Lee v. AM. Nat'l Ins. Co.

• Citation: 260 F.3d 997
• Decision Date: 08 August 2001
• Docket Number: DEFENDANTS-APPELLEES,PLAINTIFF-APPELLANT,No. 99-15846,99-15846
• Parties: (9th Cir. 2001) HOWARD M. LEE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,, v. AMERICAN NATIONAL INSURANCE COMPANY; AMERICAN NATIONAL INSURANCE COMPANY OF TEXAS,
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 997

260 F.3d 997 (9th Cir. 2001)

HOWARD M. LEE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT, v. AMERICAN NATIONAL INSURANCE COMPANY; AMERICAN NATIONAL INSURANCE COMPANY OF TEXAS, DEFENDANTS-APPELLEES.

No. 99-15846

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted November 13, 2000

Filed August 8, 2001

[Copyrighted Material Omitted] Counsel Marie Seth Weiner, Cotchett, Pitre & Simon, Burlingame, California, for the plaintiff-appellant.

James M. Wagstaffe, Kerr & Wagstaffe Llp, San Francisco, California, for the defendants-appellees.

Appeal from the United States District Court for the Northern District of California Charles A. Legge, District Judge, Presiding D.C. No. CV-97-01532-CAL

Before: Alex Kozinski, Michael Daly Hawkins and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Berzon; Partial Concurrence by Judge Kozinski

This case presents the question whether, in a diversity action removed from state court, the entire case must be remanded if the plaintiff lacks Article III standing as to one of several defendants. We conclude that the case need not be remanded, and therefore affirm the district court's denial of plaintiff Howard Lee's motion to remand his suit, in its entirety, to state court.

I. Background

Howard Lee purchased several life insurance policies for himself and members of his family from American National Insurance Company ("ANI"). In exchange for fixed premium payments for a preset number of years, these policies promised a specific schedule of increasing dividends. According to Lee's complaint, however, these benefits were never realized. Similar life insurance policies were issued by the American National Life Insurance Company of Texas ("ANTEX"), a wholly owned subsidiary of ANI, but Lee never bought one of these policies.

On March 26, 1997, Lee filed a complaint in California Superior Court on behalf of himself and all other buyers of similar ANI and ANTEX life insurance policies since January 1, 1988. Lee's complaint alleged that because ANI and ANTEX sold policies promising dividends they failed to deliver, their marketing practices violated the California Unfair Business Practices Act, Cal. Bus. & Prof. Code §§§§ 17200 and 17500. Lee also alleged common law causes of action for fraud, breach of the covenant of good faith and fair dealing, negligent misrepresentation, negligence, and unjust enrichment. Asserting that the parties were diverse, ANI and ANTEX promptly removed the case to district court. Lee did not contest the removal.

Over the ensuing months, Lee twice moved unsuccessfully for class certification, each time narrowing the scope of the putative class. At the hearing on Lee's second motion for class certification, the district court explained that because Lee had not purchased an ANTEX policy, he could not demonstrate that he had suffered an actual injury and therefore could not establish standing to bring suit in federal court. Even though the California unfair business practices statute requires no such actual injury to pursue a claim in state court, said the district court, Article III of the Constitution "takes priority" in federal court over the California statute's more liberal standing rules.

Lee then moved to remand the case to state court. ¹ The crux of Lee's argument was that because subject matter jurisdiction was lacking over some of his claims, remand of those claims was mandatory under 28 U.S.C. §§ 1447(c), and that remand of the justiciable claims together with the non-justiciable claims served the interests of judicial economy and convenience.

This motion, too, was denied.² Although Lee's claims against ANTEX had not been dismissed, the district court's ruling on the remand motion was premised on its previous holding that the court lacked jurisdiction under Article III over Lee's claims against ANTEX. The district court noted that the propriety of removal generally turns upon whether the case is within the district court's original jurisdiction, that there is original jurisdiction over Lee's case because there is complete diversity of the parties, and that dismissal of some but not all claims ordinarily does not affect a district court's original jurisdiction as long as there is jurisdiction over the remaining claims. Dismissal of some claims for lack of Article III standing, the district court reasoned, therefore provides no basis for concluding that removal was improper or that remand of the entire case is appropriate, as long as the remaining claims are within the court's subject matter jurisdiction and justiciable under Article III.

