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CROSS-COUNTY BANK v. KLUSSMAN

May 3, 2004.

CROSS-COUNTY BANK, a Delaware Corporation, and APPLIED CARD SYSTEMS, INC., a Delaware corporation, Petitioners,
v.
DANA KLUSSMAN, an individual, Respondent



The opinion of the court was delivered by: SAMUEL CONTI, Senior District Judge

ORDER DISMISSING CASE

As a notice of correction, this Court enters the following Order: Case C-01-4190 is HEREBY DISMISSED pursuant to this Court's Order remanding to state court related case C-01-4228.

IT IS SO ORDERED. [EDITORS' NOTE: THIS PAGE CONTAINED CERTIFICATE OF SERVICE.] ORDER RE: RESPONDENT'S MOTION TO DISMISS FOR LACK OF FEDERAL JURISDICTION
I. INTRODUCTION

  Presently before the Court are Respondent Dana Klussman's ("Respondent," "Plaintiff" or "Klussman") Motion to Dismiss for lack of federal jurisdiction and Cross County Bank's ("CCB") and Applied Card System, Inc.'s ("ACS") (collectively "Petitioners" or "Defendants") Petition to Compel Arbitration. For the reasons set forth below, this Court hereby: (1) declines to address the arbitration issue raised in the motion filed by CCB and ACS, (2) dismisses the action commenced by CCB and ACS against Dana Klussman, and (3) remands Dana Klussman's action against CCB, ACS, et al. to the Superior Court of the State of California, Alameda County, for lack of federal subject matter jurisdiction. II. BACKGROUND

  On October 9, 2001, Dana Klussman, on behalf of herself and all others similarly situated, filed a class action against CCB, ACS, and others in the Superior Court for the State of California, Alameda County. (Klussman v. Cross County Bank et. al., Case No. 2001-02668). In her original complaint, Plaintiff set forth seven causes of action which all sounded in state law. Plaintiff's claims all related to interactions that Klussman and other class members had with the Defendants in connection with credit cards issued to them by CCB.

  On November 9, 2001, pursuant to the Federal Arbitration Act, 9 U.S.C. § 4, CCB and ACS filed a Petition to Compel Arbitration in this Court in an action styled Cross County Bank et al. v. Dana Klussman. In their Petition Defendants argue that an arbitration provision in the agreements between Plaintiff and Defendants obligate Plaintiff to submit to binding arbitration for resolution of Plaintiff's underlying claims.

  On November 13, 2001, CCB and ACS filed a Notice of Removal, pursuant to which Klussman's state court action was removed to this Court. CCB and ACS asserted that this Court had subject matter jurisdiction because Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 ("DIDA"), 12 U.S.C. § 1831d, completely preempts Klussman's state law claims. The removed action was related to the Petition filed by CCB and ACS, and on May 15, 2002 this Court heard Petitioner's Motion to Compel Arbitration and Klussman's motions to dismiss the action against her and remand her complaint back to state court. In its May 15, 2002 Order this Court (1) declined to address the arbitration issue raised in the motion filed by CCB and ACS, (2) dismissed the action commenced by CCB and ACS against Dana Klussman, and (3) remanded Dana Klussman's action against CCB, ACS, et al. to the Superior Court of the State of California, Alameda County, for lack of subject matter jurisdiction.

  On September 8, 2003, the Ninth Circuit vacated this Court's Order in light of the United States Supreme Court's decision in Beneficial Nat'l Bank v. Anderson, 123 S.Ct. 2058 (2003). See Cross Country Bank v. Klussman, 74 Fed.Appx. 796, 2003 WL 22088801 (9th Cir. Sept. 8, 2003). The Ninth Circuit remanded the case to this Court to decide whether the allegations in Klussman's complaint are completely preempted under the reasoning in

 Anderson:
While it appears that the rationale of the Supreme Court's decision in Anderson would extend to usury claims against state chartered, federally insured banks such as CCB, we do not decide this question. Instead, we remand to the district court for it to consider and decide, in the first instance, whether and the extent to which any of these allegations are preempted under Anderson and applicable law, providing a basis for federal jurisdiction. The district court is also instructed to consider the impact, if any, of federal regulations, such as 12 C.F.R. § 7.4001(a), on the issue of whether the charges at issue in the complaint constitute "interest" or are otherwise of a nature as to require preemption of state law challenges. 78 Fed.Appx. at 797-98, 2003 WL 22088801, at *1.
  Consequently, this Court is again asked to decide whether the allegations in Klussman's complaint are completely preempted so as to confer original subject matter jurisdiction on this Court and provide a basis for Defendant's removal of Klussman's state court action.*fn1 Defendants argue that Klussman's allegations amount essentially to a claim for usury and thus are completely preempted according to the rationale of the Supreme Court's decision in Anderson. Plaintiff adamantly argues that she has not asserted any usury claims against Defendants, and thus the case was improperly removed because there is no federal subject matter jurisdiction over this action. Plaintiff completely disavows any interpretation of her complaint which would include a claim alleging that she had been charged a rate of interest which is usurious under state law. Having read Plaintiff's complaint and the papers submitted in connection with this motion and for the reasons articulated below, the Court Hereby Grants Plaintiff's motion to dismiss for lack of federal subject matter jurisdiction and Hereby Remands this action to the Superior Court of the State of California, Alameda County, for lack of subject matter jurisdiction.

 III. LEGAL STANDARD

  A. Removal Jurisdiction

  Federal courts have limited subject matter jurisdiction. A suit filed in state court may be removed to federal court only if the federal court would have had original subject matter jurisdiction over the suit. 28 U.S.C. § 1441(a); Caterpillar. Inc. v. Williams, 482 U.S. 386 (1987). Remand to state court may be ordered for lack of subject matter jurisdiction under 28 U.S.C. § 1447(c)). Ordinarily, "jurisdiction must be analyzed on the basis of the pleadings filed at the time of the removal without reference to subsequent amendments". Sparta Surgical Corp. v. Nat'l Ass'n of Secs. Dealers. Inc., 159 F.3d 1209, 1213 (9th Cir. 1998). A plaintiff may not compel remand under 28 U.S.C. § 1441(b) by amending a complaint to eliminate the federal question on which the notice of removal was based. Id.

  Out of respect for the independence of state courts, and in order to control the federal docket, the removal statute is narrowly construed and the court must reject jurisdiction if there is any doubt as to whether removal was proper. Duncan v. Steutzle, 76 F.3d 1480, 1485 (9th Cir. 1996); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Moreover, the burden of establishing federal jurisdiction is on the party seeking removal. Duncan, 76 F.3d at 1485. When the removal of an action to federal court is contested, "the burden falls squarely upon the removing party to establish its right to a federal forum by `competent proof'." R.G. Barry Corp. v. Mushroom Makers. Inc., 61 ...


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