Tanner v. Ford Motor Company

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION [7] JAMES TANNER, et al., 8 Case No. 5:19-cv-02495-EJD Plaintiffs, 9 ORDER GRANTING PLAINTIFFS’ v. MOTION TO REMAND [10] FORD MOTOR COMPANY, et al., Re: Dkt. No. 9 [11] Defendants. [12] 13 Plaintiffs allege various state-law causes of actions against Ford Motor Company and 14 Cypress Coast Ford Lincoln (“Cypress Coast”). Ford Motor Company (“Defendant”) argues that 15 this Court has jurisdiction pursuant to 28 U.S.C. § 1332 and that removal was proper. Plaintiffs 16 argue that removal is improper because Cypress Coast destroys diversity jurisdiction as Plaintiffs 17 and Cypress Coast are both California citizens.1 Defendant contends that Cypress Coast is a sham 18 defendant and a dispensable party, thus making removal proper. The Court disagrees.2 Because 19 dismissing Cypress Coast is improper, complete diversity does not exist among the parties and the 20 Court lacks jurisdiction. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 829 (1989). The 21 Clerk is DIRECTED to REMAND this case to Santa Clara County Superior Court and close the [23] 1 This loosely characterizes Plaintiffs’ argument. Plaintiffs spend a portion of their brief arguing 24 that Defendant has not established that Plaintiffs are California citizens. Perplexingly, this undercuts their main argument that the inclusion of Cypress Coast destroys diversity and mandates 25 remand. If the Court agrees that Defendant has not established Plaintiffs’ California citizenship, then the inclusion of Cypress Coast, a California domiciliary, is irrelevant. In fact, Plaintiffs need 26 to be California citizens for Cypress Coast’s citizenship to matter. The Court thus “recasts” Plaintiffs’ argument for clarity and cohesiveness. 27 2 After considering the parties papers, the Court finds this motion suitable for consideration without oral argument. See N.D. Cal. Civ. L.R. 7-1(b). 1 file. 2 I. BACKGROUND 3 A. Factual Background 4 On or about July 3, 2013, Plaintiffs purchased a 2013 Ford F-430 vehicle (the “Vehicle”) 5 from Cypress Coast Ford. Complaint for Violation of Statutory Obligations (“Compl.”) ¶ 8, Dkt. 6 1-2, Ex. B. Plaintiffs received an express written warranty with this purchase. Id. ¶ 9. During the 7 warranty period, the Vehicle contained or developed defects, which substantially impaired the use, 8 value, or safety of the Vehicle. Id. ¶ 10. Plaintiffs assert six causes of action, but only the fifth 9 cause of action, that Defendants breached the implied warranty of merchantability, includes 10 Cypress Coast Ford. Id. ¶¶ 31–35. The other five causes of action are only asserted against 11 Defendant Ford Motor and are not at issue in this action. Id. ¶¶ 13–18, 19–23, 24–26, 27–30, 36– 12 48. Plaintiffs assert the fifth cause of action under the Song-Beverly Consumer Warranty Act, see [13] Cal. Civ. Code §§ 1791.1 , 1794, 1795.5. See id. at 6 . Plaintiffs are “residents of Alameda 14 County, California.” Id. ¶ 2 . Defendant Ford Motor is a citizen of Delaware and Michigan. Id. 15 ¶ 4. Cypress Coast is a California citizen. Id. ¶ 5 . 16 B. Procedural History 17 Plaintiffs filed their Complaint in the Santa Clara County Superior Court on April 5, 2019. 18 Compl. at 11. Defendant Ford Motor removed the action to this Court on May 8, 2019 pursuant to [19] 28 U.S.C. § 1332 . Dkt. 1. On July 2, 2019, Plaintiffs filed a motion to remand. Motion to 20 Remand Case (“Mot.”), Dkt. 9. Defendant filed on opposition on July 16, 2019. 21 Opposition/Response re Motion to Remand (“Opp.”), Dkt. 10. On July 23, 2019, Plaintiffs 22 submitted a reply. Reply re Motion to Remand Case (“Reply”), Dkt. 12. 23 II. LEGAL STANDARDS 24 A. Motion to Remand 25 The party seeking removal bears the burden of establishing jurisdiction. Gaus v. Miles, 26 Inc., 980 F.2d 564, 566 (9th Cir. 1992). The Court strictly construes the removal statute against 27 removal jurisdiction. Id. Federal jurisdiction must be rejected if there is any doubt as to the right 1 of removal in the first instance. