Christopher Zyda, et al v. Four Seasons Hotels and Resorts, et al
ORDER DENYING PLAINTIFFS' MOTION FOR REMAND 11 Motion to Remand to State Court. Signed by JUDGE LESLIE E. KOBAYASHI on 03/28/2017. (eps, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF).
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
CHRISTOPHER ZYDA, On Behalf
of Himself and All Others
FOUR SEASONS HOTELS AND
RESORTS FOUR SEASONS HOLDINGS
INC.; FOUR SEASONS HUALALAI
RESORT; HUALALAI RESIDENTIAL,
LLC (dba HUALALAI REALTY);
HUALALAI INVESTORS, LLC;
KAUPULEHU MAKAI VENTURE;
HUALALAI DEVELOPMENT COMPANY;
HUALALAI VILLAS & HOMES;
HUALALAI INVESTORS, LLC;
HUALALAI RENTAL MANAGEMENT,
LLC; and DOES 1-100,
CIVIL 16-00591 LEK
ORDER DENYING PLAINTIFFS’ MOTION FOR REMAND
On November 14, 2016, Plaintiff Christopher Zyda, on
behalf of himself and all others similarly situated (“Zyda” and
collectively “Plaintiffs”), filed a Motion for Remand (“Motion”).
[Dkt. no. 11.]
Defendants Four Seasons Hotels Ltd., Four Seasons
Holdings, Inc., Hualalai Investors, LLC, Hualalai Residential,
LLC, and Hualalai Rental Management, LLC (collectively “Four
Seasons” or “Defendants”) filed their memorandum in opposition on
December 6, 2016, and Plaintiffs filed their reply on December
[Dkt. nos. 24, 25.]
The Court finds this matter
suitable for disposition without a hearing pursuant to Rule
LR7.2(d) of the Local Rules of Practice of the United States
District Court for the District of Hawai`i (“Local Rules”).
After careful consideration of the Motion, supporting and
opposing memoranda, and the relevant legal authority, Plaintiffs’
Motion is HEREBY DENIED for the reasons set forth below.
On October 2, 2015, Plaintiffs filed their Class Action
Complaint for Damages Declaratory and Injunctive Relief in the
Circuit Court of the Third Circuit, State of Hawai`i
[Notice of Removal, filed 11/1/16 (dkt. no. 1),
Decl. of William Meheula (“Meheula Decl.”), Exh. 1 (Complaint).]
On October 14, 2015, Plaintiffs filed their First Amended Class
Action Complaint for Damages Declaratory and Injunctive Relief
[Id., Exh. 2 (Amended Complaint).]
Defendants own or manage the Hualalai Resort and
Hualalai Club on Hawai`i Island in the State of Hawai`i.
[Amended Complaint at ¶¶ 5-6.]
Plaintiffs, property owners
within the Hualalai Resort, allege that Defendants made various
promises regarding membership to the Hualalai Club to induce home
purchases, but that, after they had committed substantial
resources, “Defendants failed to maintain and provide adequate
facilities to handle the growing population and increased usage
of the resort.”
[Id. at ¶¶ 10-11.]
Instead, Defendants, inter
continued to build homes; increased the fees for
unaccompanied guests at the Hualalai Club, which has affected
property values; and continue to operate the Hualalai Resort and
Hualalai Club “in secrecy, and fail and refuse to act openly and
in good faith” with regard Plaintiffs’ rights.
[Id. at ¶¶ 12-
Plaintiffs bring state law claims for:
the Condominium Property Act, Haw. Rev. Stat. § 514B (“Count I”);
[id. at ¶¶ 24-29;] violation of the Uniform Land Sales Practices
Act, Haw. Rev. Stat. § 484 (Count II”); [id. at ¶¶ 30-36;] unfair
methods of competition, in violation of Haw. Rev. Stat. § 480-2
(“Count III”); [id. at ¶¶ 37-40;] promissory estoppel/detrimental
reliance (“Count IV”); [id. at ¶¶ 41-44;] violation of the duty
of good faith and fair dealing (“Count V”); [id. at ¶¶ 45-47;]
negligent misrepresentation (“Count VI”); [id. at ¶¶ 48-54;]
estoppel (“Count VII”); [id. at ¶¶ 55-58;] unjust enrichment
(“Count VIII”); [id. at ¶¶ 59-61;] organized crime, pursuant to
Haw. Rev. Stat. Chapter 842 (“Count IX”); [id. at ¶¶ 62-65;] and
breach of fiduciary and other common law duties (“Count X”) [id.
at ¶¶ 66-68].
