The opinion of the court was delivered by: GONZALEZ
ORDER GRANTING PLAINTIFFS' MOTION TO REMAND
On April 2, 1998, plaintiffs filed a class action lawsuit in San Diego Superior Court against defendant tobacco companies based on a single claim of unfair and deceptive business practices under Cal. Bus. & Prof. Code § 17200 et seq..
In the complaint, plaintiffs allege that (a) defendants' advertising practices are deceptive because they fail to warn consumers of the addictive nature of tobacco; (b) as a result of these deceptive practices, plaintiffs have become addicted to cigarettes; and, (c) this addiction has cost the plaintiffs thousands of dollars each in cigarette purchases. This lawsuit is an effort to recoup those expenditures.
In their prayer for relief, plaintiffs request (a) restitution; (b) an injunction to prohibit defendants from engaging in deceptive advertising; (c) costs of the suit; and, (d) attorney's fees.
On May 4, 1998, defendants filed a notice of removal under 28 U.S.C. § 1441. In their notice, defendants noted that this Court has jurisdiction over the case based on diversity jurisdiction. Defendants contend there is complete diversity between the parties and the amount in controversy requirement is satisfied because "the Complaint alleges substantial restitution damages and also seeks equitable relief and attorney's fees." Removal Notice, P 6. On June 3, 1998, plaintiffs filed the instant motion to remand. In their moving papers, plaintiffs contend that (a) to defeat a remand, defendants must establish that each plaintiffs individual claim exceeds the jurisdictional amount and (b) defendants cannot satisfy this burden. In opposition, defendants argue that (a) they do not have to establish that each class member's claim meets the amount-in-controversy requirement and (b) assuming arguendo they have such an obligation, they meet it in this case.
A. Standard for Motion to Remand
A federal court may exercise removal jurisdiction over a case only if jurisdiction existed over the suit as originally brought by the plaintiff. 28 U.S.C. § 1441(a). A strong presumption exists against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Accordingly, when there is a doubt as to removeability, it is resolved in favor of remanding the case to state court. Id. The removing party bears the burden of establishing that federal subject matter jurisdiction exists. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). In order to establish removal jurisdiction over a diversity action, the removing defendants must establish compliance with 28 U.S.C. § 1332(a), which provides for diversity jurisdiction where (a) the amount in controversy exceeds $ 75,000.00 and (b) the suit is between citizens of different states. Where the complaint does not allege a specific amount of damages, the removing defendants must prove, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional minimum. Sanchez v. Monumental Life Ins. Co., 95 F.3d 856, 862 (9th Cir. 1996).
1. Does the $ 75,000 Requirement Apply to Each Member of the Class?
Before reviewing defendants' evidence that the amount in controversy requirement is satisfied in the instant case, the Court must first determine whether defendants must prove that each class member's claims comply with the $ 75,000 requirement. In Zahn v. International Paper Co., 414 U.S. 291, 301, 38 L. Ed. 2d 511, 94 S. Ct. 505 (1973), the Supreme Court held that, in a class action, each class member's claims must independently satisfy the amount in controversy requirement to establish diversity jurisdiction.
Therefore, under Zahn, defendants must demonstrate that each class member's claim exceeds the $ 75,000 requirement. Otherwise, in the absence of such a showing, the Court would not have jurisdiction over the class and the case would have to be remanded. In 1990, however, Congress passed the Judicial Improvements Act which amended 28 U.S.C. § 1367 to create "supplemental" jurisdiction out of pendent and ancillary jurisdiction.
As a result of these modifications, which provide district courts with supplemental jurisdiction "over all other claims that are so related to claims in the action [for which the court has] original jurisdiction that they form part of the same case or controversy," it remains uncertain whether Zahn is still good law. 28 U.S.C. § 1367(a).
Defendants argue that the amendments to § 1367 effectively overrule Zahn because, under § 1367, if defendants establish that the claims of some class members satisfy the $ 75,000 requirement, then the Court can assert supplemental jurisdiction over the claims of any remaining class members that do not meet the amount in controversy requirement. To support that assertion, defendants cite to In re Abbott Laboratories, 51 F.3d 524 (5th Cir. 1995) and Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir. 1996). In Abbott, the Fifth Circuit squarely addressed the issue of whether the 1990 revisions to § 1367 effectively overruled Zahn and found that they did; the Abbott Court held that a court may properly assert supplemental jurisdiction over the claims of class members which did not independently satisfy the amount in controversy requirement. In finding that Zahn did not survive the revisions to § 1367, the Abbott Court indicated that the statute was unambiguous on its face and, therefore, it was unnecessary to examine the legislative history to ascertain the statute's meaning. Abbott, 51 F.3d at 528. In particular, the Court noted that § 1367(a) provided for the existence of supplemental jurisdiction subject to certain exceptions set forth in § 1367(b). Id. at 528-29. The Abbott Court reasoned that the absence of class actions in the list of enumerated exceptions to supplemental jurisdiction (§ 1367(b)) necessarily meant that class actions were subject to district courts' supplemental jurisdiction and, therefore, compliance with the amount in controversy requirement for all class members was unnecessary so long as some class members satisfied the requirement. Id. In Stromberg, the Seventh Circuit adopted the reasoning of Abbott. Stromberg, 77 F.3d at 930.
Against the backdrop of these two cases, plaintiffs underscore the fact that all of the district courts in the Ninth Circuit to consider the issue have (a) distinguished Abbott and Stomberg ; (b) found that Zahn survived the amendments to § 1367;
and, therefore, (c) required that the claims of each class member individually satisfy the amount in controversy requirement. See Snider v. Stimson Lumber Co., 914 F. Supp. 388 (E.D. Cal. 1996) (distinguishing Abbott); Tortola Restaurants, L.P. v. Kimberly Clark Corp., 987 F. Supp. 1186 (N.D. Cal. 1997); Borgeson v. Archer-Daniels Midland Co., 909 F. Supp. 709, 716 (C.D. Cal. 1995); Haisch v. Allstate Ins. Co., 942 F. Supp. 1245, 1248 (D. Ariz. 1996).
The principal criticism directed at the Abbott decision is that the Fifth Circuit made an erroneous determination that (a) the statute was clear and unambiguous on its face and (b) it was therefore unnecessary to refer to the legislative history. For example, in Borgeson v. Archer-Daniels Midland Co., 909 F. Supp. 709, 716 (C.D. Cal. 1995), the Court highlighted the ambiguity of the statute by providing an alternative to the analysis set forth in Abbott. The Court stated:
It is evident that the plain language of subsection (a) is entirely consistent with Zahn. Through the incorporation of the language "or as expressly provided otherwise by federal statute," Congress specifically included as an exception to § 1367(a) any other federal statute ...