Hu v. The Guardian Life Insurance Company of America
Filing
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Order by Judge Lucy H. Koh Sua Sponte Remanding Case and Denying as Moot 6 Motion to Dismiss.(lhklc2, COURT STAFF) (Filed on 10/24/2017) (Additional attachment(s) added on 10/24/2017: # 1 Certificate/Proof of Service) (iym, COURT STAFF).
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
United States District Court
Northern District of California
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JASON HU,
Plaintiff,
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ORDER SUA SPONTE REMANDING
CASE AND DENYING AS MOOT
MOTION TO DISMISS
v.
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Case No. 17-CV-04098-LHK
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA,
Defendant.
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Plaintiff Jason Hu (“Plaintiff”), proceeding pro se, brings an action for violation of Cal.
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Ins. Code § 10277(b) against The Guardian Life Insurance Company of America (“Defendant”).
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ECF No. 1-1 at 3–7. Before the Court is Defendant’s motion to dismiss. ECF No. 6. The Court
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finds this matter suitable for decision without oral argument under Civil Local Rule 7-1(b) and
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hereby VACATES the motion hearing set for November 2, 2017 at 1:30 p.m. and the case
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management conference set for November 22, 2017 at 2:00 p.m. Having considered the
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submissions of the parties, the relevant law, and the record in this case, the Court hereby ORDERS
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that this case be remanded to Santa Clara County Superior Court for lack of subject matter
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jurisdiction. Accordingly, the Court DENIES as moot Defendant’s motion to dismiss.
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I.
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BACKGROUND
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
On June 20, 2017, Plaintiff filed a Claim and Order to Go to Small Claims Court
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(“Complaint”) against Defendant in Santa Clara County Superior Court. ECF No. 1-1 at 3–7.
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Plaintiff alleged that Defendant violated Cal. Ins. Code § 10277(b) by failing to give Plaintiff
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advance notice that under Plaintiff’s group health insurance policy issued by Defendant, coverage
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of Plaintiff’s dependent son would be terminated on May 30, 2016. Id. at 4. Plaintiff sought
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$1525.00—the “doctor’s bill” for two claims—in damages. Id.
Defendant timely removed this case to federal court on July 20, 2017.1 ECF No. 1
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(“Notice of Removal”). Then, on July 26, 2017, Defendant filed the instant motion to dismiss.
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ECF No. 6. Plaintiff failed to timely file a consent or declination to proceed before a magistrate
judge, and to timely respond to Defendant’s motion to dismiss. Thus, on August 11, 2017,
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United States District Court
Northern District of California
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Magistrate Judge Nathanael Cousins ordered Plaintiff to “show cause why the action should not be
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dismissed for failure to prosecute” and to “consent[] to or declin[e] the jurisdiction of a magistrate
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judge” by August 25, 2017. ECF No. 9. Plaintiff failed to timely respond to Judge Cousins’s
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August 11, 2017 order to show cause. On August 28, 2017, Judge Cousins requested that this case
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be randomly reassigned to a District Court Judge and recommended “that the newly assigned
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judge dismiss this case unless [Plaintiff] demonstrates an interest in pursuing his case.” ECF No.
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10 at 1.
The next day, on August 29, 2017, this case was reassigned to this Court. ECF No. 11. On
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September 7, 2017, within the 14-day period for Plaintiff to file objections to Judge Cousins’s
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recommendation, a letter from Plaintiff dated September 3, 2017 was filed. ECF No. 13. In the
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letter, Plaintiff (1) asked this Court not to dismiss his case; (2) stated that Plaintiff could not
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respond to Judge Cousins’s August 11, 2017 order to show cause by the August 25, 2017 deadline
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because Plaintiff did not receive the order to show cause until August 30, 2017; and (3) requested
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“this case [] be returned to” Santa Clara County Superior Court. ECF No. 13. Because Plaintiff’s
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letter “demonstrate[d] an interest in pursuing his case,” this Court declined to adopt Judge
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Exhibit 1 to Defendant’s Notice of Removal states that service of process on Defendant was
completed on June 22, 2017. ECF No. 1-1 at 2.
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
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Cousins’s recommendation to dismiss Plaintiff’s case for failure to prosecute. ECF No. 14 at 2.
Subsequently, on September 13, 2017, Defendant filed a “Reply to Plaintiff’s September 3,
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2017 Letter.” ECF No. 15. On September 28, 2017, Plaintiff filed a “Response” to Defendant’s
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reply. ECF No. 19.
