1 JS -6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 Case No. 2:23-cv-03438-SSS-KKx 11 ANNETTE CODY, 12 Plaintiff, 13 ORDER REMANDING CASE TO v. STATE COURT SUA SPONTE 14 15 P.C. RICHARD AND SON SERVICE COMPANY, INC., 16 17 Defendant. 18 On September 18, 2023, the Court issued an order to show cause as to 19 why the matter should not be remanded (the “OSC”). [Dkt. 31]. On September 20 29, 2023, Defendant P.C. Richard and Son Service Company, Inc., (“P.C. 21 Richard”) filed its response to the OSC [Dkt. 32], and Plaintiff Annette Cody 22 (“Cody”) filed her response in support of P.C. Richard’s response. [Dkt. 33]. 23 This matter is fully briefed and ripe for review. For the reasons set forth below, 24 the Court finds it lacked subject matter jurisdiction over the complaint at the 25 time of removal and therefore REMANDS the case to state court. 26 I. BACKGROUND 27 On April 5, 2023, Cody filed a complaint against P.C. Richard in the 1 her initial complaint, Cody brought claims in her individual capacity against 2 P.C. Richard for violations of the California Invasion of Privacy Act (“CIPA”), 3 specifically for violations of

and 632.7. 1 [Dkt. 1-1 at 4 8–10]. On May 5, 2023, P.C. Richard removed this action to federal court. 5 [Dkt. 1]. On May 17, 2023, Cody amended her complaint (the “FAC”) to be a 6 putative class action where jurisdiction in this Court is allegedly proper under 7 the Class Action Fairness Act (“CAFA”).2 8 As the Court discussed in its OSC, P.C. Richard alleged removal was 9 proper under

(a) because the Parties are completely diverse and 10 the amount in controversy exceeds $75,000. [Dkt. 1 at 3]. Because the Court 11 was concerned about P.C. Richard’s ability to meet the jurisdictional 12 requirements, it issued the OSC directing P.C. Richard to show cause why the 13 case should not be remanded. [Dkt. 31]. 14 P.C. Richard responded to the OSC by arguing the Court’s “jurisdictional 15 concerns are unfounded for multiple reasons.” [Dkt. 32 at 2]. More 16 specifically, P.C. Richard argues the FAC, rather than the state court complaint, 17 is determinative of the jurisdictional analysis such that the Court need only 18 concern itself with the sufficiency of CAFA jurisdiction rather than jurisdiction 19 under

(a).3

20

21 1 Cody’s state court complaint reads, “[p]laintiff brings this lawsuit as an 22 individual action[,] … [and] the amount in controversy does not exceed 23 $75,000.” [Dkt. 1-1 at 7]. 2 Cody’s FAC alleged jurisdiction was proper under 28 U.S.C. 1332(d)(2) 24 because there are 100 or more class members, the aggregate amount in 25 controversy exceeds five million dollars, and there is minimal diversity between the parties. [Dkt. 32 at 2–3]. 26 3 While the burden of establishing removal jurisdiction is on P.C. Richard, 27 Abrego Abrego v. The Dow Chemical Co.,

(9th Cir. 2006), Cody advances a near identical argument to this by asserting the FAC is the 1 II. LEGAL STANDARD 2 Under

(a), “any civil action brought in a state court of 3 which the district courts of the United States have original jurisdiction, may be 4 removed by the defendant . . . to the district court of the United States . . ..” The 5 removal statutes are strictly construed and remand to the state court is to be 6 granted where there are doubts as to the right of removal. Jordan v. Nationstar 7 Mortg. LLC,

(9th Cir. 2015). District courts must remand 8 the case “[i]f at any time before final judgment it appears that the district court 9 lacks subject matter jurisdiction.”

