Act

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(“CAA”).

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allegedly installed illegal software-based “defeat devices” in

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certain diesel vehicles, which “reduce[] the effectiveness of the

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emission control systems” and produce “compliant emission

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results” only “when the vehicle was being tested for compliance

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with EPA emissions standards.”

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result, Volkswagen’s vehicles allegedly emitted levels of

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pollutants up to forty times above EPA- and CARB-compliant levels

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during normal operation.

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(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

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actions across the United States for their sale of purportedly

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“clean diesel” vehicles containing these defeat devices.

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Judicial Panel on Multidistrict Litigation (“JPML”) has

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consolidated over 1,200 cases of these cases into a federal

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multidistrict litigation in the United States District Court for

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the Northern District of California (“MDL court”).

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Volkswagen Clean Diesel Mktg., Sales Practices, and Prod. Liab.
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The

In re:

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Litig., MDL No. 2672, Conditional Transfer Order 85 (J.P.M.L.

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Feb. 21, 2017).

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Plaintiffs filed the instant action in state court,

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incorporating part of the consolidated consumer class action

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complaint in the MDL court and bringing separate California state

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law claims.

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(1) violation of California Unfair Competition Law (“UCL”); (2)

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violation of California False Advertising Law; (3) breach of

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express warranty under the Song-Beverly Consumer Warranty Act;

Plaintiffs allege the following causes of action:

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(4) violation of the California Consumer Legal Remedies Act; (5)

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fraud by concealment; and (6) negligent misrepresentation.

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(Compl.)

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court on the basis of federal question jurisdiction.

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1.)

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Defendants subsequently removed the case to federal
(Docket No.

On February 6, 2017, plaintiffs filed a motion to

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remand the case to state court for lack of subject matter

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jurisdiction, arguing that the case implicates only California

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law.

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anticipating transfer of this case to the MDL court, then moved

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to stay this action.

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February 10, 2017, the JPML issued a Conditional Transfer Order

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(“CTO”) indicating its decision that this case should be

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transferred to the MDL court.

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No. 12-3).)

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and then moved to vacate the CTO pursuant to J.P.M.L. Rule 7.1.

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II.

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(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
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motion--plaintiffs’ motion to remand or defendants’ motion to

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stay--to entertain first.

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preliminary matter that should be resolved before all others.

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Smith v. Mail Boxes, Etc., 191 F. Supp. 2d 1155, 1157 (E.D. Cal.

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2002) (“[J]urisdictional issues should be resolved before the

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court determines if a stay is appropriate.”).

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approach changes when deference to an MDL court will further “the

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uniformity, consistency, and predictability in litigation that

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underlies the MDL system.”

Generally, jurisdiction is a

However, the

Conroy v. Fresh Del Monte Produce

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Inc., 325 F. Supp. 2d 1049, 1053 (N.D. Cal. 2004).

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can resolve a motion to remand when “the motion raises issues

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likely to arise in other actions pending in [the consolidated

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action].”

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Supp. 2d 1352, 1354 (J.P.M.L. 2005) (“[M]otions to remand . . .

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can be presented to and decided by the transferee judge.”).

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The MDL court

Id.; see also In re Vioxx Prods. Liab. Litig., 360 F.

Several courts, including this one, have applied the

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Conroy methodology when considering simultaneous motions to

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remand and stay in the MDL context.

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Volkswagen Grp. of Am., Inc., Civ. No. 16-cv-27-GFVT, 2016 WL

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3040492, at *2-6 (E.D. Ky. May 25, 2016); Leeson v. Merck & Co.,

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Inc., Civ. No. 2:05-2240 WBS PAN, 2006 WL 3230047, at *2-4 (E.D.

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Cal. Jan. 27, 2006).

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merits of the motion to remand” and consider it in full if “this

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preliminary assessment suggests that removal was improper.”

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Conroy, 325 F. Supp. 2d at 1053.

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issue appears factually or legally difficult, the court should

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determine whether identical or similar jurisdictional issues have

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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

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to the MDL proceeding.”

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both difficult and similar or identical to those in cases

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transferred or likely to be transferred, the court should stay

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the action.”

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1044, 1048-49 (E.D. Wis. 2001).

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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

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is proper.

First, in light of the defendants’ subject matter

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jurisdiction arguments, “removal was not plainly improper.”

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Leeson, 2006 WL 3230047, at *3.

See

Defendants removed this case to

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federal court, arguing plaintiffs’ state law claims necessarily

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require the resolution of substantial federal law issues.

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Federal question jurisdiction exists over state law claims “if a

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federal issue is: (1) necessarily raised, (2) actually disputed,

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(3) substantial, and (4) capable of resolution in federal court

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without disrupting the federal-state balance approved by

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Congress.”

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Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S.

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308, 314 (2008)).

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Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013) (citing

“When a claim can be supported by alternative and

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independent theories--one of which is a state law theory and one

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of which is a federal law theory--federal question jurisdiction

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does not attach because federal law is not a necessary element of

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the claim.”

Rains v. Criterion Sys., Inc., 80 F.3d 339, 346 (9th

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Cir. 1996).

