United States District Court, S.D. California
ORDER GRANTING MOTIONS TO STRIKE, AND DENYING WITHOUT
PREJUDICE MOTIONS TO DISMISS [DOCKET NUMBERS 38, 40, 42, 43,
ALAN BURNS, UNITED STATES DISTRICT JUDGE
their first amended complaint (“FAC”), Felix and
Maria Emma Hernandez on their own behalf and on behalf of a
putative class bring fraud, unfair competition, and related
claims in connection with water mitigation claims under their
own a condominium in Santa Ana, California that was damaged
by water, leaving it uninhabitable. They allege State Farm
discouraged them from using any mitigation company other than
ServiceMaster or Servpro, and falsely claimed that those two
companies were independent. They allege they contacted
ServiceMaster, whose local franchise failed to carry out the
mitigation services competently, which resulted in further
losses. After they complained about ServiceMaster's work,
they say State Farm steered them to Servpro, whose local
franchise also did a bad job.
allege that by arrangement among Defendants, insureds receive
significantly less in the way of mitigation services than
they have been led to expect, and that as a result Defendants
profit unfairly. They also make allegations of financial harm
and damage to their home and class members' homes.
are bringing claims against State Farm Fire and Casualty
Company (“SFFCC”); State Farm General Insurance
Company (“SFGIC”); The ServiceMaster Company, LLC
(“ServiceMaster”); Servpro Industries, Inc.
(“Servpro”); Douglas D. Dehart, Inc. dba
ServiceMaster Absolute Water and Fire Damage Service
(“ServiceMaster Local”); and Servpro of Santa Ana
South (“Servpro Local”). The FAC refers to SFFCC
and SFGIC collectively as “State Farm”.
Plaintiffs are suing for breach of contract and intentional
interference with contractual relations; claims against all
Defendants for breach of the implied covenant of good faith
and fair dealing; and claims under various California
statutes against all Defendants for various unfair business
practices. The FAC brought claims against several individual
Defendants as well, but those were voluntarily dismissed.
motions ask the Court to dismiss the FAC for failure to state
a claim pursuant to Fed.R.Civ.P. 12(b)(6), to strike class
claims pursuant to Fed.R.Civ.P. 12(f), and to dismiss fraud
claims that are not pled to the standard required by
has been a question in this case from the start. When the
Court issued an order requiring Plaintiffs to show cause
regarding jurisdiction, it was not only the Plaintiffs who
responded. Two Defendants also spontaneously filed briefs
(Docket nos. 8 and 9) conceding that the Court had subject
matter jurisdiction under the Class Action Fairness Act
(CAFA). Of course, subject matter jurisdiction can never be
waived, even by consent, and the Court is obligated to raise
the issue sua sponte even if the parties concede it.
Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006).
The Supreme Court has made clear that presumption must be
presumed to be lacking, until it is affirmatively shown.
Kokkonen v. Guardian Life Ins. Co. of America, 511
U.S. 375, 377 (1994). Furthermore, the Court must
confirm its jurisdiction before proceeding to the merits,
even if the jurisdiction is complex and the merits question
is relatively straightforward. Steel Co. v. Citizens for
a Better Environ., 523 U.S. 83, 94 (1998). If
jurisdiction is lacking, the Court must announce that fact
and dismiss. Id.
Court has jurisdiction at all, it must be under CAFA. Neither
the original complaint nor the FAC raises a federal question,
and no basis for a federal claim is apparent. Ordinary
diversity jurisdiction is unavailable because the parties are
not completely diverse. Plaintiffs are California citizens,
as are at least two Defendant, Douglas D. DeHart, Inc. and
Servpro Santa Ana South. But other Defendants are non-California
citizens. Because CAFA only requires minimal diversity -
i.e., one plaintiff and one defendant who are citizens of
different states - this requirement is satisfied.
See 28 U.S.C. § 1332(d)(2)(C). Because facts to
satisfy other requirements are properly alleged, the Court
can exercise CAFA jurisdiction.
their motions to dismiss, Defendants are asking the Court to
strike class action allegations. Doing so would deprive the
Court of jurisdiction to reach the merits. The Court will
therefore address requests to strike before requests for
multiple sets of briefing have thoroughly covered most of the
important issues. Of course, the Court must address any
jurisdictional defects, even if not raised. This is
particularly important here, where Defendants challenge the
putative class members' standing. It is also relevant
with regard to Plaintiffs' and the class's standing
to seek injunctive relief.
Fed.R.Civ.P. 12(f), the Court can strike from a pleading any
“redundant, immaterial, impertinent, or scandalous
matter, ” either sua sponte or in response to
a motion. In general, the appropriateness of proceeding as a
class action is not tested at the pleading stage, but there
is no rule preventing this. As the Supreme Court has
explained, most of the time determining whether a case can
proceed as a class action involves deciding factual and legal
questions that are closely tied up with the cause of action
itself. Gen'l Tel. Co. of Southwest v. Falcon,
457 U.S. 147, 160 (1982). In their opposition, Plaintiffs
rely on the fact that a motion to strike usually is
an inappropriate way to test class claims.
being said, “[s]ometimes the issues are plain enough
from the pleadings to determine whether the interests of the
absent parties are fairly encompassed within the named
plaintiff's claim.” Id. See also
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011)
(construing Falcon as holding that it may sometimes
be necessary to look beyond the pleadings to determine
whether class treatment was appropriate). When it is clear
from the complaint that class actions cannot be maintained,
the Court may grant a motion to strike them. Sanders v.
Apple, Inc., 672 F.Supp.2d 978, 990-91 (N.D. Cal. 2009).
This Court, too, has treated motions to strike as an
appropriate means of ...