(c); see also Smith v. Mylan, 10 Inc.,

(9th Cir. 2014). 11 “[T]he Circuits have unanimously and repeatedly held that whether 12 remand is proper must be ascertained on the basis of the pleadings at the time of 13 removal.” Broadway Grill, Inc. v. Visa, Inc.,

(9th Cir. 14 2017); see also Williams v. Costco Wholesale Corp.,

(9th Cir. 15 2006) (“We have long held that post-removal amendments to the pleadings 16 cannot effect whether a case is removable[.]”); Sparta Surgical Corp. v. Nat’l 17 Ass’n of Sec. Dealers, Inc.,

(9th Cir. 1998) (“[J]urisdiction 18 must be analyzed on the basis of the pleadings filed at the time of removal 19 without reference to subsequent amendments.”), abrogated on other grounds by 20 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Manning,

, 381 21 (2016); Strotek Corp. v. Air Transp. Ass’n. of Am.,

(9th 22 Cir. 2002) (“[T]he core principle of federal removal jurisdiction on the basis of 23 diversity–namely, that it is determined (and must exist) as of the time the 24 complaint is filed and removal is effective.”) 25 As one prominent secondary source for this jurisdiction stated, 26 “amendments made after removal do not confer federal jurisdiction where no 27 “‘federal question’” or “‘diversity’” claim was present at the time of removal.” 1 Federal Civil Procedure Before Trial §2:2419 (Cal. & 9th Cir. ed. Apr. 2023) 2 (citing Libhart v. Santa Monica Dairy Co.,

(9th Cir. 3 1979)). For purposes of this order, the Court will refer to the above rule as the 4 Sparta Rule. 5 While the Sparta Rule is generally applicable, the Ninth Circuit has, in 6 some circumstances, deviated from it and considered post-removal amended 7 pleadings when determining if jurisdiction exists. See, e.g., Chabner v. United 8 of Omaha Life Ins. Co.,

, 1046 n.3 (9th Cir. 2000) (finding the 9 addition of an ADA claim after removal created federal question jurisdiction); 10 Roessert v. Health Net,

(N.D. Cal. 1996) (considering a 11 plaintiff’s amended complaint in its remand analysis because plaintiff was pro 12 se and the court ordered the plaintiff to amend the complaint with the assistance 13 of counsel to clarify jurisdiction); Benko v. Quality Loan Serv. Corp.,

(9th Cir. 2015) (holding “plaintiffs should be permitted to amend a 15 complaint after removal to clarify issues pertaining to federal jurisdiction under 16 CAFA.”). 17 III. DISCUSSION: 18 A. P.C. RICHARD’S ARGUMENTS 19 1. P.C. Richard’s Reliance on Chabner Is Improper 20 The success of P.C. Richard’s argument rests on whether Chabner 21 controls in this instance. For the reasons stated below, the Court finds Chabner 22 does not control such that the Court elects to consider the complaint as it existed 23 at the time of removal for purposes of determining if removal is proper. 24 In Chabner, the plaintiff filed his complaint in California Superior Court, 25 and the defendant later removed the action to federal court. Chabner,

. After removal, the plaintiff amended his complaint to include an ADA 27 claim.

After that amendment, the district court granted the plaintiff’s 1 dismissing the plaintiff’s remaining claims. Chabner,

. On 2 appeal, the Ninth Circuit noted in a footnote (“Footnote Three”) that the 3 plaintiff’s amendment to include an ADA claim created a federal question such 4 that any defect with removal was inconsequential because the district court had 5 jurisdiction at the time it “entered judgment.”

at 1046 n.3. 6 In so holding, the Ninth Circuit explicitly relied upon Supreme Court 7 cases which held an “erroneous removal” does not render a final judgment void. 8

(citing Caterpillar, Inc. v. Lewis,

(1996); Grubbs v. Gen. 9 Elec. Credit Corp.,

(1972)). A key factual touchstone of 10 those cases was that the district courts had already entered judgment for a party 11 such that, on appeal, “considerations of finality, efficiency, and economy 12 bec[ame] overwhelming” so as to justify not remanding the case for lack of 13 jurisdiction at the time of removal. Caterpillar, 518 U.S. at 76 & 66; Grubbs, 14

