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Waters v. Advent Product Development

June 26, 2008

MATTHEW WATERS, INDIVIDUALLY AND ON BEHALF OF OTHER MEMBERS OF THE GENERAL PUBLIC SIMILARLY SITUATED, PLAINTIFF,
v.
ADVENT PRODUCT DEVELOPMENT, INC., A SOUTH CAROLINA CORPORATION, DENISE THURLOW, ALPHONSO EILAND, AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER DENYING MOTION TO REMAND, DENYING AS MOOT MOTION TO AMEND NOTICE OF REMOVAL, AND DENYING MOTION TO DISMISS

Plaintiff Matthew Waters ("Plaintiff") has filed a motion to remand this action to state court. Defendants Advent Product Development, Inc. ("Advent"), Denise Thurlow ("Thurlow"), and Alphonso Eiland ("Eiland") (collectively "Defendants"), have filed a motion for leave to file an amended notice of removal and a motion to dismiss. For the reasons discussed below, Plaintiff's motion is DENIED, Defendants' motion for leave to file an amended notice of removal is DENIED AS MOOT, and Defendants' motion to dismiss is DENIED.

I. BACKGROUND

Plaintiff commenced this action in the Superior Court of the State of California, County of San Diego. According to Plaintiff's Complaint, in or about April 2006, Plaintiff responded to a radio advertisement in which Advent offered assistance to prospective inventors with respect to obtaining legal protection for their inventions and marketing the inventions once legal protection had been obtained. (Compl. ¶ 20.) Plaintiff met with Thurlow and Eiland, representatives of Advent. (Comp. ¶ 21.) At this initial meeting, Thurlow and Eiland told Plaintiff that his proposed invention had a great chance of success. (Compl. ¶ 22.) Thurlow and Eiland informed Defendant that Advent's standard procedure was that the parties would enter into a "Phase I" contract, in which an initial patent search was performed and a legal opinion would be provided regarding whether the patent search showed that the proposed invention was or was not covered by an existing patent. (Compl. ¶ 23.) If the patent search indicated that there was a good chance that a patent could be obtained for the proposed invention, the parties could enter into a "Phase II" contract, under which further services, including a patent application and marketing of the proposed product, would be performed. (Compl. ¶ 23.)

Plaintiff signed the "Phase I" contract and provided a sum of $1,190.00 to Defendants. (Compl. ¶ 24.) In or about May 2006, Plaintiff received a "Legal Protection Report" from Defendants. (Id.) The "Legal Protection Report" recommended that Plaintiff proceed further and file a patent application. (Id.) Relying on the "Legal Protection Report," Plaintiff entered into the "Phase II" contract, which required Plaintiff to provide Defendants with a sum total of $9,240.00. (Compl. ¶ 25.) Plaintiff began to make the required payments. (Id.)

In or about April, 2007, after becoming frustrated with the lack of performance on Defendants' part, Plaintiff investigated the accuracy of the "Legal Protection Report," and discovered that the report was incomplete, deficient, and erroneous. (Compl. ¶ 27.) Specifically, Plaintiff found that at least four separate patents were so closely related to Plaintiff's idea that patent protection could not have been obtained. (Id.) Plaintiff discovered the four patents within one hour of starting his informal investigation. (Id.)

Plaintiff is informed and believes that Defendants failed to disclose the existence of the four patents in a blatant attempt to induce Plaintiff to enter into the "Phase II" contract and pay the required fee. (Compl. ¶ 28.) Plaintiff brings this action on behalf of himself and a purported class of approximately 800 individuals who are current and/or former customers of Defendants. (Compl. ¶¶ 11-19.)

