MacKinnon v. IMVU, Inc et al

Filing 31

ORDER by Judge Hamilton Granting 8 Motion to Remand and Vacating Hearing Date (pjhlc2, COURT STAFF) (Filed on 1/11/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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PETER MACKINNON, JR.,
Plaintiff,

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v.
IMVU, INC.,

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For the Northern District of California

United States District Court

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No. C 11-4840 PJH
ORDER GRANTING MOTION
TO REMAND AND VACATING
HEARING DATE

Defendant.
_______________________________/

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Before this court are plaintiff’s motion to remand this matter to Santa Clara County

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Superior Court, and plaintiff’s motion for sanctions. Having carefully read the parties’

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papers and considered the relevant legal authority, the court GRANTS plaintiff’s motion to

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remand and DENIES plaintiff’s motion for sanctions, for the following reasons.

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The Class Action Fairness Act (“CAFA”) provides that the district courts shall have

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original jurisdiction of "any civil action" where 1) the number of members of all proposed

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plaintiff classes in the aggregate is 100 or more, 2) the claims of the individual class

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members, in the aggregate, exceed the sum or value of $5,000,000 exclusive of

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interest and costs, and 3) "any member of a class of plaintiffs is a citizen of a State different

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from any defendant." See 28 U.S.C. § 1332(d). Pursuant to CAFA, a removing defendant

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must file a notice of removal within thirty days from the time of receipt of the initial

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complaint or receipt of “an amended pleading, motion, order or other paper from which it

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may first be ascertained that the case is one which is or has become removable." See 28

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U.S.C. § 1446(b).

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Neither party disputes that defendant failed to file a notice of removal within 30 days
of receipt of the initial, or first amended (and operative) complaint. Rather, the parties

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dispute whether defendant’s subsequent notice of removal was timely, based upon

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defendant’s receipt of information that would qualify as “an amended pleading, motion,

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order or other paper from which it may first be ascertained that the case is one which is or

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has become removable.” Specifically, the parties dispute whether defendant’s September

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30, 2011 notice of removal is timely, based upon an in-court, off the record oral statement

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purportedly made by plaintiff’s counsel at a September 27, 2011 discovery conference.

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According to defendant, the oral statement made by plaintiff’s counsel at the discovery

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conference established for the first time that plaintiff’s class action claims seek damages of

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“up to and including $10,000,000" – a figure that, if true, would satisfy CAFA’s amount in
controversy requirement.

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For the Northern District of California

United States District Court

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As a preliminary matter, by its express terms, section 1446(b) does not apply to oral

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statements. See 28 U.S.C. § 1446(b)(referencing “an amended pleading, motion, order or

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other paper from which it may first be ascertained that the case is one which is or has

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become removable”)(emphasis added). Defendant, however, has relied on several cases

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(the majority outside of this district) that purportedly confirm the propriety of removal under

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section 1446(b) on the basis of oral statements made in court. Opp. Br. at 5:5-7:21; see

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also, e.g., Mike Silverman & Assocs., Inc. v. Drai, 659 F. Supp. 741, 745 (C.D. Cal.

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1987)(time for removal commenced when defendant learned in court of co-defendant’s

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dismissal, thereby establishing grounds for diversity jurisdiction). In response, plaintiff

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submits opposing legal authorities holding that oral communications and statements are

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insufficient to qualify as ‘other papers’ that trigger removal pursuant to section 1446(b).

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See, .e.g, Jiminez v. Sears, Roebuck & Co., 2010 WL 653548 *2 (C.D. Cal. Feb. 18

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2010)(“oral statements are not an “other paper” which triggers removal under 42 U.S.C. §

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1446(b)”); Mendoza v. OM Financial Life Ins. Co., 2009 WL 1813964, *5 (N.D. Cal. June

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25, 2009)(“oral communications do not constitute “other papers” for the purposes of §

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1446(b)”).