(“The case was ultimately tried to the district court without a 15 jury.”). 16 Here, the Court declines to apply Chabner to the present case. The text of 17 Footnote Three itself makes clear that the Ninth Circuit gave weight to the fact 18 that judgment had been entered.4 As described above, Footnote Three rests 19 almost entirely on cases that carve out an exception to the Sparta Rule because a 20 final judgment had been entered and, prior to the judgment, the jurisdictional 21 deficiency had been cured. Caterpillar,

(“The jurisdictional 22 defect was cured … before the trial commenced.”); Grubbs,

. 23 Unlike those cases, Chabner, Caterpillar, and Grubbs, the Court in this case has 24 not entered a final judgment, or any judgment for that matter, for either party. 25

26 4Chabner, 225 F.3d at 1046 n.3 (“In this case, because the ADA claim raised a 27 federal question, subject matter jurisdiction existed at the time the district court entered judgment. Therefore, this case was properly in federal court.” [emphasis 1 As such, the Court notes that the “considerations of finality, efficiency, and 2 economy” are not as overwhelming here as they were in Caterpillar. 3 Caterpillar, 518 U.S. at 76. Therefore, deviance from the Sparta Rule is not 4 justified in this case. 5 Similarly, P.C. Richard’s reliance on Singh v. America Honda Finance 6 Corp.,

(9th Cir. 2019), and Retail Property Trust v. United 7 Brotherhood of Carpenters and Joiners of America,

(9th Cir. 8 2014), suffers from the same defect as its reliance on Chabner. In Singh, the 9 Ninth Circuit held voluntarily amending a complaint to include a federal cause 10 of action can establish subject matter jurisdiction such that any defect in 11 removal is mooted. Singh,

. In so doing, the Ninth Circuit 12 again emphasized the importance of the lower court’s entry of final judgment.5 13 More specifically, the Ninth Circuit noted in relevant part: 14 “We hold that the district court did not have subject-matter jurisdiction over this action at the time of removal because CAFA's 15 home state exception barred the exercise of jurisdiction. However, 16 the district court had subject-matter jurisdiction at the time it rendered a final decision on the merits, because Singh voluntarily 17 amended his complaint to assert a federal TILA claim. “To wipe out 18 the adjudication post-judgment, and return to state court a case now satisfying all federal jurisdictional requirements, would impose an 19 exorbitant cost on our dual court system, a cost incompatible with 20 the fair and unprotracted administration of justice.” Caterpillar Inc. v. Lewis,

,

,

(1996). 21 We decline to impose such a cost.” Singh,

. 22 23 24

25 5 Singh,

(In discussing the approach required under various 26 Supreme Court cases to determine if a case should be remanded for lack of 27 subject matter jurisdiction at the time of removal, the Singh Court phrased portions of the test as considering if a defect was “properly cured before the 1 Similarly, in Retail Property Trust, the Ninth Circuit held the plaintiff’s 2 second amended complaint created subject matter jurisdiction where the lower 3 court had dismissed the plaintiff’s claims with prejudice. Retail Prop. Tr., 768 4 F.3d at 949 n.6 & 945. Thus, as was the case with Chabner, Caterpillar, and 5 Grubbs, both Singh and Retail Property Trust were cases in which the lower 6 court had entered a final judgment against a party despite removal possibly 7 being improper. This Court finds the above cases stand for the proposition that 8 absent a lower court entering a judgment against a party, the “considerations of 9 finality, efficiency, and economy” that would justify a departure from the Sparta 10 Rule are not present. 11 The Ninth Circuit decision in Libhart is instructive as to the distinctions 12 in the case law discussed above. In Libhart, the Ninth Circuit noted as follows: 13 “The Supreme Court has recognized certain circumstances where a judgment of a district court may be upheld, even though there was 14 no right to removal, if (1) the case is tried on the merits; and (2) the 15 federal court would have had jurisdiction had the case been filed in federal court in the posture it had at the time of the entry of the final 16 judgment. Grubbs v. General Electric Credit Corp.,