Plaintiffs seek: “[g]eneral, special, triple, and
consequential damages”; attorneys’ fees; prejudgment interest;
punitive damages; injunctive and declaratory relief; a forensic
audit; disgorgement; rescission; a democratically elected board
of homeowners to govern the Hualalai Club and Hualalai Community
Association; “regular financial transparency and disclosure
requirements”; elimination of guest fees; elimination of
definition of “family members” as it relates to admission to the
Hualalai Resort and Hualalai Club; no new home sales until
current homeowners agree they have constructed enough facilities;
“the replacement of the existing Hualalai Resort management
team”; and any other relief the Court “deem[s] just and proper.”
[Id., Prayer for Relief ¶¶ 1-15.]
On October 13, 2016, the state
court granted class certification in the instant matter (“Class
[Meheula Decl., Exh. 3 (Class
On November 1, 2016, Defendants removed
the case to this Court pursuant to the Class Action Fairness Act
(“CAFA”), 28 U.S.C. § 1332(d)(2)(A).
[Notice of Removal at
In 2005, Congress passed CAFA to permit
defendants to remove class actions to federal
court if they meet three requirements: there must
be minimal diversity of citizenship between the
parties; the proposed class must have at least 100
members; and the aggregated amount in controversy
The Class Certification Order defines the certified class
All purchasers of residential properties in the
Hualalai Resort from 1995 to the present who are
members of the Hualalai Club and whose properties
are subject to a guest fee or other restriction on
the use of Hualalai Resort amenities for any
family member or guest (including rental guest) of
[Class Certification Order at ¶ 2.]
must equal or exceed the sum or value of
$5 million. 28 U.S.C. § 1332(d); Class Action
Fairness Act of 2005, Pub. L. No. 109-2, § 4, 119
Stat. 4, 12 (2005).
Jordan v. Nationstar Mortg., LLC, 781 F.3d 1178, 1182 (9th Cir.
The mechanics and requirements for removal
are governed by 28 U.S.C. § 1446. Section 1446(b)
“identifies two thirty-day periods for removing a
case.” Carvalho v. Equifax Info. Servs., LLC, 629
F.3d 876, 885 (9th Cir. 2010). “The first thirtyday removal period is triggered if the case stated
by the initial pleading is removable on its face.”
Id. (internal quotation marks omitted). “The
second thirty-day removal period is triggered if
the initial pleading does not indicate that the
case is removable, and the defendant receives ‘a
copy of an amended pleading, motion, order or
other paper’ from which removability may first be
ascertained.” Id. (quoting § 1446(b)).
Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 1139 (9th
The Ninth Circuit has also held,
“that the thirty day time period [for removal]
. . . starts to run from defendant’s receipt of
the initial pleading only when the pleading
affirmatively reveals on its face the facts
necessary for federal court jurisdiction.” Harris
v. Bankers Life & Cas. Co., 425 F.3d 689, 691-92
(9th Cir. 2005) (internal quotation marks
omitted). We also recently held in Roth v. CHA
Hollywood Medical Center, L.P., that the two 30day periods are not the exclusive periods for
removal. 720 F.3d 1121, 1124-25 (9th Cir. 2013).
In other words, as long as the complaint or “an
amended pleading, motion, order or other paper”
does not reveal that the case is removable, the
30-day time period never starts to run and the
defendant may remove at any time.
Rea v. Michaels Stores Inc., 742 F.3d 1234, 1237-38 (9th Cir.
2014) (alterations in Rea).
There is no dispute that minimal diversity exists in
the instant matter, and that the proposed class consists of at
least one hundred members.
Moreover, there is no dispute that
the amount in controversy exceeds $5 million.
The only issues
are when Defendants knew or should have known that Plaintiffs’
claims exceeded this jurisdictional threshold, and whether the
Notice of Removal was untimely.
Plaintiffs argue that the Court
must determine “[w]hether Four Seasons could (and did) ascertain
that the amount in controversy exceeded CAFA’s $5 million dollar
threshold more than 30 days before its November 1, 2016, Notice
[Mem. in Supp. of Motion at 10.]
present four documents or series of documents that they believe
alerted Defendants to the amount in controversy in the instant
matter, and the Court will address each of these in turn.