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II.
LEGAL STANDARD
A suit may be removed from state court to federal court only if the federal court would
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have had subject matter jurisdiction over the case. 28 U.S.C. § 1441(a); see Caterpillar Inc. v.
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Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions that originally could have been filed
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in federal court may be removed to federal court by the defendant.”). “In civil cases, subject
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matter jurisdiction is generally conferred upon federal district courts either through diversity
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United States District Court
Northern District of California
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jurisdiction, 28 U.S.C. § 1332, or federal question jurisdiction, 28 U.S.C. § 1331.” Peralta v.
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Hispanic Bus., Inc., 419 F.3d 1064, 1068 (9th Cir. 2005). If it appears at any time before final
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judgment that the federal court lacks subject matter jurisdiction, the federal court must remand the
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action to state court. 28 U.S.C. § 1447(c).
The party seeking removal bears the burden of establishing federal jurisdiction. Provincial
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Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir.2009). “The removal
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statute is strictly construed, and any doubt about the right of removal requires resolution in favor
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of remand.” Moore–Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir.2009) (citing
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Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992)).
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III.
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DISCUSSION
Federal courts “are obligated to consider sua sponte whether [they] have subject matter
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jurisdiction.” Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir.2004). This “independent
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obligation” exists “even if the issue is neglected by the parties.” Allstate Ins. Co. v. Hughes, 358
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F.3d 1089, 1093 (9th Cir.2004). Here, Plaintiff has not filed a motion to remand, but has
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requested in his September 3, 2017 letter to the Court that “this case [] be returned to” Santa Clara
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County Superior Court. ECF No. 13. The Court concludes, for the reasons stated below, that it
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lacks subject matter jurisdiction over this action. Accordingly, the Court must remand this action
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
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to Santa Clara County Superior Court and deny as moot Defendant’s motion to dismiss.
A. Subject Matter Jurisdiction
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Defendant removed this case from state court on the basis of federal question jurisdiction.
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Notice of Removal at 2. For the Court to have federal question jurisdiction over a complaint, the
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complaint must arise under federal law. 28 U.S.C. § 1331. Generally speaking, “[a] cause of
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action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of
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federal law.” Hansen v. Blue Cross of Cal., 891 F.2d 1384, 1386 (9th Cir. 1989). “The well-
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pleaded complaint rule is the basic principle marking the boundaries of the federal question
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jurisdiction of the federal district courts.” Met. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987)
(internal quotation marks omitted). Plaintiff's FAC, like Plaintiff's Complaint, asserts only state
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United States District Court
Northern District of California
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law claims. Generally, a complaint that asserts only state law claims does not arise under federal
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law. Id.
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Here, Plaintiff’s Complaint asserts only one claim against Defendant—a state law cause of
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action for violation of Cal. Ins. Code § 10277(b). However, Defendant argues that Plaintiff’s state
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law claim is completely preempted by the Employee Retirement Income Security Act (“ERISA”)
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of 1974, and cites 29 U.S.C. § 1132(a). Notice of Removal at 3. In rare circumstances, “Congress
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may so completely pre-empt a particular area [of law]” that a state law claim arising from this area
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of law “is necessarily federal in character.” Met. Life Ins., 481 U.S. at 63–64. Thus, a completely
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preempted state law claim inherently arises under federal law, conferring federal question
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jurisdiction and allowing removal from state court to federal court. The Court thus considers
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whether Plaintiff’s state law cause of action for violation of Cal. Ins. Code § 10277(b) is
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completely preempted by ERISA under 29 U.S.C. § 1132(a).
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ERISA is a “comprehensive legislative scheme” intended to protect the interests of
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participants in employee benefit plans and their beneficiaries. Aetna Health Inc. v. Davila, 542
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U.S. 200, 208 (2004). One distinctive feature of ERISA is the integrated enforcement mechanism
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provided under 29 U.S.C. § 1132(a), which provides ten “carefully integrated civil enforcement
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provisions.” Id. (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987)). Congress
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
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“clearly manifested an intent to completely preempt causes of action within the scope of §
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1132(a), thereby making such causes of action removable to federal court.” Met. Life Ins., 481
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U.S. at 66.
