Steele v. W.W. Grainer, Inc.

Filing 25

ORDER (1) granting Plaintiff's 18 Motion to Remand; and (2) denying as moot 9 Motion to Dismiss. Signed by Judge Anthony J. Battaglia on 6/10/13. (Certified Order sent to superior court).(cge)

Download PDF
1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 11 KENNETH STEELE, individually and ) on behalf of all others similarly ) 13 situated, ) ) 14 Plaintiffs, ) ) 15 v. ) ) 16 W.W. GRAINGER, INC., an Illinois ) Corporation, ) 17 ) Defendant. ) 18 ) 12 19 Case No. 13cv895 AJB (BGS) ORDER: (1) GRANTING PLAINTIFF’S MOTION TO REMAND, (Doc. No. 18); AND (2) DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS, (Doc. No. 9). Presently before the Court are Defendant W.W. Grainger, Inc.’s (“Grainger”) 20 motion to dismiss, (Doc. No. 9), and Plaintiff Kenneth Steele’s (“Plaintiff”) motion to 21 remand, (Doc. No. 18). Both motions are opposed. In accordance with Civil Local Rule 22 7.1.d.1, the Court finds the motions suitable for determination on the papers and without 23 oral argument. Accordingly, the motion hearing scheduled for June 27, 2013 regarding 24 Plaintiff’s motion to remand, and the motion hearing scheduled for July 11, 2013 25 regarding Grainger’s motion to dismiss, are hereby vacated. (Doc. Nos. 12, 19.) For the 26 reasons set forth below, the Court GRANTS Plaintiff’s motion to remand, (Doc. No. 18), 27 and DENIES AS MOOT Grainger’s motion to dismiss, (Doc. No. 9). The Clerk of Court 28 is instructed to remand this action to San Diego Superior Court. 1 13cv895 AJB (BGS) BACKGROUND 1 2 On March 14, 2013, Plaintiff filed a class action complaint against Grainger in San 3 Diego Superior Court (hereinafter, “the Complaint”). (Doc. No. 1, Ex. 1.) The Com- 4 plaint alleges that Plaintiff had one or more telephone communications with Grainger, 5 and that Grainger secretly recorded these communications, and other communications 6 with California Grainger customers, in violation of California Penal Code §§ 632 and 7 632.7. (Id. at ¶ 5.) The Complaint further alleges that during the twelve-month period 8 preceding the filing of the Complaint, Grainger routinely recorded both incoming and 9 outgoing telephone communications with customers who resided in and were physically 10 present in the State of California, even though Grainger did not notify or inform these 11 individuals that the communications would be recorded. (Id. at ¶ 6.) As a result, the 12 Complaint seeks statutory damages for the class in the amount of $5,000.00 per recorded 13 violation pursuant to California Penal Code § 637.2(a), injunctive relief, costs of suit, and 14 pre-judgment interest.1 (Id. at ¶ 19.) 15 Grainger was served with a copy of the summons and Complaint on March 15, 16 2013. Thereafter, Grainger timely removed the action to this Court pursuant to the 2005 17 Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). (Doc. No. 1.) Seven days 18 later, Grainger filed a motion to dismiss, accompanied by a request for judicial notice. 19 (Doc. Nos. 9, 10). In support of its motion to dismiss, Grainger attached the declaration 20 of Mike Tiernan (“Tiernan”), wherein Tiernan declared that Grainger’s telephone system 21 plays an automated warning for all inbound calls, notifying callers that the call will be 22 recorded. (Doc. No. 9, Ex. 3, Tiernan Decl. ¶ 4.) On May 3, 2013, after the parties met 23 and conferred, Grainger filed a notice of errata and a supplement to the Tiernan declara- 24 tion. (Doc. No. 15.) In his supplemental declaration, Tiernan stated that due to a mistake 25 26 1 The Complaint defines the proposed class as follows: “All natural persons who, while residing and physically present in the State of California, and during the applicable 27 statute of limitations: (1) participated in at least one telephone communication with a live representative of defendants that was recorded by defendants; (2) were not notified by 28 defendants that their telephone communication was being recorded; and (3) are identifiable through records held by defendant and/or third parties.” (Compl. ¶ 9.) 