Animal Protection and Rescue League, Inc. v. Northridge Owner, L.P. et al

Filing 35

ORDER DISMISSING CASE FOR LACK OF SUBJECT MATTER JURISDICTION; TERMINATING 18 MOTION TO DISMISS AS MOOT. Signed by Judge Beth Labson Freeman. (blflc2S, COURT STAFF) (Filed on 8/24/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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ANIMAL PROTECTION AND RESCUE
LEAGUE, INC.,
Plaintiff,

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v.

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NORTHRIDGE OWNER, L.P., et al.,

ORDER DISMISSING CASE FOR
LACK OF SUBJECT MATTER
JURISDICTION; TERMINATING
MOTION TO DISMISS AS MOOT
[Re: ECF 18]

Defendants.

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United States District Court
Northern District of California

Case No. 16-cv-01494-BLF

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Seeking protection under the California Constitution and California Unfair Competition

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Law (“UCL”), Plaintiff Animal Protection and Rescue League, Inc. (“APRL”) has filed this

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federal court action challenging Defendants’ time, place, and manner restrictions on expressive

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activities at their shopping mall. Compl., ECF 1. Federal jurisdiction is purportedly based on

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diversity. Id. ¶ 9. There is no question that the parties are diverse and that this suit raises

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important issues, but it appears that Plaintiff has failed to allege an adequate amount in

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controversy to support federal jurisdiction.

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I.

BACKGROUND
Earlier this year, APRL sought to “engage in expressive activities” at the Northridge Mall

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(“Mall”), which is owned by Defendants. Compl. ¶ 13, ECF 1. At APRL’s request, the Mall

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emailed APRL a copy of the rules and application the Mall had adopted for such activities. Id. ¶¶

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13–15. Upon receipt, APRL expressed concerns about the rules and regulations to the Mall’s

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management. Id. ¶¶ 18–22. Specifically, APRL expressed its belief that the “Expressive Activity

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Regulations contain numerous unconstitutional provisions” and “may be enforced in

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unconstitutional ways.” Id. ¶¶ 23–24. After weeks of negotiations, APRL decided “not to proceed

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with its activity because of unlawful provisions in the Mall’s rules,” and instead brought this

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lawsuit seeking declaratory and injunctive relief. 1 Compl., ECF 1; Opp. 12, ECF 21. Defendants

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moved to dismiss the complaint under Rules 12(b)(1) for lack of ripeness and 12(b)(6) for failure

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to state a claim under California’s UCL. Mot., ECF 18.

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Because it was not apparent on the face of the complaint that APRL could satisfy the

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amount in controversy requirement, the Court sought supplemental briefing. ECF 30. After

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careful consideration of the parties’ respective written submissions, for the reasons stated below,

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the Court finds that the action must be dismissed for lack of subject matter jurisdiction.

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II.

LEGAL STANDARD
“Federal courts are courts of limited jurisdiction. They possess only that power authorized

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by Constitution and statute, which is not to be expanded by judicial decree.” Kokkonen v.

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United States District Court
Northern District of California

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Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations omitted). “A party

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invoking the federal court’s jurisdiction has the burden of proving the actual existence of subject

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matter jurisdiction.” Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996) (citation omitted).

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This Court has an independent obligation to ensure that it has subject matter jurisdiction over a

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matter and may raise the question, sua sponte, at any time during the pendency of the action. Snell

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v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002). If a court determines that it lacks subject

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matter jurisdiction, the court must dismiss the action. Fed. R. Civ. P. 12(h)(3). Because the

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jurisdictional problem appears on the face of the Complaint in this case, the Court assumes that

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Plaintiff’s allegations are true. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.

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2004).

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A.

