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Gonzalez v. Comenity Capital Bank

United States District Court, E.D. California

October 21, 2019

LORI ANN GONZALEZ, individually and on behalf of others similarly situated, a Plaintiff,
v.
COMENITY CAPITAL BANK, DOES 1-30, Defendants.

          ORDER ON PLAINTIFF'S MOTION TO REMAND (DOC. NO. 9)

         INTRODUCTION

         On January 25, 2019, Plaintiff Lori Ann Gonzalez (“Gonzalez”) filed a putative class action in Fresno County Superior Court alleging that Defendant Comenity Capital Bank (“Comenity Capital”) routinely violates California statutes relating to identity theft in connection with credit cards branded for “Blair” and “Overstock.com.” Comenity Capital removed the action to this Court on March 14, 2019 and Gonzalez sought remand. For the reasons set forth below, Gonzalez's motion to remand will be denied.

         BACKGROUND

         The Complaint, as filed in Fresno Superior Court, alleges as follows:[1]

         In 2017 or 2018, Gonzalez began receiving telephone calls from Comenity Capital to collect on two credit card accounts issued by Comenity Capital, one branded for a retailer called “Overstock.com” and the other branded for a retailer called “Blair.” Doc. No. 1, Ex. A (Complaint) ¶¶ 13 & 18. In those telephone calls, Gonzalez verbally informed Comenity Capital that she had not opened either account and that she was a victim of identity theft, but Comenity Capital did not inform Gonzalez that claims of identity theft must be in writing. Id., Ex. A ¶¶ 20-21.

         On or about March 16, 2018, Comenity Capital sent Gonzalez a form letter “seeking to collect on the alleged Overstock.com credit card debt” and “threatening to bring ‘Legal action' if Plaintiff did not ‘[m]ake a payment online or by phone.'” Doc. No. 1, Ex. A ¶ 23. According to Gonzalez, the representations in this form letter were “false, deceptive, and misleading” because Comenity Capital “had no intention of bringing any legal action against [Gonzalez] for the purported Overstock.com debt.” Id., Ex. A ¶¶ 24-26. Moreover, the Complaint alleges that Comenity Capital “maintain[s] a pattern and practice of automatically sending [threatening collection letters] to alleged delinquent debtors” without first determining whether the debts in question satisfy its criteria for initiating legal action. Id., Ex. A ¶¶ 30-31.

         In August 2018, Gonzalez sent a letter notifying Comenity Capital that she had been a victim of identity theft in connection with the Overstock.com account and a letter notifying Comenity Capital that she had been a victim of identity theft in connection with the Blair account, but Comenity Capital “did not cease collection activities” as to either account. Doc. No. 1, Ex. A ¶¶ 32-39.

         In December 2018, Gonzalez sent additional letters to Comenity Capital seeking documents and information relating to the accounts, and again stating that she was a victim of identity theft. Doc. No. 1, Ex. A ¶¶ 40-41. Comenity Capital did not provide the information or documents requested as to either account, and the Complaint alleges that Comenity Capital “maintain[s] a pattern and practice” of failing to respond to requests involving identity theft in the manner required under Section 530.8 of the California Penal Code. Id., Ex. A ¶¶ 45-47. Moreover, the Complaint alleges that Gonzalez “suffered actual damage” as a result of Comenity Capital's conduct, that Comenity Capital's “practices … present a continuing threat” to the public “unless enjoined or restrained, ” and that Comenity Capital's conduct as to “empty threats of legal action, ” “oral claims of identity theft, ” “written claims of identity theft, ” and “requests for information and/or documents” “was and is persistent, frequent, willful and knowing.” Id., Ex. A ¶¶ 48-49, 65, 74, 77 & 80.

         Based on these factual allegations, Gonzalez alleges seven causes of action against Comenity Capital: (i) “Violations of California Civil Code, § 1788.13, subd. (j)”; (ii) “Violations of California Civil Code, § 1788.17”; (iii) “Violations of California Civil Code, § 1788.18's Requirement to Notify Oral Identity Theft Claimants that the Claim Must Be in Writing”; (iv) “Violations of California Civil Code, § 1788.18's Requirements for Responses to Written Identity Theft Claims”; (v) “Violations of California Penal Code, § 530.8, subd. (a)”; (vi) “Violations of California Business & Professions Code, §§ 17200 et seq.”; and (vii) “Action to Establish Identity Theft under California Civil Code, § 1798.93.”[2] Doc. No. 1, Ex. A, pp. 10-15.

         Gonzalez brings the first six causes of action individually and on behalf of putative classes, and brings the seventh cause of action solely as an individual claim. Doc. No. 1, Ex. A, pp. 10-15. As to the first four causes of action, Gonzalez seeks actual damages and statutory damages, as well as attorneys' fees and costs. Id., Ex. A, Prayer for Relief ¶¶ 1-4. As to the Fifth Cause of Action, Gonzalez seeks actual damages and “a penalty as authorized by Penal Code section 530.8, subdivision (d)(2), ” equitable relief, and attorneys' fees and costs. Id., Ex. A, Prayer for Relief ¶ 5. As to the Sixth Cause of Action, Gonzalez seeks restitution and equitable relief, as well as attorneys' fees and costs. Id., Ex. A, Prayer for Relief ¶ 6. And on the Seventh Cause of Action, Gonzalez seeks damages and “a civil penalty, ” as well as attorneys' fees and costs, along with equitable relief. Id., Ex. A, Prayer for Relief ¶ 7.

