Whittaker v. Tactical USA LLC

[7] 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA [10] 11 SHAMICA WHITTAKER, et al., No. 2:23-cv-02914-JAM-CKD 12 Plaintiffs, ORDER GRANTING PLAINTIFFS’ MOTION TO REMAND AND DENYING 13 v. PLAINTIFFS’ REQUEST FOR ATTORNEYS’ FEES AND COSTS 14 TACTICAL USA LLC, et al. 15 Defendants. [16] 17 I. BACKGROUND 18 On July 12, 2023, Plaintiffs filed a complaint in Sacramento 19 County Superior Court against multiple defendants alleging 20 violations of the California Business and Professions Code. 21 Compl., Exh. A to Not. of Removal (“Not.”), ECF No. 1-1. 22 Plaintiffs argue they received over five hundred (500) 23 unsolicited commercial email advertisements (“spam”) from 24 defendant Tactical USA LLC (“Tactical”) which they never directly 25 consented to receive, nor did they ever have any business 26 relationship with Tactical. Id. at 9. Plaintiffs argue that 27 pursuant to California Business and Professions Code § 17529.5 28 (“Section 17529.5”), they are entitled to liquidated damages of 1 $1,000 per spam as well as reimbursement of their fees and costs. 2 Id. 20-23. 3 On December 14, 2023, Tactical and defendant Tim Reiss 4 (“Reiss”) (collectively, “Removing Defendants”) filed a notice of 5 removal (“Notice”). Not., ECF No. 1. Removing Defendants allege 6 the Court has original jurisdiction over this matter because all 7 parties are diverse and the amount in controversy exceeds 8 $75,000. Id. ¶ 6. The Complaint lists only one non-diverse 9 party, defendant TACTICALDEFENSEUSA.COM (“TACTICALDEFENSE”). 10 Compl. ¶ 25. Removing Defendants contend TACTICALDEFENSE is not 11 a citizen of California, but rather a business entity located in 12 Florida. Notice ¶ 16. Tactical and Reiss allege Plaintiffs 13 improperly identified TACTICALDEFENSE as a California business to 14 defeat federal court diversity jurisdiction. Id. 15 On January 12, 2024, Plaintiffs filed the present motion to 16 remand (“Motion”) arguing removal was improper. Motion 17 (“Mot.”), ECF No. 13. Removing Defendants filed an opposition 18 (“Opposition”). Opp’n, ECF No. 14. Plaintiffs filed a reply 19 (“Reply”). Reply, ECF No. 16.1 20 II. OPINION 21 A. Legal Standard 22 Removal jurisdiction is a creation of statute. See Libhart 23 v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979) 24 (“The removal jurisdiction of the federal courts is derived 25 entirely from the statutory authorization of Congress.”). In [26] 27 1This matter is determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). [28] 1 general, only those state court actions that could have been 2 originally filed in federal court may be removed. 28 U.S.C. 3 § 1441(a) (“Except as otherwise expressly provided by Act of 4 Congress, any civil action brought in a State court of which the 5 district courts of the United States have original jurisdiction, 6 may be removed by the defendant”); see also Caterpillar, Inc. v. 7 Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions 8 that originally could have been filed in federal court may be 9 removed to federal court.”). Accordingly, the removal statute 10 provides two ways in which a state court action may be removed 11 to federal court: (1) the case presents a federal question, or 12 (2) the case is between citizens of different states and the 13 amount in controversy exceeds $75,000. 28 U.S.C. §§ 1331 , 1332. 14 On a motion to remand, it is the removing defendant’s 15 burden to establish federal jurisdiction, and the court must 16 strictly construe removal statutes against removal. Gaus v. 17 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (“The ‘strong 18 presumption’ against removal jurisdiction means that the 19 defendant always has the burden of establishing that removal is 20 proper.”). If there is any doubt as to the right to removal, 21 the case should be remanded to state court. Matheson v. 22 Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 23 2003). 