Greene v. Harley-Davidson, Inc., No. 20-55281

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: LEE, Circuit Judge
• Citation: 965 F.3d 767
• Parties: Matthew D. GREENE, an individual, on behalf of himself, the proposed class(es), all others similarly situated, and on behalf of the general public, Plaintiff-Appellee, v. HARLEY-DAVIDSON, INC., a Wisconsin corporation; Harley-Davidson Motor Company, Inc., a Wisconsin corporation; Harley-Davidson Motor Company Operations, Inc., a Wisconsin corporation, Defendants-Appellants, and Does, 1 through 10, inclusive, Defendant.
• Docket Number: No. 20-55281
• Decision Date: 14 July 2020

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Matthew D. GREENE, an individual, on behalf of himself, the proposed class(es), all others similarly situated, and on behalf of the general public, Plaintiff-Appellee,
v.
HARLEY-DAVIDSON, INC., a Wisconsin corporation; Harley-Davidson Motor Company, Inc., a Wisconsin corporation; Harley-Davidson Motor Company Operations, Inc., a Wisconsin corporation, Defendants-Appellants,
and
Does, 1 through 10, inclusive, Defendant.

No. 20-55281

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 14, 2020 Pasadena, California
Filed July 14, 2020

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James S. Azadian (argued) and Cory L. Webster, Dykema Gossett LLP, Los Angeles, California, for Defendants-Appellants.

Ross H. Hyslop (argued), Pestotnik LLP, San Diego, California, for Plaintiff-Appellee.

Before: Daniel P. Collins and Kenneth K. Lee, Circuit Judges, and Gregory A. Presnell,^* District Judge.

OPINION

LEE, Circuit Judge:

From Easy Rider ’s Captain America to the Rolling Thunder motorcade, Harley-Davidson motorcycles have symbolized the spirit of rebelliousness and rugged individualism in American culture. Class actions, too, are uniquely American: the United States pioneered this litigation vehicle, and it remains the most robust in the world. These two American institutions intersect in this case about allegedly deceptive pricing of Harley-Davidson motorcycles.

This case presents a technical, but unresolved, question in this circuit: If the defendant relies on potential punitive damages to meet the amount-in-controversy requirement for removal under the Class Action Fairness Act, what is the defendant's burden in establishing that amount? We hold that the defendant must show that the punitive damages amount is reasonably possible. Harley-Davidson met that standard by identifying prior cases involving the same cause of action in which the juries awarded punitive damages based on the same or higher punitive/compensatory damages ratios than the one relied upon by Harley-Davidson. We thus reverse the district court's order remanding this case to state court because it effectively required Harley-Davidson to provide evidence that the proffered punitive damages amount is probable or likely.

BACKGROUND

In 2015, Plaintiff-Appellee Matthew Greene started shopping for a Harley-Davidson motorcycle. He researched online, reviewed Harley-Davidson's catalogs and brochures, and browsed motorcycles at the Riverside Harley-Davidson dealership. The motorcycles had price tags with a "manufacturer suggested retail price," and according to Harley-Davidson's advertising, the price "exclude[d] dealer setup, taxes, title and licensing." Based on this advertising, Greene expected the dealership

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to charge him a dealer setup fee on top of the suggested retail price.

Greene bought a motorcycle from the Riverside dealership on June 13, 2015. He paid $23,799.63, which included a $1,399 freight and prep charge. As expected, Greene paid the $1,399 fee in addition to the manufacturer's suggested retail price. But, unbeknownst to Greene, the dealership had already performed the necessary prep and setup tasks for the motorcycle, and Harley-Davidson had reimbursed the dealership for the costs of doing so. Therefore, contrary to the dealership's advertising, the suggested retail price actually included the dealership's setup costs.

Two years later, Harley-Davidson's advertising revealed that it in fact reimburses dealers for performing setup tasks. Greene now claims that he would not have paid the $1,399 fee if not for Harley-Davidson's fraudulent statement that the suggested retail price did not include dealer setup.

Greene filed a putative class action against Harley-Davidson on June 11, 2019, in California state court.¹ Greene brought claims for (1) false advertising, (2) violations of the Consumer Legal Remedies Act (CLRA), (3) breach of express warranty, (4) negligent misrepresentation, (5) fraud and deceit (6) quasi-contract/unjust enrichment, (7) aiding and abetting, and (8) unfair competition.