, 17

,

(1972). However, that situation did not exist in this case, for the action had not proceeded to trial on the 18 merits.” Libhart,

. 19 Like in Libhart, the Court has not entered a final judgment in this case. 20 As such, the Court declines to apply those cases that would result in the Court 21 ignoring a lack of a right of removal. 6

Thus, the Court declines to apply the 22 cases set out above. 23 24 25 6 The Court also notes that, like the Chabner Court, the Court is concerned by Cody’s FAC because it can be seen as a means of forum shopping. While the 26 Chabner Court was concerned about complaints that were intended to destroy 27 jurisdiction so as to force remands, the Court notes that at the heart of that concern is a fear of plaintiffs manipulating complaints in order to forum shop. 1 2. P.C. Richard’s Reliance on Benko Is also Misplaced 2 P.C. Richard also contends more generally that a Court may look to post- 3 removal amendments of pleadings when determining if remand is proper. [Dkt. 4 32 at 4]. In support of this proposition, P.C. Richard cites Benko v. Quality 5 Loan Service Corp.,

(9th Cir. 2015) (noting a court may 6 consider an amended complaint where the amendment occurred to explain “the 7 nature of the action for purposes of [the court’s] jurisdictional analysis”). 8 However, P.C. Richard’s argument does not fairly address more modern Ninth 9 Circuit cases that narrow and clarify Benko’s reach. 10 In Broadway Grill, the Ninth Circuit clarified Benko allows plaintiffs to 11 amend their complaints to “explain[] the impact of the [original] complaint’s 12 allegations,” but not to “change the nature of the claims.” Broadway Grill, 856 13 F.3d at 1279. As Judge Carney put it, “Benko held that ‘‘‘plaintiffs should be 14 permitted to amend a complaint after removal to clarify issues pertaining to 15 federal jurisdiction under CAFA [emphasis added].’” Lopez v. Aerotek, Inc., 16 No. 14-cv-00803,

(C.D. Cal. Jan. 19, 2017) (citing Benko, 789 17 F.3d at 1117). As to the definition of a permissible clarification that would 18 allow the Court to consider the amended pleading, various courts have held that 19 an amendment changing “the description of a party from “‘resident’” to 20 “‘citizen’” was a mere clarification.” Alivera v. Swift Transp. Co. of Ariz., No. 21 18-cv-2329,

, at *4 (C.D. Cal. Feb. 7, 2019) (collecting cases). 22 Here, Cody’s amendments are “much more significant than those 23 commonly considered clarifications.”

Cody’s amendments transformed 24 what was an action brought in her own individual capacity valued at under 25 $75,000, to an action that was brought on behalf of a class of at least 100 people 26

27 clearly state federal jurisdiction, doing so where removal is improper is a means 1 valued at, at least, five million dollars. [Dkt. 1-1 at 7; Dkt. 12 at 2–3]. Because 2 Cody’s FAC radically changes the nature of the claims, rather than explain the 3 impact of the original complaint’s allegations, the Court declines to apply Benko 4 here and considers the original complaint in its remand analysis.7 5 B. Plaintiff Cody’s Arguments 6 The Court now turns to Cody’s argument in support of P.C. Richard’s 7 removal of Cody’s complaint.8 Cody alleges P.C. Richard met its burden 8 because P.C. Richard asserted Cody would be entitled to attorney’s fees. [Dkt. 9 1 at 27]. More specifically, Cody herself alleges that she might be entitled to 10 attorney’s fees under California’s “private attorney general doctrine.” [Dkt. 33 11 at 6]. Cody’s argument fails for a variety of reasons. 12 As discussed below, the propriety of removal is to be determined based 13 on the pleadings as they existed at the time of removal. Broadway Grill, 856 14 F.3d at 1277. Cody’s original complaint contains no mention of attorney’s fees 15 or a right to attorney’s fees under the “private attorney general doctrine.” 16 [Dkt.1-1]. Because this allegation as to the amount in controversy was not in 17 18 7 P.C. Richard’s reliance on Roessert is also misplaced because the “unique 19 circumstances” justifying the district court’s review of the amended pleading there are not present here. Roessert,

