1 JS-6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 ) 11 AMANDA D’AMICO, ) Case No.: CV 20-2985-CJC (JCx) ) 12 ) ) Plaintiff, 13 ) ) v. 14 ) ORDER GRANTING PLAINTIFF’S ) MOTION TO REMAND [Dkt. 12] 15 FORD MOTOR COMPANY, A ) ) 16 Delaware Corporation; and DOES 1 ) through 20, inclusive, ) 17 ) ) 18 Defendants. ) ) 19 ) 20

21 I. INTRODUCTION & BACKGROUND 22

23 On February 20, 2020, Plaintiff Amanda D’Amico filed this action in Los Angeles 24 County Superior Court against Defendant Ford Motor Company, asserting claims for 25 breach of express and implied warranties under the Song-Beverly Consumer Warranty 26 Act (the “Act”) relating to a new 2017 Ford Explorer that she leased. (Dkt. 4-1 Ex. 1 27 [Complaint, hereinafter “Compl.”].) Defendant removed the case to this Court, asserting 1 diversity jurisdiction. (Dkt. 1 [Notice of Removal, hereinafter “NOR”].) Before the 2 Court is Plaintiff’s motion to remand. (Dkt. 12 [hereinafter “Mot.”].) For the following 3 reasons, that motion is GRANTED.1 4 5 II. LEGAL STANDARD 6 7 “Federal courts are courts of limited jurisdiction,” possessing “only that power 8 authorized by Constitution and statute.” Gunn v. Minton,

(2013) 9 (internal quotations omitted). A defendant may remove to federal district court a civil 10 action brought in state court, but over which a federal court may exercise original 11 jurisdiction.

(a). By statute, federal courts have diversity jurisdiction 12 over suits where more than $75,000 is in controversy if the citizenship of each plaintiff is 13 different from that of each defendant.

(a). “[T]he amount in 14 controversy includes damages (compensatory, punitive, or otherwise), the costs of 15 complying with an injunction, and attorneys’ fees awarded under fee-shifting statutes or 16 contract.” Fritsch v. Swift Transp. Co. of Ariz., LLC,

(9th Cir. 2018). 17 18 The burden of establishing subject matter jurisdiction falls on the defendant. See 19 Gaus v. Miles, Inc.,

(9th Cir. 1992). A notice of removal must include 20 only “a plausible allegation that the amount in controversy exceeds the jurisdictional 21 threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens,

, 553–54, 22 (2014). But where “the plaintiff contests, or the court questions, the defendant’s 23 allegation” and “both sides submit proof,” the defendant must prove the amount in 24 controversy by a preponderance of the evidence.

. 25 26

27 1 Having read and considered the papers presented by the parties, the Court finds this matter appropriate 1 The removal statute is strictly construed against removal jurisdiction. Gaus, 980 2 F.2d at 566. Indeed, “[f]ederal jurisdiction must be rejected if there is any doubt as to the 3 right of removal in the first instance.” Id. If the court determines that it lacks subject 4 matter jurisdiction, the action shall be remanded to state court.

(c). 5 6 III. ANALYSIS 7 8 Plaintiff alleges that the total amount in controversy exceeds $25,000, but does not 9 allege a specific amount in controversy. (Compl. ¶ 14.) Defendant calculates its asserted 10 amount in controversy by adding the “base Manufacturer Suggested Retail Price 11 (‘MSRP’) for a new 2017 Explorer Front Wheel Drive XLT” to a penalty of double the 12 base MSRP, for a total of $101,325. (NOR ¶ 19.) Defendant therefore contends that the 13 amount in controversy exceeds $75,000 “[e]ven without adding reasonable attorney’s 14 fees.” (Id.) However, after examining actual damages, civil penalties, and attorney fees, 15 the Court concludes that Defendant has failed to meet its burden to show by a 16 preponderance of the evidence that the amount in controversy exceeds $75,000. 17 18 A. Defendant Fails to Carry its Burden as to Actual Damages 19 20 The first category of damages Defendant includes in its calculation of the amount 21 in controversy is actual damages. Actual damages under the Act are the 22 “actual price paid or payable by the buyer,” minus the reduction in value “directly 23 attributable to use by the buyer.”

