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Carlson v. Gatestone & Co. International, Inc.

United States District Court, N.D. California, San Jose Division

June 16, 2017

GATESTONE & CO. INTERNATIONAL, INC., et al., Defendants.


          BETH LABSON FREEMAN United States District Judge

         Defendants Gatestone & Co. International, Inc. and Nicholas Wilson (“Defendants”) removed this action from the Santa Clara Superior Court on diversity grounds. ECF 1. Plaintiff Linda Carlson (“Carlson”) now moves to remand it. ECF 12. At issue is whether the federal “amount in controversy” requirement has been satisfied. The crux of the issue is whether the Court should consider reasonably expected attorney's fees in calculating the amount in controversy, or whether it is proper to include only those attorney's fees expended at the time of removal. The Court adopts the later position, and thus GRANTS the motion to remand.

         I. BACKGROUND

         Carlson brings this putative class action lawsuit alleging that Defendants violated the California Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). Ex. A to Notice of Removal, ECF 1-1 (“Compl.”) ¶¶ 1-3, ECF 1-1. Carlson alleges that she incurred debts on her consumer credit card accounts issued by Bank of America, N.A. Id. ¶¶ 16-17. She further alleges that Defendants had sent two collection letters to her in attempt to collect these debts. Id. ¶¶ 19-23. According to Carlson, Defendants knew or should have known that the letters were directed toward a senior citizen but the two letters did not provide the notice required by California law in the proper type-size. Id. ¶¶ 24-27; see Cal. Civ. Code § 1812.701.

         After the suit was filed in Santa Clara Superior Court in February 2017, Defendants removed to this Court, asserting diversity jurisdiction over this action. Carlson now moves to remand.


         “[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). “A defendant may remove an action to federal court based on federal question jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. § 1441).

         District courts have diversity jurisdiction over all civil actions between citizens of different states where the amount in controversy exceeds $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332. If the district court determines that it lacks jurisdiction, the action should be remanded back to the state court. Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005). The Ninth Circuit recognizes a “strong presumption against removal.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (internal quotations omitted). Thus, “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Id. The court “resolves all ambiguity in favor of remand.” See Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).


         In the Complaint, Carlson asserts that she is a citizen of California, that Defendant Gatestone & Co. International Inc. is an Delaware corporation with its principal place of business located in Arizona, and that Defendant Wilson is a resident of Arizona. Compl. ¶¶ 10-12. Thus, there is complete diversity between the parties. Accordingly, the only question remaining is whether the amount in controversy requirement is satisfied.

         A. Amount in Controversy

         In the motion to remand, Carlson avers that the “the maximum statutory damages an individual may recover is $1, 000” and that “the maximum recovery for the Class” is capped at $500, 000. Mot. 9, ECF 12-1. Carlson first urges the Court to adopt the view that “future unaccrued attorney's fees are not properly in controversy for jurisdictional purposes of removal based on diversity.” Id. at 4. Regardless of whether the Court adopts that view, Carlson further argues that Defendants fail to prove by a preponderance of evidence that inclusion of attorney's fees would cause the amount in controversy to exceed $75, 000. Id. at 9-10.

         Defendants in opposing the motion argue that the case law on whether to consider future attorney's fees remains unclear and this Court should include a reasonable estimate of future attorney's fees in the amount in controversy. Opp'n 7-9, ECF 14. Defendants further contend that they have demonstrated that the amount in controversy exceeds $75, 000. Id. at 11. Defendants note that Carlson's counsel has admitted that his hourly rate is $600 and cite to other RFDCPA cases to estimate the number of hours in this case. Id. at 11-12. Defendants also provide an attorney declaration stating that the number of hours to be expended would be 160. Shultz Decl. ¶ 6, ECF 14-1.

         Typically, attorney's fees are not considered part of the amount in controversy for diversity purposes, but “where an underlying statute authorizes an award of attorney's fees, either with mandatory or discretionary language, such fees may be included in the amount in controversy.” Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). It is unclear from the case law, however, what amount of attorney's fees are properly included within the amount in controversy. As acknowledged by the parties, there are two ...

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