2 13cv895 AJB (BGS) 1 in programming, certain inbound calls made to 1-800-Grainger from certain area codes 2 between November 19, 2013 and April 29, 2013 (161 days) did not receive the automated 3 warning. (Doc. No. 15, Ex. A, Tiernan Supp. Decl. ¶ 4.) The Supplemental Tiernan 4 declaration also stated that no other calls were affected as a result of the mistake. (Id. at ¶ 5 5.) Thus, inbound calls to 1-800-Grainger from other area codes, and all inbound calls to 6 a Grainger branch store (not 1-800-Grainger) would still have received the automated 7 warning. (Id.) Less than a month later, on May 14, 2013, Plaintiff filed the instant motion to 8 9 remand, wherein Plaintiff argues that Grainger has failed to prove by a preponderance of 10 the evidence that the amount in controversy meets or exceeds $5,000,000. (Doc. No. 18.) 11 As of the date of this order, both motions have been fully briefed and are presently before 12 the Court. DISCUSSION 13 14 I. Motion to Remand 15 Grainger contends the Court has jurisdiction over this matter pursuant to the Class 16 Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). However, as stated below, because 17 the Court finds Grainger has failed to prove by a preponderance of the evidence that the 18 amount in controversy requirement has been met, the Court lacks jurisdiction over the 19 matter. Accordingly, the Court does not address the merits of Grainger’s motion to 20 dismiss. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94, 118 S. Ct. 1003, 140 L. 21 Ed. 2d 210 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L. Ed. 264 22 (1868)) (“Jurisdiction is power to declare the law, and when it ceases to exist, the only 23 function remaining to the court is that of announcing the fact and dismissing the cause.”); 24 Kokkonen v. Guardian Ins. Co. of America, 511 U.S. 375, 377, 114 S. Ct. 1673 (1994) 25 (“Federal courts are courts of limited jurisdiction.”). 26 A. 27 28 Legal Standard Governing Removal The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal 3 13cv895 AJB (BGS) 1 statute, 28 U.S.C. § 1441, allows defendants to remove an action when a case originally 2 filed in state court presents a federal question or is between citizens of different states and 3 involves an amount in controversy that exceeds $75,000. See 28 U.S.C. §§ 1441(a) and 4 (b); 28 U.S.C. §§ 1331, 1332(a). Only state court actions that could originally have been 5 filed in federal court can be removed. 28 U.S.C. § 1441(a); see also Caterpillar, Inc. v. 6 Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 96 L. Ed. 2d 318 (1987); Ethridge v. 7 Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). “[J]urisdiction in a diversity 8 case is determined at the time of removal.” Am. Dental Indus., Inc. v. EAX Worldwide, 9 Inc., 228 F. Supp. 2d 1155, 1157 (D. Or. 2002) (citing St. Paul Mercury Indemnity Co. v. 10 Red Cab Co., 303 U.S. 283, 289, 58 S. Ct. 586, 82 L. Ed. 845 (1938) (“The inability of 11 plaintiff to recover an amount adequate to give the court jurisdiction does not show his 12 bad faith or oust the jurisdiction . . . Events occurring subsequent to the institution of suit 13 which reduce the amount recoverable below the statutory limit do not oust jurisdiction”)). 14 The Ninth Circuit “strictly construe[s] the removal statute against removal jurisdic- 15 tion,” and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of 16 removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) 17 (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988), Takeda v. Northwestern Nat'l 18 Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)). “The ‘strong presumption’ against 19 removal jurisdiction means that the defendant always has the burden of establishing that 20 removal is proper.” Id. (citing Nishimoto v. Federman–Bachrach & Assocs., 903 F.2d 21 709, 712 n.3 (9th Cir. 1990), and Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th 22 Cir. 1988)). 23 24 25 B. Jurisdiction Under the Class Action Fairness Act (“CAFA”) and the Preponderance of the Evidence Standard As amended by CAFA, 28 U.S.C. § 1332(d) vests district courts with “original 26 jurisdiction of any civil action in which: (1) the amount in controversy exceeds the sum 27 or value of $5,000,000, exclusive of interest and costs;” (2) the aggregate number of 28 proposed plaintiffs is 100 or greater; and (3) any member of the plaintiff class is a citizen 4 13cv895 AJB (BGS) 1 of a state different from any defendant (minimal diversity). 