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 2 1979). Indeed, federal courts are “particularly skeptical of cases removed from state court.” 3 Warner v. Select Portfolio Servicing, 193 F. Supp. 3d 1132, 1134 (C.D. Cal. 2016) (citing Gaus, [4] 980 F.2d at 566 ). “If at any time before final judgment it appears that the district court lacks 5 subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447 (c). 6 B. Sham Defendant 7 While 28 U.S.C. § 1332 requires complete diversity of citizenship, see Caterpillar Inc. v. 8 Lewis, 519 U.S. 61, 68 (1996), one exception is where a non-diverse defendant has been 9 “fraudulently joined.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). 10 Fraudulent joinder is a “term of art,” it does not imply any intent to deceive on the part of a 11 plaintiff or his counsel. Lewis v. Time Inc., 83 F.R.D. 455, 460 (E.D. Cal. 1979); McCabe v. Gen. 12 Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Joinder of a non-diverse defendant is 13 fraudulent if: (1) the plaintiff fails to state a cause of action against a defendant and (2) the failure 14 is obvious according to the settled rules of the state. McGabe, 811 F.3d at 1339. 15 As a matter of general principle, courts generally employ a presumption against fraudulent 16 joinder. Diaz v. Allstate Ins. Grp., 185 F.R.D. 581, 586 (C.D. Cal. 1998). Indeed, defendants who 17 assert fraudulent joinder carry a heavy burden of persuasion. Id. It must appear to a “near 18 certainty” that the joinder was fraudulent. Alexander v. Select Comfort Retail Corp., 2018 WL 19 6726639, at *2 & n.4 (N.D. Cal. Dec. 21, 2018) (citing Diaz, 185 F.R.D. at 586 ). Merely showing 20 that an action is “likely to be dismissed” against that defendant does not demonstrate fraudulent 21 joinder. Diaz, 185 F.R.D. at 586 ; Lieberman v. Meshkin, Mazandarani, 1996 WL 732506 , at *2 22 (N.D. Cal. Dec. 11, 1996) (“The standard is not whether plaintiffs will actually or even probably 23 prevail on the merits, but whether there is a possibility that they may do so.”). The defendant must 24 be able to show that the individuals joined in the action cannot be liable under any theory. Calero 25 v. Unisys Corp., 271 F. Supp. 2d 1172, 1176 (N.D. Cal. 2003). In resolving the issue, the court 26 must resolve all ambiguities in state law in favor of the plaintiffs. Diaz, 185 F.R.D. at 586 . [27] 1 III. DISCUSSION 2 A. Subject-Matter Jurisdiction 3 Defendant first argues that Plaintiffs’ motion to remand is untimely. Opp. at 3. A motion 4 to remand must be filed within thirty days after the filing of the notice of removal. 28 U.S.C. 5 § 1447(c). Defendant argues that Plaintiffs’ motion to remand is untimely because it is “55 days 6 [late].” Opp. at 3. Of course, if this Court determines that it is without subject-matter jurisdiction, 7 then the thirty-day timeline in 28 U.S.C. § 1447 (c) is inapplicable. See Ruhrgas AG v. Marathon 8 Oil Co., 526 U.S. 574, 583 (1999) (“[S]ubject-matter delineations must be policed by the courts on 9 their own initiative . . . .”); Fed. R. Civ. P. 12(h)(3) (“Whenever it appears . . . that the court lacks 10 jurisdiction . . . the court shall dismiss the action.”). The crux of Plaintiffs’ motion is that Cypress 11 Coast destroys diversity and thereby this Court’s jurisdiction over this case. The motion, thus, 12 hinges on subject-matter jurisdiction, which is never untimely. See Steel Co. v. Citizens for a 13 Better Env’t, 523 U.S. 83, 93 (1998); Alvarez v. TransitAmerica Servs., Inc., 2019 WL 4644909 , at 14 *2 & n.1 (N.D. Cal. Sept. 24, 2019). Accordingly, Plaintiffs’ motion to remand is not untimely. 15 B. Sham Defendant 16 Defendant argues that Cypress Coast is a sham defendant because Plaintiffs fail to state a 17 cause of action since the statute of limitations for the implied warranty claim (the fifth cause of 18 action) has expired. Opp. at 4, 9. The Song-Beverly Act does not include its own statute of 19 limitations; rather, the statute of limitations is governed by two seperate time limits. MacDonald 20 v. Ford Motor Co., 37 F. Supp. 3d 1087, 1100 (N.D. Cal. 2014). First, “[u]nder California Civil 21 Code § 1791.1(c), implied warranties exist for one year following the sale of [new] goods.” 