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California v. Bank of America Corp.

United States District Court, C.D. California

February 2, 2015

California
v.
Bank of America Corporation, et al

Attorneys for Plaintiff: Not Present.

Attorneys for Defendants: Not Present.

Honorable Percy Anderson, UNITED STATES DISTRICT JUDGE.

CIVIL MINUTES - GENERAL

Proceedings: IN CHAMBERS -- COURT ORDER

On December 19, 2014, Los Angeles City Attorney Michael Feuer (" Feuer") commenced an action against defendants Bank of America Corporation, Bank of America, N.A., Countrywide Financial Corporation, Countrywide Home Loans, and Countrywide Bank, FSB (collectively " BofA") alleging a single claim for unfair business practices pursuant to California Business and Professions Code section 17200, in Case No. CV 14-9744 PA (AGRx) (" Case No. CV 14-9477"). Feuer brings the action " in the name of the People of the State of California pursuant to section 17200." (Compl. ¶ 14.) The state law unfair competition in Case No. 1409744 is premised on a violation of the Fair Housing Act (" FHA"), 42 U.S.C. § § 3601, et seq., to support allegations under the " unlawful prong" of section 17200. The Complaint alleges that this Court's jurisdiction is based on " 42 U.S.C. § 3613 and 28 U.S.C. § 1331, [and] 1343, because the claims alleged herein arise under the laws of the United States." (Compl. ¶ 30.) According to the Complaint, " Plaintiff's unlawful prong claim under [section 17200] necessarily required determination whether Defendants violated the FHA." (Id.)

Previously, on December 6, 2013, Feuer, as Los Angeles City Attorney, and on behalf of the City of Los Angeles (the " City"), commenced an action against the identical defendants in Case No. CV 13-9046 PA (AGRx) (" Case No. CV 13-9046"). In both actions, Feuer is represented by the same private counsel. Case No. CV 13-9046 alleges a single claim against BofA for violation of the FHA. The substantive allegations against BofA concerning discriminatory lending practices are nearly identical in Case Nos. CV 13-9046 and CV 14-9744.

On August 14, 2014, this Court issued a Minute Order in Case No. CV 13-9046 establishing pretrial and trial dates. The Minute Order was followed by a Scheduling Order issued on August 15, 2014. Those orders established that the last day for a hearing on a motion to amend the pleadings or add parties was November 10, 2014. The City never sought to add a section 17200 claim to Case No. CV 13-9046.

After reviewing the Complaint in Case No. CV 14-9744, the Court issued two orders to show cause. In the first order to show cause, the Court ordered the parties to show cause why Case No. CV 14-9744 should not be dismissed for impermissible claim-splitting. In the second order to show cause, the Court ordered the parties to show cause why Case No. CV 14-9744 should not be dismissed for lack of subject matter jurisdiction. The parties have submitted their responses to both orders to show cause.

It is well-established that " a district court's duty to establish subject matter jurisdiction is not contingent upon the parties' arguments." See United Investors Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 966 (9th Cir. 2004). Parties cannot agree to nor can they " waive" a lack of such jurisdiction. Id. at 966-67. Courts may consider the issue sua sponte. Demery v. Kupperman, 735 F.2d 1139, 1149 n.8 (9th Cir. 1984). Indeed, the Supreme Court has repeatedly emphasized that " district courts have an 'independent obligation to address subject-matter jurisdiction sua sponte.'" Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 593, 124 S.Ct. 1920, 1937, 158 L.Ed.2d 866 (2004) (quoting United States v. So. Cal. Edison Co., 300 F.Supp.2d 964, 972 (E.D. Cal. 2004)).

Mere reference to a federal law to support a state unfair competition claim does not convert such a claim into a federal cause of action. See Nevada v. Bank of America Corp., 672 F.3d 661, 675 (9th Cir. 2012). " Even where a state law claim does necessarily turn on a substantial and disputed question of federal law, removal is subject to a 'possible veto' where exercising federal jurisdiction is not 'consistent with congressional judgment about the sound division of labor between state and federal courts governing the application of § 1331.'" Id. at 675 (quoting Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 313-14, 125 S.Ct. 2363, 2367, 162 L.Ed.2d 257 (2005)); see also id. at 676 (" State courts frequently handle state-law consumer protection suits that refer to or are predicated on standards set forth in federal statutes. Exercising federal question jurisdiction over any state law claim that references a federal consumer protection statute would 'herald[] a potentially enormous shift of traditionally state cases into federal courts.'") (quoting Grable & Sons, 545 U.S. at 319, 125 S.Ct. at 2370-71, 162 L.Ed.2d 257).

Although the Complaint in Case No. 14-9744 alleges violations of the FHA to support the unlawful prong of the 17200 claim, that claim could easily be supported by the analogous provisions of the California Fair Employment and Housing Act (" FEHA"), Cal. Gov't Code § 12955. For instance, both the FHA and FEHA make it unlawful for a business that engages in residential real estate-related transactions to discriminate against any person on the basis of race and other characteristics in making available a transaction or the terms of such a transaction. Compare 42 U.S.C. § 3605(a) (" It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin."); with Cal. Gov't Code § 12955(i) (" [It shall be unlawful] for any person or other organization or entity whose business involves real estate-related transactions to discriminate against any person in making available a transaction, or in the terms and conditions of a transaction, because of race, color, religion, sex, gener, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, source of income, familial status, disability, or genetic information.").

Analogous provisions of the FHA and FEHA are interpreted similarly by California's courts. See Walker v. City of Lakewood, 272 F.3d 1114, 1131 n.8 (9th Cir. 2001) (" [W]e apply the same standards to FHA and FEHA claims."); Sada v. Robert F. Kennedy Med. Ctr., 56 Cal.App.4th 138, 150 n.6, 65 Cal.Rptr.2d 112, 119 (1997) (" In applying the provisions of FEHA, California courts often follow decisions construing federal antidiscrimination statutes, as long as those decisions provide appropriate guidance."). The mere fact that the Complaint in Case No. CV 14-9744 references the FHA, and ignores the nearly identical language in FEHA does not transform the state law 17200 claim into a federal claim even if, for strategic reasons, neither party wishes to recognize that fact. To hold otherwise would allow parties to transform state law claims into " substantial" federal claims simply by neglecting to cite an alternative state law basis of the claim. See Nevada, 672 F.3d at 675-76. The parties cannot stipulate to create federal question jurisdiction where there is none. See United Investors Life Ins. ...


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