Polo v. Innoventions Int'l, LLC

• Decision Date: 18 August 2016
• Docket Number: No. 14-55916,14-55916
• Citation: 833 F.3d 1193
• Parties: Elsa Polo, on behalf of herself and all others similarly situated, Plaintiff–Appellant, v. Innoventions International, LLC, a limited liability company, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

833 F.3d 1193

Elsa Polo, on behalf of herself and all others similarly situated, Plaintiff–Appellant,

v.Innoventions International, LLC, a limited liability company, Defendant–Appellee.

No. 14-55916

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 4, 2016—Pasadena, California

Filed August 18, 2016

Christopher L. Rudd (argued), The C2 Law Group, P.C., Sherman Oaks, California, for Plaintiff–Appellant.

Thomas J. Peistrup (argued), Tantalo & Adler LLP, Los Angeles, California, for Defendant–Appellee.

Before: RAYMOND C. FISHER, MILAN D. SMITH, JR., and JACQUELINE H. NGUYEN, Circuit Judges.

OPINION

M. SMITH, Circuit Judge:

Elsa Polo appeals the district court's grant of summary judgment in favor of Innoventions International, LLC (“Innoventions”). Polo originally filed suit in state court, but Innoventions removed the case to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA), Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). After the parties engaged in some discovery, Innoventions moved for summary judgment, arguing that Polo lacked Article III standing. The district court agreed, and dismissed the case. We hold that upon determining that it lacked jurisdiction, the district court should have remanded the case to state court pursuant to 28 U.S.C. § 1447(c). Accordingly, we reverse and remand to the district court.

FACTS AND PRIOR PROCEEDINGS

Elsa Polo sued Innoventions in California state court. She alleged several causes of action, including four class claims. The gravamen of her complaint was that Innoventions had marketed a product called DiabeStevia with “grossly misleading and exaggerated claims” concerning its use and effectiveness—in particular, with the claim that it could be used to treat diabetes. Based upon Polo's allegation that the classes included “hundreds of customers,” Innoventions removed the case to federal court pursuant to the provisions of CAFA, which provides for original jurisdiction in the federal district courts over certain class actions. See 28 U.S.C. § 1332(d)(2), (d)(5)(B).

Polo went through several rounds of pleading before settling on a Third Amended Complaint (TAC). The TAC alleged, among other things, that Polo had been diagnosed with Type 2 diabetes ; that Innoventions marketed DiabeStevia as a treatment for diabetes ; that relying upon Innoventions's claims, Polo stopped taking her prescribed diabetes medication, and instead began treating her diabetes with DiabeStevia; and that DiabeStevia failed to perform as advertised, causing Polo to suffer “life threatening illness.” Based upon these and other allegations, Polo asserted nine different causes of action in her TAC.

Of those original nine causes of action, Polo appeals the dismissal of only one, her class-action claim for violations of California's Consumers Legal Remedies Act (CLRA), Cal. Civ. Code § 1750 et seq. That claim was predicated on a rather more limited set of allegations, i.e., that DiabeStevia “did not have the level of safety, quality, effectiveness or value as promised” and that she and the class members “would not have purchased DiabeStevia on the same terms”—that is, for a “premium price”—“had they known the true facts.” Polo also asserted that her counsel had mailed to Innovations the written notice and demand required by the CLRA. See Cal. Civ. Code § 1782(a).

On summary judgment, the district court found undisputed that Polo does not have diabetes, and that she had stopped taking her diabetes medication at least five months before she purchased and used DiabeStevia. Thus, the district court reasoned, Polo “cannot have been injured in the manner in which she alleges—that she became severely ill with diabetes symptoms in response to discontinuing her prescriptions in reliance on DiabeStevia.” With respect to Polo's CLRA claim, the district court found that Innoventions had undisputedly refunded Polo her entire purchase price, including tax and shipping. As a result, the district court held that Polo lacked Article III standing for all of her claims, granted summary judgment in favor of Innoventions, and dismissed the case. This appeal followed.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the district court's decision not to remand de novo. See ARCO Envtl. Remediation, L.L.C. v. Dep't of Health & Envtl. Quality , 213 F.3d 1108, 1111 (9th Cir. 2000) ; see also Ah Quin v. Cty. of Kauai Dep't of Transp. , 733 F.3d 267, 270 (9th Cir. 2013) (reviewing grant of summary judgment).

