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deciding motion to remand before motion to stay and noting "[a]lthough the Court has the inherent power to stay proceedings, it balances that discretion against its historic obligation to ensure jurisdiction is proper"
Summary of this case from Lopez v. PfefferOpinion
No. C 04-1992 FMS.
August 17, 2004
ORDER GRANTING PLAINTIFF KAREN BROCK'S MOTION TO REMAND
This is a price fixing case brought by Plaintiff Karen Brock (Brock), on behalf of herself and others similarly situated, against Defendants Stolt-Nielsen SA, Stolt-Nielsen Transportation Group, Ltd., Odfjell ASA, Odfjell USA, Inc., Odfjell Seachem AS, Jo Tankers BV, Jo Tankers USA, Inc., and Tokyo Marine Co., Ltd. (Shippers). Before the Court is Brock's motion to remand pursuant to 28 U.S.C. § 1447(c). The Court finds this matter suitable for decision without oral argument, Civil L.R. 7-1(b), and hereby GRANTS Brock's motion to remand and AWARDS Brock her just costs and actual expenses, including reasonable attorneys' fees.
I. BACKGROUND
Brock alleges that the Shippers illegally agreed "to fix, raise, maintain or stabilize freight rates on parcel tankers," injuring indirect purchasers such as herself and the other potential class members. Am. Compl. at 11:3. Brock bases her claims on California law (disclaiming federal causes of action) and limits the relief for any particular plaintiff to $74,999. Id. at 2:10-11. Among other requests, Brock specifically demands that the Shippers "be ordered to restore all funds to each member of the Class acquired by means of any act or practice declared by this Court to be unlawful or to constitute unfair competition . . ., including disgorgement of their wrongfully obtained revenues, earnings profits, compensation, and benefits. . . ." Id. at 16:4-9.
On May 20, 2004, Stolt-Nielsen Transportation Group, Ltd., Odfjell USA, Inc., and Jo Tankers USA, Inc. removed the instant action to this Court. Brock then moved for remand During briefing, the Judicial Panel on Multidistrict Litigation (Panel) issued a Conditional Transfer Order, stating that the instant action involves questions of fact common to actions it previously transferred to a multidistrict litigation (MDL) court. On July 13, 2004, after notifying this Court that one of the parties opposed such a transfer, the Panel suggested that
your jurisdiction continues until any transfer ruling becomes effective. If you have a motion pending before you in the action — particularly a motion to remand to state court (if the action was removed to your court) — you are encouraged to rule on the motion unless you conclude that the motion raises issues likely to arise in other actions in the transferee court, should we order transfer, and would best be decided there.
II. ANALYSIS
A. MDL ProceedingThe Court will not postpone its decision on Brock's remand motion while the Panel decides whether to transfer conclusively. Although the Court has the inherent power to stay proceedings, Landis v. North Am. Co., 299 U.S. 248, 254 (1936), it balances that discretion against its historic obligation to ensure jurisdiction is proper. See Mansfield, C. L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884) (holding that jurisdiction is a concept of fundamental concern of which a federal court is "bound to ask and answer for itself, even when not otherwise suggested, and without respect to the relation of the parties to it."); Ex Parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868) ("Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause."). In the light of a multidistrict proceeding, for example,
[t]he pendency of a motion, order to show cause, conditional transfer order or conditional remand order before the Panel concerning transfer or remand of an action pursuant to 28 U.S.C. § 1407 does not affect or suspend orders and pretrial proceedings in the district court in which the action is pending and does not in any way limit the pretrial jurisdiction of that court.
J.P.M.L. Rule 1.5, 199 F.R.D. 425, 427 (2001); see also Villarreal v. Chrysler Corp., No. C-95-4414 FMS, 1996 WL 116832, at *1 (N.D. Cal. Mar. 12, 1996) ("Consistent with the directives of the Panel, a stay is improper. Judicial economy will best be served by addressing the remand issue because a determination on this issue will facilitate litigation in the appropriate forum."); Manual for Complex Litigation § 20.132, at 220-21 (4th ed. 2004) (approving of the resolution of motions to remand prior to the Panel's conclusive decision regarding transfer). The Court considers a motion to remand in the time provided by its local rules unless the removing party demonstrates that the jurisdictional issue is both difficult and similar to those in cases already or likely transferred. Meyers v. Bayer AG, 143 F. Supp. 2d 1044, 1049 (E.D. Wis. 2001).