24 B. Analysis 25 Removing Defendants removed this action based on diversity 26 jurisdiction. Not. at 3. Plaintiffs argue removal was improper 27 for four (4) reasons: first, Removing Defendants failed to state 28 in their removal papers the citizenship of Tactical’s members; 1 second, Removing Defendants failed to indicate whether they 2 received consent for removal from all other defendants who were 3 served; third, Removing Defendants failed to state any facts 4 proving TACTICALDEFENSE is a diverse party located in Florida; 5 and fourth, this Court lacks Article III standing, which is 6 necessary for federal jurisdiction. Mot. at 1. Plaintiffs’ 7 challenges to removal are addressed below. 8 1. Citizenship of Tactical’s Members 9 For purposes of diversity jurisdiction, a limited liability 10 company (“LLC”) is a citizen of “every state of which its 11 owners/members are citizens.” Johnson v. Columbia Props. 12 Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Thus, if an 13 LLC is a party to a suit, the removing party must affirmatively 14 allege the citizenship of each of the LLC’s members. Lindley 15 Contours, LLC v. AABB Fitness Holdings, Inc., 414 F. App'x 62 , 64 16 (9th Cir. 2011). A failure to do so can result in remand for 17 lack of subject matter jurisdiction. Id. at 65 . 18 “A district court ‘may properly look beyond the [pleading’s] 19 jurisdictional allegations and view whatever evidence has been 20 submitted to determine whether in fact subject matter 21 jurisdiction exists.’” Adler v. Federal Republic of Nigeria, 107 22 F.3d 720 , 728 (9th Cir. 1997) (citing Bowyer v. U.S. Dept. of Air 23 Force, 875 F.2d 632 (7th Cir. 1989)). “A district court ‘has 24 considerable latitude in devising the procedures it will follow 25 to ferret out the facts pertinent to jurisdiction.’” Id. (citing 26 Foremost-McKesson, Inc. v. Islamic Republic of Iran, 284 U.S. 27 App. D.C. 333, 905 F.2d 438, 449 (1990)). 28 Plaintiffs argue Removing Defendants failed to affirmatively 1 allege the citizenship of each of Tactical’s members in their 2 Notice of Removal, which, as an LLC, is required to establish 3 complete diversity. Mot. at 2. Plaintiffs are correct. 4 Removing Defendants’ Notice does, in fact, fail to make any 5 mention of Tactical’s members. See Not. With respect to the 6 citizenship of Tactical, Removing Defendants only allege that 7 Tactical is a Texas LLC with a primary place of business in the 8 state of Massachusetts. Not. ¶ 9. This is not the proper test 9 to determine the citizenship of an LLC. Johnson, 437 F.3d at 10 899. Removing Defendants were required to affirmatively allege 11 the citizenship of each of Tactical’s members. Lindley 12 Contours, LLC, 414 F. App'x at 64 . Federal jurisdiction is 13 therefore not clearly established based on the Notice alone. 14 Looking beyond the Notice, the Court finds that Tactical has 15 not demonstrated that Removing Defedants are truly diverse from 16 Plaintiffs. 17 First, regarding the members of Tactical, the Complaint 18 alleges defendant John C. Keel Jr. (“Keel”) is Tactical’s only 19 member. Compl. at 5. The Complaint, however, is silent as to 20 Keel’s citizenship. The Notice states Removing Defendants are 21 “informed and believe” that Keel is domiciled in Texas. 22 Not. ¶ 11. Absent unusual circumstances, however, a party 23 seeking to invoke diversity jurisdiction should be able to 24 affirmatively allege the actual citizenship of the relevant 25 parties. Kanter, 265 F.3d at 857. “Jurisdictional allegations 26 based on information and belief are insufficient to confer 27 jurisdiction.” Clear Blue Ins. Co. v. B, No. CV 22-7449-JFW(Ex), [28] 2022 U.S. Dist. LEXIS 192510 , at *4 (C.D. Cal. Oct. 20, 2022) 1 (citing Kanter, 265 F.3d at 857). Tactical is one of the 2 Removing Defendants. As Keel is alleged to be Tactical’s sole 3 member, Tactical should have affirmatively stated Keel’s 4 citizenship rather than done so on “information and belief”. 