ANALYSIS

On appeal, Polo does not dispute that she lacked Article III standing. Instead, she argues that upon making that determination, the district court was required to remand the case to state court, pursuant to 28 U.S.C. § 1447(c). Innoventions disagrees. Its primary argument is that § 1447(c) does not apply in the context of this case. Even if it does, Innoventions insists, the district court was permitted to dismiss this case because remand to the California courts would have been “futile.” See Bell v. City of Kellogg , 922 F.2d 1418, 1425 (9th Cir. 1991). We address each of Innoventions' arguments in turn.

I. Removal without Jurisdiction

It is axiomatic that federal courts are courts of limited jurisdiction.

Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). We are limited, by Congress and by the Constitution, in the subject matter of cases we may adjudicate. Id. State courts, by contrast, are not so limited. See Tafflin v. Levitt , 493 U.S. 455, 458–60, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990). As a result, federal and state courts frequently have concurrent jurisdiction over a given case. See, e.g. , id. (concerning federal claims); Colo. River Water Conservation Dist. v. United States , 424 U.S. 800, 809, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (concerning state-law claims with diverse parties). When this is so, a plaintiff may choose the court system in which she files suit—she is, as the old maxim declares, “master of [her] case.” See, e.g. , Emrich v. Touche Ross & Co. , 846 F.2d 1190, 1196 (9th Cir. 1988).

The availability of removal is an important check on the plaintiff's mastery. Removal permits a defendant to bring to federal court a suit initially filed in state court—if the federal court could have exercised original jurisdiction in the first instance. 28 U.S.C. § 1441(a), (b).¹ Removal is a powerful tool: It operates largely automatically in that once a defendant has filed the appropriate notice of removal in the federal district court removal is a fait accompli . §§ 1446(a), 1447(a), (b). If the removal suffers from procedural defects, the plaintiff is responsible for bringing those defects to the attention of the district court in a timely motion to remand. § 1447(c) ; Kelton Arms Condo. Owners Ass'n, Inc. v. Homestead Ins. Co. , 346 F.3d 1190, 1192 (9th Cir. 2003). Generally, procedural defects not so raised are waived. See Lively v. Wild Oats Mkts., Inc. , 456 F.3d 933, 942 (9th Cir. 2006).

Defects of subject-matter jurisdiction, however, are another matter. In an ordinary removal case, “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” § 1447(c) (emphasis added). No motion, timely or otherwise, is necessary: ultimate responsibility to ensure jurisdiction lies with the district court. Kelton Arms , 346 F.3d at 1192. Moreover, the district court generally must remand the case to state court, rather than dismiss it. Bruns v. Nat'l Credit Union Admin. , 122 F.3d 1251, 1257 (9th Cir. 1997). Remand is the correct remedy because a failure of federal subject-matter jurisdiction means only that the federal courts have no power to adjudicate the matter. State courts are not bound by the constraints of Article III. ASARCO Inc. v. Kadish , 490 U.S. 605, 617, 109 S.Ct. 2037, 104 L.Ed.2d 696 (1989).

The rule that a removed case in which the plaintiff lacks Article III standing must be remanded to state court under § 1447(c) applies as well to a case removed pursuant to CAFA as to any other type of removed case. § 1453(c)(1) (“Section 1447 shall apply to any removal of a case under [CAFA], except ... section 1447(d)....”); see also Me. Ass'n of Interdependent Neighborhoods v. Comm'r, Me. Dep't of Human Servs. , 876 F.2d 1051, 1053–54 (1st Cir. 1989). Despite this straightforward proposition, Innoventions argues that § 1447(c) should not apply to this case for three reasons.

First, Innoventions relies on general maxims in our precedents, such as “a putative class action, once properly removed, stays removed.” See United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union v. Shell Oil Co. , 602 F.3d 1087, 1091 (9th Cir. 2010). Taken at face value, the stated maxim proves too much: It squarely contradicts the statutory language, which provides for remand of CAFA actions on (mostly) the same terms as any other case removed to federal court. See § 1453(c)(1). In context, the quoted statement in United Steel applies only to “post-filing developments,” such as a failure of Rule 23 class certification that might defeat CAFA eligibility. See 602 F.3d at 1091–92 & n.3. Our primary concern in that case was thwarting “jurisdictional ping-pong game[s]” in which parties lob a case back and forth between federal and state courts as post-filing developments occur. See id. at 1090. But when federal jurisdiction is absent from the commencement of a case, a putative class action is not “properly removed”—and therefore need not “stay[ ] removed.” See id. at 1091, 1092 n.3. This case lacked a named plaintiff with Article III standing, and therefore was not properly removed. Moreover, after remand of this appeal, Polo's lack of Article III standing will be law of the case.² Thus, there is no danger of a jurisdictional ping-pong game in this case: this rally has...