(d)(2)(B)-(C). Defendant 24 estimates Plaintiff’s actual damages to be the MSRP of the car. This is unpersuasive for 25 two reasons: Defendant fails to account for (1) the fact the car was leased, and (2) the 26 use offset. 27 1 1. Defendant Fails to Account for the Fact the Car Was Leased 2 3 Defendant’s calculation entirely fails to account for the fact that the car was leased, 4 not purchased. (Compare NOR ¶ 19 [contending that “Plaintiff alleges that she 5 purchased the Subject Vehicle on or about July 1, 2017”] with Compl. ¶ 6 [“On or about 6 July 1, 2017, Plaintiff leased, for personal, family, and/or household purposes, the subject 7 Vehicle from the Lessor.”].) Because Plaintiff leased the car, the “price paid” under the 8 statute is not the MRSP, but only what Plaintiff has paid under her lease. See Ghayaisi v. 9 Subaru of Am., Inc.,

, at *1 (C.D. Cal. Mar. 6, 2020) (remanding where 10 defendant relied on total payments to be made under lease agreement, but “present[ed] no 11 facts regarding how many payments were actually made on the installment contract”); see 12 also Chavez v. FCA US LLC,

, at *2 (C.D. Cal. Jan. 27, 2020) 13 (remanding where defendant failed to meet burden of showing actual damages because 14 the defendant provided only the sales contract, and “fail[ed] to indicate an amount of 15 payments made”). Defendant does not provide any information regarding that amount, 16 and Plaintiff states that she has made less than half of the payments called for under the 17 lease—far less than the MSRP. (Dkt. 14 [Reply] at 2.) 18 19 In its opposition, Defendant argues that Plaintiff’s actual damages include the total 20 amount payable under Plaintiff’s lease, which is $33,480. (Dkt. 13 [Opposition, 21 hereinafter “Opp.”] at 9–10 [citing

].) In support, Defendant 22 cites Brady v. Mercedes-Benz USA, Inc.,

(N.D. Cal. 2002). (Id.) 23 But that case squarely concludes that in the context of a lease, the Act’s phrase “actual 24 price paid or payable by the buyer” is “limit[ed] . . . to payments actually made.”

at 25 1008. The court there explained that this conclusion “is consistent with the logic and 26 purpose of the Song–Beverly Act to make the consumer whole,” and also “with the 27 general principle of restitution embodied in Cal. Civ.Code § 1793.2(d)(2)(B) which seeks 1 actual damages here, where Plaintiff leased the car and has made only half the payments 2 called for under a $33,480 lease, are close to the car’s MSRP. 3 4 2. Defendant Fails to Account for the Use Offset 5 6 Defendant’s amount in controversy calculation also fails to reduce actual damages 7 to account for Plaintiff’s use of the car before she took it in for repair See Cal. Civ. Code 8 § 1793.2(d)(2)(C) (“[T]he amount to be paid by the manufacturer to the buyer may be 9 reduced by the manufacturer by that amount directly attributable to use by the buyer prior 10 to the time the buyer first delivered the vehicle to the manufacturer or distributor, or its 11 authorized service and repair facility for correction of the problem that gave rise to the 12 nonconformity.”). This is often called a “use offset.” See, e.g., Schneider v. Ford Motor 13 Co.,

, 700–01 (9th Cir. 2018). Defendant’s oversight is especially 14 significant here, where Plaintiff has driven the car for three years, because it is possible 15 that Plaintiff drove the car for many miles before she took it in for repair. See, e.g., 16 Mullin v. FCA US, LLC,

, at *3 (C.D. Cal. May 14, 2020) (remanding 17 where the defendants “failed to take into account the mileage offset in alleging that the 18 amount in controversy exceeds the jurisdictional minimum”); Eberle v. Jaguar Land 19 Rover N. Am., LLC,

, at *2 (C.D. Cal. Sept. 26, 2018) (remanding, 20 even where the purchase price of the car was high, because the defendant “offered no 21 maintenance record or any other facts to assist the Court in determining what the actual 22 damages might be without resorting to speculation”). 23 24 Given Defendant’s failure to account for both the fact that the car was leased and 25 for the use offset, Defendant has failed to carry its burden as to Plaintiff’s actual 26 damages. See, e.g., Edwards v. Ford Motor Co.,

, at *4 (C.D. Cal. 27 Nov. 4, 2016) (concluding that “Defendant has failed to establish the likelihood that 1 where the court lacked information about how much the plaintiff paid for the car or what 2 the use offset would be); Chajon v. Ford Motor Co.,

, at *1 (C.D. Cal. 3 Jan. 8, 2019) (remanding where the defendant provided only the MSRP, and explaining 4 that this does not reflect “the actual agreed-upon sale amount,” especially where there 5 was “no indication as to whether Plaintiff paid in full or agreed to financing, and if so, 6 how many payments were made,” or how many miles the plaintiff drove); Sanchez v. 7 Ford Motor Co.,

, at *1 (C.D. Cal. Dec. 4, 2018) (remanding where 8 defendant did not account for use offset). 9 10 B. Defendant Fails to Carry its Burden as to a Civil Penalty 11 12 The next category Defendant includes in its estimate of the amount in controversy 13 is a civil penalty, which Defendant estimates to be two times the MSRP (NOR ¶ 19) or 14 two times the amount payable under the lease (Opp. at 12.) A plaintiff who establishes 15 that a violation of the Act was willful may recover a civil penalty of up to two times the 16 amount of actual damages. See

