1 JS-6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 YANIRA COVARRUBIAS, Case No. 2:23-cv-09375-FLA (JCx)

12 Plaintiff, ORDER REMANDING ACTION FOR 13 v. LACK OF SUBJECT MATTER JURISDICTION 14 MERCEDES-BENZ USA, LLC, et al., 15 Defendants. 16

17 18 RULING 19 On October 2, 2023, Plaintiff Yanira Covarrubias (“Plaintiff”) initiated this 20 action against Defendant Mercedes-Benz USA, LLC (“Defendant”) in the Los 21 Angeles County Superior Court. Dkt. 1-1 (“Compl.”). The Complaint alleges two 22 causes of action, both stemming from the Song-Beverly Consumer Warranty Act (the 23 “Song-Beverly Act”). Id. Plaintiff seeks actual damages, civil penalties, and 24 attorney’s fees. Id. 25 On November 6, 2023, Defendant removed the action to this court based on 26 alleged diversity jurisdiction. Dkt. 1 (“NOR”). In its Notice of Removal, Defendant 27 alleges the court has subject matter jurisdiction under

because the 28 amount in controversy exceeds $75,000.

at 3–5. 1 On January 3, 2024, the court ordered the parties to show cause why the action 2 should not be remanded for lack of subject matter jurisdiction due to an insufficient 3 amount in controversy. Dkt. 14 (“OSC”). Both Plaintiff and Defendant filed 4 responses. Dkts. 16, 17 (“Def. Resp.”). 5 Having reviewed the Notice of Removal and the responses to this court’s Order 6 to Show Cause, and for the following reasons, the court finds Defendant fails to 7 establish subject matter jurisdiction and accordingly REMANDS this action to the Los 8 Angeles County Superior Court. 9 DISCUSSION 10 Federal courts are courts of “limited jurisdiction,” possessing “only that power 11 authorized by the Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of 12 Am.,

(1994); U.S. Const. art. III, § 2, cl. 1. District courts are 13 presumed to lack jurisdiction unless the contrary appears affirmatively from the 14 record. See DaimlerChrysler Corp. v. Cuno,

, 342 n. 3 (2006). 15 Additionally, federal courts have an obligation to examine jurisdiction sua sponte 16 before proceeding to the merits of a case. See Ruhrgas AG v. Marathon Oil Co., 526

, 583 (1999). 18 Federal courts have jurisdiction where an action arises under federal law or 19 where each plaintiff’s citizenship is diverse from each defendant’s citizenship and the 20 amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. 21 §§ 1331, 1332(a). Thus, a notice removing an action from state court to federal court 22 must include “a plausible allegation that the amount in controversy exceeds the 23 jurisdictional threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574

(2014). Where “the plaintiff contests, or the court questions, the 25 defendant’s allegation” concerning the amount in controversy, “both sides [shall] 26 submit proof,” and the court may then decide whether the defendant has proven the 27 amount in controversy “by a preponderance of the evidence.”

at 88–89. “Federal 28 jurisdiction must be rejected if there is any doubt as to the right of removal in the first 1 instance.” Gaus v. Miles, Inc.,

(9th Cir. 1992). It is Defendant’s 2 burden as the removing party to justify this court’s exercise of jurisdiction.

. 3 A. Actual Damages 4 At issue here is whether the amount of money Plaintiff places in controversy 5 with the two Song-Beverly Act claims is sufficient. Under the Song-Beverly Act, a 6 plaintiff may recover “in an amount equal to the actual price paid or payable by the 7 buyer,” reduced by “that amount directly attributable to use by the buyer.” Cal. Civ. 8 Code § 1793.2(d)(2)(B)–(C). This includes a mileage offset. The offset is calculated 9 by reducing the purchase price by an amount directly proportional to the number of 10 miles driven. See id. § 1793.2(d)(2)(C). 11 Here, Defendant argues that Plaintiff’s prayer for actual damages places 12 $180,652.41 in controversy, based on the “price paid or payable for the subject 13 vehicle,” which includes Plaintiff’s total financing obligations throughout the maturity 14 of the loan.1 Def. Resp. at 2. Defendant further calculates an offset of $3,098.19, 15 based on the mileage of the vehicle at the time Plaintiff first presented the vehicle for 16 repair. Id. at 6. Specifically, Defendant’s counsel attests that, “based on [counsel’s] 17 review of the file materials in this case, including the repair orders for the subject 18 vehicle, Plaintiff’s first warrantable concern during Plaintiff’s ownership occurred at 19 2,062 miles[.]” Dkt. 17-1 ¶ 3. 20 This is insufficient. Despite the court’s encouragement to the parties to submit 21 evidence, see OSC at 2–3, Defendant provides none aside from the declaration from 22 its counsel. Defendant’s counsel is not a fact witness and her statements in this regard 23 are not evidence. See Ninth Circuit Manual of Model Civil Jury Instructions No. 1.10 24 (2017). Further, counsel’s declaration is deficient insofar as it does not articulate how 25

