Used Tires Veer off Track En Route to Federal Court

Norton v. Ford of Santa Monica, et al, 2:11-cv-01433-JHN JEM, (C.D. Cal. April 26, 2011).

Used car salesmen remanded to state court without oral argument…maybe there is justice in the world.

This class action case arose out of Stephen Norton’s purchase of a used Chrysler vehicle from Subaru of Santa Monica (“SSM”). Norton alleged that he was charged the California Tire Fee for new tires, when in fact the vehicle had all used tires; that he was charged a higher price than was promised for an extended warranty; and that he was not given the choice to opt out of an optional $29 DMV electronic filing fee. Wait…used car salesmen accused of misrepresenting facts and sneaking in additional charges? Insert shocked expression here.

Norton filed suit in the Superior Court of California against SSM and others alleging a variety of causes of action under California law. Norton alleged individual claims, as well as claims on behalf of two classes: Class One was composed of individuals who had purchased a vehicle from SSM in the four-year period prior to the filing of the complaint and who were charged the new tire fee for used tires; Class Two was composed of individuals who had purchased a vehicle from SSM in the same period and who were automatically charged the optional $29 DMV electronic filing fee.

A co-defendant timely removed the action to federal court, arguing diversity jurisdiction under CAFA.

Norton filed a motion to remand, arguing that the putative class actions fell under the “local controversy” exception to CAFA, found in 28 U.S.C. § 1332(d)(4)(A), and the District Court agreed.

The Court noted that all of the requirements for the “local controversy” exception to federal jurisdiction were met. First, it was undisputed that more than two-thirds of the proposed class members in both classes were citizens of California.

Second, local defendant SSM was certainly a defendant “from whom significant relief was sought” and whose alleged conduct “formed a significant basis” for the claims asserted, as it was the only defendant named in each of the six class claims and each of Norton’s individual claims. (The other defendants were only named in Norton’s individual claims).

Third, it was undisputed that the “principal injuries” occurred in Santa Monica.

And finally, the parties presented no evidence that any defendant had been sued in a class action in the previous three years for similar violations.

Thus, the Court concluded, the action fell within the “local controversy” exception to CAFA and should be remanded to the Superior Court of the State of California, County of Los Angeles.

The moral of the story is simple: if you’re an in-state defendant that caused all of the class members’ injuries, you’re stuck in state court. And especially if you’re a used car salesman.