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Murray v. Carmax Auto Superstores California, LLC

United States District Court, Ninth Circuit

August 21, 2013



M. JAMES LORENZ, District Judge.

Plaintiff moves to have the above-captioned case remanded to the state court for lack of jurisdiction. Defendant objects to the motion contending that the action was properly removed based upon diversity of citizenship. Having fully considered the matters presented, the Court enters the following decision.


On November 1, 2012, Plaintiff Dellaree Murray filed her Complaint in the Superior Court of the State of California, in and for the County of San Diego alleging various violations of California consumer protection laws following her purchase of a vehicle from Defendant Carmax Auto Superstore California, LLC ("CarMax"), a limited liability company headquartered in Virginia, in July 2011. (Comp. ¶ 6). At the time of purchase, Plaintiff alleges that a CarMax employee repeatedly assured her that the vehicle had never been in an accident and was free of serious defects and nonconformities after completing CarMax's AutoCheck Vehicle History and inspection. ( Id. ¶¶ 6-21) The purchase price of the vehicle was $16, 599.00, which Plaintiff seeks to recover upon recession of the contract. ( Id. ) She also seeks general damages. ( Id. ) Further, Plaintiff requests attorneys' fees and costs, and for equitable and injunctive relief for the alleged fraudulent practices. (Comp. ¶ 51)

Plaintiff states four causes of action in her complaint 1) Violation of the Consumers Legal Remedies Act (CAL. CIV. CODE § 1750); 2) Violation of the Song-Beverly Consumer Warranty Act (CAL. CIV. CODE § 1790); 3) Violation of the Business and Professions Code § 17200; and 4) Fraud and Deceit. Defendant removed this case to federal court on December 12, 2012, on the basis of diversity of citizenship jurisdiction. Plaintiff seeks remand of the action to state court arguing that there is no diversity of citizenship. Plaintiff does not contest statements regarding the amount in controversy made in Defendant's Opposition brief and therefore concedes that the amount in controversy requirement is met.

Legal Standards for Removal

Although a number of motions are pending in this case, the Court addresses the issue of jurisdiction first as "[t]he requirement that jurisdiction be established as a threshold matter spring[s] from the nature and limits of the judicial power of the United States' and is inflexible and without exception.'" Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-94 (1998) quoting Mansfield, C & L. M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884).

"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). "They possess only that power authorized by Constitution or statute, which is not to be expanded by judicial decree." Id. (internal citations omitted). "It is to be presumed that a cause lies outside this limited jurisdiction and the burden of establishing the contrary rests upon the party asserting jurisdiction." Id. (internal citations omitted); see also Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006).

Consistent with the limited jurisdiction of federal courts, the removal statute is strictly construed against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992); see also Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002); Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 698 (9th Cir. 2005); O'Halloran v. University of Wash., 856 F.2d 1375, 1380 (9th Cir. 1988). "The strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Gaus, 980 F.2d at 566; see also Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709, 712 n.3 (9th Cir. 1990); O'Halloran, 856 F.2d at 1380. "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus, 980 F.2d at 566.

Diversity Jurisdiction

A federal court has jurisdiction over an action involving citizens of different states and the amount in controversy exceeds $75, 000.00. 28 U.S.C. § 1332. The diversity statute must be strictly construed. Kantor v. Wellesley Galleries, Ltd., 704 F.2d 1088, 1092 (9th Cir. 1983).

Because circuit courts had interpreted the test for "principal place of business" differently, the Supreme Court resolved the issue by holding that a corporation's principal place of business is "the place where the corporation's high level officers direct, control, and coordinate the corporation's activities, " i.e., its "nerve center." Hertz Corp. v. Friend, 130 S.Ct. 1181, 1191-92 (2010). The Court further explained that a principal place of business "should normally be the place where the corporation maintains its headquarters - provided that the headquarters is the actual center of direction, control, and coordination." Id. Thus, Hertz "provided a uniform test for courts to apply when determining the principal place of business for federal diversity jurisdiction purposes." Harris v. Rand, 682 F.3d 846, 851 (9th Cir. 2012).

In the Harris case, the court found that Hertz does not impose a "heightened pleading requirement or dictate a precise manner for pleading subject matter jurisdiction." Id. Nevertheless, when the allegations of a party's principal place of business are in doubt about whether diversity exists, the party alleging jurisdiction is required to demonstrate its "allegations by a preponderance of evidence." Id. (quoting Gaus, 980 F.2d at 567); see also Hertz, 130 S.Ct. at 1194-95 (The district court may ...

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