Some of plaintiffs’ claims do not necessarily raise

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federal law questions.

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defendants violated the UCL by violating federal and state

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emissions laws.

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does not necessarily, turn on federal law issues.

Plaintiffs allege, for example, that

(Compl. ¶ 90.)

Thus, the UCL claim may, but

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However, it is

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not plainly clear from the Complaint that there are theories for

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each claim that do not necessarily require resolution of a

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federal law issue.

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Additionally, the entire action arose out of the EPA’s

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notice of violation by defendants for their use of “defeat

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devices.”

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defendants sold vehicles exceeding emissions standards using

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“defeat devices”--a term defined by federal law--which is a

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substantial issue in this litigation.

(Id. ¶¶ 1-2.)

The Complaint repeatedly alleges that

See 40 C.F.R. §

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1045.115(g) (“A defeat device is an auxiliary emission control

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device that reduces the effectiveness of emission controls under

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conditions that the engine may reasonably be expected to

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encounter during normal operation and use.”).

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specifically incorporates many portions of the amended

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consolidated consumer class action complaint in the MDL court,

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further complicating this jurisdictional issue.

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1.)

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this issue would not disrupt the federal-state balance approved

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by Congress because Congress desires uniform application of

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environmental regulations and the CAA.

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3040492, at *5.

The Complaint also

(See Compl. ¶

Lastly, defendants argue that allowing the court to hear

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See Beshear, 2016 WL

Plaintiffs argue that no federal issue is “actually

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disputed” because Volkswagen’s CEO admitted to the use of

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software that defeats emissions tests while testifying before

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Congress.

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alleged factual scenario has led to litigation across the

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country.

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issue, with outcomes on both sides.

This argument is weakened by the fact that the same

Many courts across the country have evaluated this

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Compare id. at *4 (finding

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there may be disputed federal issues and thus a stay is proper

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under Conroy), with Springsted v. Valenti Motors, Inc., 2016 WL

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2977235, at *3 (D. Conn. May 20, 2016) (finding it is unclear

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whether there is an actual dispute and thus remand is proper).

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It is unclear at this juncture to what extent

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plaintiffs’ claims depend on allegations of fraud and

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misrepresentations rather than a disputed issue of federal law.

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See Beshear, 2016 WL 3040492, at *4.

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assessment is only a limited inquiry, defendants’ federal

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question jurisdiction arguments are not clearly baseless.

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Leeson, 2006 WL 3230047, at *3.

Since this preliminary

See

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Second, the jurisdictional issue here is similar to

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jurisdictional issues in cases already transferred to the MDL

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court.

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contain the precise jurisdictional question at issue here--

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whether plaintiffs’ state law claims for relief are based upon a

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disputed issue of federal law.

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Grp. of Am., Inc., Civ. No. 2:16-cv-668-KOB, 2016 WL 3483166

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(N.D. Ala. June 27, 2016).

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transfer order for 41 actions, noted that 40 cases had pending

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motions for remand.

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Furthermore, several related cases in California district courts

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have been stayed and subsequently transferred while motions for

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remand were pending on the same issue of federal question

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jurisdiction.

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Civ. No. 2:16-1942 JAM CKD (E.D. Cal. Aug. 26, 2016), ECF No. 5;

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Alvarado v. Lasher Auto Grp., Civ. No. 2:16-979 (June 14, 2016),

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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.,

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3087 DOC SP (C.D. Cal. June 6, 2016), ECF No. 18.

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Further, this case shares “common question[s] of fact”

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with other cases already transferred to the MDL court.

28 U.S.C.

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§ 1407(a).

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are private consumers.

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related to the defendants’ alleged use of “defeat devices.”

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Finally, there are many cases brought by California consumers

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under California state law.

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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

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jurisdictional issues have been raised in other cases that have

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been or may be transferred to the MDL proceeding.”

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F. Supp. 2d at 1053.

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Conroy, 325

Because jurisdiction is a threshold issue and the MDL

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court has many consumer actions bringing state law claims with

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pending motions to remand, the MDL court will necessarily need to

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rule on the motions to remand.

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that the court should rule upon defendants’ motion to stay.

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B.

The Conroy methodology suggests

Motion to Stay
The power to stay proceedings “is incidental to the

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power inherent in every court to control the disposition of the

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causes on its docket with economy of time and effort for itself,

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for counsel, and for litigants.”

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248, 254 (1936).

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are particularly appropriate when the parties contest issues that

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are “likely to arise in other actions pending” in the

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consolidated proceedings.

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evaluating whether to stay proceedings, the court is concerned

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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.

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In

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potential prejudice to the non-moving party; (2) hardship and

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inequity to the moving party if the action is not stayed; and (3)

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the judicial resources that would be saved by avoiding

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duplicative litigation if the cases are in fact consolidated.”

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Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal.

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1997); see also Landis, 299 U.S. at 254-55; CMAX, Inc. v. Hall,

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300 F.2d 265, 268 (9th Cir. 1962).

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First, as to prejudice to plaintiffs, plaintiffs argue

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that a stay will place their case in a “procedural limbo” in the

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MDL court with hundreds of other cases where they will be

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unfairly prejudiced by a delay in proceedings.