5 Second, Removing Defendants state in their Opposition: 6 Plaintiffs’ Complaint alleges that [Tactical] has only one Member, [Keel]. Compl. ¶ 15. Plaintiffs appear to 7 contend that [Keel] resides in and is a citizen of Texas. [Plaintiffs’ Proof of Service Keel, ECF No. 8 12]. Thus, as Plaintiffs have alleged, [Tactical] is completely diverse from the Plaintiffs. Compl. ¶¶ 9– 9 15. 10 Opp’n at 2. To support the argument that Plaintiffs’ “appear to 11 contend” Keel is a citizen of Texas, Removing Defendants cite to 12 Plaintiffs’ Proof of Service of Summons on Keel, ECF No. 12, 13 which was docketed after Removing Defendants’ Notice of Removal. 14 Id. A review of the proof of service only indicates that Keel 15 was served at an address in Texas. Pl.’s Proof of Service on 16 Keel, ECF No. 12. The proof of service does not allege that 17 Texas is where Keel is “domiciled” or even if the location he was 18 served at is a residence. Id. 19 The proof of service is the only evidence Removing 20 Defendants provide to support their contention that Keel is a 21 citizen of Texas. See Opp’n at 2. It is the Removing Defendants’ 22 burden to establish Keel’s citizenship, not Plaintiffs. Kanter, 23 265 F.3d at 857. Further, even if there was evidence presented 24 that Keel was residing in Texas, citizenship is determined by an 25 individual’s domicile, not their residence. Id. “A person 26 residing in a given state is not necessarily domiciled there, and 27 thus is not necessarily a citizen of that state.” Id. Removing 28 Defendants needed to provide sufficient evidence that Texas is 1 not only where Keel is residing, but also where he intends to 2 stay. They have failed to do so. 3 Removing Defendants have not met their burden of 4 establishing Keel is diverse. As Keel is alleged to be 5 Tactical’s only member, Removing Defendants have also not met 6 their burden of establishing Tactical’s diversity. 7 2. Consent of Served Defendants 8 Plaintiffs argue Removing Defendants did not obtain consent 9 to remove from defendants HealthyNewsUSA.com (“HealthyNews”), 10 Products4Patriots.com (“Products4Patriots”), Keel, or MOFC Inc. 11 (“MOFC”). Mot. at 3. Plaintiffs state these defendants were 12 served four (4) months prior to the removal. Id. Plaintiffs 13 admit they did not file proofs of service in state court for 14 these defendants, however, they were waiting for all defendants 15 to be served prior to filing. Id. Plaintiffs also allege 16 Removing Defendants had knowledge that Keel and MOFC were 17 served, but still failed to obtain their consent. Id. 18 Removing Defendants argue they should not have the burden 19 to independently investigate whether any other defendants were 20 served. Opp’n at 3. Removing Defendants contend it was proper 21 for them to assume Plaintiffs had not yet properly served any 22 other defendants. Id. [23] 28 U.S.C. § 1446 (b)(2)(A) requires all defendants who have 24 been properly joined and served in diversity cases to join in or 25 consent to the removal of the action. The plain language of 26 Section 1446 is silent as to whether a proof of service in state 27 court needs to be filed before a removing defendant is required 28 to obtain consent. 1 Removing Defendants cite Bogosian v. CR Title Servs., No. 2 5:11-cv-02043 EJD (HRL), 2011 U.S. Dist. LEXIS 91072 (N.D. Cal. 3 Aug. 16, 2011) to support their contention that they were not 4 required to obtain consent in the removal. Bogosian offers 5 little guidance to the Court. In Bogosian, two defendants did 6 not consent in the removal. Id. at *9. The plaintiffs in 7 Bogosian argued that the complaint was served on all parties, 8 however, they did not provide “anything that can be considered 9 actual evidence” to prove that all parties were served. 10 Id. at *10. The court found there was no evidence the non11 consenting defendants were properly served prior to removal. 