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MB Service Station, LLC v. ConocoPhillips Co.

October 28, 2009



Plaintiff MB Service Station, LLC brought this action in state court against defendant ConocoPhillips Company alleging violations of the California Franchise Act, Cal. Corp. Code §§ 31101, 31201, and 31202, and California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210 and asking for damages, declaratory relief, and injunctive relief. Defendant subsequently removed this action to this court. Before the court is plaintiff's motion to remand the action to state court.

I. Factual and Procedural Background

Plaintiff operates a Union 76 gasoline station at 35550 Fremont Boulevard, in Fremont, California,*fn1 which is leased from defendant. (Notice of Removal, Ex. A ¶¶ 1, 10.) Plaintiff was in a franchise relationship with defendant and operated the station as a franchisee pursuant to a "76 Dealer Station Lease and Motor Fuel Supply Agreement" ("Franchise Agreement"). (Id. ¶ 11.) The most recent agreement became effective on May 1, 2008, and is to expire on April 30, 2011. (Singh Declaration ("Singh Dec.") ¶ 4.) In the agreement, plaintiff's rent was initially set at $5,848 per month. (Id. ¶ 5.) As part of the agreement, plaintiff also had to accept credit and debit cards at his station and pay transaction fees and charges. (Bonilla Declaration ("Bonilla Dec.") Ex. B 5-6.) From May 1, 2008, to July 31, 2009, plaintiff allegedly paid $73,795 in credit and debit card fees to defendant. (Curtis Declaration ("Curtis Dec.") ¶ 2, Ex. A.) Plaintiff claims that such fees are excessive, and that portions of these fees are being kept by defendant as a "kickback" from credit and debit card companies. (Reply 6:3-28, 7:1-17.)

On March 30, 2009, defendant sent a letter to plaintiff indicating that the rent amount would increase by $1,049 a month to $6,987, effective July 1, 2009. (Id. ¶ 6, Ex. C.) Defendant claims that this rent increase was part of its "Rent Policy," which plaintiff was subject to. (Eldredge Declaration ("Eldredge Dec.") Ex. A ¶ 11.) Under the Rent Policy rent at defendant's west coast gasoline stations was to increase gradually until 2013, to maximize defendant's rate of return on its property. (Id. at ¶¶ 10-11.) Under the plan the rent would be increased beginning July 1, 2009, to include maintenance and property taxes. (Id. at ¶ 11.) Starting on the anniversary of the previous dealer agreements in 2010, rent would be increased by a set increment each year, so that rent would ultimately reach nine percent of the appraised market value of the underlying property plus maintenance and property tax costs by 2013.*fn2 (Id.)

On May 15, 2009, plaintiff filed this action in Yolo County Superior Court. (Docket No. 1.) Plaintiff alleged that defendant's rent modifications and credit card service fee charges violated the California Franchise Act and UCL, and requested declaratory and injunctive relief, as well as damages and restitution. (Notice of Removal, Ex. A 7-9.) On July 7, 2009, defendant filed a notice of removal, based upon diversity jurisdiction pursuant to 28 U.S.C. § 1441(b). (Id. 2:19-21.) Defendant filed the instant motion to remand on August 8, 2009, arguing that its action falls below the amount in controversy requirement of $75,000, making subject matter jurisdiction on the basis of diversity of citizenship improper.*fn3 (Docket No. 17.)

II. Discussion

"Under 28 U.S.C. § 1441, a defendant may remove an action filed in state court to federal court if the federal court would have original subject matter jurisdiction over the action." Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1243 (9th Cir. 2009). A district court will have original jurisdiction based on diversity when the amount in controversy is greater than $75,000 and there is complete diversity between the parties--i.e., the parties are "citizens of different states."

28 U.S.C. § 1332(a). When a plaintiff moves to remand a case, the defendant bears the burden of establishing that removal was proper. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Any questions regarding the propriety of removal are resolved in favor of the party moving for remand. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). If removal was improper, "the district court lack[s] subject matter jurisdiction, and the action should [be] remanded to the state court." Toumajian v. Frailey, 135 F.3d 648, 653 (9th Cir. 1998) (citing 28 U.S.C. § 1447(c)).

A. Amount in Controversy

The parties concede that they are completely diverse-- the only question in this case is whether defendant has met the amount in controversy requirement. Jurisdictional facts are assessed on the basis of plaintiff's complaint at the time of removal. 28 U.S.C. § 1441. "In cases where a plaintiff's state court complaint does not specify a particular amount of damages, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds $[75,000]." Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). "The district court determines whether [a] defendant has met this burden by first considering whether it is 'facially apparent' from the complaint that the jurisdictional amount has been satisfied." Simmons v. PCR Tech., 209 F.Supp.2d 1029, 1031 (N.D. Cal. 2002)(citing Singer v. State Farm Mut. Auto Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)).

In determining whether defendant has met this test, courts may consider "facts presented in the removal petition as well as any summary-judgment-type evidence relevant to the amount in controversy at the time of removal." Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090-1091 (9th Cir. 2003)(citing Singer, 116 F.3d at 377; Gaus, 980 F.2d at 567). In the Ninth Circuit, the amount in controversy in suits other than class actions can be calculated from the defendant's viewpoint (the amount the defendant stands to lose) or the plaintiff's viewpoint (the amount the plaintiff stands to gain). Ridder Bros., Inc. v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944)("The value of the 'thing sought to be accomplished by the action' may relate to either or any party to the action." (citation omitted)); see also Kanter v. Warner-Lambert Co., 265 F.3d 853, 858 (9th Cir. 2001)(noting that Ridder Bros. remains good law only in non-class action cases).

Plaintiff's complaint at the time of removal did not specify an amount of damages, simply asserting "on information and belief" that its damages are less than $75,000. (See Notice of Removal, Ex. A 7-9.) Instead, plaintiff prayed generally for damages, an injunction restraining defendant "from implementing CONOCO's Rent Modification at [p]laintiff's station, charging fees for credit and debit card processing, assigning

[p]laintiff's Franchise Agreement and prohibiting CONOCO from engaging in any retaliatory conduct," declaratory relief, and an unknown amount in restitution. (Id. at 7:24-28, 8:1-15.) Therefore, the court must evaluate if defendant has proved by a preponderance of the evidence that the case exceeds the amount in controversy requirement. Sanchez, 102 F.3d at 404. Defendant presents three arguments to support that the amount in controversy requirement is met: (1) that the value of the Rent Policy is over $75,000; (2) the value of the credit and ...

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