First, Plaintiffs argue that Hualalai is “[p]opulated
exclusively by multi-millionaires and billionaires” and that,
because of the nature of the development itself, “a dispute with
even one homeowner . . . would indicate to anyone remotely
familiar with the project that the value of claims exceeds five
[Id. at 10-11.]
Moreover, Plaintiffs argue
that they informed Defendants of their belief that certain
policies would adversely affect property values before filing the
Complaint, and that, given “the value of individual homes at
Hualalai,” the fact that “more than 300 homes are potentially
impacted,” and Plaintiffs “allegation that Four Season’s [sic]
policies significantly impacted property values” put Defendants
“on notice of the potential value of this class action before it
even was filed.”
[Id. at 11-12 (footnotes omitted).]
Plaintiffs appear to suggest that because extremely
wealthy people live at Hualalai, and because property is very
expensive there, Defendants should have assumed that any suit
involving Hualalai homeowners would exceed CAFA’s amount in
The Ninth Circuit has stated that
“defendants need not make extrapolations or engage in guesswork,”
but they must “‘apply a reasonable amount of intelligence in
Kuxhausen, 707 F.3d at 1140
(quoting Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 206 (2d
It is clear to the Court that guesswork includes
making assumptions about an amount in controversy based simply on
the wealth of the individuals involved.
argument regarding information received by Defendants before the
Complaint was even filed is directly contradicted by Ninth
Circuit case law.
In Carvalho v. Equifax Information Services,
LLC, the Ninth Circuit stated that,
[i]t is axiomatic that a case cannot be removed
before its inception. If the second paragraph of
section 1446(b) were meant to include as “other
paper” a document received by the defendant months
before receipt of the initial pleading, the
requirement that the notice of removal “be filed
within thirty days after receipt by the defendant”
of the “other paper” would be nonsensical.
Moreover, that the second paragraph lists “an
amended pleading, motion, order” – all documents
which logically cannot predate the initial
pleading – before “or other paper” leads us to
conclude that “other paper” does not include any
document received prior to receipt of the initial
pleading. See United States v. Williams, 553 U.S.
285, 294, 128 S. Ct. 1830, 170 L. Ed. 2d 650
(2008) (noting that “the commonsense canon of
noscitur a sociis . . . counsels that a word is
given more precise content by the neighboring
words with which it is associated”). Accordingly,
we conclude that any document received prior to
receipt of the initial pleading cannot trigger the
second thirty-day removal period.
629 F.3d 876, 885-86 (9th Cir. 2010) (alterations in Carvalho).
Neither the wealth of the Plaintiffs nor information provided to
Defendants prior to the filing of the Complaint triggered the
thirty-day removal period, and the Court must reject Plaintiffs’
The Class Complaint
Next, Plaintiffs argue that the Amended Complaint
provided Defendants with sufficient information for them to
ascertain that the amount in controversy exceeded $5 million.
[Mem. in Supp. of Motion at 12-14.]
First, Plaintiffs cite a
number of clauses in the Amended Complaint, none of which contain
any direct numbers about their damages or potential losses.
Second, Plaintiffs recite the claims against
Defendants, and state that “[w]hen relief rescission,
disgorgement, unjust enrichment, treble damages, punitive
damages, injunctive relief, and attorneys’ fees are sought for a
class of 300 homeowners for properties ranging between $2 million
and $20 million dollars, it is preposterous to believe Four
Seasons did not ascertain that the amount in controversy exceed
CAFA’s $5 million threshold.”
[Id. at 14.]
Here, “[n]othing in the [Amended Complaint] indicates
. . . the amount demanded by each putative class member,” see
Carvalho, 629 F.3d at 886 (emphasis omitted), or the value of
each class member’s home.
Instead, Plaintiffs again rely on
Plaintiffs’ general wealth to insinuate that Defendants should
have guessed the amount in controversy exceeds the CAFA
The Ninth Circuit has stated:
The fact remains, however, that we “don’t charge
defendants with notice of removability until
they’ve received a paper that gives them enough
information to remove.” Durham [v. Lockheed
Martin Corp.], 445 F.3d [1247,] 1251 [(9th Cir.
