Kyung Baek v. Mercedes-Benz USA, LLC

1 JS-6 [7] 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA [10] 11 KYUNG AE BAEK, Case No. 2:23-cv-06816-FLA (Ex) 12 Plaintiff, ORDER REMANDING ACTION FOR 13 v. LACK OF SUBJECT MATTER JURISDICTION [14] MERCEDES-BENZ USA, LLC, et al., [15] Defendants. [17] 18 RULING 19 On June 30, 2023, Plaintiff Kyung Ae Baek (“Plaintiff”) initiated this action 20 against Defendant Mercedes-Benz USA, LLC (“MBUSA” or “Defendant”) and DOES 21 1 through 25 in the Los Angeles County Superior Court. Dkt. 1. Plaintiff asserts 22 violations of the Song-Beverly Act and breach of warranty. Id. 23 On August 18, 2023, MBUSA removed the action to this court based on alleged 24 diversity jurisdiction. Dkt. 1 (“NoR”). On August 23, 2023, the court ordered the 25 parties to show cause why the action should not be remanded for lack of subject 26 matter jurisdiction due to an insufficient amount in controversy. Dkt. 8. Only 27 MBUSA filed a response. Dkt. 13 (“Def. Resp.”). In its response, MBUSA argues 28 the amount in controversy exceeds $75,000 based on the stated purchase price of the 1 vehicle and further recovery of civil penalties. Id. at 6-7. 2 Having reviewed MBUSA’s Notice of Removal and its response to this court’s 3 order to show cause, and for the following reasons, the court finds MBUSA fails to 4 establish this court’s jurisdiction and accordingly REMANDS the action. 5 DISCUSSION 6 Federal courts are courts of “limited jurisdiction,” possessing only “power 7 authorized by the Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of 8 Am., 511 U.S. 375, 377 (1994); U.S. Const. art. III, § 2, cl. 1. Courts are presumed to 9 lack jurisdiction unless the contrary appears affirmatively from the record. See 10 DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 , 342 n. 3 (2006). Additionally, federal 11 courts have an obligation to examine jurisdiction sua sponte before proceeding to the 12 merits of a case. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999). 13 Federal courts have jurisdiction where an action arises under federal law or 14 where each plaintiff’s citizenship is diverse from each defendant’s citizenship and the 15 amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. 16 §§ 1331, 1332(a). Accordingly, a defendant may remove a case from state court to 17 federal court pursuant to the federal removal statute, 28 U.S.C. § 1441 , on the basis of 18 federal question or diversity jurisdiction. Courts strictly construe the removal statute 19 against removal jurisdiction, and “[f]ederal jurisdiction must be rejected if there is any 20 doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 21 564, 566 (9th Cir. 1992). The party seeking removal bears the burden of establishing 22 federal jurisdiction. Id. 23 A notice removing an action from state court to federal court must include “a 24 plausible allegation that the amount in controversy exceeds the jurisdictional 25 threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81 , 89 26 (2014). Where “the plaintiff contests, or the court questions, the defendant’s 27 allegation” concerning the amount in controversy, “both sides [shall] submit proof,” 28 and the court may then decide whether the defendant has proven the amount in 1 controversy “by a preponderance of the evidence.” Id. at 88–89. “Federal jurisdiction 2 must be rejected if there is any doubt as to the right of removal in the first instance.” 3 Gaus, 980 F.2d at 566 . 4 The issue here is whether the amount of money Plaintiff places in controversy is 5 sufficient to invoke jurisdiction. Based on the evidence and allegations presented in 6 the Notice of Removal and the response to the court’s order to show cause, the court is 7 not persuaded that MBUSA has carried its burden of showing, by a preponderance of 8 the evidence, that the amount in controversy requirement has been met here. 9 A. Actual Damages 10 The first remedy at issue is actual damages. Under the Song-Beverly Act, the 11 buyer of a vehicle may recover “in an amount equal to the actual price paid or payable 12 by the buyer,” reduced by an amount “directly attributable to use by the buyer.” Cal. 13 Civ. Code § 1793.2(d)(2)(B)–(C). This reduction, also known as a mileage offset, 14 reduces the buyer’s recovery by an amount directly proportional to the number of 15 miles driven, with each mile driven reducing the purchase price by 1/120,000. See id. 16 § 1793.2(d)(2)(C). 17 Here, MBUSA argues Plaintiff’s Complaint places $260,020.00 in controversy, 18 based on the “stated value of the Subject Vehicle at the time of Plaintiff’s purchase[.]” 19 Def. Resp. at 4. Defendant attaches only a third-party report evidencing vehicle 20 ownership history—to demonstrate the vehicle was purchased rather than leased—and 21 an internal vehicle history report detailing the same. Def. Resp., Exs. A, B. Neither 22 provides any evidence of the vehicle’s purchase price. Additionally, neither Plaintiff 23 nor MBUSA calculate any offset in the complaint or Notice of Removal, based on the 24 mileage of the vehicle at the time Plaintiff first presented the vehicle for repair. 25 MBUSA’s assertion that the full value of the vehicle at the time of its purchase should 26 serve as the benchmark for calculating Plaintiff’s actual damages is alone insufficient 27 to meet the amount in controversy requirement without adequate consideration of the 28 vehicle offset. 1 B. Civil Penalties 2 MBUSA’s inclusion of civil penalties to establish the amount in controversy is 3 highly speculative and insufficient to meet its burden. “A plaintiff who establishes 4 that a violation of the [Song-Beverly] Act was willful may recover a civil penalty of 5 up to two times the amount of actual damages.” See Cal. Civ. Code § 1794 (c). 6 However, “[t]he civil penalty under California Civil Code § 1794(c) cannot simply be 7 assumed.” Pennon v. Subaru of Am., Inc., Case No. 2:22-cv-03015-SB (RAOx), 2022 8 WL 2208578 , at *2 (C.D. Cal. June 17, 2022) (remanding action where defendant 9 provided no specific argument or evidence for including a civil penalty in the amount 10 in controversy) (quoting Castillo v. FCA USA, LLC, Case No. 3:19-cv-151-CAB11 MDD, 2019 WL 6607006 , at *2 (S.D. Cal. Dec. 5, 2019)). Instead, district courts 12 regularly find that a Song-Beverly Act plaintiff’s boilerplate allegations regarding a 13 defendant’s willfulness are, without more, insufficient to place civil penalties in 14 controversy. Estrada v. FCA US LLC, Case No. 2:20-cv-10453-PA (JPRx), 2021 WL 15 223249, at *3 (C.D. Cal. Jan. 21, 2021) (collecting cases and remanding where 16 defendant’s inclusion of civil penalties to establish amount in controversy was “too 17 speculative and not adequately supported by the facts and evidence.”). This is 18 because “[s]imply assuming a civil penalty award is inconsistent with the principle 19 that the defendant must provide evidence that it is more likely than not that the 20 amount in controversy requirement is satisfied.” Makol v. Jaguar Land Rover N. Am., 21 LLC, Case No. 5:18-cv-03414-NC, 2018 WL 3194424 , at *3 (N.D. Cal. June 28, 22 2018) (internal quotation marks removed); see Zawaideh v. BMW of N. Am., LLC, 23 Case No. 2:21-cv-01290-PA (PDx), 2018 WL 1805103 , at *2 (S.D. Cal. Apr. 17, 24 2018) (“[T]he defendant must make some effort to justify the assumption.”); see also 25 Khachatryan, 2021 WL 927266 at *2. 26 Here, MBUSA offers no argument or evidence supporting the potential 27 awarding of civil penalties beyond stating that civil penalties “are not speculative” 28 because the “very caption of the Complaint indicates Plaintiff seeks a civil penalty” | | and “Plaintiffs prayer seeks ‘any and all other remedies allowed pursuant to the 2 || [Song-Beverly Act],’” which inherently include civil penalties. Def. Resp. at 5-6. In 3 || fact, the Notice of Removal states “Plaintiff seeks civil penalties, but the demand for 4 | civil penalties is not elaborated upon[.]” MBUSA also fails to prove “that it is 5 | reasonable to double the amount of actual damages in arriving [at] the size of the 6 | likely award.” Pennon, 2021 WL 2208578 , at *2. 7 CONCLUSION 8 For the aforementioned reasons, the court finds that MBUSA has failed to carry 9 | its burden in demonstrating the diversity jurisdiction amount in controversy 10 | requirement is met here. The court, therefore, REMANDS the action to the Los 11 | Angeles County Superior Court, Case No. 23STCV15352. All dates and deadlines in 12 | this court are VACATED. The clerk of the court shall close the action 13 | administratively. [14] 15 IT IS SO ORDERED. [16] 17 | Dated: September 14, 2023 18 FERNANDO L. AENLLE-ROCHA 19 United States District Judge