The district court certified its denial of Lee's remand motion for interlocutory appeal under 28 U.S.C.§§ 1292(b), stating its view that the requirements of that section were met.³ In particular, the court acknowledged in its certification order that there was substantial ground for difference of opinion on the question whether the court's conclusion "that plaintiff has no Article III standing as to two of the removed state law causes of action against one defendant[ ] requires that the entire case be remanded to state court." This court agreed that interlocutory appeal was appropriate and granted Lee's petition for interlocutory review of the district court's certified order. We therefore have jurisdiction over Lee's appeal under 28 U.S.C. §§ 1292(b).

Our jurisdiction under §§ 1292(b), it is worth noting, is not limited to deciding the precise question the district court certified to us. Rather, we are reviewing the district court's order refusing to remand the case, and may address any issue fairly included within that order. Yamaha Motor Corp. USA v. Calhoun, 516 U.S. 199, 205 (1996). We review de novo the district court's order denying Lee's motion to remand. ARCO Envtl. Remediation L.L.C. v. Dept. of Health & Envtl. Quality, 213 F.3d 1108, 1111 (9th Cir. 2000).

II. Discussion

Lee, a California resident, originally filed this action in California Superior Court. Both defendants, ANI and ANTEX, are Texas corporations whose principal place of business is Texas. The complaint states a claim by Lee for compensatory and punitive damages that will not to a"legal certainty" amount to less than the jurisdictional threshold of $75,000. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). On the face of things, then, the defendants' removal of this action to the district court was proper. See 28 U.S.C. §§§§ 1332, 1441.

After removing Lee's action to federal court, however, the defendants contended that Lee cannot meet federal standing requirements with respect to the claims against ANTEX. Lee now appears to accept that proposition as well, as did the district court, and argues that because he therefore cannot proceed in federal court with certain aspects of his case, the entire case must be remanded.

1. Standing

Although the parties now agree that the plaintiffs lack standing to prosecute the claims stated in the complaint against ANTEX, the district court never actually dismissed any claims in this case for lack of standing. Instead, the district court ruled on standing in the context of the class action motions and then necessarily assumed, for purposes of the remand motion, that the claims against ANTEX would eventually be dismissed for lack of standing if the case remained in federal court.

It would make little sense for us to decide this case on the assumption that the plaintiff lacks standing to pursue the claims it alleged against ANTEX if that were not the case. The plaintiff is arguing that the district court must decline to entertain jurisdiction over claims that are otherwise properly before it because of the lack of standing over the ANTEX claims. Before considering whether we are required to oust from federal court causes of actions that are, indisputably, within both our statutory and our constitutional jurisdiction, we should determine whether there is any need to consider that course at all. And, although the standing question was not expressly certified to this court, we have, as noted, interlocutory jurisdiction to decide all questions fairly raised by the order under review, of which the district court's earlier ruling concerning standing--on which the order under review was based--is one. We therefore briefly address the standing issue.

We agree with the consensus view of the parties and the district court that Lee cannot proceed with his claims against ANTEX in federal court. Lee's action against ANTEX stems from his right under California law to challenge the company's allegedly unfair business practices as a private attorney general even if he suffered no individualized injury as a result of the defendant's challenged conduct. Cal. Bus. & Prof. Code §§ 17204 (authorizing civil action to enforce Unfair Business Practices Act, Cal. Bus. & Prof. Code §§ 17200, by "any person acting for the interests of itself, its members, or the general public"); Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal. 4th 553, 561 (1998). Article III of the Constitution, however, limits the jurisdiction of the federal courts to "cases and controversies," a restriction that has been held to require a plaintiff to show, inter alia , that he has actually been injured by the defendant's challenged conduct. Friends of the Earth, Inc. v. Laidlaw Envtl. Serv., Inc., 528 U.S. 167, 180 (2000). So a plaintiff whose cause of action is perfectly viable in state court under state law may nonetheless be foreclosed from litigating the same cause of action in federal court, if he cannot demonstrate the requisite injury. See, e.g., Cantrell v. City of Long Beach, 241 F.3d 674, 683 (9th Cir. 2001); Fiedler v. Clark, 714 F.2d 77, 79-80 (9th Cir. 1983); Toxic Injuries Corp. v. Safety-Kleen Corp., 57 F. Supp. 2d 947, 954-56 (C.D. Cal. 1999). And Lee cannot, because he did not buy any policy from ANTEX and so did not suffer any...