The Shippers have not demonstrated that the jurisdictional issue is both difficult and similar. They demand that the Court delay its consideration of remand because "[s]imilar remand motions will inevitably arise that would be best resolved in a consistent and unified fashion by the MDL court. Allowing the MDL court to rule on this and any future remand action will avoid possibly inconsistent rulings." Shippers' Opp'n at 2:28-3:3. The Shippers fail to provide any cogent explanation why the legal issues appurtenant to the determination of federal subject matter jurisdiction are difficult or similar; they rely solely on the mere existence of factually-related MDL proceedings. If this alone were sufficient, it would create an automatic stay whenever factually-related MDL proceedings existed, rendering superfluous the provisions cited above from the authority, the Panel rules, and the Manual for Complex Litigation. And, in one of those factually-related actions to which the Shippers refer, a federal court in Tennessee already refused to delay, and immediately remanded to state court, an almost identical case raising the same indirect purchaser claims. Sutton v. Stolt-Nielsen Transp. Group, Ltd., No. 2:04-CV-67, at 2 (E.D. Tenn. May 27, 2004) ("[T]he Court finds that no benefit will be gained by staying consideration of the motion to remand . . ."). This Court's obligation to review its jurisdiction strictly and the Shippers' failure to demonstrate that the jurisdictional issue is both difficult and similar to those in transferred cases require that the Court immediately decide Brock's pending motion to remand
B. Federal Subject Matter Jurisdiction
Remand to state court is necessary because federal subject matter jurisdiction is absent. Removal of an action instituted in a state court is proper if the case originally could have been filed in federal court. 28 U.S.C. § 1441. The Court will remand a case to the state court from which it was removed if it appears, at any time prior to final judgment, that it lacks federal subject matter jurisdiction. 28 U.S.C. § 1447(c); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) ("We strictly construe the removal statute against removal jurisdiction."). Here, diversity of citizenship is the only possible basis for federal subject matter jurisdiction. See 28 U.S.C. § 1332(a)(1) ("The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States. . . ."); see also Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (holding that federal courts do not have federal question jurisdiction over antitrust damages actions by indirect purchasers of goods whose price was fixed earlier in the stream of commerce and passed on to them by those who purchase directly from the price fixers). The only dispute here is whether the matter in controversy exceeds the sum or value of $75,000. Cf. Notice of Removal at 4:6-18 (stating that Brock is a California citizen and that no Shipper is a California citizen); Am. Compl. at 3:9-4:12 (same).
In diversity cases removed from state court where the amount in controversy is in doubt, the Court applies a "strong presumption" against removal jurisdiction and "the defendant always has the burden of establishing that removal is proper." Gaus, 980 F.2d at 566. The Shippers do not challenge the Amended Complaint's limitation of damages to $74,999 per plaintiff; instead, they contend that the disgorgement demand creates a common and undivided interest among the potential class members that satisfies the amount in controversy requirement. Cf. Zahn v. International Paper Co., 414 U.S. 291, 294 (1973) (holding that two or more plaintiffs, uniting to enforce a single title or right in which they have a common and undivided interest, may aggregate to meet the jurisdictional amount). The phrase "common and undivided interest" means that the matter could not have been adjudicated without implicating the rights of everyone involved. McCauley v. Ford Motor Co. (In re Ford Motor Co./Citibank (South Dakota), N.A.), 264 F.3d 952, 959-60 (9th Cir. 2001). "[T]he `paradigm cases' allowing aggregation of claims `are those which involve a single indivisible res, such as an estate, a piece of property (the classic example), or an insurance policy." Id. at 959 (quoting Gilman v. BHC Sec., Inc., 104 F.3d 1418, 1423 (2d Cir. 1997)). In contrast, when plaintiffs have separate and distinct demands, but unite in a single suit for convenience and economy, "it is essential that the demand of each be of the requisite jurisdictional amount. . . ." Zahn, 414 U.S. at 294.
The Shippers base their aggregation argument on the incorrect assertion that Brock seeks a common and undivided interest called "nonrestitutionary disgorgement." See Shippers' Opp'n at 4:24-5:14 (citing Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (Cal. 2003); Kraus v. Trinity Mgmt. Servs., Inc., 23 Cal.4th 116 (Cal. 2000)). In Korea Supply and Kraus, the California Supreme Court distinguished restitutionary and nonrestitutionary disgorgement: in the former, a court compels the return of wrongfully-obtained property to those persons from whom it was taken, that is, to persons who had a prior interest in the property; in the latter, a court compels the surrender of all wrongfully-obtained property, even though not all is to be restored to the persons from whom it was obtained. Korea Supply, 29 Cal.4th at 1148-49; Kraus, 23 Cal.4th at 126-27. Brock demands "[t]hat Defendants . . . be ordered to restore all funds to each member of the Class acquired by means of any act or practice declared by this Court to be unlawful. . . ." Am. Compl. at 16:3-6. Although including the phrase "all funds" — the significance of which is questionable, see In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d at 961 ("[S]imply because the plaintiffs request disgorgement of `all benefits' does not establish that the right which they seek to enforce is collective.") — Brock specifically uses the term "restore," which means "[t]o give back, to make return or restitution of (anything previously taken away or lost)." XIII The Oxford English Dictionary 755 (2d ed. 1989) (emphasis added). The Amended Complaint, when read fairly, demands that the Shippers return property obtained through unfair business practices to those persons from whom it was taken. In her briefing on this motion, Brock reemphasizes that she does not seek nonrestitutionary disgorgement. Brock Reply at 6:23-24 ("There is no mention of `nonrestitutionary disgorgement,' much less a claim for it."). Brock's disgorgement claim, thus, is not nonrestitutionary.
The Court only finds that Brock does not seek nonrestitutionary disgorgement. It does not decide whether nonrestitutionary disgorgement can be a common and undivided interest.
The Court finds, as the federal court in Tennessee found, that the nature of the rights asserted by Brock and the potential class are uncommon and divisible. The injuries to Brock and the potential class members allegedly were caused when they individually, not as a group, indirectly purchased products for prices artificially heightened by the freight rate price fixing. They shared no common interest prior to this litigation; their claims arising from the alleged price fixing scheme do not implicate a single indivisible res, could be adjudicated on an individual basis, and are joined merely for convenience and economy. See Sutton, No. 2:04-CV-67, at 10. The Court finds that aggregation is improper, that the claims do not meet the jurisdictional minimum, and that remand to state court is necessary.
III. CONCLUSION
For the reasons set forth above, the Court REMANDS this action to the state court from which it originally was removed. The Shippers shall pay Brock the just costs and any actual expenses, including reasonable attorneys' fees, she incurred as a result of the removal. See 28 U.S.C. § 1447(c).
IT IS SO ORDERED.