moves to remand the case back to the Superior Court of the County of
Alameda. For the reasons set forth hereinafter, the motion is granted.
The following summary of the facts of this case is taken from the
allegations in plaintiffs complaint filed in the Superior Court.
The VA Program permits eligible veterans of the United States Armed
Forces to purchase homes with mortgages backed by the federal
government. (Id. ¶ 2.) State and federal law limit the type and
amount of fees and costs that a lender may charge a veteran participating
in the VA Program. (Id. ¶ 4.) Mortera alleges that North American
violates the law by charging veterans excess fees for loans originated by
mortgage brokers. (Id. ¶ 5.)
Mortera, suing on of behalf of the general public as a private attorney
general as defined in § 17204 of the California Business and
Professions Code (id. ¶ 11), does not herself claim to be a veteran
or otherwise eligible for the VA Program, nor does she allege to have
been personally injured by North American's allegedly illegal loan
practices. Her single cause of action pleads a violation of California's
Unfair Competition Act, § 17200 et seq. of the California Business
and Professions Code (id. ¶¶ 35-39). She seeks injunctive and
declaratory relief to stop North American From engaging in the allegedly
unlawful Business practices, restitution of the loan fees, and attorney's
fees and costs.
If at any time before final judgment it appears that the district court
lacks subject matter jurisdiction over a case that has been removed to
federal court, the case shall be remanded. 28 U.S.C. § 1447 (c). "We
strictly construe removal statute against removal jurisdiction." Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). This strong
presumption against removal jurisdiction means that the defendant always
has the burden of proving that removal is proper. Id.
Here, Mortera makes three independent arguments in support of her
motion to remand. First, she argues that remand is required because her
lack of Article III standing deprives this Court of original
jurisdiction. Second, she argues that this Court lacks diversity
jurisdiction because the amount in controversy requirement is not met in
this case. Third, she argues that there is no federal question
jurisdiction because her claim arises under California law. Because it is
clear that Mortera lacks standing to bring this case in federal court, it
is unnecessary to reach her remaining arguments.
The jurisdiction of federal courts is defined and limited by Article
III of the Constitution. Flast v. Cohen, 392 U.S. 83, 94, 88 S.Ct. 1942,
20 L.Ed.2d 947 (1968). Standing "is an essential and unchanging part of
the case-or-controversy requirement of Article III." Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
The Supreme Court has established that parties seeking to invoke federal
jurisdiction must establish (1) personal injury or threat of injury; (2)
that the injury can be fairly traced to the action challenged; and (3)
that the injury is likely to be addressed by the requested relief. Id. at
561, 112 S.Ct. 2130.
In this case, Mortera does not allege that she suffered any injury as a
result of North American's allegedly unfair and illegal loan practices.
brings her claim on behalf of the public as a private attorney general
under California's Unfair Competition Act (the "UCA"), Business &
Professions Code § 17200 et seq. The UCA provides that an action
challenging wrongful business conduct may be brought "by any person
acting for the interests of itself, its members or the general public."
Id. § 17204. The California Supreme Court has held that a person
suing under the UCA does not have to prove that he or she was directly
injured by the defendant's wrongful business practice. Stop Youth
Addiction, Inc. v. Lucky Stores, Inc., 17 Cal.4th 553, 561,
71 Cal.Rptr.2d 731, 736, 950 P.2d 1086 (1998) ("`[A] private plaintiff
who has himself suffered no injury at all may sue to obtain relief for
others.'") (quoting Cal. Bus. & Prof.Code § 17204). Thus, a plaintiff
can sue in California courts under the UCA even though he or she has
suffered no injury in fact and would not have standing to sue in federal
A number of federal courts have remanded private attorney general
actions under the UCA due to lack of standing. In Toxic Injuries Corp.
v. Safety-Kleen Corp., 57 F. Supp.2d 947 (C.D.Cal. 1999), the court held
that plaintiff did not have standing because it alleged only generalized
injuries as a result of exposure to defendant's chemicals, not that
plaintiff or any of its directors suffered individual injuries.
Similarly, in Levy v. Dial Corp., 1997 WL 588925 (N.D.Cal. 1997), the
court remanded a UCA case involving misleading product packaging where
the complaint did not allege that the plaintiff ever bought the product
or was personally misled. The court in As You Sow v. Sherwin-Williams
Co., 1993 WL 560086 (N.D.Cal. 1993), held that "[plaintiffs] state
created statutory right to act as a private attorney general does not
confer "injury' on [plaintiff] sufficient to satisfy federal standing
requirements." Id. at *2. The As You Sow court cited Mangini v. R.J.
Reynolds Tobacco Co., 793 F. Supp. 925 (N.D.Cal. 1992), for the
proposition that a state cannot "by way of a state created right, confer
injury in the Art. III sense where none would otherwise exist." Id. at
929 (footnote omitted).
The cases cited are not controlling on this Court, but their reasoning
is convincing. North American argues, however, that these cases are no
longer viable in light of a recent Supreme Court case, Vermont Agency of
Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct.
1858, 146 L.Ed.2d 836 (2000). In Vermont Agency, the Court held that a
plaintiff who brought an action under the False Claims Act ("FCA"),
31 U.S.C. § 3729-3733, had standing to sue in federal court. Under
the FCA, a private person (the "relator") may bring a qui tam civil
action "in the name of the Government" [id. § 3730(b)(1)] against
"[a]ny person" who "knowingly presents . . . to . . . the United States
Government . . . a false or fraudulent claim for payment[.]" Id. §
3729(a). The relator receives a share of the proceeds from the action
(id. § 3730(d)), often referred to as the "bounty." See Vermont
Agency, 529 U.S. at 773, 120 S.Ct. 1858.
The Court held that the relator in a qui tam suit under the FCA has a
"concrete private interest in the outcome of [the] suit" by virtue of his
right to a portion of the recovery. Id. at 772, 120 S.Ct. 1858 (quoting
Lujan, 504 U.S. at 573, 112 S.Ct. 2130). The Court noted that a mere
interest in the outcome is not enough to confer standing; rather, "[t]he
interest must consist of obtaining compensation for, or pre. venting, the
violation of a legally protected right." Id. at 772-73, 120 S.Ct. 1858.
In other words, the interest must relate to injury in fact. Id. The Court
did state that "adequate basis for the relator's suit for his bounty is
to be found in the
doctrine that the assignee of a claim has standing to assert the injury
in fact suffered by the assignor." Id. at 773, 120 S.Ct. 1858. The
relator, because he has a right to a portion of the recovery, "is, in
effect, suing as a partial assignee of the United States" and,
therefore, has standing. Id. at 774 n. 4, 120 S.Ct. 1858.
North American contends that the Vermont Agency analysis of standing
under the federal FCA applies equally to private attorney general claims
under California's UCA. In fact, Vermont Agency is easily distinguishable
from the case at bar. As noted above, the Court's holding in Vermont
Agency turned entirely on the fact that the FCA gives the qui tam relator
a right to a portion of the recovery. Mortera, in contrast, seeks no
bounty and is entitled to none under the UCA. Mortera seeks, on behalf of
the public, declaratory and injunctive relief, and a disgorgement of the
allegedly illegal fees collected by North American. For herself, Mortera
requests only attorney's fees and costs, which do not constitute a
"bounty." See Vermont Agency, 529 U.S. at 773, 120 S.Ct. 1858 (quoting
Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 107, 118
S.Ct. 1003, 140 L.Ed.2d 210 (1998) ("[A] plaintiff cannot achieve
standing to litigate a substantive issue by bringing suit for the cost of
bringing suit.")); Diamond v. Charles, 476 U.S. 54, 69-71, 106 S.Ct.
1697, 90 L.Ed.2d 48 (1986) (holding that assessment of attorney's fees
does not confer standing to pursue the action on appeal). Thus, Mortera
does not have the kind of concrete private interest in the litigation
that conferred standing on the plaintiff in Vermont Agency.
The Ninth Circuit recently (post-Vermont Agency) reached a similar
conclusion in Lee v. American National Insurance Co., 260 F.3d 997,
1001-002 (9th Cir. 2001) (citations omitted):
We agree with the consensus view of the parties and
the district court that Lee cannot proceed with his
claims against ANTEX in federal court. Lee's action
against ANTEX stems from his right under California
law to challenge the company's allegedly unfair
business practices as a private attorney general even
if he suffered no individualized injury as a result of
the defendant's challenged conduct. Article III of the
Constitution, however, limits the jurisdiction of the
federal courts to "cases and controversies," a
restriction that has been held to require a plaintiff
to show, inter alia, that he has actually been injured
by the defendant's, challenged conduct. So a plaintiff
whose cause of action is perfectly viable in state
court under state law may nonetheless be foreclosed
from litigating the same cause of action in federal
court, if he cannot demonstrate the requisite injury.
And Lee cannot, because he did not buy any policy from
ANTEX and so did not suffer any injury due to ANTEX's
North American argues that this statement in Lee is merely dicta, and
that it is inconsistent with Vermont Agency. As discussed above,
however, Vermont Agency does not compel the conclusion that plaintiffs
suing' as private attorney generals under the UCA have Article III
standing. As for whether this portion of the opinion is dicta, even
conceding that it is not strictly necessary to the holding in Lee, the
court's argument is carefully considered and well-reasoned.
As Lee and the other cases cited make clear, Mortera has not alleged
injury in fact sufficient to meet the standing requirements of Article
III. This Court, therefore, does not have subject matter jurisdiction
over this case. Accordingly, Mortera's motion to remand is granted.
Mortera also requests an award of "costs incurred litigating the
removal, including attorney's fees, in the amount of $6,625. Section
1447(c) of Title 28, United States Code, provides that "[a]n order remanding
the case may require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of the removal." Costs may
be awarded for an improper removal even absent at finding of bad faith.
Moore v. Permanents Med. Group Inc., 981 F.2d 443, 446 (9th Cir. 1992).
The award of fees is within the discretion of the district court. Id.
This, Court, in the exercise of its discretion, declines to award costs
and attorney's fees to Mortera. Although Mortera's counsel has
undoubtedly invested significant time in bringing this motion to remand,
North America's removal was not so obviously unfounded as to warrant an
award. North America's arguments were ultimately unpersuasive, but they
were not frivolous. Therefore, Mortera's request for an award of costs
and expenses, including attorney's fees, incurred due to removal is
IT IS HEREBY ORDERED, that:
1. Plaintiffs motion to remand is GRANTED, and this action is remanded
forthwith to the Superior Court for the County of Alameda.
2. Plaintiffs request for an award of costs and expenses, including
attorney's fees, is DENIED.
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