Dawson et al v. Richmond American Homes of Nevada, Inc.
Filing
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ORDER that 15 Motion to Remand to State Court is GRANTED. Plaintiffs' Motion to Strike 19 is DENIED. Signed by Judge Miranda M. Du on 4/5/13. (Copies have been distributed pursuant to the NEF - MMM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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***
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CECELIA DAWSON, et al.,
Case No. 2:12-cv-01563-MMD-VCF
Plaintiffs,
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v.
ORDER
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RICHMOND AMERICAN HOMES OF
NEVADA, INC., et al.,
(Plfs.’ Motion to Remand – dkt. no. 15;
Plfs.’ Motion to Strike – dkt. no. 19)
Defendants.
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I.
SUMMARY
Before the Court are Plaintiffs’ Motion to Remand to State Court (dkt. no. 15) and
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Motion to Strike Defendant’s Evidentiary Objections (dkt. no. 19).
For the reasons
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discussed below, the Motion to Remand is granted, and the Motion to Strike is denied.
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II.
BACKGROUND
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Plaintiffs, a group of homeowners, originally brought this action in state court
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against Defendant Richmond American Homes of Nevada, Inc. (“Richmond”) seeking
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recovery for Richmond’s allegedly defective construction of Plaintiffs’ homes. (See dkt.
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no. 1-1.) Richmond timely removed the action to this Court on August 31, 2012, on the
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basis of both diversity jurisdiction, see 28 U.S.C. § 1332(a), and the case’s class action
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status, see 28 U.S.C. § 1332(d)(2)(A). (See dkt. no. 1.)
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On September 28, 2012, Plaintiffs filed their Amended Complaint, which added
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twenty eight (28) additional plaintiffs and removed references to unnamed and unknown
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“Zoe” plaintiffs. (See dkt. no. 9.)
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Plaintiffs now seek remand of the suit to state court, arguing that neither the
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requirements of diversity jurisdiction nor the requirements for class action jurisdiction
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exist to confer this Court authority to hear this suit. (See dkt. no. 15.) Richmond opposes
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remand. (See dkt. no. 16.) Plaintiffs filed their Reply on November 26, 2012 (see dkt.
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no. 17),1 which prompted an opposition from Richmond relating to the declaration of
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Jonathan Lattie, Plaintiffs’ attorney of record (see dkt. no. 18).2
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III.
LEGAL STANDARD
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Federal courts are courts of limited jurisdiction, having subject matter jurisdiction
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only over matters authorized by the Constitution and Congress. U.S. Const. art. III, § 2,
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cl. 1; e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit
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filed in state court may be removed to federal court if the federal court would have had
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original jurisdiction over the suit. 28 U.S.C. § 1441(a). However, courts strictly construe
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the removal statute against removal jurisdiction, and “[f]ederal jurisdiction must be
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rejected if there is any doubt as to the right of removal in the first instance.” Gaus v.
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Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (emphasis added). The party seeking
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removal bears the burden of establishing federal jurisdiction.
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Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006).
Durham v. Lockheed
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To establish subject matter jurisdiction pursuant to diversity of citizenship, the
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party asserting jurisdiction must show: (1) complete diversity of citizenship among
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opposing parties and (2) an amount in controversy exceeding $75,000. 28 U.S.C.
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§ 1332(a). Where a defendant removes a plaintiff’s state action on the basis of diversity
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jurisdiction, the defendant must either: (1) demonstrate that it is facially evident from the
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plaintiff’s complaint that the plaintiff seeks in excess of $75,000, or (2) prove, by a
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Plaintiffs are advised to adhere strictly to Local Rule 7-4, which limits the length
of reply briefs to 20 pages, excluding exhibits. Plaintiffs filed their 29-page Reply without
seeking leave of Court, a violation of the local rules which will not be excused in future
filings.
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Finding no occasion to consider Richmond’s Objection in light of the ruling below,
the Court denies Plaintiffs’ Motion to Strike.
