Travis Z. Gonzales, an individual, Plaintiff-Appellant,
CarMax Auto Superstores, LLC, a Virginia Limited Liability Company; Santander Consumer USA, Inc., an Illinois Corporation; Safeco Insurance Company of America, a New Hampshire Corporation, Defendants-Appellees. Travis Z. Gonzales, an individual, Plaintiff-Appellee,
CarMax Auto Superstores, LLC, a Virginia Limited Liability Company; Santander Consumer USA, Inc., an Illinois Corporation; Safeco Insurance Company of America, a New Hampshire Corporation, Defendants-Appellants.
and Submitted August 2, 2016 Pasadena, California
from the United States District Court for the Central
District of California Cormac J. Carney, District Judge,
Presiding D.C. No. 8:13-cv-01391-CJC-RNB
D. Rosner (argued), Rosner, Barry & Babbitt, LLP, San
Diego, California, for Plaintiff-Appellant/Cross-Appellee.
A. Schlichter (argued), Steven C. Shonack, Jamie L. Keeton,
Schlichter & Shonack, LLP, El Segundo, California, for
Before: Stephen Reinhardt, Alex Kozinski, and Kim McLane
Wardlaw, Circuit Judges.
panel reversed the district court's summary judgment in
favor of CarMax Auto Superstores, LLC, and remanded with
instructions to enter summary judgment for Travis Gonzales on
his Consumer Legal Remedies Act and Unfair Competition Law
claims, based on CarMax's alleged violations of
California Vehicle Code section 11713.18(a)(6), which
requires a car dealer to provide consumers with a
"completed inspection report" prior to the sale of
any "certified" used vehicle.
panel held that the district court properly exercised
diversity-based subject matter jurisdiction over the case.
The panel held that the district court did not err in finding
that the jurisdictional amount-in-controversy requirement was
satisfied where the potential cost of complying with
injunctive relief was considered along with Gonzales's
claims for compensatory damages and punitive damages.
the requirements of Cal. Veh. Code § 11713.18(a)(6), the
panel held that a report that fails to indicate the results
of an inspection in a manner that conveys the condition of
individual car components to a buyer is not a "completed
inspection report" under California law. The panel
concluded that CarMax's generic list of car parts
inspected failed to inform consumers of the material results
of the inspection.
REINHARDT, Circuit Judge
Z. Gonzales sued CarMax Auto Superstores, LLC
("CarMax"), a used car retailer, after experiencing
problems with a vehicle he purchased at one of its lots.
Gonzales alleged violations of four California consumer
protection laws: (1) the Consumer Legal Remedies Act
("CLRA"); (2) the Song-Beverly Consumer Warranty
Act ("Song-Beverly"); (3) common law fraud and
deceit; and (4) the Unfair Competition Law ("UCL").
Gonzales's claims under the CLRA and UCL were both based
on CarMax's alleged violation of California Vehicle Code
section 11713.18(a)(6), which requires a car dealer to
provide consumers with a "completed inspection
report" prior to the sale of any "certified"
vehicle. The district court dismissed Gonzales's fraud
and Song-Beverly claims and granted CarMax summary judgment
on his CLRA and UCL claims.
issue before us is whether a report that fails to indicate
the results of an inspection in a manner that conveys the
condition of individual car components to a buyer is a
"completed inspection report" under California law.
Because we conclude that it is not, we reverse the district
court's decision to grant summary judgment to CarMax on
Gonzales's CLRA and UCL claims.
and Procedural Background
purchased a 2007 Infiniti G35 from CarMax's Costa Mesa
sales lot. Gonzales alleges that he was drawn to CarMax after
hearing radio and online advertisements regarding the
benefits of purchasing a "certified" vehicle that
had passed CarMax's rigorous "125-point"
certification inspection. Gonzales further alleges that he
would have paid less, or possibly not even purchased the car,
had it not been a "certified" vehicle.
to Gonzales, it is CarMax's policy to simply provide
purchasers of used vehicles with a pre-printed "CarMax
Quality Inspected Certificate" ("CQI
Certificate") listing vehicle components that were
inspected. Gonzales received two versions of the CQI
Certificate: a one-sided CQI Certificate provided to him
prior to sale, and a two-sided CQI Certificate, which was
placed in the glove compartment before he took possession of
the car. In addition to the two CQI Certificates that CarMax
provides to purchasers of used vehicles, CarMax also uses a
third document known as the "CQI/VQI Checklist."
This is a checklist which contains 236 points of inspection
and is filled out by a technician during the inspection
process. The CQI/VQI Checklist, unlike the CQI Certificates,
indicates the condition of each individual component
inspected. Rather than provide the CQI/VQI Checklist to
consumers, CarMax destroys the document after the inspection
results are entered into its electronic system, and no copy
of the Checklist is retained.
after purchasing the Infiniti, Gonzales experienced some
difficulty with the car. He contended that the brake pads
needed replacing, there was a clicking noise coming from the
engine, and the windows malfunctioned. Additionally, the
check-engine light illuminated routinely, there were problems
with the transmission, the clicking noise from the engine
persisted, and other warning lights on the dashboard
illuminated "in clusters."
filed suit in California state court alleging that CarMax
violated California consumer protection laws by selling him a
lemon and falsely claiming that the car was certified.
Gonzales's central argument is that CarMax violated
California law by failing to provide him with a
"completed inspection report" prior to the sale of
the "certified" vehicle.
timely filed a notice of removal pursuant to 28 U.S.C. §
1441(b) claiming diversity jurisdiction. A week after
removal, CarMax filed a motion to dismiss the first amended
complaint, as well as a motion to strike Gonzales's
punitive damages claim. The following month, while the motion
to dismiss the first amended complaint was pending, the
district judge issued an order to show cause regarding
subject matter jurisdiction, noting that he had "serious
doubts" whether the case met the amount-in-controversy
requirement. After the parties responded to the order to show
cause, the district judge found that CarMax had shown by a
preponderance of the evidence that the amount in controversy
was over $75, 000 and thus the action was properly removable.
district court then granted CarMax's motion to dismiss on
all claims except for Gonzales's CLRA and UCL claims.
Following discovery, CarMax filed a motion for summary
judgment on Gonzales's CLRA and UCL claims. The district
court granted the motiom, holding that there was no material
legal difference between the one-sided form and the two-sided
form, and that both forms were legally sufficient. Gonzales
appeals the district court's dismissal and summary