26 1 Defendant provides a Kelley Blue Book Pricing report for the subject vehicle. NOR, 27 Ex. B. Even if the court were to accept the report as evidence of the subject vehicle’s trade-in value, Defendant does not articulate how such evidence would affect the 28 actual damages calculation here. 1 counsel reached such a conclusion. Defendant’s assertion that the “total sales price of 2 the vehicle” should serve as the benchmark for calculating Plaintiff’s actual damages 3 is alone insufficient to meet the amount in controversy requirement without adequate 4 consideration of the vehicle offset. 5 Defendant argues two additional damages categories bring the amount in 6 controversy to over $75,000: civil penalties and attorney’s fees. For the following 7 reasons, however, Defendant fails to demonstrate the amount in controversy under 8 either of these categories brings the action past the jurisdictional threshold. 9 B. Civil Penalties 10 Defendant’s inclusion of civil penalties to establish the amount in controversy 11 is highly speculative and insufficient to meet its burden. “A plaintiff who establishes 12 that a violation of the Song-Beverly Act was willful may recover a civil penalty of up 13 to two times the amount of actual damages.” Estrada v. FCA US LLC, Case No. 2:20- 14 cv-10453-PA (JPRx),

, at *3 (C.D. Cal. Jan. 21, 2021) (citing Cal. 15 Civ. Code § 1794(c)) (brackets omitted). However, “‘[t]he civil penalty under 16 California Civil Code § 1794(c) cannot simply be assumed.’” Pennon v. Subaru of 17 Am., Inc., Case No. 2:22-cv-03015-SB (RAOx),

, at *2 (C.D. Cal. 18 June 17, 2022) (remanding action where defendant provided no specific argument or 19 evidence for including a civil penalty in the amount in controversy) (quoting Castillo 20 v. FCA USA, LLC, Case No. 3:19-cv-00151-CAB-MDD,

, at *2 21 (S.D. Cal. Dec. 5, 2019)). 22 Instead, district courts regularly find that a Song-Beverly Act plaintiff’s mere 23 allegations regarding a defendant’s willfulness are, without more, insufficient to place 24 civil penalties in controversy. Estrada,

, at *3 (collecting cases and 25 remanding where defendant’s inclusion of civil penalties to establish amount in 26 controversy was “too speculative and not adequately supported by the facts and 27 evidence”). This is because “[s]imply assuming a civil penalty award is inconsistent 28 with the principle that the defendant must provide evidence that it is more likely than 1 not that the amount in controversy requirement is satisfied.” Makol v. Jaguar Land 2 Rover N. Am., LLC, Case No. 5:18-cv-03414-NC,

, at *3 (N.D. Cal. 3 June 28, 2018) (internal quotation marks removed); see also Khachatryan v. BMW of 4 N. Am., LLC, Case No. 2:21-cv-01290-PA (PDx),

, at *2 (C.D. Cal.