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preponderance of the evidence, that the amount in controversy meets the jurisdictional
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limit. Valdez v. Allstate Ins. Co., 372 F.3d 1115 (9th Cir. 2004). In determining what
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evidence may be considered under (2) above, the Ninth Circuit has adopted the
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“practice of considering facts presented in the removal petition as well as any ‘summary-
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judgement-type evidence relevant to the amount in controversy at the time of removal.’”
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Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003)
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(quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)).
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For jurisdictional purposes, the amount in controversy is determined by the
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amount at stake in the underlying litigation. Theis Research, Inc. v. Brown & Bain, 400
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F.3d 659, 662 (9th Cir. 2005). In determining the amount in controversy, a district court
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may consider the amount of compensatory and punitive damages recoverable based on
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the plaintiff’s complaint as well as attorneys’ fees, but may not consider interest and cost
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of suit. Meisel v. Allstate Indem. Co., 357 F. Supp. 2d 1222, 1225 (citing Hunt v. Wash.
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State Apple. Adver. Comm’n, 432 U.S. 333, 347-48 (1977)).
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In addition to diversity jurisdiction, the Class Action Fairness Act (“CAFA”), 28
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U.S.C. § 1332(d), vests a district court with “original jurisdiction of any civil action in
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which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of
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interest and costs, and is a class action in which” the parties satisfy, among other
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requirements, minimal diversity. 28 U.S.C. § 1332(d)(2). CAFA includes within its
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definition of a class action a “mass action,” which is in turn defined as “any civil action
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. . . in which monetary relief claims of 100 or more persons are proposed to be tried
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jointly on the ground that the plaintiffs’ claims involve common questions of law or fact,
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. . . .” Id. at § 1332(d)(11)(B)(i).
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IV.
DISCUSSION
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A.
Diversity Jurisdiction
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Richmond argues that diversity jurisdiction is proper here because it is a Colorado
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corporation with its principal place of business in Colorado, and the amount-in-
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controversy exceeds $75,000.
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Citizenship of the Parties
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A corporation is a citizen of both the state where it is incorporated and the state
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where it maintains its principal place of business. See 28 U.S.C. § 1332(c)(1). The
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parties do not dispute that Richmond is incorporated in Colorado. They disagree on
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Richmond’s principal place of business: Plaintiffs argue that because Richmond’s
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President is “located in” Las Vegas, Nevada (according to Richmond’s corporate filing
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with the Nevada Secretary of State), its principal place of business is in Nevada.
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Richmond disagrees, and appends to its Response a declaration from its President that
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testifies to Richmond’s principal place of business being in Richmond’s Denver corporate
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headquarters.
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In light of the affidavit provided by Richmond, the Court is satisfied that
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Richmond’s principal place of business is in Denver. The President testified that
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although he is based in Las Vegas, Nevada ─ the site of Richmond’s homebuilding
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operations ─ all other Richmond officers, as well as its Board of Directors, are located
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and work out of its parent company’s corporate headquarters in Denver. (See dkt. no.
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16-1.) Significant corporate decisions are “subject to review and approval” in Denver,
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while the company’s “primary administrative operations” and use of “marketing and
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promotional material” occurs in Denver. That Richmond’s President manages day-to-
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day operations from Nevada does not change the Court’s conclusion that Denver is the
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place where Richmond’s “officers direct, control, and coordinate the corporation’s
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activities.” See Hertz Corp. v. Friend, 559 U.S. 77, 130 S. Ct. 1181, 1192 (2010).
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Accordingly, Richmond has met its burden to demonstrate its Colorado citizenship.
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2.
Amount-in-Controversy
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The Court analyzes the amount in controversy under the “anti-aggregation
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principle” that forecloses multiple plaintiffs who assert “separate and distinct” claims in a
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lawsuit from aggregating their claims to meet the threshold amount-in-controversy
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requirement. See Synder v. Harris, 394 U.S. 332, 335 (1969). Here, each Plaintiff’s
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claims are “separate and distinct,” see Eagle v. Am. Tel. and Tel. Co., 769 F.2d 541, 546
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(9th Cir. 1985), since they can enforce their own construction defect claims independent
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of the others, see Troy Bank of Troy, Ind., v. G.A. Whitehead & Co., 222 U.S. 39, 41
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(1911) (noting that a common and undivided interest requires that “neither [party] can
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enforce in the absence of the other”).