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The court construes these cases in plaintiff’s favor. While defendant has submitted

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cases that do suggest that oral statements made in court are a sufficient basis from which a

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defendant may ascertain removability, the vast majority, if not all, of defendant’s cited case

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law is confined to the diversity of citizenship inquiry, not the amount in controversy question

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that the court is presented with here. And none expressly dealt with an off the record

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statement by counsel such as that which is present here. By contrast, the amount in

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controversy requirement is discussed in the authorities submitted by plaintiff, and these

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cases instruct that removability is to be ascertained from a verifiable “paper” document,

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consistent with the plain language of section 1446(b). All of which suggests that, as

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applied to the off-record and unrecorded oral statement made by plaintiff’s counsel here,
section 1446(b)’s removal provisions are not satisfied.

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For the Northern District of California

United States District Court

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Critically, moreover, defendant’s cited case law does not address the situation

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where, as here, the parties dispute the content of the oral statement to begin with. Defense

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counsel avers, for example, that plaintiff’s counsel explicitly stated at the discovery

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conference that damages sought by plaintiff are “up to and including $10,000,000.” Opp.

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Br. at 1:15-16; Declaration of Carter Ott ISO Opp. (“Carter Decl.”), ¶ 2. Defense counsel

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then simultaneously submits his own contemporaneous recording of the discovery

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conference, in which counsel specifically credited plaintiff’s counsel with the slightly

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different claim that there “may be $10M in dispute.” See Carter Decl., Ex. A. Plaintiff’s

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counsel, for their part – who dispute that Mr. Safier affirmatively stated that $10 million are

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in dispute – declare instead that Mr. Safier stated only that he “did not know” how much

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was on dispute, but that there were “probably millions of dollars” in dispute. See

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Declaration of Seth A. Safier ISO Remand (“Safier Decl.”), ¶ 7; Declaration of Todd

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Kennedy ISO Remand (“Kennedy Decl.”), ¶ 3. Plaintiff’s counsel also declare that just a

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few weeks prior to the discovery conference, defense counsel told plaintiff’s counsel that

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there was only $350,000 at issue. Safier Decl., ¶ 8; Kennedy Decl., ¶ 5.

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Even assuming that counsel’s oral, off the record statement were a sufficient basis
from which to ascertain removability, the foregoing factual dispute would preclude the court

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from determining the actual amount in controversy here (indeed, this dispute also serves to

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underscore the wisdom of holding that oral, off the record statements are not a sufficient

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basis from which to ascertain removability, since such statements are not objectively

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verifiable).

demonstrate that the amount in controversy is satisfied, such that removal is appropriate

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pursuant to section 1446(b). See 28 U.S.C.A. § 1332(a); Abrego Abrego v. The Dow

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Chem. Co., 443 F.3d 676, 683, 690 (9th Cir. 2006)(where amount in controversy is at

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issue, "the removing defendant must prove by a preponderance of the evidence that the

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amount in controversy requirement has been met."); Lowdermilk v. U.S. Bank National

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For the Northern District of California

As such, the court finds that defendant has failed to discharge its burden to

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United States District Court

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Ass'n, 479 F.3d 994 (9th Cir. 2007).

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Mindful of its duty to conservatively construe the removal statutes, and for all the

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foregoing reasons, plaintiff’s motion to remand is accordingly GRANTED. Abrego, 443 F.

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3d at 690 (doubt as to the propriety of removal requires that the lawsuit be remanded).

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Plaintiff's corresponding motion for fees and costs is DENIED. While the court has

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concluded that no grounds for removability are present, the court is not convinced that

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defendants' counsel was objectively unreasonable in seeking to remove the present action.

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Plaintiff’s motion for sanctions pursuant to Rule 11 and 28 U.S.C. § 1927, which is
based on overlapping arguments, is similarly DENIED.
The January 18, 2012 date for hearing is VACATED. The February 8, 2012 date for

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hearing on defendant’s motion for judgment on the pleadings is also VACATED, as

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defendant’s motion is dismissed as moot in light of the foregoing ruling.

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The clerk shall close the file.

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IT IS SO ORDERED.

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Dated: January 11, 2012
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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