(the district court 20 reviewed an amended complaint because the plaintiff was pro se, the court had 21 ordered the plaintiff to amend, and the original complaint was unclear if jurisdiction was proper). P.C. Richard’s reliance on Candy v. 474 Club LLC is 22 also improper because the original complaint here included facts, such as the 23 estimation of the amount in controversy and the citizenship of the Parties, that were probative of the availability of removal jurisdiction. Candy v. 474 Club 24 LLC, No. 06-222-S-EJL,

, at *3 (D. Idaho Jan 31, 2007) 25 (holding where the state court complaint is silent as to certain jurisdictional requirements, a district court can consider later-filed amendments when 26 determining jurisdiction). [Dkt.1-2 at 6–10]. 27 8 The Court notes that its concerns regarding Cody’s possibly forum shopping motivations seems to be confirmed by Cody’s arguments in support of P.C. 1 the originally complaint, the Court will not consider it. Miller v. Grgurich, 763

(9th Cir. 1985) (noting a court should look at the face of the 3 complaint when determining if diversity jurisdiction exists). To the extent that 4 Plaintiff relies on Fritsch v. Swift Transportation Company of Arizona, LLC, 5

(9th Cir. 2018), to contend the Court should consider future 6 attorney’s fees, the Court emphasizes in Fritsch the plaintiff “demanded 7 attorney’s fees” in the complaint whereas Cody did not. [Dkt. 1-1].9 The cases 8 are thus readily distinguishable on their facts, and the Court declines to apply 9 Fritsch. 10 The Court also highlights that Cody’s arguments fundamentally recasts 11 her entire complaint to present clear grounds for removal. In the initial 12 complaint, Cody stated clearly “the amount in controversy does not exceed 13 75,000.00.” [Dkt. 1-1 at 15]. Now, Cody argues the jurisdictional amount in 14 controversy is met because a separate unpled statute,

1021.5, “surely allows for the potential recovery of attorneys’ fees if the 16 requirements of that statute are met.” [Dkt. 33 at 5]. Setting aside the fact that 17 Cody had to qualify that she would only be entitled to attorney’s fees “if the 18 requirements” of the statute was met, Cody did not plead a cause of action or 19 even mention

in her initial complaint.

20 21 22 9 Cody also argues the Court is “bound” by Ninth Circuit precedent which holds 23 “where an underlying statute authorizes an award of attorneys’ fees, either with mandatory or discretionary language, such fees may be included in the amount 24 in controversy.” [emphasis added].” Galt G/S v. JSS Scandinavia,

(9th Cir. 1998). The Court notes that as the Ninth Circuit used the permissive “may” in the above case, the language does not impose on this Court 26 an absolute duty to include attorney’s fees in the amount in controversy 27 calculation. Moreover, Galt’s holding is clearly limited to “underlying statute[s],” and here Cody admits CIPA has no fee shifting provisions that 1 Because the claim for attorney’s fees under

2 was not within the operative pleading at the time of removal, the Court declines 3 to consider it. Broadway Grill,

. Thus, despite Cody’s efforts 4 to recast her complaint, the Court finds the complaint as it existed at the time of 5 removal determines its jurisdictional analysis, and P.C. Richard failed to meet 6 the jurisdictional threshold under

(a). 7 C. Binding Ninth Circuit Precedent Requires Removal Jurisdiction to be Determined at the Time of Removal in this Case 8 Having established why Chabner does not control in this case, the Court 9 now turns to the applicable law.