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In their Amended Complaint, Plaintiffs allege general and special damages in
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excess of $40,000, excluding attorneys’ fees, costs, and expert costs and expenses.
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(See dkt. no. 9 at 15.) Richmond speculates that this figure will more likely than not total
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in excess of $75,000, in part by offering evidence that a similar suit against Richmond
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brought by Plaintiffs’ counsel met the threshold amount. But having offered no facts to
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demonstrate that the second suit is factually identical, the Court cannot appraise the
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value of this suit. See Mireles v. Wells Fargo Bank, N.A., 845 F. Supp. 2d 1034, 1055
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(C.D. Cal. 2012) (requiring “factually identical or, at a minimum, analogous” comparison
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case). Richmond provides no other facts that allow the Court to determine how much
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above $40,000 Plaintiffs seek. As it must “resolve[] all ambiguity in favor of remand to
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state court,” these doubts over the amount-in-controversy preclude the Court from
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exercising jurisdiction over this case. 3 See Hunter v. Phillip Morris USA, 582 F.3d 1039,
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1042 (9th Cir. 2009).
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B.
Class Action Fairness Act Jurisdiction
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Richmond also argues that removal to this Court was appropriate under CAFA.
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At the time of its removal, Plaintiffs’ original complaint was brought on behalf of sixteen
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(16) named homeowners and 1-500 fictitious “Zoe” plaintiffs. (See dkt. no. 1-1.) The
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Richmond also suggests that Plaintiffs should be estopped from seeking remand
in light of their previous actions in a past suit. But Richmond’s estoppel argument is
inapplicable here, since the Court is under a perpetual obligation to ensure its own
jurisdiction over the case ─ an obligation that cannot be waived or otherwise limited by a
party’s actions. See Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir.1983)
(“The defense of lack of subject matter jurisdiction cannot be waived, and the court is
under a continuing duty to dismiss an action whenever it appears that the court lacks
jurisdiction.”); Whiting v. Krassner, 391 F.3d 540, 543-544 (3d Cir. 2004) (“[C]ourts have
generally refused to resort to principles of judicial estoppel to prevent a party from
‘switching sides’ on the issue of jurisdiction.”).
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Amended Complaint struck all reference to the fictitious plaintiffs, and raised the total
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number of named plaintiffs to 46. (See dkt. no. 9.) The Court notes first that the federal
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rules’ liberal amendment procedures disfavor the use of fictitious parties in litigation.
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See Gillespie v. Civiletti, 629 F.2d 637, 642 (9th Cir. 1980). For this reason, the Ninth
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Circuit has rejected attempts to use fictitious parties to satisfy federal jurisdictional rules.
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Molnar v. Nat'l Broad. Co., 231 F.2d 684, 687 (9th Cir. 1956) (noting that “no one of the
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Rules of Civil Procedure under which federal courts operate gives warrant for the use of”
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fictitious parties for jurisdictional purposes). Thus, at the time of Richmond’s removal,
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the fictitious individuals were not proper plaintiffs, and could not serve as the basis for
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characterizing this suit as a “mass action.” See Pullman Co. v. Jenkins, 305 U.S. 534,
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537 (1939) (right to remove is determined according to plaintiff's pleadings at the time of
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the petition for removal). Removal here was never proper, so Richmond’s citation to the
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language of St. Paul Mercury Indemnity Co. v. Red Cab Co. is unavailing. See 303 U.S.
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283, 292 (1938) (precluding plaintiffs from defeating jurisdiction through amendment
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after proper removal). Therefore, this suit does not fall under the category of cases to
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which CAFA applies. Remand is thus appropriate.
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V.
CONCLUSION
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In light of the strong presumption against removal jurisdiction, the Court holds that
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Richmond has failed to meet its burden of establishing that removal was proper. See
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Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Accordingly, Plaintiffs’ Motion to
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Remand (dkt. no. 15) is GRANTED.
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Plaintiffs’ Motion to Strike (dkt. no. 19) is DENIED.
DATED THIS 5th day of April 2013.
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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE
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