12 Id. Therefore, the removing defendants were not required to 13 obtain consent. Id. Bogosian did not examine whether there is 14 an independent duty on behalf of a removing defendant to 15 determine whether other defendants were served if no proofs of 16 service had been filed in state court. 17 Here, Removing Defendants do not dispute whether the 18 remaining defendants were served. Rather, they focus on 19 California Rules of Court that establish proofs of service are 20 the “authoritative source” for determining whether proper 21 service was effectuated. Opp’n at 4. As the court in Bogosian 22 notes, a challenge to removal based on lack of consent is 23 procedural, not jurisdictional. Bogosian, 2011 U.S. Dist. LEXIS 24 91072, at *3. Therefore, the Court turns to federal authority, 25 not state, to determine whether service was properly effectuated 26 and whether consent was required. Id. Removing Defendants’ 27 California citations have no bearing on this matter. 28 In support of proper service being effectuated, Plaintiffs 1 provide authenticated exhibits to the Court which evidence that 2 all defendants had been served prior to removal. See Exh.’s C3 H, ECF No. 13-1. The same district that decided Bogosian, the 4 Northern District of California, has held that “the obligation 5 to join all defendants is based on whether the defendant 6 actually has been served, not on the subjective knowledge of the 7 removing party.” Barbera v. WMC Mortg. Corp., No. C 08-02677 8 SBA, 2009 U.S. Dist. LEXIS 25785 , at *4 N.D. Cal. Mar. 18, 9 2009). “[A] removing defendant must exercise due diligence to 10 ascertain if other defendants have been served, and simply 11 checking if a proof of service has been filed with the court is 12 insufficient.” Beltran v. Monterey Cty., No. C 08-05194 JW, [13] 2009 U.S. Dist. LEXIS 21644 , at *8 (N.D. Cal. Mar. 6, 2009) 14 (citing Orozco v. EquiFirst Corp., No. CV 08--8064 PA (CWx), [15] 2008 U.S. Dist. LEXIS 105944 , at *3 (C.D. Cal. Dec. 22, 2008)). 16 Removing Defendants fail to address whether they exercised 17 reasonable diligence in determining whether the other defendants 18 were served. Absent controlling authority suggesting otherwise, 19 the Court agrees with the Northern District. Merely checking a 20 state court’s docket does not constitute “reasonable diligence” 21 to ascertain whether other defendants have been served. The 22 Court finds all parties were properly served prior to the Notice 23 of Removal and Removing Defendants were required to obtain their 24 consent. Removal without their consent was improper. 25 Removing Defendants request the Court grant leave to obtain 26 consent from all properly served defendants. Opp’n at 4. Given 27 the other independent grounds to remand that are addressed in 28 this Order, the Court denies this request. 1 3. Citizenship of TACTICALDEFENSE 2 Plaintiffs state defendant TACTICALDEFENSE is a business 3 entity with a primary place of business in San Francisco, 4 California. Mot. at 4. Plaintiffs claim TACTICALDEFENSE is a 5 California citizen because they received at least thirty-three 6 (33) spams from TACTICALDEFENSE from an address in San 7 Francisco. Id. Removing Defendants, however, contend in their 8 Notice that TACTICALDEFENSE is a citizen of Florida. Not. ¶ 16. 9 Removing Defendants do not detail specific facts or provide 10 evidence to support this contention. Rather, Removing 11 Defendants state on information and belief that TACTICALDEFENSE 12 is not located in California. Id. Plaintiffs argue Removing 13 Defendants failed to provide evidence that TACTICALDEFENSE is a 14 citizen of Florida. Mot. at 4. The Court agrees. 