22 Gerstle v. Am. Honda Motor Co., Inc., 2017 WL 2797810 , at *11 (N.D. Cal. June 28, 2017) 23 (alterations in original) (quoting Roberts v. Electrolux Home Prods., Inc., 2013 WL 7753579 , at 24 *5 (C.D. Cal. Mar. 4, 2013)). To state a breach of implied warranty claim, a plaintiff must allege 25 that the product was unfit or unmerchantable at the time of sale or within a year after delivery of 26 the product. Mexia v. Rinker Boat Co., 95 Cal. Rptr. 3d 285, 294 (Cal. Ct. App. 2009). After that 27 period “the warranty ceases to exist,” which means any breach of the implied warranty must have 1 occurred within one-year of purchase. Id. Second, pursuant to California Commercial Code 2 § 2725, “implied warranty claims must be brought within four years of the date when the breach 3 occurred.” Gerstle, 2017 WL 2797810 at *11. 4 Here, the alleged breach occurred “[d]uring the warranty period.” Compl. ¶ 10. Thus, the 5 first time limit is satisfied. The dispute focuses on the second inquiry—whether Plaintiffs brought 6 suit within the four-year time limit. Ford argues that the statute of limitations expired nearly two 7 years ago, on July 3, 2017, and would have the limitations period run from the date of purchase. 8 Opp. at 6. Defendant argues that because the action is time-barred, it is “obvious” that Defendant 9 Cypress Crest cannot be liable on any theory and subject-matter jurisdiction is proper. Id.; Calero, [10] 271 F. Supp. 2d at 1176 . 11 This argument, however, is contrary to applicable California law, which holds that the 12 statute of limitations begins to run once a defect is discovered, not when a product is delivered. 13 See, e.g., Mexia, 95 Cal. Rptr. 3d at 293 ; Daniel v. Ford Motor Co., 806 F.3d 1217 , 1222–23 (9th 14 Cir. 2015). Under the Song-Beverly Act, a claim for breach of the implied warranty of 15 merchantability may be based upon a defect not discoverable at the time of the sale. Ehrlich v. 16 BMW of N. Am., LLC, 801 F. Supp. 2d 908, 922 (C.D. Cal. 2010) (discussing Mexia and stating 17 “The statute of limitations for Plaintiff’s breach of implied warranty claim thus began running in 18 March 2008, when he first discovered that BMW would not repair his defective windshield”) 19 (emphasis added). Thus, contrary to Defendant’s assertion, the statute of limitations for implied 20 warranty claims does not run at tender. It runs at discovery. See, e.g., Chipley, 2018 WL 1965029 21 at *3; Audo v. Ford Motor Co., 2018 WL 3323244 , at *2 (S.D. Cal. July 6, 2018) (“California 22 Code § 1791.1(c) provides that implied warranties of merchantability last for a minimum 23 duration . . . . It follows that Plaintiffs’ implied warranty explicitly extends to future performance. 24 The Discovery Rule therefore applies . . . .” (emphasis added)). 25 Defendant contends that the discovery rule has been rejected by other courts in this 26 District. Opp. at 6 (citing Gerstle, 2017 WL 2797810 , at *12; Marcus v. Apple Inc., 2015 WL 27 151489, at *8 (N.D. Cal. Jan. 8, 2015) (“ If a warranty period on a product did not begin to toll 1 until the purchaser discovered a defect, the warranty would be useless.”); MacDonald, 37 F. Supp. 2 3d at 1100–01 (holding Ehrlich unpersuasive and concluding that the discovery rule does not 3 apply to implied warranty claims because such warranties do not “explicitly extend to future 4 performance of the goods”). While California courts have “consistently held [an implied 5 warranty] is not a warranty that ‘explicitly extends to future performance of the goods,’” see 6 Cardinal Health 301, Inc. v. Tyco Elec. Corp., 87 Cal. Rptr. 3d 5, 17 (Cal. Ct. App. 2008), they 7 also have held that the discovery rule applies to implied warranty claims. See, e.g., Mexia, 95 Cal. 8 Rptr. 3d at 291–92. 