28 U.S.C. § 1332(d). The 2 Ninth Circuit has recently affirmed that “under CAFA the burden of establishing removal 3 jurisdiction remains, as before, on the proponent of federal jurisdiction.” Lowdermilk v. 4 U.S. Bank Ass’n, 479 F.3d 994, 997 (9th Cir. 2007) (citing Abrego Abrego v. The Dow 5 Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006) (per curiam)); see also Serrano v. 180 6 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007) (holding that the proponent of federal 7 jurisdiction bears the burden of proving jurisdiction); Morgan v. Gay, 471 F.3d 469, 8 472-73 (3d Cir. 2006) (holding that under CAFA, the party seeking removal bears the 9 burden of establishing the requisite amount in controversy). Under CAFA, “where the 10 plaintiff has pled an amount in controversy less than $5,000,000, the party seeking 11 removal must prove with legal certainty that CAFA’s jurisdictional amount is met.” 12 Lowdermilk, 479 F.3d at 1000. However, if a plaintiff’s “complaint is unclear [regarding] 13 ‘a total amount in controversy,’ the proper burden of proof . . . is proof by a preponder- 14 ance of the evidence.” Guglielmino v. McKee Foods Corp., 506 F.3d 696, 701 (9th Cir. 15 2007). 16 Here, the Complaint does not allege a specific amount of damages, and the parties 17 do not dispute that the preponderance of the evidence rather than the legal certainty 18 standard applies. (Doc. No. 18 at 4; Doc. No. 20 at 4.) Thus, Grainger must prove by a 19 preponderance of the evidence that the amount in controversy exceeds $5,000,000, 20 exclusive of interest and costs.2 See Abrego Abrego, 443 F.3d at 685 (finding that when a 21 plaintiff fails to plead a specific amount of damages, the defendant seeking removal 22 “must prove by a preponderance of the evidence that the amount in controversy require- 23 ment has been met”) ((citing Gaus, 980 F.2d at 566); Grant v. Capital Mgmt. Servs., L.P., 24 449 F. App’x 598, 599-600 (9th Cir. 2011) (“Because neither the size of the proposed 25 class nor the total amount in controversy was apparent from the face of the class com- 26 plaint, CMS need only show by a preponderance of the evidence that Grant’s action 27 28 2 The parties also do not dispute that the number of plaintiffs in this action exceeds 100 and that the citizenship of the parties is minimally diverse. 5 13cv895 AJB (BGS) 1 places more than $5,000,000 in controversy and implicates a class with greater than 100 2 members.’). 3 The preponderance of the evidence standard means that the “defendant must 4 provide evidence establishing that it is ‘more likely than not ’ that the amount in contro- 5 versy exceeds that amount.” Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 6 (9th Cir. 1996) (emphasis added) (citation omitted). This burden is not “daunting,” and 7 the removing defendant is not obligated to “research, state, and prove the plaintiff’s 8 claims for damages.” McCraw v. Lyons, 863 F. Supp. 430, 434 (W.D. Ky. 1994). 9 Nevertheless, a court “cannot base [its] jurisdiction on a [d]efendant’s speculation and 10 conjecture.” Lowdermilk, 479 F.3d at 1002. Rather, a defendant must set forth the 11 underlying facts supporting its assertion that the amount in controversy exceeds the 12 statutory minimum. Gaus, 980 F.2d at 567. In addition to the contents of the removal 13 petition, the court may consider “summary-judgment-type evidence relevant to the 14 amount in controversy at the time of removal,” such as affidavits or declarations. Valdez 15 v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004) (internal quotations omitted); 16 Singer, 116 F.3d at 374 (“defense counsel submitted declarations to show that the amount 17 in controversy exceeded $50,000”). A court may also consider supplemental evidence 18 later proffered by the removing defendant, which was not originally included in the 19 removal notice. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002). 20 In measuring the amount in controversy, a court must assume that the allegations 21 of the complaint are true and that a jury will return a verdict for the plaintiff on all claims 22 made in the complaint. Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F. 23 Supp. 2d 993, 1001 (C.D. Cal. 2002). The ultimate inquiry is what amount is put “in 24 controversy” by the plaintiff’s complaint, not what a defendant will actually owe. Rippee 25 v. Boston Market Corp., 408 F. Supp. 2d 982, 986 (S.D. Cal. 2005); see also Scherer v. 26 Equitable Life Assurance Soc’y of the United States, 347 F.3d 394, 399 (2d Cir. 2003) 27 (recognizing that the ultimate or provable amount of damages is not what is considered 28 6 13cv895 AJB (BGS) 1 when determining the amount in controversy; rather, it is the amount put in controversy 2 by the plaintiff’s complaint). 3 C. Analysis 4 Here, Grainger attached the declaration of Sheri Mello (“Mello”), the Senior 5 Manager of Deployment and Customer Experience at Grainger, to support its notice of 6 removal. (Doc. No. 1, Ex. 2, Mello Decl. ¶ 1.) In her declaration, Mello states that she is 7 responsible for the customer experience team at Grainger, and based on her responsibili- 8 ties, is familiar with Grainger’s voice and data department, including Grainger’s business 9 practice with respect to the recording of inbound and outbound calls received or made by 10 Grainger. (Id. at ¶ 3.) Mello then states that “Grainger has received and recorded in 11 excess of 1,000 inbound phone calls from the State of California in the past year.” (Id. at 12 ¶ 4.) Based on this assertion, Mello then calculates statutory damages in the amount of 13 $5,000 per recorded phone call, equating to $5,000,000—the statutory minimum required 14 under CAFA. (Id.) 15 In opposition, Plaintiff’s argues that the Mello’s declaration ignores the fact that 16 Plaintiff only seeks relief for those calls that were recorded without the class members’ 17 consent, i.e., without notification that the call would be recorded. (Compl. ¶¶ 5, 6, 16, 18 17.) As a result, Plaintiff asserts that the Mello declaration fails to provide any evidence 19 as to the number of calls that were recorded without notice or warning that the call would 20 be recorded, as requested in the Complaint and allowable under Penal Code §§ 632 and 21 632.7. Moreover, Plaintiff contends that because the Tiernan Declaration and the 22 Supplemental Tiernan Declaration—both of which were offered by Grainger as attach- 23 ments to Grainger’s pending motion to dismiss—declares under penalty of perjury that 24 the only inbound calls that did not receive the automatic warning were calls made to 1- 25 800-Grainger from selected area codes and only from November 19, 2012 to April 29, 26 2013 (161 days), Grainger has in essence supplemented its notice of removal and thereby 27 drastically limited the amount in controversy. Therefore, in light of this new evi- 28 dence—supplied by Grainger only seven days after its notice of removal—Plaintiff 7 13cv895 AJB (BGS) 1 argues Grainger’s notice of removal is now insufficient to meet the amount in contro- 2 versy requirement under CAFA. 3 In response, Grainger contends Plaintiff’s arguments are without merit because it is 4 well settled that removal “jurisdiction must be analyzed on the basis of the pleadings filed 5 at the time of removal without reference to subsequent amendments.” Sparta Surgical 6 Corp. v. Nat'l Ass'n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998). As a 7 result, Grainger argues that based on Plaintiff’s assertions that: (1) Grainger “routinely” 8 records customer calls without notice; and (2) Plaintiff and other putative class members 9 are “entitled to statutory damages of $5,000 per recorded communication,” all Grainger 10 was required to show to meet the amount in controversy requirement under CAFA was 11 that Grainger recorded more than 1,000 calls during the class period. Therefore, Grainger 12 contends Plaintiff cannot use the fact that seven days after Grainger filed its notice of 13 removal it filed a motion to dismiss, whereby Grainger attached a declaration stating that 14 an automated warning was played to most, if not all inbound calls made during the class 15 period. Grainger asserts allowing such evidence would require Grainger to prove it is 16 liable for the violations alleged in the Complaint and is contrary to clearly established 17 law. 18 Although Grainger is correct that amendments to a complaint post-dating the 19 notice of removal do not alter a removing defendants burden, in that a plaintiff cannot 20 later lower the amount