15 Removing Defendants fail to provide any evidence that 16 TACTICALDEFENSE is a citizen of Florida. See Not. ¶ 16; 17 Opp’n ¶ 16. The Notice states Removing Defendants are “informed 18 and believe that defendant [TACTICALDEFENSE] was at this [sic] 19 time of filing this Action not a business entity not a business 20 entity [sic] of unknown organization located in the state of 21 California but rather a business entity of unknown organization 22 located in the state of Florida.” Notice ¶ 16. In their 23 Opposition, Removing Defendants state “an email address is not a 24 ‘principal place of business’—that requires ‘the place where a 25 corporation’s officers direct, control, and coordinate the 26 corporation’s activities.’ Hertz Corp. v. Friend, 559 U.S. 77 , 27 92 (2010). As a result, [TACTICALDEFENSE] is also completely 28 diverse from the Plaintiffs and the Court has diversity 1 jurisdiction over Plaintiffs’ claims.” Opp’n at 2. 2 Removing Defendants do not provide the Court with any 3 evidence in their Notice or Opposition to support that 4 TACTICALDEFENSE is a Florida citizen, rather than a California 5 citizen. While an email address may not be conclusive evidence 6 of a principal place of business, Removing Defendants have 7 provided no evidence clearly demonstrating that TACTICALDEFENSE 8 is not a California citizen. Plaintiffs, however, have at least 9 provided some evidence that TACTICALDEFENSE is a California 10 citizen, as it is undisputed they received thirty-three (33) 11 emails from a San Francisco address. Balsam Declaration ¶ 33, 12 ECF No. 13-1; Exh. I, ECF No. 13-1. 13 Removing Defendants attempt to satisfy their burden by 14 simply stating, with no supporting evidence, that they are 15 “informed and believe” a defendant is a citizen of a diverse 16 state. Plaintiffs, on the other hand, have provided evidence to 17 suggest otherwise Plaintiffs’ argument in support of their 18 motion here lends further support that removal was not proper. 19 Gaus, 980 F.2d at 566 . 20 4. Article III Standing 21 Plaintiffs argue they lack Article III standing because 22 their injuries are not concrete and particularized, Mot. at 5, 23 given that they are only requesting liquidated damages for 24 statutory violations. Id. at 8. Plaintiffs further contend the 25 alleged violations under California Business and Professions 26 Code § 17529.5 (“Section 17529.5”) are punitive in nature, and 27 focus on a defendant’s conduct, rather than a plaintiff’s harms. 28 Id. at 7. 1 Removing Defendants argue Plaintiffs do have Article III 2 standing because Section 17529.5 codifies the substantive right 3 to be protected from the transmission of unwanted spam. 4 Opp’n at 5, 7. Removing Defendants further contend that the 5 alleged violations of Section 17529.5 establish an injury in 6 fact and Plaintiffs do not need to allege further damages to 7 establish standing. Id. at 8. 8 To satisfy Article III’s standing requirements, “a 9 plaintiff must show (1) it has suffered an ‘injury in fact’ that 10 is (a) concrete and particularized and (b) actual or imminent, 11 not conjectural or hypothetical; (2) the injury is fairly 12 traceable to the challenged action of the defendant; and (3) it 13 is likely, as opposed to merely speculative, that the injury 14 will be redressed by a favorable decision.” Friends of the 15 Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167 , 16 180-81 (2000). The party invoking federal jurisdiction bears 17 the burden of establishing all three requirements are met. 18 Lujan v. Defs. Of Wildlife, 504 U.S. 555, 561 (1992). 19 When there is an alleged statutory violation, Article III 20 standing still requires a concrete injury. Spokeo, Inc. v. 21 Robins, 578 U.S. 330, 341 (2016). A violation of a statute does 22 not automatically establish Article III standing. Robins v. 23 Spokeo, Inc., 867 F.3d 1108, 1110 (9th Cir. 2017). Rather, the 24 alleged statutory violation must have caused a plaintiff to 25 suffer a harm that actually exists and is not abstract or merely 26 procedural. Id. 27 Section 17529.5 prohibits the transmission of the following 28 types of emails: 1 (1) The e-mail advertisement contains or is accompanied by 2 a third-party’s domain name without the permission of the third 3 party. 