Diversity Jurisdiction
To invoke diversity jurisdiction in an action involving U.S. citizens, the complaint must

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allege that the matter in controversy is between citizens of different states and the amount in

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controversy must exceed $75,000. 28 U.S.C. §1332(a)(1).
When a plaintiff files a lawsuit in federal court, the “legal certainty” test is used to

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The Court notes that APRL improperly seeks damages on its UCL claim. Compl. ¶ 62, ECF 1;
see Clark v. Superior Court, 50 Cal. 4th 605, 610 (2010) (“Not recoverable [under California
unfair competition law] are damages . . . .”).
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determine whether the complaint meets the amount in controversy requirement. Naffe v. Frey, 789

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F.3d 1030, 1039 (9th Cir. 2015). “Under this test, the sum claimed by the plaintiff controls if the

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claim is apparently made in good faith. It must appear to a legal certainty that the claim is really

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for less than the jurisdictional amount to justify dismissal.” Id. at 1040 (citation and internal

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quotation marks omitted). Thus, “the district court must accept the amount in controversy claimed

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by the plaintiff unless it can declare to a legal certainty that the case is worth less.” Id. (citing St.

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Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288–89 (1938)).

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B.

Leave to Amend
Pursuant to Federal Rule of Civil Procedure 15(a), a court should grant leave to amend a

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complaint “when justice so requires,” because the “purpose of Rule 15 ... [is] to facilitate decision

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United States District Court
Northern District of California

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on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127

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(9th Cir.2000) (en banc). The Court may deny leave to amend, however, for a number of reasons,

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including “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to

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cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by

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virtue of allowance of the amendment, [and] futility of amendment.” Eminence Capital, LLC v.

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Aspeon, Inc., 316 F.3d 1048, 1052 (2003).

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III.

DISCUSSION
Because APRL seeks both injunctive relief and attorney’s fees, the Court considers

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whether either or both satisfies the amount in controversy requirement.
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Value of Injunctive Relief
The Ninth Circuit has adopted the “either viewpoint” rule for determining whether the

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request for injunctive relief carries the case over the jurisdictional amount threshold. In re Ford

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Motor Co./Citybank (South Dakota), N.A., 264 F.3d 952, 958 (9th Cir. 2001). “Under the ‘either

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viewpoint’ rule, the test for determining the amount in controversy is the pecuniary result to either

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party which the judgment would directly produce.” Id. (citing Ridder Bros. Inc., v. Blethen, 142

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F.2d 395, 399 (9th Cir. 1944)). “In other words, where the value of a plaintiff’s potential recovery

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. . . is below the jurisdictional amount, but the potential cost to the defendant of complying with

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the injunction exceeds that amount, it is the latter that represents the amount in controversy for
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jurisdictional purposes.” Id.
Defendants contend that “[t]he cost to Northridge Mall of complying with the requested

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injunctive relief is likely zero.” Def.’s Suppl. Br. 2, ECF 33. In its supplemental briefing, APRL

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failed to address this issue. See Pl.’s Suppl. Br., ECF 34. Accordingly, the Court concludes that

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the cost of an injunction to either party would not exceed $75,000. And in fact may be $0.

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B.

Consideration of Attorney’s Fees
APRL seeks to recover its fees under California’s private attorney general statute, Cal. Civ.

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Proc. Code § 1021.5, which gives courts discretion to award fees to certain successful plaintiffs

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whose litigation advances the public interest. APRL estimates that its fees are reasonably
expected to exceed $75,000 based on fee awards it has received in similar cases. Pl.’s Supp. Br. 3,

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United States District Court
Northern District of California

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ECF 34.

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Typically, attorney’s fees are not considered part of the amount in controversy for diversity

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purposes, but “where an underlying statute authorizes an award of attorney’s fees, either with

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mandatory or discretionary language, such fees may be included in the amount in controversy.”

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Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). It is unclear from the case law,

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however, what amount of attorney’s fees are properly included within the amount in controversy.

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There are two main lines of cases on this point, each of which has been adopted by at least one

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court in this district. The Ninth Circuit has not yet decided the issue.

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Some courts, including the Tenth Circuit, have held that a reasonable estimate of fees

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likely to be recovered may be used in calculating the amount in controversy. See, e.g., Miera v.

