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Gonzalez v. Comenity 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 BANK, DOES 1-30, Defendants.

          ORDER ON PLAINTIFF'S MOTION TO REMAND (DOC. NO. 11)

         INTRODUCTION

         On January 29, 2019, Plaintiff Lori Ann Gonzalez (“Gonzalez”) filed a putative class action in Fresno County Superior Court alleging that Defendant Comenity Bank (“Comenity”) routinely violates California statutes relating to identity theft in connection with credit cards branded for a clothing retailer called “The Limited.” Comenity 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 County Superior Court, alleges as follows:[1]

         In 2017 or 2018, Gonzalez began receiving telephone calls from Comenity to collect on a credit card account issued by Comenity and branded for “The Limited.” Doc. No. 1, Ex. A (Complaint) ¶¶ 13-18. In those telephone calls, Gonzalez verbally informed Comenity that she had not opened the account, but Comenity failed to inform Gonzalez that claims of identity theft must be in writing. Id., Ex. A ¶ 22. In August 2018, Gonzalez mailed Comenity a letter (along with a police report) stating that she was a victim of identify theft with respect to the account in question and requesting “the account application …, any signatures associated with the account and any bills associated with the account.” Id., Ex. A ¶¶ 23-26. Comenity received that mailing on September 5, 2018. Id., Ex. A ¶ 27. On September 17, 2018, Gonzalez sent Comenity a copy of the August 2018 mailing at a second address. Id., Ex. A ¶ 28. Comenity received that mailing on September 20, 2018. Id., Ex. A ¶ 29.

         Comenity sent Gonzalez a letter dated October 7, 2018 rejecting her claim of identity theft without providing the materials Gonzalez requested in her mailings of August 2018 and September 17, 2018. Doc. No. 1, Ex. A ¶ 30. In December 2018, Gonzalez sent another letter to Comenity asking “what categories of identifying information were used to open the account” and again requesting copies of the application and other documents associated with the account, which, Gonzalez contends, Comenity was required to provide under Section 530.8 of the California Penal Code. Id., Ex. A ¶¶ 31-34. Comenity received that letter on December 29, 2018 but did not provide Gonzalez with the requested materials. Id.

         Gonzalez further alleges: (i) Comenity “maintain[s] a pattern and practice of failing to inform debtors who make oral claims of identity theft that the claims must be in writing, ” Doc. No. 1, Ex. A ¶ 22; (ii) Comenity “maintain[s] a pattern and practice of not providing requested information and documents as required under California Penal Code section 530.8, ” id., Ex. A ¶ 35; (iii) Comenity's practices “present a continuing threat to [Gonzalez] … and members of the public unless enjoined or restrained, ” id., Ex. A ¶ 37; (iv) Comenity's “conduct in response to oral claims of identity theft was and is persistent, frequent, willful and knowing, ” id., Ex. A ¶ 51; (v) Comenity's “conduct in response to … requests for information and/or documents was and is persistent, frequent, willful and knowing, ” id., Ex. A ¶¶ 54-55 (also alleging that Comenity has “willfully and knowingly violated Penal Code section 530.8, subdivision (a)”); and (vi) Comenity “failed to diligently investigate [Gonzalez's] notification of identification of identity theft” and “continued to pursue the claim against [Gonzalez] after being presented with facts underlying [Gonzalez's] claim of identity theft.” Id., Ex. A ¶¶ 69-70.

         Based on these factual allegations, Gonzalez alleges four claims against Comenity: (i) “Violations of California Civil Code, § 1788.18's Requirement to Notify Oral Identity Theft Claimants that the Claim Must Be in Writing”; (ii) “Violations of California Penal Code, § 530.8, subd. (a)”; “Violations of California Business & Professions Code, §§ 17200 et seq., ” and (iv) “Action to Establish Identity Theft under California Civil Code, § 1798.93.”[2] Doc. No. 1, Ex. A, ¶¶ 47-70.

         Gonzalez brings the first three causes of action on behalf of herself and putative classes, and brings the fourth cause of action solely as an individual. Doc. No. 1, Ex. A, pp. 7-10. As to the First Cause of Action, for violations of Section 1788.18 of the Civil Code, Gonzalez prays for “actual damages according to proof and statutory damages to be paid to [Gonzalez] and each Oral Identity Theft Claim Class member, and attorneys' fees and costs.” Id., Ex. A, Prayer for Relief ¶ 1. As to the Second Cause of Action, for violations of Section 530.8 of the Penal Code, Gonzalez prays for “actual damages according to proof and a penalty as authorized by Penal Code section 530.8, subdivision (d)(2), to be paid to Plaintiff and each Information Request Class member; injunctive relief and such other equitable relief as the Court may deem appropriate; and reasonable attorneys' fees and costs.” Id., Ex. A, Prayer for Relief ¶ 2. As to the Third Cause of Action, for violations of Section 17200 et seq. of the Business & Professions Code, Gonzalez prays for “restitution for [Gonzalez] and all Class members, injunctive relief and such other equitable relief as the Court may deem appropriate; and an award of attorneys' fees and costs pursuant to Code of Civil Procedure section 1021.5.” Id., Ex. A, Prayer for Relief ¶ 3. And as to the individual Fourth Cause of Action, to establish identity theft under Section 1798.93 of the Civil Code, Gonzalez seeks “declaratory relief, injunctive relief, and such other equitable relief as the Court may deem appropriate; actual damages according to proof; a civil penalty; and attorneys' fees and costs.” Id., Ex. A, Prayer for Relief ¶ 4.

