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Steele v. W.W. Grainger, Inc.

United States District Court, Ninth Circuit

June 10, 2013

KENNETH STEELE, individually and on behalf of all others similarly situated, Plaintiffs,
W.W. GRAINGER, INC., an Illinois Corporation, Defendant.



Presently before the Court are Defendant W.W. Grainger, Inc.'s ("Grainger") motion to dismiss, (Doc. No. 9), and Plaintiff Kenneth Steele's ("Plaintiff") motion to remand, (Doc. No. 18). Both motions are opposed. In accordance with Civil Local Rule 7.1.d.1, the Court finds the motions suitable for determination on the papers and without oral argument. Accordingly, the motion hearing scheduled for June 27, 2013 regarding Plaintiff's motion to remand, and the motion hearing scheduled for July 11, 2013 regarding Grainger's motion to dismiss, are hereby vacated. (Doc. Nos. 12, 19.) For the reasons set forth below, the Court GRANTS Plaintiff's motion to remand, (Doc. No. 18), and DENIES AS MOOT Grainger's motion to dismiss, (Doc. No. 9). The Clerk of Court is instructed to remand this action to San Diego Superior Court.


On March 14, 2013, Plaintiff filed a class action complaint against Grainger in San Diego Superior Court (hereinafter, "the Complaint"). (Doc. No. 1, Ex. 1.) The Com-plaint alleges that Plaintiff had one or more telephone communications with Grainger, and that Grainger secretly recorded these communications, and other communications with California Grainger customers, in violation of California Penal Code §§ 632 and 632.7. ( Id. at ¶ 5.) The Complaint further alleges that during the twelve-month period preceding the filing of the Complaint, Grainger routinely recorded both incoming and outgoing telephone communications with customers who resided in and were physically present in the State of California, even though Grainger did not notify or inform these individuals that the communications would be recorded. ( Id. at ¶ 6.) As a result, the Complaint seeks statutory damages for the class in the amount of $5, 000.00 per recorded violation pursuant to California Penal Code § 637.2(a), injunctive relief, costs of suit, and pre-judgment interest.[1] ( Id. at ¶ 19.)

Grainger was served with a copy of the summons and Complaint on March 15, 2013. Thereafter, Grainger timely removed the action to this Court pursuant to the 2005 Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). (Doc. No. 1.) Seven days later, Grainger filed a motion to dismiss, accompanied by a request for judicial notice. (Doc. Nos. 9, 10). In support of its motion to dismiss, Grainger attached the declaration of Mike Tiernan ("Tiernan"), wherein Tiernan declared that Grainger's telephone system plays an automated warning for all inbound calls, notifying callers that the call will be recorded. (Doc. No. 9, Ex. 3, Tiernan Decl. ¶ 4.) On May 3, 2013, after the parties met and conferred, Grainger filed a notice of errata and a supplement to the Tiernan declara-tion. (Doc. No. 15.) In his supplemental declaration, Tiernan stated that due to a mistake in programming, certain inbound calls made to 1-800-Grainger from certain area codes between November 19, 2013 and April 29, 2013 (161 days) did not receive the automated warning. (Doc. No. 15, Ex. A, Tiernan Supp. Decl. ¶ 4.) The Supplemental Tiernan declaration also stated that no other calls were affected as a result of the mistake. ( Id. at ¶ 5.) Thus, inbound calls to 1-800-Grainger from other area codes, and all inbound calls to a Grainger branch store (not 1-800-Grainger) would still have received the automated warning. ( Id. )

Less than a month later, on May 14, 2013, Plaintiff filed the instant motion to remand, wherein Plaintiff argues that Grainger has failed to prove by a preponderance of the evidence that the amount in controversy meets or exceeds $5, 000, 000. (Doc. No. 18.) As of the date of this order, both motions have been fully briefed and are presently before the Court.


I. Motion to Remand

Grainger contends the Court has jurisdiction over this matter pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). However, as stated below, because the Court finds Grainger has failed to prove by a preponderance of the evidence that the amount in controversy requirement has been met, the Court lacks jurisdiction over the matter. Accordingly, the Court does not address the merits of Grainger's motion to dismiss. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264 (1868)) ("Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause."); Kokkonen v. Guardian Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673 (1994) ("Federal courts are courts of limited jurisdiction.").

A. Legal Standard Governing Removal

The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal statute, 28 U.S.C. § 1441, allows defendants to remove an action when a case originally filed in state court presents a federal question or is between citizens of different states and involves an amount in controversy that exceeds $75, 000. See 28 U.S.C. §§ 1441(a) and (b); 28 U.S.C. §§ 1331, 1332(a). Only state court actions that could originally have been filed in federal court can be removed. 28 U.S.C. § 1441(a); see also Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). "[J]urisdiction in a diversity case is determined at the time of removal." Am. Dental Indus., Inc. v. EAX Worldwide, Inc., 228 F.Supp.2d 1155, 1157 (D. Or. 2002) (citing St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938) ("The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction... Events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction")).

The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdic-tion, " and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988), Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)). "The strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990), and Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)).

B. Jurisdiction Under the Class Action Fairness Act ("CAFA") and the Preponderance of the Evidence Standard

As amended by CAFA, 28 U.S.C. § 1332(d) vests district courts with "original jurisdiction of any civil action in which: (1) the amount in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs;" (2) the aggregate number of proposed plaintiffs is 100 or greater; and (3) any member of the plaintiff class is a citizen of a state different from any defendant (minimal diversity). 28 U.S.C. § 1332(d). The Ninth Circuit has recently affirmed that "under CAFA the burden of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction." Lowdermilk v. U.S. Bank Ass'n, 479 F.3d 994, 997 (9th Cir. 2007) (citing Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006) (per curiam)); see also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007) (holding that the proponent of federal jurisdiction bears the burden of proving jurisdiction); Morgan v. Gay, 471 F.3d 469, 472-73 (3d Cir. 2006) (holding that under CAFA, the party seeking removal bears the burden of establishing the requisite amount in controversy). Under CAFA, "where the plaintiff has pled an amount in controversy less than $5, 000, 000, the party seeking removal must prove with legal certainty ...

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