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Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998); Brady v. Mercedes-Benz USA, Inc., 243

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F. Supp. 2d 1004, 1011 (N.D. Cal. 2002). Other courts, including the Seventh Circuit, have held it

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proper to include only those fees incurred as of the date the complaint is filed. See, e.g.,

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Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 958 (7th Cir. 1998) (reasoning that an

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estimate of future fees beyond those incurred in initiating the suit “includes the value of legal

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services that have not been and may never be incurred, and are therefore not ‘in controversy’

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between the parties”); Fid. & Guar. Ins. Co. v. KB Homes South Bay, Inc., No. 15-cv-00062-EDJ,

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2015 WL 5569110 (N.D. Cal. Sept. 21, 2015).
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APRL asks the Court to adopt the former and find that “[w]here the law entitles the

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prevailing plaintiff to recover reasonable attorney fees, a reasonable estimate of fees likely to be

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incurred to resolution is part of the benefit permissibly sought by the plaintiff and thus contributes

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to the amount in controversy.” Pl.’s Suppl. Br. 2, ECF 34 (citing and quoting Brady, 243 F. Supp.

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2d at 1011). The Court declines to do so, and instead holds that it is proper to consider only those

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fees incurred as of the date the complaint is filed.

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The cases holding that the court should consider a reasonable estimate of fees likely to be

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incurred to resolution are distinguishable because the attorney’s fees at issue there were

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mandatory, unlike the fees at issue here. In Miera, the Tenth Circuit was considering New
Mexico’s Unfair Trade Practice Act, which states that “[t]he court shall award attorney fees” to a

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United States District Court
Northern District of California

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prevailing plaintiff. N.M. Stat. Ann. § 57-12-10, subd. C (emphasis added). Similarly, under

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California’s Song-Beverly Consumer Warranty Act, which was at issue in Brady, “[i]f the buyer

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prevails in an action under this section, the buyer shall be allowed by the court to recover as part

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of the judgment . . . attorney’s fees[.]” Cal. Civ. Proc. Code §1794 (emphasis added). Under

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California Civil Procedure Code §1021.5, which is at issue here, the award of attorney’s fees is

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discretionary. Cal. Civ. Proc. Code § 1021.5 (“Upon motion, a court may award attorneys’ fees to

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a successful party[.]”).

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That attorney’s fees are not mandatory here would not be dispositive standing alone

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because it is reasonable to conclude, based on the nature of this suit, that the Court would award

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attorney’s fees if APRL were successful. However, it is well established that jurisdiction

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“depends upon the state of things at the time of the action brought.” Grupo Dataflux v. Atlas

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Glob. Grp., L.P., 541 U.S. 567, 570 (2004) (internal citation and quotation marks omitted). “This

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time-of-filing rule is hornbook law . . . taught to first-year law students in any basic course on civil

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procedure.” Id. at 570–71 (internal citations omitted). Moreover, “[s]ubsequent events do not

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confer jurisdiction.” Faysound Ltd. v. United Coconut Chems., Inc., 878 F.2d 290, 296 (9th Cir.

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1989). Accordingly, the Court holds that a plaintiff must meet the amount in controversy

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requirement at the time the action is filed.

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To demonstrate that, if successful, APRL’s fees would satisfy the amount in controversy
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requirement, APRL alleges that it has “incurred more than $60,000 in attorney’s fees . . .

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researching, drafting and serving the complaint, having multiple conference calls with opposing

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counsel . . ., providing and receiving Rule 26 disclosures, researching and drafting a response to a

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complicated motion [to dismiss], and preparing for oral argument.” Pl.’s Suppl. Br. 3, ECF 34.

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Given the amount of post-filing work listed in APRL’s fee estimate, APRL’s attorney’s fees

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incurred as of the time the complaint was filed plainly cannot satisfy the amount in controversy

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requirement.

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Thus, as of the time the complaint was filed, it appears to a legal certainty that Plaintiff’s

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claims for declaratory and injunctive relief are for less than $75,000. Accordingly, because this
Court lacks subject matter jurisdiction Plaintiff’s claims must be dismissed. Because it is not clear

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United States District Court
Northern District of California

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that amendment would be futile, the Court grants leave to amend to allege a proper basis for

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federal jurisdiction.

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IV.

ORDER

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For the foregoing reasons, Plaintiff’s claims are DISMISSED WITH LEAVE TO

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AMEND. Plaintiff must file an amended complaint on or before September 23, 2016. The Court

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TERMINATES Defendants’ pending motion to dismiss as moot.

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IT IS SO ORDERED.
Dated: August 24, 2016
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BETH LABSON FREEMAN
United States District Judge

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