Kuxhausen v. BMW Fin. Servs. NA LLC

• Decision Date: 25 February 2013
• Docket Number: No. 12–57330.,12–57330.
• Citation: 707 F.3d 1136
• Parties: Shanna Lee KUXHAUSEN, individually and on behalf of all others similarly situated, Plaintiff–Appellee, v. BMW FINANCIAL SERVICES NA LLC, a Delaware limited liability company, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

707 F.3d 1136

Shanna Lee KUXHAUSEN, individually and on behalf of all others similarly situated, Plaintiff–Appellee,

v.BMW FINANCIAL SERVICES NA LLC, a Delaware limited liability company, Defendant–Appellant.

No. 12–57330.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 6, 2013.

Filed Feb. 25, 2013.

Michael J. Hassen, Jeffer Mangels Butler & Mitchell LLP, San Francisco, CA, for Defendant–Appellant.

Christopher P. Barry (argued), Hallen D. Rosner and Angela J. Patrick, Rosner, Barry & Babbitt, LLP, San Diego, CA, for Plaintiff–Appellee.

Appeal from the United States District Court for the Central District of California, Andrew J. Guilford, District Judge, Presiding. D.C. No. 8:12–cv–00366–AG–JPR.

Before: DIARMUID F. O'SCANNLAIN, STEPHEN S. TROTT, and RICHARD R. CLIFTON, Circuit Judges.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether the defendant timely removed this proposed class action involving a California automobile dealership to federal court.

I

A

Seeking to trade in her BMW sedan for a larger model, Shanna Kuxhausen visited Crevier Motors in Irvine, California. A salesperson for the dealership interested her in a BMW X3 sports utility vehicle (SUV). After learning about the SUV's features and taking a test drive, Kuxhausen and Crevier worked out the preliminary financing details. Kuxhausen then signed a Retail Installment Sale Contract (RISC or “contract”), which structured her purchase over a sixty-month term. In the “Itemization of the Amount Financed Section” of the RISC appeared the notation “N/A” (not applicable) on a line designated for registration and titling fees. On the reverse side of the RISC was, allegedly unbeknownst to Kuxhausen, an agreement to arbitrate all disputes.

Kuxhausen took the SUV home. Around January 6, 2009, Crevier telephoned Kuxhausen with the news that because it had failed to obtain her financing, she would need either to return her purchase or make a down payment as part of a new financing deal. A few days later, she returned to the dealership, rescinded her RISC, and executed a new one. The new RISC had a top line of $52,309.13, and the same “N/A” notation and agreement to arbitrate as the original. Although executed in January, the new RISC was dated December 30, 2008—the date of her original contract. This time financing was successful, and sometime later Crevier transferred Kuxhausen's note to BMW Financial Services (“BMW”), a Delaware Limited Liability Corporation with its principal place of business in Ohio.

B

On August 30, 2011, Kuxhausen filed a class action complaint in Orange County Superior Court against Crevier and BMW as assignee and holder in due course of RISCs issued by the dealership. The complaint asserted ten California causes of action, including alleged violations of the Consumer Legal Remedies Act (CLRA), Cal. Civ.Code § 1750 et seq., and the Automobile Sales Finance Act, id. § 2981, et seq. The complaint proposed two class actions, each comprising Crevier customers who had financed their vehicles with an RISC over the last four years. Class One was composed of customers with backdated RISCs that included allegedly unconscionable arbitration clauses. Class Two covered customers whose RISCs “falsely state[d] [that] registration transfer, and/or titling fees[,] were ‘not applicable’ to their purchase.” Kuxhausen, although not specifying a total sum for class-wide damages, sought “statutory damages of up to $1,000 per consumer” and $5,000 for senior-citizen consumers under the CLRA. She also sought “restitution and/or rescission of any RISC entered into by any Class Member.”

The case proceeded apace in Superior Court with BMW unsuccessfully attempting to compel arbitration. In a Case Management Conference Statement dated January 20, 2012, Kuxhausen stated that she “may amend to plead a separate class on behalf of all California consumers whose contracts were assigned to BMW Financial, regardless of the selling dealership.”

On February 9, 2012, Kuxhausen filed a First Amended Complaint along those lines; a new group of all California–BMW purchasers whose RISCs had failed to disclose registration or titling fees was added as a third class. Invoking the diversity jurisdiction provision of the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d), BMW filed a notice of removal in the District Court for the Central District of California on March 9, 2012. In that notice of removal, BMW claimed that a search of its business records had revealed that the number of RISCs in Class Three far exceeded 100, and that “the total dollar amount of RISCs that fall within the scope of [Kuxhausen's] Class 3” exceeded ten million dollars. It also claimed that, given the size of the newly added Class Three, a minimum of $1,000 in statutory damage per purchaser would itself cause the amount in controversy to total more than ten million dollars.

Kuxhausen moved to remand within the prescribed period, arguing that BMW's March 9 removal was untimely since it had been more than thirty days after the original state complaint's August filing. The district court granted the motion. BMW then sought leave to appeal the remand order under CAFA, which we granted on December 27, 2012. See28 U.S.C. § 1453(c). Consistent with Congress's mandate, this decision is being rendered “not later than 60 days” from that grant. Id.

II

BMW contends that its March removal was indeed timely because the face of Kuxhausen's original state complaint did not contain all the facts necessary for diversity jurisdiction under CAFA.

A

The mechanics and requirements for removal are governed by 28 U.S.C. § 1446. Section 1446(b) “identifies two thirty-day periods for removing a case.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 885 (9th Cir.2010). “The first thirty-day removal period is triggered if the case stated by the initial pleading is removable on its face.” Id. (internal quotation marks omitted). “The second thirty-day removal period is triggered if the initial pleading does not indicate that the case is removable, and the defendant receives ‘a copy of an amended pleading, motion, order or other paper’ from which removability may first be ascertained.” Id. (quoting § 1446(b)).

The statute does not define “removable.” See Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir.2006). Although every complaint is either capable of being removed or not, for the purpose of assessing timeliness we do not treat the concept as a strict dichotomy. Rather, some pleadings are “indeterminate” in the sense that the face of the complaint does not make clear whether the required jurisdictional elements are present. Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 693 (9th Cir.2005). To avoid saddling defendants with the burden of investigating jurisdictional facts, we have held that “the ground for removal must be revealed affirmatively in the initial pleading in order for the first thirty-day clock under § 1446(b) to begin.” Id. at 695. Removals invoking CAFA jurisdiction are equally subject to this rule. See, e.g., Carvalho, 629 F.3d at 886.

B

Federal jurisdiction under CAFA has three elements: (1) there must be minimal diversity of citizenship between the parties, (2) the proposed class must have at least 100 members and (3) the amount in controversy must “exceed[ ] the sum or value of $5,000,000.” ¹See28 U.S.C. § 1332(d). Although BMW concedesthat the first criterion was satisfied, it contends that the district court erred in concluding that Kuxhausen's original complaint revealed the requisite class size or that the dispute concerned over five million dollars.

As to numerosity, we reject BMW's contention out of hand. BMW cites as proof of indeterminacy the fact that the complaint stated that the “exact number” of class members was unknown and that Kuxhausen alleged being “one of many customers.” Yet, the first paragraph of the complaint states that Kuxhausen is seeking to “provide remedies for hundreds of affected consumers.” We agree with the district court that this was enough. No investigation, “subjective knowledge,” or “further inquiry” was necessary for BMW to understand that “hundreds,” by definition, means at least 200. Carvalho, 629 F.3d at 886;see Tompkins v. Basic Research LL, No. S–08–244 LKK/DAD, 2008 WL 1808316, at *3 (E.D.Cal. Apr. 22, 2008) (CAFA numerosity satisfied because the allegation “a class of ‘thousands of persons' ” implies “a logical minimum of 2,000 class members”).

BMW next argues that the first thirty-day period did not start because an “examination of the four corners of the applicable pleading[ ]” did not reveal that the amount in controversy exceeded five million dollars. Carvalho, 629 F.3d at 886 (quoting Harris, 425 F.3d at 694). In deeming this element of CAFA satisfied, the district court reasoned that, given 200 class members and given Kuxhausen's demand for “rescission of a vehicle contract exceeding $50,000,” there were class-wide damages “of at least $10,000,000.”

BMW perceives two errors. First, it suggests that Harris and Carvalho freed defendants from the need to make this sort of mathematic calculation. As we explain below, defendants need not make extrapolations or engage in guesswork; yet the statute “requires a defendant to apply a reasonable amount of intelligence in ascertaining removability.” Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 206 (2d Cir.2001). Multiplying figures clearly stated in a complaint is an aspect of that duty. See, e.g., Carvalho, 629 F.3d at 884 (noting that the “amount in controversy was at least $12.5 million ( i.e., $25,000 times 500 potential plaintiffs)”).²

BMW's second challenge is more substantial. It correctly observes that lurking in the district court's analysis was an implicit premise not furnished by the complaint. Nowhere in that pleading does Kuxhausen allege the value, even as an approximation, of other class members' vehicle financing contracts....