United States District Court, S.D. California
EDMUND HOY, an individual person, on behalf of himself and all others similarly situated, Plaintiff,
JOHN CLINNIN, et al., Defendant.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND
DENYING AS MOOT DEFENDANTS' MOTION TO TRANSFER
Ted Moskowitz, Chief Judge.
April 19, 2017, Defendants removed this action from the
Superior Court of California, County of San Diego. (ECF No.
1.) Pending before the Court are Plaintiff's motion to
remand and Defendants' motion to transfer venue. (ECF
Nos. 5, 7.) For the reasons discussed below, Plaintiff's
motion to remand is granted and Defendants' motion to
transfer venue is denied as moot.
brought a putative class action for alleged violations of the
California Business & Professions Code § 17200
(“UCL”) against Defendant Linebarger Goggan Blair
& Sampson, LLP (“Linebarger”) and its
employees. Linebarger is a foreign limited law partnership
that represents California government agencies in connection
with their debt collections. According to the Complaint
(“Compl.”), as a foreign LLP, Linebarger may only
render its services in California through active members of
the California State Bar who are employed by the foreign
limited liability law partnership for that purpose. (Compl.
¶ 12.) Plaintiff alleges that Defendants have violated
the California Rules of Professional Conduct and California
Corporations Code because the designated California
attorneys-Defendants John Clinnin and Timothy
O'Reily-have failed to supervise Linebarger's
employees in sending out demand letters under the Linebarger
letterhead to California debtors. (Compl. ¶¶
14-16.) The Complaint seeks both injunctive and
restitutionary relief from all Defendants. (Compl. ¶
removed this action under the Class Action Fairness Act
(“CAFA”), 28 U.S.C. § 1332(d).
Motion to Remand
moves to remand, arguing that the Court should decline
jurisdiction under the local controversy exception under the
CAFA. See 28 U.S.C. § 1332(d)(4).
grants federal courts with original diversity jurisdiction
over class actions comprised of 100 or more persons if the
matter in controversy exceeds the sum or value of $5, 000,
000 and any member of a class of plaintiffs is a citizen of a
state different from any defendant. § 1332(d)(2). Under
CAFA, only “minimal diversity” is required.
Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1020-21
(9th Cir. 2007). Although CAFA grants federal courts with
subject matter jurisdiction over qualified class actions, it
also provides express exceptions, including the local
controversy exception, to the exercise of that jurisdiction.
Id. at 1024. The local controversy exception applies
if: (1) greater than two-thirds of the members of all
proposed plaintiff classes are citizens of the State in which
the action was originally filed; (2) at least 1 defendant is
a defendant whose alleged conduct forms a “significant
basis” for the claims asserted, from whom
“significant relief” is sought by members of the
proposed class, and who is a citizen of the State in which
the action was originally filed; (3) the principal injuries
resulting from the alleged conduct or any related conduct of
each defendant were incurred in the State in which the action
was originally filed; and (4) no similar class action has
been filed against any of the defendants in the last three
years. § 1332(d)(4). The Ninth Circuit has held that
although the removing party bears the initial burden of
establishing jurisdiction under CAFA, the party seeking
remand bears the burden of proof as to the applicability of
the local controversy exception. Serrano, 478 F.3d
argue that the local controversy exception does not apply in
this case because Defendant Clinnin, a citizen of California,
is not a defendant from whom significant relief is sought or
whose alleged conduct forms a significant basis for the
claims asserted by the proposed class. In determining whether
Plaintiff seeks significant relief from Defendant Clinnin and
whether his conduct forms a significant basis for the claims,
the Court may look only to the Complaint. See, Coleman v.
Estes Exp. Lines, Inc., 631 F.3d, 1010, 1015 (9th Cir.
the “significant basis” condition is met requires
a “substantive analysis comparing the local
defendant's alleged conduct to the alleged conduct of all
the other, non-local defendants.” Benko v. Quality
Loan Serv. Corp., 789 F.3d 1111, 1118 (9th Cir. 2015)
(quoting Kaufman v. Allstate New Jersey Ins. Co.,
561 F.3d 144, 156 (3d Cir. 2009)).
argue that Defendant Clinnin's conduct does not form a
significant basis of the proposed class' UCL claims
because Defendant Clinnin cannot as a matter of law be liable
under the UCL. Defendant contends that the California Rule of
Professional Conduct 1-120 cannot serve as the basis for a
§ 17200 claim because it is not intended to create a
private cause of action. However, as Plaintiff notes, in
People ex. rel. Herrera v. Stender, 212 Cal.App.4th
614, 632 (2012), a California court held that an unlawful UCL
claim could be based on a violation of the California Rules
of Professional Conduct. See also Estakhrian v.
Obenstine, No. CV 11-3480, 2017 WL 2191622, at * 20
(C.D. Cal. Feb. 4, 2017) (granting class certification and
finding commonality of issues where the plaintiffs'
allegations of California's professional and ethical
rules of conduct would establish liability under the UCL).
Defendants argue that Plaintiff is attempting to circumvent
the “bar on asserting claims for violation of the Rules
of Professional Conduct by recasting the claim as a 17200
violation.” (Opp'n to Mtn to Remand, ECF No. 12,
7.) However, as the Herrera Court stated:
The gravemen of the complaint is not to regulate the practice
of law but rather is to prevent a fraud upon the public.
There is a distinction for our purposes between trying to
regulate professional conduct, which plaintiff is not trying
to do, and trying to ...