2006)]. This principle helps avoid a “Catch-22"
for defendants desirous of a federal forum. By
leaving the window for removal open, it forces
plaintiffs to assume the costs associated with
their own indeterminate pleadings. That is only
fair after all, because – even under CAFA – “the
burden is on the party removing the case from
state court to show the exercise of federal
jurisdiction is appropriate.” Lewis v. Verizon
Commc’ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010).
Kuxhausen, 707 F.3d at 1141; see also Graiser v. Visionworks of
Am., Inc., 819 F.3d 277, 285 (6th Cir. 2016) (“Accordingly, we
join our sister circuits and hold that, in CAFA cases, the
thirty-day clocks of § 1446(b) begin to run only when the
defendant receives a document from the plaintiff from which the
defendant can unambiguously ascertain CAFA jurisdiction.
this bright-line rule, a defendant is not required to search its
own business records ‘or perform an independent investigation
into a plaintiff’s indeterminate allegations to determine
removability.’” (emphasis in Graiser) (quoting Cutrone v. Mortg.
Elec. Registration Sys., Inc., 749 F.3d 137, 285 (2d Cir.
The Amended Complaint does not “affirmatively reveal
on its face” that the amount in controversy exceeds $5 million,
and Plaintiffs’ argument must be rejected.
See Rea, 742 F.3d at
1238 (citation and internal quotations marks omitted).
III. Sullivan Declaration
Plaintiffs also assert that a declaration by one of
Defendants’ attorneys and a notification to potential bond
purchasers show that Defendants knew that the amount in
controversy exceeded the CAFA requirement.
[Mem. in Supp. of
Motion at 14-16.]
In October 2016, Defendants’ attorney, Barry Sullivan,
Esq., submitted a declaration (“Sullivan Declaration”), which
Further, discovery is necessary as to the very
basis of one of Zyda’s complaint [sic] as stated
in the First Amended Complaint: The resort
Facilities can become overcrowded during certain
peak/peak of peak seasons. Zyda is advocating
that the Club and Resort owner construct tens of
millions in new facilities, apparently on land
that he has not even bothered to identify and
which obviously does not exist within the Resort,
while Defendants propose that adherence to the
Club Documents and implementation of policies
authorized therein is both a permissible and an
eminently rational response. Moreover, Defendants
have served Plaintiff with a First Request for
Production of Documents, Exhibit I, and
Plaintiff’s responses are December 18, 2015
(thirty days from November 16, 2015). This
discovery will bear heavily on the allegations
made by Zyda and this Motion.
[Mem. in Supp. of Motion, Decl. of Terrance M. Revere (“Revere
Decl.”), Exh. 2 (Sullivan Decl.) at ¶ 11.]
that “[t]he ‘tens of millions in new facilities’ comment . . .
was not taken from the [Amended Complaint], . . . and was made to
support Defendants’ need for discovery as to what Plaintiff meant
by his allegation of, and not prayer for, ‘failure to provide
adequate facilities’ allegations in the [Amended Complaint].”
[Mem. Opp. at 9.]
Moreover, “[s]ubsequent discovery, namely
Zyda’s deposition . . . , confirmed that he was not pursuing
construction of additional Club or Resort Facilities as a
[Id. at 9-10.]
Thus, this statement related to a
question that Defendants hoped to answer during discovery.
Moreover, discovery answered this particular question in the
While Plaintiffs argue that the Sullivan Declaration
proves that “Four Seasons received a pleading from which it did,
in fact, ascertain that the amount in controversy exceed $5
million,” [Reply at 2,] Plaintiffs do not identify that pleading,
nor do they dispute that they were not seeking millions of
dollars in new facilities.
Plaintiffs’ argue further that “Four Seasons chose in
the middle of marketing its bond offering to amend its risk
disclosure to investors to warn them that this suit could impact
their ability to repay their $300 [million] bond wholly
undermines Four Season’s [sic] representation to this Court that
it only realized posed [sic] a risk in excess of $5 million
dollars last month.”