         On March 14, 2019, Comenity Capital removed the case to this forum based on diversity of citizenship pursuant to 28 U.S.C. § 1441(b). Doc. No. 1 ¶ 6. The notice of removal asserts that Gonzalez and Comenity Capital are citizens of different states and that “the total amount of individual relief to which [Gonzalez] claims she is entitled if she prevails in this action exceeds $75, 000.” Id. ¶¶ 2-4. Gonzalez now seeks remand.[3]

         PLAINTIFF'S MOTION TO REMAND

         The notice of removal asserts that Comenity Capital and Gonzalez are citizens of different states and that Gonzalez stands to recover “an amount greater than $75, 000” if she prevails on all of her claims, Doc. No. 1 ¶¶ 2, 3 & 17 - factoring in penalties under the Rosenthal Act, the CITA claim and Section 530.8 of the California Penal Code, as well as attorneys' fees. Id. ¶ 9, 13, 15 & 16.

         In moving for remand, Gonzalez does not dispute that she and Comenity Capital are citizens of different states but contends that the Court lacks subject matter jurisdiction over this action - and that remand is required under 28 U.S.C. § 1447(c) - because Comenity Capital cannot meet its burden to show that the amount in controversy exceeds the $75, 000 jurisdictional threshold set forth in 28 U.S.C. § 1332(a). See Doc. No. 10 at 7:15-17. Specifically, Gonzalez argues that using the maximum penalty under the Rosenthal Act and the maximum penalty under the CITA to calculate the amount in controversy is improper because the award amounts are discretionary and the Complaint does not expressly seek - or allege facts to support - the maximum award under either statute. Doc. No. 10, Part 3.B. (1). Gonzalez also takes the position that it is speculative to assume that she would recover a separate civil penalty on each of her four causes of action under the Rosenthal Act, since past cases have capped the penalty “at $1, 000 per plaintiff, per lawsuit, not per violation.” Id., Part 3.B. (2). Further, Gonzalez asserts that it is speculative and unreasonable to assume that the post-removal portion of penalties under Section 530.8 of the California Penal Code will continue to accrue through trial. Doc. No. 12, Part 3.B. (3). According to Gonzalez, the Section 530.8 civil penalty will stop accruing (well in advance of trial) once Comenity Capital fulfills its obligation to produce documents relating to the account at issue in discovery. Id., Part 3.B. (3)(b). Finally, Gonzalez contends that Comenity Capital's estimate of attorneys' fees cannot be credited because it overstates the incremental costs associated with litigating Gonzalez's individual CITA claim and because the underlying methodology is unsound. Doc. No. 16, Part 2.D.

         Comenity Capital's Opposition Comenity

         Capital argues that using the maximum penalty under the Rosenthal Act[4] and the maximum penalty under the CITA to calculate the amount in controversy in this action is proper because recent Ninth Circuit decisions make it clear that the amount in controversy in a case includes all relief a court may grant on a complaint if the plaintiff prevails on all claims, Doc. No. 15 at 1:6-13, and because Gonzalez has not stipulated that she is seeking less than the maximum penalty under either statute. Id. at 1:20. Further, Comenity Capital contends that it is proper to assume the penalty under Section 530.8 of the California Penal Code will continue to accrue through completion of the trial - at the statutory rate of $100 per day for each of the two credit card accounts at issue - because Gonzalez “refuses to stipulate that she is not seeking post-removal penalties” and because the amount in controversy is to be estimated at the time of removal, without regard to future events (such as settlement or the production of documents in discovery) that might reduce the amount in controversy after removal. Id. at 12:5-13:17. Finally, Comenity Capital argues that at a rate of $300 per hour, Gonzalez could recover attorneys' fees in the amount of at least $23, 229 on her individual CITA claim alone. Id., Part III.D.

         Legal Standard

         Under 28 U.S.C. § 1441, “[a] defendant generally may remove an action filed in state court if a federal district court would have had original jurisdiction over the action.” Chavez v. JPMorgan Chase & Co, 888 F.3d 413, 415-16 (9th Cir. 2018) (citing 28 U.S.C. § 1441(a) and Gonzales v. CarMax Auto Superstores, LLC, 840 F.3d 644, 648 (9th Cir. 2016)). The Ninth Circuit “strictly construe[s] the removal statute against removal jurisdiction, ” and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted).

         There are two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 28 U.S.C. § 1331, which gives federal courts original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States”; and (2) diversity jurisdiction under 28 U.S.C. § 1332, which gives federal courts original jurisdiction where the amount in controversy “exceeds the sum or value of $75, 000, exclusive of interest and costs” and there is “complete diversity among the parties.” See Chavez, 888 F.3d at 415 (citing Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 774 (9th Cir. 2017)). Where a putative class action is removed on the basis of diversity jurisdiction under 28 U.S.C. § 1332, courts examine “only the claims of named class plaintiffs for purposes of the amount-in-controversy requirement.”[5]Gibson v. Chrysler Corp., 261 F.3d 927, 941 (9th Cir. 2001), holding modified by Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) (citing Supreme ...


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