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8:11-18 (Docket No. 14).)

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that there are several other cases consolidated in the MDL court

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from other federal California district courts that have pending

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motions to remand on the exact same issue.

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likely be able to have their motion to remand heard at the same

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time as the other California plaintiffs’ motions.

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(Pls.’ Opp’n

This argument is weakened by the fact

Plaintiffs would

The court is mindful that there may be some delay or

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inconvenience to plaintiffs if a stay is granted.

“But if this

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case is transferred to the MDL, the efficiencies gained through

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the MDL will benefit all parties.”

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Am., Inc., Case No. 16-cv-0754 (WMW/TNL), 2016 WL 3004631, at *2

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(D. Minn. May 24, 2016).

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plaintiffs from seeking remand in the MDL court, and plaintiffs

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may very well benefit from the perspectives of plaintiffs’

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counsel in other cases with pending motions to remand.

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may also be brief if the JPML grants plaintiffs’ motion to vacate

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the conditional transfer of this case to the MDL court.

Lessard v. Volkwagen Grp. of

Granting a stay will not preclude

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The stay

Further,

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other courts have stayed cases pending transfer to an MDL court

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when “plaintiffs have not demonstrated any prejudice in the event

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of a stay except the slight delay in deciding the remand motion.”

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See, e.g., Med. Soc’y of N.Y. v. Conn. Gen. Corp., 187 F. Supp.

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2d 89, 92 (S.D.N.Y. 2001).

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Second, the potential hardship and inequity to

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defendants weighs heavily in favor of a stay.

If this court

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considers and denies plaintiffs’ motion to remand, plaintiffs may

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have a second chance before the MDL court if the case is

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subsequently transferred because the MDL court will necessarily

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need to address motions to remand in the several cases already

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transferred.

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same motion repeatedly brought by the same plaintiff[s].”

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Leeson, 2006 WL 3230047, at *4.

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determines that defendants improperly removed this case but the

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MDL court holds removal was proper in the other California cases,

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defendants will be stuck with a decision in this case that is

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inconsistent with the majority of other similar cases involving

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purely California state law claims.

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Case No. 13-cv-2466-JST, 2013 WL 3889159, at *2 (N.D. Cal. July

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26, 2013) (“On the other hand, Defendants would face the risk of

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unnecessary proceedings and inconsistent rulings on recurring

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questions of law and fact if the case is not stayed.”).

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defendants would not be able to appeal an order granting remand.

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Kunzi v. Pan Am. World Airways, Inc., 833 F.2d 1291, 1293 (9th

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Cir. 1987) (“Remand orders . . . are immune from appellate review

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. . . even if the district court’s jurisdictional decision was

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erroneous.”).

“[Defendants] should not have to defend against the
See

Conversely, if this court

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See A.D. v. Pfizer, Inc.,

Yet

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Denying a stay will also require defendants to

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potentially respond to any other pretrial matters raised by

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plaintiffs that the MDL court could decide.

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adjudicated by this court increases the risk of inconsistent

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rulings and prejudices defendants’ ability to defend themselves

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in the actions with similar allegations and issues.

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2013 WL 3889159, at *2.

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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

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actions with common facts.

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JPML’s decision to consolidate this action in the MDL court

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increases efficiency and consistency, especially “when the

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pending motions raise issues likely to be raised in other cases.”

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Manual for Complex Litigation (Fourth) § 22.35; see Meyers, 143

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F. Supp. 2d at 1053 (“[J]udicial economy clearly favors a stay”

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when the “other cases present the same or a similar issue.”).

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28 U.S.C. § 1407.

A stay pending the

There are a vast number of cases already consolidated

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in the MDL court, including cases with pending motions to remand

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based on lack of federal question jurisdiction.

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court has cases from many different states, which implicates

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different state laws, there are several cases before the MDL

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court that concern the precise issue here--whether California

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state law claims against defendants necessarily require the

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resolution of a federal law issue.

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resolution by the MDL court prevents repetitive decisions and the

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use of excessive and unnecessary judicial resources.

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980 F. Supp. at 1360-61.

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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

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already established a procedure for many aspects of the MDL,

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including the filing and briefing of motions for remand.

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Hogberg Decl., Ex. C (Docket No. 14-4).)

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procedures and the MDL court’s extensive knowledge of the

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underlying facts favor granting a stay.

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(See

The already-set

If this case is transferred to the MDL court, the MDL

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court will potentially be in a better position to address

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plaintiffs’ motion to remand and any other pretrial matters.

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“Given the fact that hundreds of similar cases have been

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transferred already, and the likelihood of many more cases being

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in a similar procedural posture, the interests of judicial

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economy and the threat of inconsistent rulings outweighs any

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potential prejudice to the [plaintiffs].”

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3040492, at *8.

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motion to stay the proceedings pending transfer of this action to

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the MDL court.

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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.

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IT IS FURTHER ORDERED that plaintiffs’ Motion to remand

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be, and the same hereby is, DENIED WITHOUT PREJUDICE.

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Dated:

March 7, 2017

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