[Mem. in Supp. of Motion at 16.]
this Class potentially places $300 million in potential
Defendants argue that the Sullivan Declaration could not
serve as the basis for removal because they could not prove that
Plaintiffs were actually seeking such construction by a
preponderance of the evidence. [Mem. in Opp. at 10 n.2.] It is
true that “[w]hether damages are unstated in a complaint, or, in
defendant’s view are understated, the defendant seeking removal
bears the burden to show by a preponderance of the evidence that
the aggregate amount in controversy exceeds $5 million when
federal jurisdiction is challenged.” Ibarra v. Manheim Invs.,
Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citation omitted). It
is also true that “a defendant cannot establish removal
jurisdiction by mere speculation and conjecture, with
unreasonable assumptions.” Id. The Court therefore concludes
that it would not have been reasonable for Defendants to attempt
to remove this case based solely on a question they had about the
relief sought by Plaintiffs, which turned out to be unwarranted.
This, again, is the exact type of guesswork the Ninth Circuit
said is not required, and would likely be insufficient to support
investments at risk then the amount in controversy is no doubt
met under CAFA.”
[Id. at 16.]
Plaintiffs overstate the record.
In TSC Industries v.
Northway, Inc., the United States Supreme Court held that, with
regard to the Security and Exchange Commission’s proxy rules,
“[a]n omitted fact is material if there is a substantial
likelihood that a reasonable shareholder would consider it
important in deciding how to vote.”
426 U.S. 438, 449 (1976).
In the document that Plaintiffs reference, Defendants explain:
The Borrower believes it has meritorious defenses
to the Plaintiff’s claims against the Borrower and
that this pending litigation will not have a
material adverse effect on the financial condition
of the Borrower or the operation of the Property.
However, neither we nor the Borrower can assure
you that the lawsuit will not be determined
adversely to the Borrower or that any outcome will
not have a material adverse effect on the ability
of the Borrower to make its debt service payments
on the Mortgage Loan or on the value of the
Property, and, in turn, a material adverse effect
on the Certificates.
[Revere Decl., Exh. 5 (“Offering Circular”) at 2.]
Circular offers no estimate of possible liability – it simply
states the nature of the suit and that it could possibly have an
effect on Defendants’ financial future.
In addition, the
Offering Circular expresses that Defendants believe that they
will be able to successfully defend the suit.
did not give Defendants enough information to remove and did not
trigger the thirty-day removal period.
arguments, too, must be rejected.
Finally, Plaintiffs cite to a series of documents that
they say clearly alerted Defendants to the fact that the amount
in controversy in the instant matter is over $5 million.
Plaintiffs cite to a declaration submitted by Hualalai homeowner
Carol Meyer (“Meyer”), expressing that she has received $500,000
in rental income over the past two years, but that she had no
bookings for 2016 because of unaccompanied guest fees imposed by
[Revere Decl., Exh. 9 (Decl. of Carol Meyer (“Meyer
Decl.”)) at ¶¶ 6-7.]
Plaintiffs also state that Defendants
admitted that around one hundred homeowners at Hualalai rent
[Revere Decl., Exh. 10 (Trans. of 10/5/16 Depo. of
Robert Kildow) at 64.]
Thus, according to Plaintiffs, simple
multiplication greatly exceeds CAFA’s jurisdictional requirement.
The Ninth Circuit has held that part of the “reasonable
amount of intelligence” a defendant must apply in determining
removability includes “[m]ultiplying figures clearly stated in a
Kuxhausen, 707 F.3d at 1140 (internal quotation
marks and some citations omitted) (citing Carvalho, 629 F.3d at
Plaintiffs cite numbers that are not in the Amended
Moreover, the homeowner’s lost rental income is
speculative at best, because the Meyer Declaration was signed in
Most importantly, Plaintiffs provide no reason
why, even if they did provide information to prove Meyer’s loss
in rental income, it would apply to all Plaintiffs who rent their
homes at Hualalai.
See, e.g., Carvalho, 629 F.3d at 886
(“Nothing in the [Meyer Declaration] indicates . . . the amount
demanded by each putative class member . . . .” (emphasis
This is not a matter of applying reasonable
intelligence or multiplying clearly stated figures, but instead
Plaintiffs argue that Defendants should have engaged in the very
extrapolations and guesswork Kuxhausen says is not required.
Second, Plaintiffs cite an October 20, 2015 email from
Zyda to other Hualalai homeowners (“10/20/15 Email”) that they
assert includes a damage calculation of $451 million.
Decl., Exh. 11 (email chain between Hualalai homeowners) at 2-3
The plain language of the 10/20/15 Email
reveals that it is not based on actual damages.