         On March 14, 2019, Comenity removed the case to this forum based on diversity of citizenship pursuant to 28 U.S.C. § 1441(a)-(b). Doc. No. 1 ¶ 6. The notice of removal asserts that Gonzalez and Comenity 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., Ex. A ¶¶ 2-4, including actual and statutory damages for the Rosenthal Act claim, id., Ex. A ¶ 9; damages and penalties for claim under Section 530.8 of the California Penal Code, id., Ex. A ¶¶ 10-12; actual damages, injunctive relief and “a civil penalty” for the CITA claim, id., Ex. A ¶ 14; and attorneys' fees. Id., Ex. A ¶ 15. Gonzalez now seeks remand.[3]

         PLAINTIFF'S MOTION TO REMAND

         Defendant's notice of removal asserts that Comenity 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 - factoring in the maximum penalty of $1, 000 for the Rosenthal Act claim, the penalty for the Section 530.8 claim (which accrues at $100 per day), the maximum penalty of $30, 000 for the CITA claim, and attorneys' fees. Doc. No. 1, Ex. A ¶¶ 9, 12, 14-16.

         In moving for remand, Gonzalez does not dispute that she and Comenity 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 has not met its burden to show that the amount in controversy exceeds the $75, 000 jurisdictional threshold set forth in 28 U.S.C. § 1332(a)(1). Doc. No. 12 at 7:15-17. Specifically, Gonzalez argues that using the maximum penalty for the Rosenthal Act claim and the maximum penalty for the CITA claim to calculate the amount in controversy, as Comenity proposes, is improper because the award amounts are discretionary and the Complaint does not expressly seek - or allege facts to support - the maximum award as to either claim. Doc. No. 12, Part 3.B. (1). Further, she argues that Comenity improperly assumes that the penalty under Section 530.8 of the Penal Code will continue to accrue through trial. Doc. No. 12, Part 3.B. (2). According to Gonzalez, the Section 530.8 civil penalty will stop accruing (well in advance of trial) once Comenity fulfills its obligation to produce documents relating to the account at issue in discovery. Id. at 13:17-14:19. Finally, Gonzalez contends that Comenity's estimate of attorneys' fees cannot be credited because it overstates the incremental costs associated with litigating Gonzalez's individual CITA claim and the underlying methodology is unsound. Id., Part 3.B. (3)-(4).

         Comenity's Opposition

         Comenity argues that using the maximum penalty for the Rosenthal Act claim and the maximum penalty for the CITA claim 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 encompasses all relief a court may grant on a complaint if the plaintiff prevails on all claims, Doc. No. 17 at 1:6-13, and because Gonzalez has not alleged - or otherwise indicated - that she is seeking less than the maximum penalty under either statute. Id. at 6:8-13. Further, Comenity 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 statutorily prescribed rate of $100 per day) because the amount in controversy is to be estimated at the time of removal, without regard to future events (such as settlement or discovery productions) that might reduce the amount in controversy after removal. Id. at 12:3-13:3. Finally, Comenity argues that at a rate of $300 per hour, Gonzalez could recover attorneys' fees in the amount of at least $28, 725 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.”[4] 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 Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 366-67 (1921)); see also Pruell v. Caritas Christi, 645 F.3d 81, 83 (1st Cir. 2011) (“The usual rule in class actions is that to establish subject matter jurisdiction one looks only to the named plaintiffs and their claims.”).

         The Ninth Circuit has “defined the amount in controversy as the ‘amount at stake in the underlying litigation.'” Gonzales, 840 F.3d at 648-49 (quoting Theis Research, Inc. v. Brown & Bain, 400 F.3d 659, 662 (9th Cir. 2005)); see also Chavez, 888 F.3d at 417 (explaining that the amount in controversy includes all amounts “at stake” in the litigation at the time of removal, “whatever the likelihood that [the plaintiff] will actually recover them”). It “is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability.” Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010) (citation omitted). “In that sense, the amount in controversy reflects the maximum recovery the plaintiff could reasonably recover.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019) (citing Chavez, 888 F.3d at 417) (emphasis original).

         “Where … it is unclear or ambiguous from the face of a state-court complaint whether the requisite amount in controversy is pled, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold.” Fritsch v. Swift Transportation Co. of Arizona, LLC, 899 F.3d 785, 793 (9th Cir. 2018) (quoting Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1121-22 (9th Cir. 2013)) (internal quotation marks omitted). “[A] removing defendant is not obligated to research, state, and prove the plaintiff's claims for damages, ” Korn v. Polo Ralph Lauren Corp., 536 F.Supp.2d 1199, 1204-05 (E.D. Cal. 2008) (citation and internal quotation marks omitted), but “[c]onclusory allegations as to the amount in controversy are insufficient.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090-1091 (9th Cir. 2003) (citation omitted). “[T]he defendant must provide evidence establishing that it is ‘more likely than not' that the amount in controversy exceeds” the jurisdictional threshold for diversity jurisdiction. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir.1996) (citations omitted).

         “In assessing the amount in controversy, [courts] may consider allegations in the complaint and in the notice of removal, as well as summary-judgment-type evidence relevant to the amount in controversy, ” Chavez, 888 F.3d at 416 (citation omitted), including “supplemental evidence later proffered by the removing defendant, which was not originally included in the removal notice.” Korn, 536 F.Supp.2d at 1205 (citing Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002)).

         ANALYSIS

         Neither party disputes that the diversity requirement is satisfied in this case, so the only issue for the Court to resolve on this motion is whether it is “more likely than not” that the amount in controversy - in connection with Gonzalez's individual claims - exceeds the jurisdictional threshold of $75, 000. See Sanchez, 102 F.3d at 404. In ...


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