of monetary relief requested in an attempt to evade federal 21 jurisdiction, Grainger’s arguments that the Court should not consider declarations and 22 documents filed by Grainger, seven days after its notice of removal, are also without 23 merit.3 It is well settled that in addition to the contents of the removal petition, a district 24 court may consider “summary-judgment-type evidence relevant to the amount in 25 controversy at the time of removal,” such as affidavits or declarations. Valdez, 372 F.3d 26 at 1117. The same is also true with respect to judicial admissions, Singer, 116 F.3d at 27 3 28 St. Paul Mercury Co. v. Red Cab Co., 303 U.S. 283, 292, 58 S. Ct. 586 (1038) (stating that district court jurisdiction is not defeated where plaintiff reduces the claim below the requisite amount by stipulation, affidavit, or amendment after removal). 8 13cv895 AJB (BGS) 1 376-77 (holding that a judicial admission may establish the amount in controversy), and 2 documents filed by the removing party after the notice of removal, Willingham v. 3 Morgan, 395 U.S. 402, 407 n.3, 89 S. Ct. 1813, 23 L. Ed. 2d 396 (1969) (stating that “it 4 is proper to treat the removal petition as if it had been amended to include the relevant 5 information contained in the later-filed affidavits”); 28 U.S.C. § 1653. Thus, the Court 6 may properly consider the Tiernan declaration and the supplemental Tiernan declaration 7 in accessing whether Grainger has proved by a preponderance of the evidence that the 8 amount in controversy exceeds $5,000,000. 9 The Court also finds the cases cited by Grainger inapposite. For example, 10 Grainger relies heavily on Lewis v. Communications, Inc., 627 F.3d 395 (9th Cir. 2010). 11 However, Lewis explicitly states that: “The law in our circuit is articulated a little 12 differently from that of others, in that we expressly contemplate the district court’s 13 consideration of some evidentiary record.” 627 F.3d at 400. Thus, because there is 14 evidence in this case, which was presented by Grainger, that it is “legally impossible for 15 the plaintiff to recover that much,” Grainger has failed to present sufficient evidence to 16 meet the minimum amount in controversy requirement under CAFA. Id. at 401 (“Once 17 the proponent of federal jurisdiction has explained plausibly how the stakes exceed $5 18 million . . . then the case belongs in federal court unless it is legally impossible for the 19 plaintiff to recover that much.”). 20 Therefore, although Grainger adamantly tries to argue that removal is based on the 21 pleadings at the time of removal, and not based on subsequent amendments or statements 22 by a plaintiff attempting to reduce the potential award, here, Plaintiff has not amended the 23 Complaint, nor alleged a different recoverable amount. Instead, it is Grainger that has 24 stated, under penalty of perjury, that most if not all inbound calls made during the 25 relevant class period received an automated warning, thereby inferring that it is “legally 26 impossible” for Plaintiff to recover for the majority of the class period. Lewis, 627 F. 3d 27 at 401. Thus, based on evidence submitted by Grainger, in the form of a declaration and 28 supplemental declaration from Tiernan, a Voice Services Specialist employed by 9 13cv895 AJB (BGS) 1 Grainger, most if not all inbound calls during the class period received an automated 2 message notifying customers that the call would be recorded. Accordingly, the Court 3 finds Grainger has not shown, by a preponderance of the evidence, that the amount in 4 controversy exceeds $5,000,000 and GRANTS Plaintiff’s motion to remand. CONCLUSION 5 6 For the reasons stated above, the Court finds Grainger has failed to prove that this 7 Court has jurisdiction over the action pursuant to CAFA, 28 U.S.C. § 1332(d). As a 8 result, this Court lacks jurisdiction to adjudicate Grainger’s pending motion to dismiss. 9 Accordingly, this action is hereby REMANDED to San Diego Superior Court, (Doc. No. 10 18), and Grainger’s motion to dismiss is DENIED AS MOOT, (Doc. No. 9). 11 12 IT IS SO ORDERED. 13 14 15 16 DATED: June 10, 2013 Hon. Anthony J. Battaglia U.S. District Judge 17 18 19 20 21 22 23 24 25 26 27 28 10 13cv895 AJB (BGS)

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?