Beck v. Ford Motor Company et al

Filing 20

Order by Judge Lucy H. Koh Granting #9 Motion to Remand.(lhklc4, COURT STAFF) (Filed on 6/9/2019)

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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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JEFFREY BECK,
Plaintiff,

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ORDER GRANTING PLAINTIFF’S
MOTION TO REMAND

v.

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Case No. 18-CV-07682-LHK

Re: Dkt. No. 9
FORD MOTOR COMPANY, et al.,
Defendants.

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Plaintiff Jeffrey Beck (“Plaintiff”) brings this lawsuit against Defendants Ford Motor

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Company (“Ford”) and Vista Ford Lincoln of Oxnard (“Vista”) for claims arising from Ford’s sale

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of an allegedly defective vehicle. Before the Court is Plaintiff’s motion to remand. Having

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considered the parties’ submissions, the relevant law, and the record in this case, the Court

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GRANTS Plaintiff’s motion to remand.

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I.

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BACKGROUND
A. Factual Background

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Plaintiff is a resident of Ventura County, California. ECF No. 1-2 (“Compl.”), at ¶ 2.

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Defendant Ford designs, manufactures, and sells automobiles, and is a Delaware corporation

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operating in California. Id. at ¶ 4. Defendant Vista sells, services, and repairs automobiles in

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ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

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Ventura County, California. Id. at ¶ 5.
Plaintiff alleges that on or about August 4, 2013, Plaintiff purchased a 2013 Ford Fusion

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vehicle (“Vehicle”) “manufactured and or distributed by Defendant Ford.” Id. at ¶ 7. Plaintiff

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purchased the Vehicle from Defendant Vista for $26,516.05. ECF No. 12-2, Ex. A. When

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Plaintiff purchased the Vehicle, Defendant Ford provided Plaintiff with express written warranties

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including a “3 year/36,000 miles bumper to bumper warranty and a 5 year/60,000 miles

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powertrain warranty, which covers the engine and transmission.” Compl. at ¶ 8.

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Those warranties provided that if “a defect developed with the Vehicle during the warranty

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period, Plaintiff could deliver the Vehicle for repair services to Defendant’s representative and the
Vehicle would be repaired.” Id. Plaintiff alleges that during the warranty period, the Vehicle

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United States District Court
Northern District of California

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developed defects related to the Vehicle’s powertrain, transmission, shift system, electrical

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system, gears, climate control system, clutches, and many other components of the Vehicle. Id. at

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¶ 9. However, “Defendant and its representatives in this state have been unable to service or

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repair the Vehicle to conform to the applicable express warranties after a reasonable number of

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opportunities.” Id. at ¶ 11.

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Plaintiff alleges that when Plaintiff presented the Vehicle to Defendant Ford’s

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representative, “Defendant and its representative failed to commence the service or repairs within

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a reasonable time and failed to service or repair the Vehicle so as to conform to the applicable

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warranties within 30 days.” Id. at ¶ 17.

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B. Procedural History
On November 8, 2018, Plaintiff filed his complaint against Defendants in California

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Superior Court for the County of Santa Clara. Compl. at 1. On November 26, 2018, Plaintiff

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served the complaint on Defendants. ECF No. 1 at 2.

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Plaintiff’s complaint includes five causes of action: (1) violation of California Civil Code §

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1793.2(d) against Defendant Ford, Compl. at ¶¶ 7–15; (2) violation of California Civil Code §

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1793.2(b) against Defendant Ford, id. at ¶¶ 16–20; (3) violation of California Civil Code §

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1793.2(a)(3) against Defendant Ford, id. at ¶¶ 21–23; (4) breach of express written warranty in

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ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

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violation of California Civil Code §§ 1791.2(a), 1794 against Defendant Ford, id. at ¶¶ 24–27; and

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(5) breach of the implied warranty of merchantability in violation of California Civil Code §§

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1791.1, 1794 against Defendant Ford and Defendant Vista. Id. at ¶¶ 28–32.
On December 21, 2018, Defendants removed Plaintiff’s complaint to federal court. ECF

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No. 1. Defendants’ notice of removal states that the Court has diversity jurisdiction over

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Plaintiff’s complaint. Id. at 1. Although Plaintiff and Defendant Vista are both citizens of

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California, Defendants state that Plaintiff fraudulently joined Defendant Vista, such that diversity

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jurisdiction is not defeated. Id. at 5–7.
On January 22, 2019, Plaintiff filed the instant motion to remand. ECF No. 9 (“Mot.”).

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Plaintiff also filed a concurrent request for judicial notice, although Plaintiff attached no document

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United States District Court
Northern District of California

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to Plaintiff’s request for judicial notice. ECF No. 9-5. The Court thus denies as moot Plaintiff’s

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request for judicial notice. On February 5, 2019, Defendants filed their opposition, ECF No. 12

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(“Opp.”), and on February 12, 2019, Plaintiff filed his reply. ECF No. 13 (“Reply”).