9 Moreover, “[w]hile California federal district courts have given Mexia mixed treatment, 10 we must adhere to state court decisions—not federal court decisions—as the authoritative 11 interpretation of state law.” Daniel, 806 F.3d at 1223 . Mexia accords with “the policy repeatedly 12 expressed by California courts of the need to construe the Song-Beverly Act so as to implement 13 the legislative intent to expand consumer protection and remedies.” Id. (quoting Mexia, 95 Cal. 14 Rptr. 3d at 296). Gerstle, Marcus, and MacDonald are unpersuasive; they ground their arguments 15 in other federal court precedent to show that California case-law using the discovery rule is 16 illogical. Cf. Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (holding that there is no “federal 17 general common law” for state causes of action). The Ninth Circuit rejected this approach and 18 concluded that cases like Gerstle, do not provide “convincing evidence that the California 19 Supreme Court would decide the issue in Mexia differently.” Id.; accord Diaz, 185 F.R.D. at 586 20 (noting that ambiguities in state law must be resolved in the plaintiff’s favor). Further to 21 Defendant’s disadvantage, MacDonald based its reasoning on disproving Krieger v. Nick 22 Alexander Imports, Inc., 285 Cal. Rptr. 717 (Cal. Ct. App. 1991). MacDonald barely discusses 23 Mexia. See 37 F. Supp. at 1099–1100 (mentioning Mexia but not analyzing its reasoning); see 24 also Covarrubias v. Ford Motor Co., 2019 WL 2866046 , at *3 (N.D. Cal. July 3, 2019) (using 25 Mexia only to establish that § 2725 governs Song-Beverly claims, but thereafter only discussing 26 Krieger to supports its ruling that implied warranty statute of limitations runs at tender). Krieger 27 does not discuss Mexia at all. Hence, MacDonald neither disproves Mexia’s analysis nor provides 1 convincing evidence that the California Supreme Court would decide Mexia differently. 2 Accordingly, Mexia’s finding that “rule [] § 1791.1 does not create a deadline for discovering 3 latent defects . . . must be followed.” Daniel, 806 F.3d at 1223 . 4 “The discovery rule, where applicable, postpones accrual of a cause of action until the 5 plaintiff discovers, or has reason to discover, the cause of action.” Aryeh v. Canon Bus. Sols., Inc., [6] 292 P.3d 871, 875 (Cal. 2013). The Court concludes that it is not obvious that Plaintiffs cannot 7 state a claim against Cypress Coast, because it is possible their implied warranty claim is not time8 barred under the discovery rule. From the face of the Complaint it is unclear when the alleged 9 defect was discovered. See Compl. ¶ 10 (alleging only that defect existed during warranty period, 10 but not when defect was discovered). However, “[e]ven if the allegations concerning [discovery] 11 are not sufficiently pled, Ford has not shown that Plaintiff will not be able to amend the complaint 12 to allege [that the discovery rule applies].” Cavale v. Ford Motor Co., 2018 WL 3811727 , at *3 13 (E.D. Cal. Aug. 9, 2018); Vincent v. First Republic Bank Inc., 2010 WL 1980223 , at *3 (N.D. Cal. 14 May 17, 2010) (“[E]ven if the complaint fails to state any claims against the non-diverse 15 individual defendants, defendants have not shown that plaintiff would not be able to amend the 16 complaint to allege any viable claim against the individual defendants under California law.”). 17 Accordingly, because the Court cannot conclude Plaintiffs have no possibility of ultimately stating 18 their claim for breach of the implied warranty of merchantability, Defendant has not met its 19 burden of establishing sham joinder.3 20 C. Indispensable Party 21 Federal Rule of Civil Procedure 21 allows a federal court, on just terms, to “add or drop a 22 party.” Rule 21 grants a federal district or appellate court the “discretionary power to perfect its 23 diversity jurisdiction by dropping a nondiverse party provided the nondiverse party is not 24 indispensable to the action under Rule 19.” Sams v. Beech Aircraft Corp., 625 F.2d 273, 277 (9th 25 Cir. 1980). Pursuant to Federal Rule of Civil Procedure 19, parties are indispensable if complete [26] 27 3 Because the Court holds that it is not obvious the implied warranty claim is time-barred, it does not address the other tolling arguments. 