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Kendrick v. Xerox State and Local Solutions, Inc.

United States District Court, N.D. California

April 3, 2018

SUMATRA KENDRICK, et al., Plaintiffs,


          RICHARD SEEBORG United States District Judge.


         Plaintiffs Sumatra Kendrick and Michelle Kelly filed this putative class action in San Francisco Superior Court. The operative complaint asserts state law claims against defendants Bay Area Toll Authority (“BATA”), Golden Gate Bridge Highway and Transportation District (“GGB”), and Conduent State and Local Solutions, Inc. f/k/a Xerox State & Local Solutions (“Conduent”). At issue is toll collection on the Golden Gate Bridge and other Bay Area bridges and the alleged attendant disclosure of consumers' personally identifiable information (“PII”).

         Conduent removed the action to this court pursuant to the Class Action Fairness Act of 2005 (“CAFA”), see 28 U.S.C. § 1332(d), contending that the amount in controversy can be reasonably estimated to exceed the $5 million threshold for jurisdiction under CAFA. Plaintiffs seek remand under three theories: (1) Conduent failed to establish the amount in controversy is sufficient; (2) even if the amount in controversy does meet the jurisdictional requirement, remand is appropriate under at least one exception to CAFA jurisdiction; and (3) removal is precluded under Section 1332(d)(5) because the primary defendants are state actors. Although plaintiffs' arguments regarding the amount in controversy and exceptions to CAFA jurisdiction fail, defendants have not carried their burden of satisfying the jurisdictional requirements of Section 1332(d)(5). Therefore, the motion to remand must be granted.


         Under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d), federal courts have original jurisdiction over class actions where there are at least 100 class members, at least one plaintiff is diverse in citizenship from any defendant, and the amount in controversy exceeds $5, 000, 000, exclusive of interest and costs. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1195 (9th Cir. 2015). A class action that meets CAFA standards may be removed to federal court. 28 U.S.C. § 1441(a).

         By enacting CAFA, Congress intended to ease the ability of defendants to remove certain class or mass actions to federal court. Accordingly, “a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554 (2014). Evidentiary submissions supporting the grounds for removal are not required.

         A court evaluating a challenge to CAFA jurisdiction looks first to the allegations in the complaint. In general, “the sum claimed by the plaintiff controls if the claim is apparently made in good faith.” Ibarra, 775 F.3d at 1197. (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). “Whether damages are unstated in a complaint, or, in the defendant's view are understated, the defendant seeking removal bears the burden to show by a preponderance of the evidence that the aggregate amount in controversy exceeds $5 million when federal jurisdiction is challenged.” Id. The defendant must also persuade the court that the estimate of damages in controversy is a reasonable one, and that the action satisfies the other requirements of CAFA. When defendants' amount in controversy estimate is contested by plaintiffs, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Ibarra, 775 F.3d at 1197 (citing Dart, 135 S.Ct. at 554). The parties may provide “summary-judgment type evidence relevant to the amount in controversy, ” including affidavits, declarations, and other evidence outside the complaint. Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997).

         CAFA instructs the district court to determine its jurisdiction by “adding up the value of the claim[s] of each person who falls within the definition of [the] proposed class and determin[ing] whether the resulting sum exceeds $5 million.” Standard Fire Ins. Co. v. Knowles, 133 S.Ct. 1345, 1348 (2013). Once jurisdiction is established, the party seeking remand bears the burden of proof as to any express statutory exceptions that bar removal. See Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).


         A. Amount in Controversy

         In its Notice of Removal, Conduent based its amount in controversy estimate on plaintiffs' proposed class size of “hundreds of thousands (if not millions) of Class Members” and requested “statutory damages in the amount of no less than $2, 500 or $4, 000 (as applicable).” Compl. at 33-34. According to Conduent, even a conservative estimate of the amount in controversy, taking into account plaintiffs' additional request for punitive damages and attorneys' fees, would result in a figure well above the $5 million threshold.

         In response to plaintiffs' challenge to its amount in controversy allegations, defendants' joint opposition attaches a declaration from the company's regional vice president David Wilson, which calculates the proposed class to be at most 509, 983, 561 members, which reflects the number of motorists assessed a penalty or charged with toll evasion for toll-bridge crossings since 2012, including over 84, 024, 846 on the Golden Gate Bridge. See Declaration of David Wilson (“Wilson Decl.”) ¶ 8. This calculation, however, appears to be based on a class definition asserted in an earlier related case, rather than the definition put forth in the operative complaint in this case.[1] Here, plaintiffs propose a class consisting of “(a) all consumers who, between May 1, 2011 and the present, had their PII provided to any person who was not authorized to receive the PII pursuant to California Streets and Highways § 31490; (b) all consumers who between May 1, 2011 and the present had their PII provide[sic] to a person who was not authorized to receive the PII in violation of the Fastrak application and/or privacy policy.” Compl. ¶ 58. As plaintiffs correctly point out, Wilson's calculations do not take into consideration the fact that the class is limited to those motorists who have had their PII provided to third parties.

         Despite Conduent's reasonable reliance upon the complaint's prayer for relief in assuming a damages floor of $2, 500 per class member, the lack of relationship between its estimate of the class size and the class definition calls into question the reasonableness of Conduent's calculations. That being said, plaintiffs have offered no evidentiary support suggesting a lower number of class members, and indeed claim on the face of their complaint that the size of the putative class is “hundreds of thousands (if not millions).” Thus, while the erroneous class definition used in the Wilson Declaration renders those calculations flawed, Conduent is entitled to assume, based on the allegations in the complaint, ...

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