(c) (authorizing a civil penalty 17 where the violation was willful). But there are two problems Defendant’s civil penalty 18 estimate: (1) the assumption that one will be awarded at all, and (2) its calculation of the 19 amount. 20 21 1. Defendant Fails to Show a Civil Penalty Would Be Awarded 22 23 “The civil penalty under California Civil Code § 1794(c) cannot simply be 24 assumed.” Castillo v. FCA USA, LLC,

, at *2 (S.D. Cal. Dec. 5, 2019) 25 (remanding where the defendant provided no specific argument or evidence for including 26 a civil penalty in the amount in controversy); see Zawaideh v. BMW of N. Am., LLC, 27

, at *2 (S.D. Cal. Apr. 17, 2018) (explaining that a defendant may not 1

, at *2 (remanding where the defendant did not explain why a penalty 2 applying to willful conduct would be awarded in the case); Eberle,

, at 3 *2 (similar). Rather, the defendant “must make some effort to justify the assumption.” 4 Zawaideh,

, at *2; Herko v. FCA US, LLC,

, at *2 5 (S.D. Cal. Oct. 30, 2019) (similar); see also Sanchez,

, at *1 6 (remanding where civil penalties were “too speculative for inclusion in the amount-in- 7 controversy”); Chajon,

, at *2 (similar). 8 9 Defendant has not shown by a preponderance of evidence that a civil penalty 10 would be awarded in this case. Defendant points only to Plaintiff’s allegation that she 11 should recover a civil penalty, and four jury verdicts awarding civil penalties. (Opp. at 12 12–13.) But Defendant does not explain how those jury verdicts are similar to this case. 13 Rather, Defendant argues that “juries award the maximum civil penalty in standard Song- 14 Beverly Consumer Warranty Act cases.” (Id. at 13.) As explained, courts do not simply 15 assume that a civil penalty will be awarded, and the removal statute is strictly construed 16 against removal jurisdiction. 17 18 2. Defendant Fails to Show What Amount of Civil Penalty Would Be 19 Awarded 20 21 Even if Defendant had offered enough evidence to carry its burden of showing that 22 a civil penalty would be awarded, “Defendant failed to establish the amount of actual 23 damages at issue, which is necessary to determine the total civil penalty.” Edwards, 2016

, at *4. Defendant argues that a civil penalty would be twice the amount 25 payable under the lease, or $66,960. (Opp. at 12.) But as explained in Section III.A., 26 there is no basis for concluding that the amount payable under the lease even roughly 27 approximates Plaintiff’s actual damages. There is equally little basis for concluding that 1 at *3 (“[B]ecause the amount of actual damages in uncertain, the Court is unable to 2 determine what civil penalties might be imposed.”); Edwards,

, at *4 3 (similar). 4 5 C. Defendant Fails to Carry its Burden as to Attorney Fees 6 7 Attorney fees that accrue after the filing of a notice of removal may be included in 8 an estimate of the amount in controversy. Fritsch,

. But a removing 9 defendant must “prove that the amount in controversy (including attorneys’ fees) exceeds 10 the jurisdictional threshold by a preponderance of the evidence,” and to “make this 11 showing with summary-judgment-type evidence.”

“A district court may reject a 12 defendant’s attempts to include future attorneys’ fees in the amount in controversy if the 13 defendant fails to satisfy this burden of proof.”

14 15 Here, Defendant makes no effort to explain what amount of attorney fees might be 16 sought or awarded in this case. (See NOR ¶ 19 [“Even without adding reasonable 17 attorney’s fees, the amount-in-controversy exceeds $75,000.”].) Instead, Defendant 18 argues only more generally that “plaintiff’s attorneys regularly request more than $65,000 19 in Song Beverly cases tried or prepared for trial.” (NOR ¶ 18 [collecting cases].) But the 20 Court is not persuaded that “more than $65,000” is a reasonable estimate of attorney fees 21 in this case. Indeed, many cases alleging violations of the Act settle early, and Defendant 22 provides no explanation for why this case is similar to ones that went to trial. Nor does 23 Defendant provide an estimate of the hours that will be incurred or hourly rates that 24 would apply in this case. See Mullin,

, at *4 (citing such a deficiency 25 in remanding); Castillo,

, at *2 (similar); see also Sanchez,

6787354, at *1 (remanding where attorney fees were “too speculative for inclusion in the 27 amount-in-controversy”); Chajon,

, at *2 (similar). 1 CONCLUSION 2 3 Simply put, the values Defendant used to compute the amount in controversy are 4 ||not adequately supported by facts and evidence. Since there remains doubt whether the 5 ||amount in controversy exceeds $75,000, the Court must remand the case to Los Angeles 6 |}County Superior Court. See Gaus,

. Accordingly, Plaintiff's motion to 7 ||{remand is GRANTED and this action is REMANDED to Los Angeles County Superior 8 || Court. 9 10 DATED: May 21, 2020 fe | fee (§ ZF 1 12 CORMAC J. CARNEY 13 UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28