, 2021). 6 Here, Defendant cites four cases in which civil penalties were awarded in Song- 7 Beverly Act cases. Def. Resp. at 4–5. Defendant does not, however, address how the 8 facts of those actions are similar to the instant matter. Defendant also fails to prove 9 “that it is reasonable to double the amount of actual damages in arriving [at] the size 10 of the likely award.” Pennon,

, at *2. 11 C. Attorney’s Fees 12 Defendant’s inclusion of attorney’s fees to establish the amount in controversy, 13 likewise, is speculative and insufficient to meet its burden. In the Ninth Circuit, 14 attorney’s fees awarded under fee-shifting statutes may be considered in assessing the 15 jurisdictional threshold. Gonzales v. CarMax Auto Superstores, LLC,

, 16 649 (9th Cir. 2016). But, before doing so, a removing defendant must “prove that the 17 amount in controversy (including attorneys’ fees) exceeds the jurisdictional threshold 18 by a preponderance of the evidence,” and must “make this showing with summary- 19 judgment-type evidence.” Fritsch v. Swift Transp. Co. of Ariz., LLC,

, 20 795 (9th Cir. 2018). “A district court may reject the defendant’s attempts to include 21 future attorneys’ fees in the amount in controversy if the defendant fails to satisfy this 22 burden of proof.”

23 “While a defendant may meet its burden to establish a reasonable estimate of 24 attorneys’ fees by identifying awards in other cases, those cases must be similar 25 enough to the case at hand that the court can conclude that it is more likely than not 26 that the plaintiff may incur a similar fee award.” Kaplan v. BMW of N. Am., LLC, 27 Case No. 3:21-cv-00857-TWR (AGS),

, at *6 (S.D. Cal. Sept. 24, 28 2021); cf. D’Amico v. Ford Motor Co., Case No. 2:20-cv-02985-CJC (JCx),

2614610, at *4 (C.D. Cal. May 21, 2020) (“[M]any cases alleging violations of the 2 [Song-Beverly] Act settle early.”). Moreover, a defendant fails to show attorney’s 3 fees are part of the amount in controversy where it “makes no effort to explain what 4 amount of attorney fees might be sought or awarded in this case, neglecting to include 5 so much as an estimate of the hour or billing rates that might apply.” Vega v. FCA 6 US, LLC, Case No. 2:21-cv-05128-VAP (MRWx),

, at *4 (C.D. 7 Cal. Aug. 25, 2021); Garcia v. FCA US LLC, Case No. 2:20-cv-04779-VAP (MRWx), 8

, at *3 (C.D. Cal. July 22, 2020). 9 Defendant fails in its burden with respect to attorney’s fees. It cites six cases in 10 which the trial court awarded attorney’s fees in amounts exceeding $100,000. Def. 11 Resp. at 7–8. Defendant, however, fails to explain how this action is similar to those 12 cases where the court awarded such attorney’s fees, beyond noting they also involved 13 Song-Beverly Act claims and/or the same Plaintiff’s counsel. See

Defendant also 14 calculates a lodestar estimate for a potential statutory attorney’s fee award in this 15 action of $39,000.

. This figure, alone, does not demonstrate the amount in 16 controversy requirement is met here. 17 Prevailing case authority does not support the proposition that district courts 18 weighing subject matter jurisdiction in Song-Beverly Act claims must assume that the 19 upper extreme of attorney’s fee awards granted in other Song-Beverly Act cases must 20 be included in the amount in controversy. If this were the law, district courts would 21 be unable to remand Song-Beverly Act cases for insufficient amounts in controversy. 22 District courts, however, regularly do so. See, e.g., D’Amico,

; 23 Sood v. FCA US, LLC, Case No. 2:21-cv-04287-RSWL (SKx),

24 (C.D. Cal. Oct. 4, 2021); Vega,

, at *3; Garcia,

, 25 at *3. Given that the removal statute is construed strictly and all doubts are resolved 26 in favor of remand, the court finds Defendant has failed to submit evidence 27 substantiating any specific amount of attorney’s fees in controversy. 28 / / / l CONCLUSION 2 Thus, the court determines Defendant has failed to demonstrate the amount in 3 | controversy exceeds $75,000 and finds that diversity jurisdiction does not exist. The 4 | court, therefore, REMANDS the action to the Los Angeles County Superior Court, 5 || Case No. 23TRCV03241. All dates and deadlines in this court are VACATED. The 6 | clerk of the court shall close the action administratively. 7 8 IT IS SO ORDERED. 9 10 | Dated: February 2, 2024 11

FERNANDO. AENLLE-ROCHA 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28