(c) provides “[i]f at any time 10 before final judgment it appears that the district court lacks subject matter 11 jurisdiction, the case shall be remanded.” Because “removal jurisdiction of the 12 federal courts is derived entirely from the statutory authorization of Congress,” 13 the Court looks to federal law to determine if the requirements for removal have 14 been met.” Libhart,

. In the Ninth Circuit, “post-removal 15 amendments to the pleadings cannot affect whether a case is removable, because 16 the propriety of removal is determined solely on the basis of the pleadings filed 17 in state court.” Williams,

. 18 Here, Cody’s original complaint in state court was brought in her 19 individual capacity and alleged violations of CIPA. [Dkt. 1-1 at 8–10]. P.C. 20 Richard removed this action under the general diversity statute which requires 21 P.C. Richard to sufficiently allege (1) complete diversity of the parties and (2) 22 that the amount in controversy exceeds the $75,000 minimum. Id. at 3. In its 23 OSC, the Court explicitly stated it had “concerns regarding the sufficiency of 24 the amount in controversy,” referring clearly to the $75,000 minimum required 25 under

(a). [Dkt. 31]. P.C. Richard’s response fails to address 26 this specific concern in any way as P.C. Richard elected to advance an argument 27 that the Court’s concerns were unfounded. [Dkt. 32 at 2]. 1 Because P.C. Richard failed to address if they did in fact meet the amount 2 in controversy requirement under

(a), the Court finds, for the 3 reasons stated in the Court’s OSC [Dkt. 31], P.C. Richard failed to show the 4 sufficiency of the amount in controversy. As such, the Court lacks subject 5 matter jurisdiction over the present case. 6 IV. CONCLUSION 7 While the case at hand presents seemingly unique factual circumstances, 8 in that Cody amended the complaint to allege CAFA jurisdiction where P.C. 9 Richard removed originally on diversity grounds, and the Court has yet to enter 10 a judgment in this case, the Court concludes the propriety of removal is to be 11 determined based on the initial complaint rather than the FAC. 12 To hold otherwise would be to simply allow a different species of forum 13 shopping, one where defendants remove improperly, and plaintiffs elect for one 14 reason or another to stay in federal court.10 While P.C. Richard has made clear 15 its intent to remove again as soon as the case is remanded, such a threat does not 16 change the Court’s opinion here. [Dkt. 32 at 9]. The law of the Ninth Circuit 17 dictates that unless the narrow exceptions carved out in Chabner and Benko 18 apply, removability is to be determined based on the pleadings at the time of 19 removal. Broadway Grill,

. This Court gave P.C. Richard an 20 opportunity to supplement and explain their Notice of Removal, and P.C. 21 Richard failed to do so. If P.C. Richard elects to remove again, that is in its 22 prerogative. 23 24

25 10 To the extent this decision creates inefficiencies, the Court notes it is not the 26 role of the Court to grant its litigants the easiest path to the forum of their 27 choice. Rather, it is the role of the Court to ensure that the laws of this circuit are faithfully and dutifully adhered to. Here, the law mandates a different result l “It is a fundamental principle that federal courts are courts of limited || jurisdiction. The limits upon federal jurisdiction, whether imposed by the 3 || Constitution or by Congress, must be neither disregarded nor evaded.” Owen 4] Equip. & Erection Co. v. Kroger,

(1978). Here, P.C. Richard 5 || failed to show the amount in controversy exceeded the $75,000 minimum. As 6 || such, P.C. Richard has not established diversity jurisdiction under

{|| 1332(a). Because the court lacks subject matter jurisdiction based on the 8 || documents filed at the time of removal, the Court REMANDS the case to state 9] court.

(c). The Clerk of Court is hereby directed to 10 || REMAND the case to the Superior Court of California for the County of Los || Angeles. 12 13 IT IS SO ORDERED. 14 15 || DATED: October 18, 2023 16 SUNSHINE S YKES United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28