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Dickerson v. NWAN Inc.

United States District Court, D. Arizona

April 4, 2018

Paul Dickerson and Ma Riza Dickerson, Plaintiffs,
NWAN Incorporated and Superstition Springs MID LLC, Defendants.


          David G. Campbell United States District Judge.

         Plaintiffs Paul and Ma Riza Dickerson sued Superstition Springs MID LLC (“Superstition”) and NWAN Incorporated for intentional interference with contract and violation of the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. § 2301, et seq. Doc. 16. On February 7, 2018, the Court dismissed the intentional interference claim and dismissed NWAN as a defendant. Doc. 45. The Court also ordered the parties to submit briefs addressing the Court's subject matter jurisdiction. Id.; see Docs. 49, 50. Superstition submitted evidence with its brief and argued that Plaintiffs cannot satisfy the amount-in-controversy requirement under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). Doc. 50. The Court ordered supplemental briefing on this issue, which the parties submitted. Docs. 52, 53. For the reasons stated below, the Court finds that it lacks jurisdiction.

         I. Background.

         Plaintiffs purchased a Dodge Ram truck from Superstition. The truck was covered by a “Warranty Forever” limited powertrain warranty administered by NWAN. The warranty required Plaintiffs to have all maintenance on the vehicle performed at Superstition or seek pre-authorization to have the service performed elsewhere. Plaintiffs' claim for a covered repair was denied and their warranty was voided because they failed to comply with this requirement. Plaintiffs allege that the pre-authorization requirement violates the MMWA's anti-tying provision, 15 U.S.C. § 2302(c).

         II. The Class Action Fairness Act.

         Plaintiffs' amended complaint asserts CAFA as the sole basis for the Court's jurisdiction. Doc. 16 ¶ 4. CAFA requires at least one member of the plaintiff class to be “a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2)(A). In addition to minimal diversity, CAFA requires that there be at least 100 class members and that the aggregate amount in controversy exceed $5 million, exclusive of interests and costs. See 28 U.S.C. § 1332(d)(2), (5); Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1195 (9th Cir. 2015). Superstition argues that the Court lacks jurisdiction because Plaintiffs cannot satisfy any of these requirements. Docs. 50, 53.[1]

         A. Burden of Proof.

         Most cases addressing the CAFA jurisdictional requirements involve a plaintiff who contests a defendant's removal of the case to federal court. See Petkevicius v. NBTY, Inc., No. 314CV02616CABRBB, 2017 WL 1113295, at *3 (S.D. Cal. Mar. 24, 2017) (“The overwhelming majority of decisions concerning CAFA jurisdiction involve cases removed to federal court by defendants.”). When a plaintiff contests jurisdiction in a removed action, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the” jurisdictional requirements have been satisfied. Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014); Ibarra, 775 F.3d at 1195. The removing defendant “has the burden to put forward evidence showing that the amount in controversy exceeds $5 million, to satisfy other requirements of CAFA, and to persuade the court that the estimate of damages in controversy is a reasonable one.” Ibarra, 775 F.3d at 1197. “[A] defendant cannot establish removal jurisdiction by mere speculation and conjecture, with unreasonable assumptions.” Id.

         In this case, Plaintiffs chose federal court. As proponents of federal jurisdiction, Plaintiffs must establish CAFA's requirements by a preponderance of the evidence. See Robinson v. United States, 586 F.3d 683, 685 (9th Cir. 2009) (“Once challenged, the party asserting subject matter jurisdiction has the burden of proving its existence[, ]” and no “presumptive truthfulness attaches to plaintiff's allegations.” (internal quotation marks omitted)); Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990) (“The party asserting jurisdiction has the burden of proving all jurisdictional facts.”).

         B. Minimal Diversity.

         The parties agree that Plaintiffs and Superstition are Arizona citizens for purposes of diversity and that NWAN is an Ohio citizen. Plaintiffs argue, however, that dismissal of NWAN did not destroy jurisdiction because diversity existed at the time they filed suit, and “post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing.” Doc. 45 at 2 (quoting United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO, CLC v. Shell Oil Co., 602 F.3d 1087, 1091-92 (9th Cir. 2010)). The Court agrees. See United Steel, 602 F.3d 1087 (denial of class certification after removal did not destroy CAFA jurisdiction); Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010) (same); Main v. Gateway Genomics, LLC, No. 15CV2945 AJB (WVG), 2016 WL 7626581, at *8 (S.D. Cal. Aug. 1, 2016) (dismissal of diverse party did not destroy jurisdiction because “minimal diversity as required by CAFA existed at the outset of this action”); Waller v. Hewlett-Packard Co., No. 11CV0454-LAB RBB, 2012 WL 1987397 (S.D. Cal. June 4, 2012) (same).

         C. Class Members and Amount in Controversy.

         Superstition argues that Plaintiffs cannot meet the class-size requirement because “there are not even 100 potential plaintiffs” in this action. Doc. 53 at 3 (emphasis in original).[2] Superstition submits internal data regarding its warranties, supported by affidavits from Superstition and NWAN employees. See Docs. 50-1, 50-2. According to the data, during the four years prior to Plaintiffs' filing of this case, [3] Superstition voided 209 “Warranty Forever” warranties. Doc. 50-1 at 2. Of those, 82 warranties were voided for failure to pre-authorize services; 63 of the 82 warranties were voided solely for this reason; and the remaining 19 were voided for multiple reasons. Id.

         Superstition argues that these 82 warranty holders cannot meet the $5 million aggregate damages requirement. Doc. 50 at 3. This is because the warranties contain a provision limiting damages to the resale value of the car at the time of the breakdown, the average sale price for new cars sold by Superstition is $33, 497, and 82 times $33, 497 equals $2.75 million. Id. at 2-3. Thus, Superstition argues, even if each of the 82 potential plaintiffs bought new cars (as opposed to used cars, which have an average sale price of $18, 683) ...

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