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II.

LEGAL STANDARD

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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.”). If it appears at any time

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before final judgment that the federal court lacks subject matter jurisdiction, the federal court must

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remand the action to state court. 28 U.S.C. § 1447(c).

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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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For federal subject matter jurisdiction to exist, a case must either involve diversity of
citizenship between the parties or involve a claim arising under federal law. See Wayne v. DHL
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Case No. 18-CV-07682-LHK
ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

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Worldwide Express, 294 F.3d 1179, 1183 n.2 (9th Cir. 2002). For the Court to have federal

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question jurisdiction, the complaint must arise under federal law. 28 U.S.C. § 1331. Generally

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speaking, “[a] cause of action arises under federal law only when the plaintiff’s well-pleaded

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complaint raises issues of federal law.” Hansen v. Blue Cross of Cal., 891 F.2d 1384, 1386 (9th

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Cir. 1989).
Under 28 U.S.C. § 1332(a)(1), federal courts have diversity jurisdiction over civil actions

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“where the matter in controversy exceeds the sum or value of $75,000 . . . and is between . . .

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citizens of different States.” 28 U.S.C. § 1332. The statute “applies only to cases in which the

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citizenship of each plaintiff is diverse from the citizenship of each defendant.” Caterpillar Inc. v.
Lewis, 519 U.S. 61, 68 (1996).

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United States District Court
Northern District of California

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III.

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DISCUSSION
Plaintiff’s motion to remand argues that the Court lacks diversity jurisdiction over

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Plaintiff’s complaint because Plaintiff and Defendant Vista are both citizens of California. Mot. at

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3. Defendants argue that the Court has diversity jurisdiction because Plaintiff fraudulently joined

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Defendant Vista. Opp. at 3. For the reasons explained below, the Court agrees with Plaintiff.

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For the Court to have diversity jurisdiction, complete diversity of parties is required: “[I]n

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a case with multiple plaintiffs and multiple defendants, the presence in the action of a single

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plaintiff from the same State as a single defendant deprives the district court of original diversity

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jurisdiction over the entire action.” Abrego v. Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006)

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(quoting Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005)). However,

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fraudulently joined defendants who destroy diversity do not defeat removal. McCabe v. Gen.

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Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).

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As this Court has previously explained, “[t]here is a ‘general presumption against

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fraudulent joinder’ and the defendant’s burden of demonstrating that a joinder is fraudulent is a

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‘heavy’ one.” Beutel v. Wells Fargo Bank N.A., 2018 WL 3084660, at *2 (N.D. Cal. Jun. 22,

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2018) (quoting Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009)). Joinder is

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fraudulent only when it is “obvious according to the settled rules of the state that [a plaintiff] has

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failed to state a claim against [a joined defendant].” Hunter, 582 F.3d at 1046.
This standard imposes a very high bar on removing defendants. The Ninth Circuit has

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repeatedly held that “if there is a possibility that a state court would find that the complaint states a

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cause of action against any of the resident defendants, the federal court must find that the joinder

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was proper and remand the case to the state court.” Grancare, LLC v. Thrower by and through

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Mills, 889 F.3d 543, 548 (9th Cir. 2018) (emphasis in original) (citations and quotation marks

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omitted); see also Warner v. Select Portfolio Serv., 193 F. Supp. 3d 1132, 1137 (C.D. Cal. 2016)

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(stating that defendants face an “immense burden” in proving fraudulent joinder). To resolve

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fraudulent joinder claims, the Court may look beyond the pleadings to evidence proffered by the

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United States District Court
Northern District of California

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parties. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1068 (9th Cir. 2001).
In this case, Plaintiff alleges against Defendant Vista a claim for violation of the implied

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warranty of merchantability under the Song-Beverly Act. Compl. at ¶¶ 28–32. Thus, the question

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is whether it is obvious under settled California law that Plaintiff cannot state an implied warranty

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claim against Defendant Vista. Defendants’ only argument for why Plaintiff cannot state an

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implied warranty claim against Defendant Vista is that the statute of limitations bars Plaintiff’s

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implied warranty claim. Opp. at 4.

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However, because it is possible under California law that Plaintiff could allege tolling of

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the statute of limitations for his implied warranty claim, the Court concludes that Defendants have

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not met their heavy burden to show that Plaintiff’s inclusion of Defendant Vista constitutes

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fraudulent joinder.

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The statute of limitations for an implied warranty claim is four years from the delivery of

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the vehicle. Cal. Comm. Code § 2725; see Mexia v. Rinker Boat Co., 174 Cal. App. 4th 1297,

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1306 (2009). Plaintiff alleges that Plaintiff purchased the vehicle on August 4, 2013. Compl. at ¶

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7. According to Plaintiff’s purchase agreement with Defendant Vista, Plaintiff first operated the

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Vehicle on August 8, 2013. ECF No. 12-2, Ex. A. Thus, Defendants argue that the four-year

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statute of limitations expired in August 2017, over a year before Plaintiff filed his complaint on

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November 8, 2018. See Compl. at 1.