1 relief cannot be afforded without that party, if the absent party’s interests will be prejudiced, or if 2 the absent party would have an inadequate remedy if they were dismissed for nonjoinder. Fed. R. 3 Civ. Pro. 19. 4 Courts in this District have held that auto dealerships “may be necessary for adjudication 5 of state law claims, for purposes of a § 1447(e) analysis.” Watson v. Ford Motor Co., 2018 WL 6 3869563, at *4 (N.D. Cal. Aug. 15, 2018). In Sandhu v. Volvo Cars of N. Am., LLC, 2017 WL 7 403495, at *2 (N.D. Cal. Jan. 31, 2017), the plaintiff alleged “that the breach of the implied 8 warranty arises from the same vehicle, the same alleged defects in that vehicle, and the same failed 9 attempt to repair that vehicle.” The Sandhu court concluded that “[t]rying the case in separate 10 actions could lead to inconsistent findings as to the condition of the vehicle and the adequacy of 11 repairs,” and thus this factor weighed in favor of joinder. Id. 12 Here, Plaintiffs allege that the breach of implied warranty arises from the same vehicle, its 13 alleged defects, and failed attempts to repair the vehicle. Reply at 2. As in Sandhu and Watson, 14 trying the two separate cases could lead to inconsistent findings. Fed. R. Civ. P. 19(b)(1); Sabag 15 v. FCA US, LLC, 2016 WL 6581154 , at *4 (C.D. Cal. Nov. 7, 2016) (holding party necessary 16 because party was “directly related” to claims for relief and was a “direct participant” in the 17 claims). Inconsistent findings may result if Cypress Coast is dismissed and, more concerning, 18 Cypress Coast may be prejudiced by dismissal because Defendant Ford is arguing it is entitled to 19 full indemnity from Cypress Coast, and so Defendant Ford has a lesser interest in vigorously 20 defending against this action. Accordingly, contrary to Defendant’s assertion, Cypress Coast is 21 not indispensable. 22 D. Plaintiffs’ Domicile 23 “The place where a person lives is taken to be his domicile until facts adduced establish the 24 contrary; and a domicile, when acquired, is presumed to continue until it is shown to have been 25 changed.” Anderson v. Watts, 138 U.S. 694, 706 (1891); Hollinger v. Home State Mut. Ins. Co., [26] 564 F.3d 564, 571 (5th Cir. 2011) (“Evidence of a person’s place of residence, however, is prima 27 facie proof of his domicile.”). 1 Plaintiffs contend that pursuant to Metropoulos v. BMW of N, Am., LLC, 2017 WL 564205 , 2 at *1 (C.D. Cal. Feb. 9, 2017), Defendant has not adequately proven Plaintiffs are California 3 Citizens. Reply at 9. In Metropoulos, the court held that a Complaint stating where a plaintiff 4 resides does not establish the plaintiff's domicile. Metropoulos, 2017 WL 564205 , at *1. This is 5 contrary to longstanding precedent which presumes that a person’s “current residence is also his 6 domicile.” 13E WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 3612 & n.28 (3d ed. 7 2013) (collecting cases). Accordingly, the Court holds that Plaintiff’ citizenship has been 8 adequately proven. See Compl. § 2 (“Plaintiffs are residents of Alameda County, California); see 9 also supra n.1 (noting that the discussion regarding Cypress Coast depends on Plaintiffs’ being 10 California citizens). 11 IV. CONCLUSION‘ 12 Because Cypress Coast is an indispensable and non-sham defendant, this Court lacks 13 subject-matter jurisdiction and must remand the action pursuant to 28 U.S.C. § 1447 (c). S 14 || Accordingly, this Court GRANTS Plaintiffs’ motion to remand. The Clerk is DIRECTED to 3 15 REMAND this case to the Santa Clara County Superior Court and close the file. 16 IT IS SO ORDERED. 5 17. || Dated: November 25, 2019 3 18 aD. EDWARD J. DAVILA 19 United States District Judge [26] 27 “ The Court does not address Plaintiffs’ amount in controversy arguments as it holds there is not complete diversity between the parties, thus mooting the amount in controversy analysis. 28 || Case No.: 5:19-cv-02495-EJD ORDER GRANTING PLAINTIFFS’ MOTION TO REMAND