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Under Davila, however, a state law cause of action is completely preempted under 29
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U.S.C. § 1132(a) only “if (1) ‘an individual, at some point in time, could have brought [the] claim
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under [§ 1132(a)(1)(B)],’ and (2) ‘where there is no other independent legal duty that is implicated
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by a defendant’s actions.’” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941,
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946 (9th Cir. 2009) (alteration in original) (quoting Davila, 542 U.S. at 210). Because Davila’s
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two-pronged test is stated “in the conjunctive,” a state law cause of action is preempted “only if
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United States District Court
Northern District of California
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both prongs of the test are satisfied.” Id. at 947.
At a minimum, here, the second prong is not satisfied. As in Marin General Hospital,
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Plaintiff’s claim does not “rely on, and [is] independent of, any duty under an ERISA plan.” 581
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F.3d at 949. Again, Plaintiff asserts that Defendant violated Cal. Ins. Code § 10277(b). Section
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10277(b) states that if a “group health insurance policy . . . provides that coverage of a dependent
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child of an employee or other member of the covered group” will terminate when the dependent
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child reaches a “limiting age . . . specified in the policy,” the insurer “shall notify the employee or
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member” of such coverage termination “at least 90 days prior to the date the child attains the
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limiting age.” Cal. Ins. Code § 10277(a)–(b). Thus, § 10277(b) creates “some other independent
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legal duty beyond that imposed by” Plaintiff’s insurance policy with Defendant—namely, a duty
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to provide advance notice of certain coverage terminations. Marin Gen. Hosp., 581 F.3d at 949.
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As a result, Plaintiff’s claim “based on that duty is not completely preempted under [29 U.S.C. §
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1132(a)].”
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In its Notice of Removal and “Reply to Plaintiff’s September 3, 2017 Letter,” Defendant
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characterizes Plaintiff’s action as a “claim for [] benefits” and “essentially” a claim “for improper
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denial of Plan benefits.” Notice of Removal at 2; ECF No. 15 at 4. The Court disagrees with
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Defendant’s characterization of Plaintiff’s claim. Although it is true that Plaintiff appears to seek
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damages in an amount equal to certain benefits provided by the insurance policy that Defendant
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
issued, see ECF No. 1-1 at 4, Plaintiff does not assert that he is entitled to those damages because
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Defendant improperly denied benefits under the insurance policy and therefore breached a duty
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imposed by the policy. Instead, Plaintiff alleges that he is entitled to those damages because
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Defendant breached a statutory duty that was independent of any duty imposed by the insurance
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policy. As the Ninth Circuit explained in Marin General Hospital, under Davila’s second prong,
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“we ask only whether ‘there is no other independent legal duty that is implicated’ by a defendant’s
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actions. We do not ask whether that legal duty provides for a similar remedy, such as the payment
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of money.” 581 F.3d at 950 (quoting Davila, 542 U.S. at 210). Thus, the fact that Plaintiff seeks a
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remedy similar to what one would seek in a claim for breach of insurance contract has no bearing
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on whether the second prong of Davila is met in this case. Instead, the fact that Plaintiff’s claim is
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United States District Court
Northern District of California
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based on a statutory duty that is independent of any duties imposed by the insurance policy
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demonstrates that Davila’s second prong has not been satisfied.
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Accordingly, the Court finds that Defendant has not carried its burden to show that
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Plaintiff’s complaint arises under federal law. As there is no original federal jurisdiction under 28
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U.S.C. § 1331, removal jurisdiction was improperly exercised and the action must be remanded to
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state court. 28 U.S.C. § 1447(c).
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B. Motion to Dismiss
As the Court lacks subject matter jurisdiction over this action, the Court must deny as moot
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Defendant’s motion to dismiss. See Alderman v. Pitney Bowes Mgmt. Servs., 191 F. Supp. 2d
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1113, 1116 (N.D. Cal. 2002) (explaining that a “court’s decision to remand renders moot [a
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defendant’s] motion to dismiss”).
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IV.
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CONCLUSION
For the foregoing reasons, the Court hereby ORDERS that this case be remanded to Santa
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Clara County Superior Court for lack of subject matter jurisdiction. The Court also DENIES as
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moot Defendant’s motion to dismiss.
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IT IS SO ORDERED.
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
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Dated: October 24, 2017
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LUCY H. KOH
United States District Judge
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United States District Court
Northern District of California
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Case No. 17-CV-04098-LHK
ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS
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