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However, as Plaintiff points out and numerous courts have recognized, it is not impossible

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for Plaintiff to state a viable implied warranty claim against Defendant Vista because tolling may

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apply.

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Specifically, this Court observed in Philips v. Ford Motor Co., 2016 WL 1745948 (N.D.

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Cal. May 3, 2016), that “[s]everal courts have determined that fraudulent concealment tolling

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applies to claims brought under the Song-Beverly Act.” Id. at *14 (citing cases in both federal

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court and California state court). Accordingly, in cases where Defendant Ford raised the same

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fraudulent joinder arguments as in this case, courts have concluded that because fraudulent

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concealment tolling could apply to implied warranty claims against a dealership defendant, joinder
of the dealership was not fraudulent. See, e.g., Cavale v. Ford Motor Co., 2018 WL 3811727, at

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United States District Court
Northern District of California

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*3 (E.D. Cal. Aug. 9, 2018) (holding that “it is possible that the statute of limitations on the breach

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of the implied warranty claim may be tolled under a theory of fraudulent concealment,” and

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remanding case to state court); Jimenez v. Ford Motor Co., 2018 WL 2734848, at *2 (C.D. Cal.

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Jun. 5, 2018) (noting that “multiple district courts” have recognized that fraudulent concealment

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tolling can “apply to the statute of limitations for implied warranty of merchantability claims,” and

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remanding case to state court).

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Although Plaintiff’s complaint does not specify how fraudulent concealment tolling

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applies in Plaintiff’s case, the question at this stage is not whether Plaintiff’s complaint states a

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claim against Defendant Vista, but only whether there is a “possibility” that Plaintiff can state a

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claim against Defendant Vista. See Grancare, 889 F.3d at 549 (“A claim against a defendant may

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fail under Rule 12(b)(6), but that defendant has not necessarily been fraudulently joined.”).

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Defendants contend that Plaintiff cannot amend Plaintiff’s complaint to allege fraudulent

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concealment tolling because Defendant Vista’s internal database of warranty repairs tracks the

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repairs to Plaintiff’s Vehicle. See ECF No. 12-2, Ex. B. However, Defendants’ own internal

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database provides little information about whether Defendants concealed the facts constituting

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Plaintiff’s claim for relief from Plaintiff. See Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1415–

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16 (9th Cir. 1987) (holding that fraudulent concealment tolling applies where the defendant’s

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conduct “lead[s] a reasonable person to believe that he did not have a claim for relief”). Thus, the

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Court cannot conclude that it is impossible for Plaintiff to allege a timely implied warranty claim.

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See Grancare, 889 F.3d at 548 (holding that joinder is not fraudulent where there is a mere

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“possibility” that the plaintiff can state a claim against the defendant).
Accordingly, the Court concludes that Plaintiff’s inclusion of Defendant Vista was not

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fraudulent joinder and that diversity jurisdiction does not exist. As a result, the Court must

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remand the case to state court.
Alternatively, Defendants ask the Court to sever Defendant Vista from the case under

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Federal Rule of Civil Procedure 21, which provides that a court may sua sponte “at any time, on
just terms, add or drop a party.” Fed. R. Civ. P. 21; see Sams v. Beech Aircraft, 625 F.2d 273, 277

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United States District Court
Northern District of California

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(9th Cir. 1980) (holding that Rule 21 “grants a federal district or appellate court the discretionary

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power to perfect its diversity jurisdiction by dropping a nondiverse party provided the nondiverse

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party is not indispensable to the action under Rule 19”).
However, the Court declines to exercise its discretion to sever Defendant Vista. Plaintiff’s

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claims against Defendant Ford and Defendant Vista arise from the same series of transactions or

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occurrence. Plaintiff brings his implied warranty of merchantability claim against both

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Defendants. The claim involves the same Vehicle and same defects as to both Defendants, such

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that judicial efficiency weighs against severing Defendant Vista. Moreover, the Court has already

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concluded that removal was not warranted because the Court lacks diversity jurisdiction. To sever

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Defendant Vista for the Court to exercise diversity jurisdiction would contradict the Ninth

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Circuit’s instruction that “[t]he removal statute is strictly construed, and any doubt about the right

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of removal requires resolution in favor of remand.” Moore-Thomas, 553 F.3d at 1244. Thus, the

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Court declines to sever Defendant Vista under Rule 21.

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IV.

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CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff’s motion to remand and

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REMANDS the case to California Superior Court for the County of Santa Clara. The Clerk shall

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close the file.

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IT IS SO ORDERED.

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Dated: June 9, 2019

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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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