4 (2) The e-mail advertisement contains or is accompanied by 5 falsified, misrepresented, or forged header information. This 6 paragraph does not apply to truthful information used by a third 7 party who has been lawfully authorized by the advertiser to use 8 that information. 9 (3) The e-mail advertisement has a subject line that a 10 person knows would be likely to mislead a recipient, acting 11 reasonably under the circumstances, about a material fact 12 regarding the contents or subject matter of the message. [13] Cal. Bus. & Prof. Code § 17529.5 . Section 17529.5 protects “the 14 concrete interest of preventing such transmissions.” Lynch v. 15 AML Network Ltd., No. CV 21-3574-GW-RAOx, 2021 U.S. Dist. LEXIS 16 187234, at *8-9 (C.D. Cal. Sep. 27, 2021). Explained further: 17 [Section] 17529.5 codifies a substantive right to be protected from spam, and that a person who is the 18 subject of a violation of that right sustains injuries including lost productivity and resources, annoyance, 19 consumption of valuable digital storage space and financial costs. Furthermore, the statute protects 20 interests and prohibits behavior that are similar to those at issue in actions for nuisance and fraud. Such 21 claims have long been deemed viable and justiciable. 22 Silverstein v. Keynetics, Inc., No. LA CV18-04100 JAK AGRx), 2018 23 U.S. Dist. LEXIS 189114 , at *23 (C.D. Cal. Nov. 5, 2018). 24 A plaintiff’s allegation that they suffered statutory 25 violations pursuant to Section 17529.5 “suffices to satisfy the 26 concreteness requirement of Article III standing.” Silverstein, [27] 2018 U.S. Dist. LEXIS 189114 , at *23. A plaintiff does not need 28 to show any actual harm, as Section 17529.5 codifies the 1 substantive right of being protected “from unwanted spam emails — 2 not necessarily protection from financial harm. An economic 3 injury would be sufficient to show an injury in fact, but it is 4 not necessary.” Lynch, 2021 U.S. Dist. LEXIS 187234 , at *12. 5 Here, Plaintiffs allege they received over five-hundred 6 (500) spam emails. Compl. at 20. Because Section 17529.5 7 codifies the substantive right to be protected from spam, 8 Plaintiffs did not need to allege any harm beyond receiving the 9 emails. The Court finds the statutory violations are injuries in 10 fact and would be sufficient to confer Article III standing in 11 this case. Plaintiffs’ argument in support of their motion to 12 remand on this ground fails. However, given Removing Defendants’ 13 failure to properly plead complete diversity and obtain the 14 consent of other defendants, the Court finds Plaintiffs’ other 15 arguments challenging removal to be compelling. Matheson, 319 16 F.3d at 1090. The Court, therefore, grants Plaintiffs request to 17 remand this case. 18 5. Request for Attorneys’ Fees and Costs 19 Plaintiffs’ request attorneys’ fees and costs incurred as a 20 result of the removal. Mot. at 14. 21 A court granting remand may award attorneys’ fees incurred 22 “as a result of” an improper removal. 28 U.S.C. § 1447 (c). To 23 award fees, the removing party must have lacked “an objectively 24 reasonable basis for seeking removal.” Martin v. Franklin 25 Capital Corp., 546 U.S. 132, 141 (2005). 26 The Court does not find Removing Defendants’ attempt to 27 remove this case lacked an objectively reasonable basis. 28 Rather, because the removing petition contains defective em EEE IE IRIE DE IRIS) ENON OIE IIE I 1 jurisdictional allegations and procedural errors the Removing 2 Defendants failed to satisfy their burden to establish federal 3 diversity jurisdiction. Plaintiffs’ request for attorneys’ fees 4 and costs is denied. 5 Til. ORDER 6 For the reasons set forth above, the Court GRANTS 7 Plaintiffs’ Motion to Remand and DENIES Plaintiffs’ request for 8 attorneys’ fees and costs. 9 IT IS SO ORDERED. 10 Dated: April 8, 2024 [11] A Tas JOHN A. MENDEZ 13 SENIOR UNITED*STATES DISTRICT JUDGE