Plaintiff asserts claims for (1) violation of the California Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750, et seq.; (2) violation of Cal. Bus. & Prof. Code §§ 17200, 22373, 22374, 22379, 22380; and (3) fraud. On the CLRA claim, Plaintiff seeks the following damages: actual damages; an order enjoining the illegal methods, acts, and practices; restitution; and for each "senior citizen" and "disabled person," an additional $5,000 under Civil Code § 1780 (b). On the second cause of action, Plaintiff seeks $3,000 or treble the actual damages per class member pursuant to Bus & Prof. Code § 22386. Plaintiff also seeks a permanent injunction on behalf of the § 17200 claimants. In addition, Plaintiff seeks an award of attorney's fee and costs and punitive and exemplary damages where permissible.

On October 31, 2007, Defendants removed this action to federal court. Defendants removed the action on the ground that the Court had original jurisdiction pursuant to 28 U.S.C. § 1332(d)(2), because the Complaint purports to be a class action, there is diversity of citizenship under the Class Action Fairness Act of 2005 ("CAFA"), and the aggregate amount in controversy exceeds the sum or value of $5,000,000.00, exclusive of interest and costs.

II. DISCUSSION

A. Motion to Remand & Motion For Leave to File Amended Notice of Removal

Plaintiff seeks to remand this action on a variety of grounds. As discussed below, the Court finds that none of these grounds has merit.

1. California Corporations Code

Plaintiff argues that Advent has failed to obtain a valid certificate from the Secretary of State and is therefore bound to the jurisdiction of the State of California. Plaintiff relies on Cal. Corp. Code § 2203(a), which provides:

Any foreign corporation which transacts intrastate business and which does not hold a valid certificate from the Secretary of State may be subject to a penalty of twenty dollars ($20) for each day that unauthorized intrastate business is transacted; and the foreign corporation, by transacting unauthorized intrastate business, shall be deemed to consent to the jurisdiction of the courts of California in any civil action arising in this state in which the corporation is named a party defendant.

However, nothing in section 2203(a) limits a defendant corporation's right to remove an action to federal court. Even if Advent may be deemed to have consented to the jurisdiction of the California courts, Advent did not waive its right to remove the action by any failure to procure a certificate from the Secretary of State.

2. Procedural Defects

Plaintiff argues that the Notice of Removal was defective because it failed to establish the out-of-state citizenship of the individual defendants and failed to attach all of the required documents. This argument lacks merit.

Defendants removed this action pursuant to 28 U.S.C. § 1132(d)(2)(A), which provides:

The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which --

(A) any member of a class of plaintiff is a citizen of a State different from any defendant;

(B) any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or

(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.

The Notice of Removal alleged that Advent is a corporation organized and existing under the laws of the State of South Carolina with its principal place of business in South Carolina. Plaintiff admittedly is a citizen of California. Therefore, diversity of citizenship exists for purposes of section 1132(d)(2)(A).

The fact that the Notice of Removal stated where Eiland and Thurlow reside but failed to state their citizenship is of no consequence to the determination of jurisdiction. Nonetheless, Defendants have clarified that Thurlow is domiciled in and is a citizen of South Carolina and Eiland is domiciled in and is a citizen of California. (Thurlow Decl. ¶ 2; Eiland Decl. ¶ 2.) The Court will treat this additional information as an amendment to the Notice of Removal. See Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n. 1 (9th Cir. 2002) (explaining that it was proper for the district court to construe an opposition to a motion to remand, which explained that the amount in controversy was based on a settlement demand, as an amendment to the notice of removal). Therefore, Defendants' motion to amend the notice of removal to identify the citizenship of Thurlow and Eiland is denied as moot.

Plaintiff also argues that the Notice of Removal was defective because it failed to attach a copy of the civil case cover sheet, a copy of the state court summons, a copy of the return of service, and an alternate dispute resolution packet. However, the Notice of Removal actually did attach copies of the civil case cover sheet, the summons, and the alternative dispute resolution packet. The Notice of Removal did not attach the return of service. However, even assuming that the return of service was served on Defendants and should have been filed, this oversight is insignificant and does not mandate the remand of this action. See, e.g., Cavanaugh v. Unisource Worldline, Inc., ...


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