Greene seeks (1) damages "in an amount not less than $1,000,000 for each year beginning June 11, 2015 and continuing to August 23, 2017," (2) reasonable attorneys’ fees under a statutory fee shifting provision, (3) punitive damages, and (4) injunctive relief. He proposes a class of "[a]ll consumers who, for the period beginning June 11, 2015 through August 22, 2017, purchased or leased from Riverside Harley-Davidson a new, assembled Harley-Davidson motorcycle," and alleges that the class "likely consists of thousands of members." The complaint also says that "any applicable statutes of limitation[s] should be tolled and are tolled under governing law."

Harley-Davidson removed the case, invoking federal jurisdiction under the Class Action Fairness Act (CAFA). Harley-Davidson alleged that the following damages satisfied CAFA's requirement that the amount in controversy exceeds $5 million: (1) at least $2,166,666 in compensatory damages based on the prayer in the Complaint (at least $1,000,000/year from June 11, 2015 to August 23, 2017); (2) approximately $2,166,666 in punitive damages based on a 1:1 punitive/compensatory damages ratio; and (3) $1,083,333 in attorneys’ fees, or 25 percent of the total amount in controversy.

Greene moved to remand the case back to state court, challenging Harley-Davidson's punitive damages and attorneys’ fees amounts. Greene argued that only the CLRA and fraud causes of action allow for punitive damages, and that both have a three-year statute of limitations. Invoking tolling principles established in American Pipe & Constr. Co. v. Utah , 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), Green argued that his punitive damages prayers had to be based on his individual claims, not the class claims.² He argued that his individual claims were for $1,399, so a 1:1 ratio would yield a punitive damages award of $1,399, not $2,166,666. Greene

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also challenged Harley-Davidson's attorneys’ fees amount, arguing that the "common fund" fees come out of the total damages and are not added to the total amount in controversy.

Harley-Davidson opposed the motion, attaching (1) evidence that juries had awarded punitive damages above a 1:1 ratio in four prior California CLRA cases and (2) evidence that Greene's attorney sought attorneys’ fees totaling 35 percent of the recovery in a similar class action.

The district court granted Greene's motion to remand. It acknowledged that Harley-Davidson had cited several cases in which the jury had awarded punitive damages on at least a 1:1 ratio. But it ruled that such evidence was insufficient because Harley-Davidson made "no attempt to analogize or explain how these cases are similar to the instant action. Although [Harley-Davidson] was not required to submit evidence of punitive damage awards in an identical case as this one, simply citing to cases without analysis or explanation is insufficient." Greene v. Harley Davidson , No. 5:19-CV-01647-RGK-KK, 2019 WL 5855982, at *3 (C.D. Cal. Nov. 7, 2019) (quotation marks and citations omitted). The court thus held that, even assuming Harley-Davidson's attorneys’ fees amount was correct, Harley-Davidson had not established by a preponderance of the evidence that the amount in controversy exceeded $5 million. Id. at *4. Finally, the district court concluded by noting that the potential recovery for punitive damages was $1,399, not $2,166,166. Id. at *3.

Harley-Davidson timely filed a petition for permission to appeal, which was granted on March 16, 2020. We have jurisdiction under 28 U.S.C. § 1453.

STANDARD OF REVIEW

The Court "review[s] remand orders in CAFA cases de novo." Arias v. Residence Inn by Marriott , 936 F.3d 920, 924 (9th Cir. 2019) (citing Fritsch v. Swift Transp. Co. of Ariz., LLC , 899 F.3d 785, 792 (9th Cir. 2018) ).

ANALYSIS

I. Harley-Davidson provided sufficient evidence showing that the potential punitive damages amount was possible.

CAFA gives federal courts original jurisdiction over class actions that have a class of over 100 members, minimal diversity between the parties, and an amount in controversy of more than $5 million. 28 U.S.C. § 1332(d) ; Standard Fire Ins. Co. v. Knowles , 568 U.S. 588, 592, 133 S.Ct. 1345, 185 L.Ed.2d 439 (2013).

The only dispute here is whether Harley-Davidson has met the amount-in-controversy requirement. To meet this requirement, Harley-Davidson presented evidence that juries have awarded punitive damages above a 1:1 punitive/compensatory damages ratio in other fraud cases involving...