10/20/15 Email at 2 (providing an example of how damages may be
calculated, including language such as “let’s say” and “[i]f all
homeowners lost exactly the same amount of theoretical rental
There is nothing in the 10/20/15 Email that indicates
that these numbers are based on any one Plaintiff’s alleged
losses, or even that this is the damages calculation that
Plaintiffs intended to use.3
In fact, the 10/20/15 Email also explains that damages
could be calculated using “market comps of sales,” but does not
Third, Plaintiffs cite a list of documents that they
assert alerted Defendants to the amount in controversy.4
assuming that all of these documents are “other paper” for
provide additional numbers or calculations – only that homes in
another residential community sell for less than at Hualalai.
[10/20/15 Email at 2-3.]
First, Plaintiffs cite an email regarding possible United
States Securities and Exchange Commission (“SEC”) violations,
dated October 5, 2015 (“10/5/15 Email”). [Revere Decl, Exh. 14
(10/5/15 Email).] The 10/5/15 Email, authored by Zyda, expresses
his belief that Defendants will need to include the “appropriate
risk factor language” in their bond offering. [10/5/15 Email at
1.] Second, Plaintiffs cite an email regarding a survey
conducted by the Members Advisory Board, which states “[a]lthough
approximately 36% of the build properties offer their homes as
vacation rentals, that is not stated as the motivating factor for
their purchase at Hualalai.” [Id., Exh. 15 at 7.] Third,
Plaintiffs cite a document that they state shows that Zyda lost
$214,000 in rental income during six months of 2015. [Id., Exh.
16.] Fourth, Plaintiffs include an email from Zyda’s husband,
Michael Wieland (“Wieland”), dated October 10, 2015 (“10/10/15
Email”), where he estimates the possible loss in the value of
their home based on lost rental income, and concludes “based on
the size of our home, our value would decrease by $1,273,000 to
$1,908,000. Multiply that by the number of single family homes
in Hualalai, and that is a staggering loss.” [Id., Exh. 17 at
1.] Finally, Plaintiffs cite a report by the Resort Access
Committee, written in May 2016, that states “[r]eduction in
rental income” due to changes at Hualalai “has caused significant
reduction in property values.” [Id., Exh. 18 at 16.] No
document cited by Plaintiffs states the amount in controversy in
the instant matter, nor do any of the documents contain numbers
or allegations that, through “a reasonable amount of
intelligence,” Defendants could ascertain removability.
See Kuxhausen, 707 F.3d at 1140 (citation and internal quotation
marks omitted). Moreover, it is clear to the Court that
Plaintiffs have misrepresented the contents of the 10/10/15 Email
as evidence of the lost value of Zyda’s home, when the clear
language of the email states that the numbers are based on
conjecture and rudimentary research.
purposes of § 1446(b),5 they do not, without guesswork,
conjecture, and extrapolation, affirmatively reveal the amount in
Finally, Plaintiffs cite the deposition of Florian
Riedel (“Riedel”), the Four Seasons’ Resort Manager, as evidence
that Defendants knew the amount in controversy was more than
[Mem. in Supp. of Motion at 22.]
At his deposition,
Plaintiffs’ attorney asked Riedel about an email from a single
Hualalai homeowner, Lisa Morgan (“Morgan”), who alleged that her
28 U.S.C. § 1146(c)(3)(A) (“If the case stated by the
initial pleading is not removable solely because the amount in
controversy does not exceed the amount specified in section
1332(a), information relating to the amount in controversy in the
record of the State proceeding, or in responses to discovery,
shall be treated as an ‘other paper’ under subsection (b)(3).”).
In their reply, Plaintiffs argue, for the first time, that
the motion for class certification explains that Plaintiffs’
claim for unfair or deceptive acts or practices, pursuant to Haw.
Rev. Stat. § 480-2, involves a Hualalai Club membership fee of
$41,000. [Reply at 7-8; Reply, Decl. of Terrance M. Revere, Exh.
1 (motion for class certification (“Certification Motion”)).]
Plaintiffs argue that, because the proposed class was
approximately 316 members, simple multiplication would lead
Defendants to a damages amount greater than $5 million.
Plaintiffs’ attorneys are not new to this district court.
Pursuant to Local Rule 7.4, “[a]ny argument raised for the first
time in the reply shall be disregarded.” Accordingly, the Court
may not consider this argument. The Court notes, however, that
even if it were to do so, the Certification Motion does not
clearly state how the club membership fees relate to or factor
into the damages Plaintiffs are seeking from Defendants. See,
e.g., Certification Motion at ¶ 11 (“this anti-competitive
practice directly impacted Zyda and other owners’ ability to use
and rent their homes at Hualalai Resort and place them at a
competitive disadvantage to Hualalai Resorts’ Four Seasons hotel,
which is a competitor for vacation renters at Hualalai Resort.”
home has lost $4 million in value.
[Revere Decl., Exh. 19
(Trans. of 7/29/16 Depo. of Riedel (“Riedel Depo.”) at 140-42);
id., Exh. 20 (email from Morgan to Wieland, dated 10/9/15).]
addition, Plaintiffs cite Riedel’s testimony that Defendants
priced access to the resort facilities higher during peak rental
season to “discourage access to the resort facilities.”
[Riedel Depo. at 43-44.]
These documents do not provide
Defendants with enough information to ascertain the amount in
controversy, and they did not trigger the thirty-day deadline for
the notice of removal.
Accordingly, Plaintiffs’ arguments must
Defendants submit that:
It was Plaintiff’s unhelpful Damages Interrogatory
Responses that led defense counsel to consider the
effect any potential withdrawal of injunctive
relief may have on the class’s loss of market
value damages and to conclude that there now was
sufficient information to invoke CAFA removal,
even though technically the thirty-day removal
clock had not begun to run.
[Mem. in Opp. at 19.]
The Ninth Circuit has stated:
A defendant should not be able to ignore pleadings
or other documents from which removability may be
ascertained and seek removal only when it becomes
strategically advantageous for it to do so. But
neither should a plaintiff be able to prevent or
delay removal by failing to reveal information
showing removability and then objecting to removal
when the defendant has discovered that information
on its own.
Roth, 720 F.3d at 1125.7
Plaintiffs allege that “Four Seasons
. . . engages in the very gamesmanship the Ninth Circuit is
concerned about,” [Mem. in Supp. of Motion at 24 (citation
omitted),] but they misstate Ninth Circuit precedent:
We discern one practical objection to our
reading of §§ 1441 and 1446(b). It may be that in
some diversity cases, defendants will be able to
take advantage of the fact that neither the
“initial pleading” nor any later document received
from plaintiff triggers one of the two thirty-day
periods. In such cases, defendants may sometimes
be able to delay filing a notice of removal until
it is strategically advantageous to do so. In a
non-CAFA diversity case, the advantage gained
through such gamesmanship is limited by the fact
that a notice of removal must be filed, in any
event, within one year of the commencement of the
action. See 28 U.S.C. § 1446(c)(1). However, in
a CAFA case, there is no such time limit. A CAFA
case may be removed at any time, provided that
neither of the two thirty-day periods under
§ 1446(b)(1) and (b)(3) has been triggered. See
28 U.S.C. 1453(b).
It is thus at least theoretically possible in
a CAFA case for a defendant to wait until the
state court has shown itself ill-disposed to
defendant, or until the eve of trial in state
court, before filing a notice of removal. . . .
Our best answer – and a likely sufficient
answer – is that plaintiffs are in a position to
protect themselves. If plaintiffs think that
It is worth noting that Plaintiffs cite this passage from
Roth, see Mem. in Supp. of Motion at 23, but leave out the Ninth
Circuit’s admonition that “a plaintiff [should not] be able to
prevent or delay removal by failing to reveal information showing
removability and then objecting to removal when the defendant has
discovered that information on its own.” Roth, 720 F.3d at 1126.
The Court finds this curious, given the direct applicability of
the Ninth Circuit’s warning in the instant matter.
their action may be removable and think, further,
that the defendant might delay filing a notice of
removal until a strategically advantageous moment,
they need only provide to the defendant a document
from which removability may be ascertained. 28
U.S.C. § 1446(b)(3). Such a document will trigger
the thirty-day removal period, during which
defendant must either file a notice of removal or
lose the right to remove.
Roth, 720 F.3d at 1126; see also 5-23 Moore’s Federal Practice –
Civil § 23.63A (2017) (“Thus, under appropriate circumstances, a
defendant may remove at any time, even several years after
commencement of the action, provided the notice of removal is
filed within 30 days after receipt of a pleading or other paper
from which the defendant first may ascertain that the action is
or has become removable.
If no such pleading or paper is filed
by the plaintiff, then the 30-day period is not triggered, and
there is no time limit on removal.”).
Further, Plaintiffs argue
that “[r]emoval . . . is construed restrictively,” [Mem. in Supp.
of Motion at 5,] but this, too, is incorrect:
presumption attends cases invoking CAFA, which Congress enacted
to facilitate adjudication of certain class actions in federal
Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.
Ct. 547, 554 (2014) (citations omitted); see also, Jordan, 781
Plaintiffs argue that the correct standard “is whether
Four Seasons had access to information from which it could
ascertain an amount in controversy over $5 million.” [Mem. in
Supp. of Motion at 26 (emphasis and footnote omitted).] While
this is not incorrect, it is incomplete, as Plaintiffs fail to
acknowledge the limits on what a defendant is required to do in
ascertaining an amount in controversy. See supra Section IV.
F.3d at 1183 (“Even though Dart Cherokee focused primarily on how
specifically the ‘amount in controversy’ requirement must be
asserted in a defendant’s removal notice under CAFA, the Supreme
Court left no doubt ‘that not antiremoval presumption attends
cases involving CAFA.’” (citing Dart Cherokee, 135 S. Ct. at
The Notice of Removal states that “Plaintiff has not
yet provided Defendants with objective and unambiguous
information concerning the potential amount in controversy.”
[Notice of Removal at ¶ 25.]
It is clear from the record that,
on October 25, 2016, and in response to an interrogatory about
whether or not Plaintiffs were seeking “damages based on a
reasonable lost profits theory,” the amount of damages, and the
evidentiary support for those damages, Plaintiffs replied:
“Plaintiffs damages will be calculated according to the
applicable rules and authority and disclosed to pursuant [sic] to
applicable Court Rules and this Court’s August 26, 2016 Order
Setting Jury Trial Date and Pretrial Deadlines.”
Exh. 5 (Plaintiffs’ response to Defendants second request for
answers to interrogatories) at 7.]
Related to their opposition to removal, Plaintiffs present
a comity argument based upon what they apparently believe is a
possibility that this Court may act as “a de facto Appellate
court and reverse certification.” [Mem. in Supp. of Motion at
30.] Any challenge to class certification is not presently
before this Court and will not be considered.
deduced that Plaintiffs may seek to, by supplemental pleading or
otherwise, attempt to recover speculative future property value
losses based on the 2016 [daily resort guest fee] policy and
subsequent policies adopted in subsequent years and that such
amounts could exceed $5 million and thus promptly sought
[Mem. in Opp., Decl. of William Meheula at ¶ 15.]
Plaintiffs argue that it is “unfair for Four Seasons to ask this
Court to now interfere with the Third Circuit’s docket when it
has refused to remove this case for months.”
[Id. at 31.]
the contrary, Plaintiffs had ample opportunity to provide
Defendants with information that would reveal the amount in
controversy and therefore trigger the deadline for removal.
Neither Plaintiffs’ pleadings nor any other document cited in the
Motion, considered individually or collectively, provided
Defendants with enough information to ascertain the amount in
The Motion is therefore DENIED.11
Plaintiffs make much of what they insinuate are
Defendants’ disingenuous litigation tactics. For example,
Plaintiffs state that “Class Plaintiffs’ believe this removal is
brought not because it has any chance of success, but simply
because Michael Dell and S. Robson Walton have litigation money
to burn and wish to derail the State Court’s June 2017 trial
date. Such conduct should not be tolerated.” [Mem. in Supp of
Motion at 4.] Plaintiffs do not provide any evidence to support
this claim, and the Court has found otherwise.
Accordingly, Plaintiffs’ request for fees and costs is
also denied. See Mem. in Supp. of Motion at 31-33.
On the basis of the foregoing, Plaintiff
Christopher Zyda’s, on behalf of himself and all others similarly
situated, Motion for Remand, filed November 14, 2016, is HEREBY
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, March 28, 2017.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
CHRISTOPHER ZYDA, ETC., ET AL. VS. FOUR SEASONS HOTELS AND
RESORTS FOUR SEASONS, INC., ET AL; CIVIL 16-00591 LEK-KSC; ORDER
DENYING PLAINTIFFS’ MOTION FOR REMAND
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