Chess v. CF Arcis IX LLC, Case No. 20-cv-01625-CRB

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
Writing for the CourtCHARLES R. BREYER United States District Judge
PartiesJOHN CHESS, et al., Plaintiffs, v. CF ARCIS IX LLC, Defendant.
Docket NumberCase No. 20-cv-01625-CRB
Decision Date22 July 2020

JOHN CHESS, et al., Plaintiffs,
CF ARCIS IX LLC, Defendant.

Case No. 20-cv-01625-CRB


July 22, 2020


Two motions are pending in this dispute between a golf club and its members. Named Plaintiffs John Chess and David Orenberg allege that Defendant CF Arcis has wrongfully modified the membership contract for the club. Plaintiffs now move for remand and attorneys' fees. CF Acris moves to compel arbitration per the arbitration agreement in the membership contract. For the reasons set forth below, the Court DENIES the Motion for Remand and Attorneys' Fees and GRANTS the Motion to Compel Arbitration.


Plaintiffs John Chess and David Orenberg have been members at The Ruby Hill Golf Club in Pleasanton, California, since 1999 and 1996 respectively. Chess Decl. (dkt. 26-2) ¶ 2; Orenberg Decl. (dkt 26-3) ¶ 2. Upon purchasing their refundable memberships, Chess and Orenberg completed membership applications that incorporated the current club rules and regulations ("Original Rules"). Compl. (dkt. 1-1) ¶ 9. This refundable membership required a deposit of tens of thousands of dollars. Id.

Purchasing the refundable membership allowed Plaintiffs to use and access the club's facilities. Id. ¶ 8. The refundable membership also entitled Plaintiffs to receive their deposit back upon resigning from the club. Id. ¶ 11. If there was a "Full Complement" of members at the club

Page 2

when they resigned, they would receive the deposit back in 30 days. Id. If the club was not a "Full Complement" when they resigned, then they could either sell their membership to a new member or wait 15 years from their date of resignation to receive the returned deposit. Id. ¶ 13. There was also a Waiting List that members who expected to resign could enter, allowing them to keep their membership until a potential replacement buyer appeared. Id.

In 2014, Defendant CF Arcis purchased The Ruby Hill Golf Club. Id. ¶ 15. After the purchase, CF Arcis modified the Original Rules with amendments that created the Ruby Hill Golf Club Membership Plan ("Membership Plan"). Id. The club had previously utilized the unilateral modification clause in the Original Rules to make amendments in 1996, 1997 and 1998. Id. ¶ 9.

The 2014 amendments resulted in three major changes. First, there were new requirements for a departing member to receive a refund of his or her membership deposit. Id. ¶ 15. Second, the club began to sell non-refundable memberships at a lower price. Id. Third, the Membership Plan contained an arbitration agreement. Mot. to Compel Arb. at 3. Plaintiffs allege that those amendments made the club crowded with less experienced golfers, made it more difficult for members who wanted to resign to receive their deposit refunds, and forced members who wanted to resign to continue to pay monthly membership dues. Compl. ¶¶ 15-16.

Named plaintiffs Chess and Orenberg filed a class action suit against CF Arcis and Does 1 through 100 in California state court. See generally id. There are eight causes of action: violation of the Consumer Legal Remedies Act (CLRA), Unfair Competition in violation of Business & Professions Code § 17200 (UCL), fraud by misrepresentation, fraud by suppression of fact, conversion, unjust enrichment, breach of written contract, and declaratory relief. See id. ¶¶ 30-75. CF Arcis filed a timely notice of removal. See generally Notice of Removal (dkt. 1). Plaintiffs now move for remand and for attorneys' fees. See generally Pls.' Mot. for Remand (dkt. 19). CF Arcis moves to compel arbitration. See generally Mot. to Compel Arb. (dkt. 11). The Court held a motion hearing in this case on July 17, 2020. See Motion Hearing (dkt. 34).


The first motion this order addresses is Plaintiffs' Motion to Remand, in which Plaintiffs argue that the Court lacks subject matter jurisdiction. See generally Mot. for Remand.

Page 3

A. Legal Standard for Subject Matter Jurisdiction

A defendant who seeks to remove a case to federal court must file a notice of removal "containing a short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a). This "short and plain statement" requirement mirrors the one found in Rule 8(a)(1) of the Federal Rules of Civil Procedure, the general pleading rule for cases filed in federal court. The use of the same language is "[b]y design," the Supreme Court has explained: "Congress, by borrowing the familiar 'short and plain statement' standard from Rule 8(a), intended to 'simplify the "pleading" requirements for removal' and to clarify that courts should 'apply the same liberal rules to removal allegations that are applied to other matters of pleading.'" Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547, 553 (2014) (quoting H.R. Rep. No. 100-889, at 71 (1988)).

A federal court that is considering whether it has jurisdiction on the basis of diversity must evaluate "the state of things at the time of the action brought." Rockwell Int'l Corp. v. United States, 549 U.S. 457, 473 (2007) (quoting Mullan v. Torrance, 22 U.S. 537, 539 (1824)). This means examining whether the parties' citizenship was sufficiently diverse, and whether the amount in controversy was satisfied at the time the case was originally filed. A federal court considering jurisdiction on the basis of the Class Action Fairness Act (CAFA) must evaluate these requirements both when the case is first filed and when the case is removed. See Strotek Corp. v. Air Transp. Ass'n. of Am., 300 F.3d 1129, 1131 (9th Cir. 2002). "The burden is on the party removing the case from state court to show the exercise of federal jurisdiction is appropriate." Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010).

B. Discussion of Motion for Remand and Attorneys' Fees

The Court has subject matter jurisdiction over this case under both (1) traditional diversity jurisdiction and (2) CAFA jurisdiction. The Court therefore DENIES both the Motion for Remand and the Motion for Attorneys' Fees.

1. Diversity Jurisdiction

District courts have subject-matter jurisdiction over civil cases where (1) the matter "is between . . . citizens of different States," and (2) the amount in controversy "exceeds the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332(a)(1). Consistent with the

Page 4

framework outlined above, "[t]he party seeking to invoke the district court's diversity jurisdiction always bears the burden of both pleading and proving diversity jurisdiction." NewGen LLC v. Safe Cig, LLC, 840 F.3d 606, 613-14 (9th Cir. 2016).

a. Complete Diversity

Diversity jurisdiction requires complete diversity: "each plaintiff must be of a different citizenship from each defendant." Grancare, LLC v. Mills ex rel. Thrower, 889 F.3d 543, 548 (9th Cir. 2018). Both parties agree that complete diversity exists between named plaintiffs and named defendants. Opp'n to Mot. for Remand (dkt. 26) at 2. But Plaintiffs argue that there is not complete diversity due to the presence of unnamed Doe defendants. See Mot. for Remand at 8. The question is therefore whether the existence of Doe defendants, described with some specificity, defeats diversity in a case that has been removed from state court.

District courts within the Ninth Circuit have split on this issue. Some courts have determined that a plain reading of the removal statute requires the court to completely ignore unnamed parties when determining diversity. See, e.g., Goldsmith v. CVS Pharmacy, Inc., No. CV 20-00750-AB (JCX), 2020 WL 1650750, at *4 (C.D. Cal. Apr. 3, 2020) (concluding that "the clear language of 28 U.S.C. § 1441(b)(1) requires it to disregard the citizenship of the Doe Defendants at this stage"); see also 28 U.S.C.A. § 1441 ("In determining whether a civil action is removable on the basis of the jurisdiction under section 1332(a) of this title, the citizenship of defendants sued under fictitious names shall be disregarded."). Others, instead, examine the specificity with which the plaintiff describes the unnamed parties to determine whether that detail is enough to destroy diversity. See, e.g., Gardiner Family, LLC v. Crimson Res. Mgmt. Corp., 147 F. Supp. 3d 1029, 1036 (E.D. Cal. 2015) (weighing "whether the Plaintiffs' description of Doe defendants or their activities is specific enough as to suggest their identity, citizenship, or relationship to the action").

Using the test in Goldsmith, the analysis is straightforward. The Doe defendants are unnamed. Compl. ¶ 5. The plain reading of the removal statute says to ignore unnamed defendants. See Goldsmith, No. CV 20-00750-AB (JCX), 2020 WL 1650750, at *4. Therefore, because the named parties are completely diverse, there is no issue of diversity in this case.

Page 5

The test in Gardiner is more involved. There, the court examines the specificity of the unnamed Doe defendants. "If . . . Plaintiff's allegations that concern the Doe Defendants provide a reasonable indication of their identity, the relationship to the action, and their diversity-destroying citizenship, then the Court lacks diversity jurisdiction." Robinson v. Lowe's Home Centers, LLC, 2015 WL 13236883, at *3 (E.D. Cal. Nov. 13, 2015) (citing Gardiner, 147 F. Supp. 3d at 1036).

In the instant case, the Doe defendants are described as an "individual, corporate, associate or otherwise" that may be an "agent, employer, partner, joint venture, alter ego, affiliate and/or co-conspirator" of the named defendants. Compl. ¶¶ 5-6. This broad, boilerplate language gives no indication of the Doe defendants' identities or relationships to the action. This vagueness stands in contrast to the case law cited by Plaintiffs, where Doe defendants were described as the named defendant's customer services representatives in the state of Montana with whom the plaintiffs had directly interacted regarding the action. See Fisher v....

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT