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Shubert v. Manheim Auctions

February 19, 2010

STEVEN M. SHUBERT, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
MANHEIM AUCTIONS, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Yohn, J.

MEMORANDUM

Plaintiff, Steven M. Shubert, asks the court to remand this consumer class action lawsuit to the Court of Common Pleas of Montgomery County, Pennsylvania, where he originally filed the action. Plaintiff argues that the notice of removal filed by one of the defendants-Manheim Auctions, Inc. ("MAI"), which plaintiff identified simply as "Manheim" in his original complaint-was untimely and that defendants have failed to show that the action satisfies the class action amount in controversy requirement for federal diversity jurisdiction. Plaintiff also seeks an award of costs and attorneys' fees incurred as a result of the improper removal. For the reasons set forth herein, the court will grant the motion to remand; however, the court will deny the request for costs and attorneys' fees.

I. Facts and Procedural History

Plaintiff filed this action in the Court of Common Pleas on April 3, 2009, naming as defendants "Manheim" and "Manheim's Pennsylvania Auction Services, Inc." ("MPAS"), two business entities that, according to the complaint, "inspected vehicles in Pennsylvania for numerous companies in the auto leasing industry." (Aff. of Michael H. Landis in Support of Pl.'s Mot. to Remand ["Landis Aff."] ¶ 2 & Ex. A ["Compl."] ¶¶ 2-4, 8.)*fn1 The complaint alleged that plaintiff and others leased motor vehicles under "closed-end" leases providing that the lessee would be responsible only for excess wear and use existing at the time the vehicle was surrendered. (Compl. ¶¶ 7, 9, 15, 17-18.) According to the complaint, members of the putative class surrendered their vehicles to defendants for inspection; however, pursuant to their policy and practice, defendants did not inspect the vehicles and prepare a "Condition Report" to establish the existence (or nonexistence) of excess wear and use at the time of surrender. (Id. ¶¶ 7, 10, 11(a), 19, 20.) Moreover, defendants did not properly secure or protect the vehicles between the time of surrender and inspection, but allowed employees and others access to and use of the vehicles. (Id. ¶¶ 7, 11(b)-(c).) When defendants did ultimately issue Condition Reports, those reports were based on untimely inspections-a fact defendants did not disclose to the vehicle lessors-and as a result, plaintiff and other class members were improperly charged for excess wear and use they did not cause.*fn2 (See id. ¶¶ 7, 11(d)-(e), 21, 22.) The complaint included three state-law counts-for negligent inspection, negligent misrepresentation, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("PUTPCPL")-and sought class certification, compensatory damages for all excess wear and use charges (plus interest), treble damages under the PUTPCPL, disgorgement, and an award of attorneys' fees and costs. (Id., Relief Requested.)

Both defendants received the complaint on or around April 10, 2009. (Decl. of Graig P. Corveleyn, Esq., in Opp'n to the Pl.'s Mot. for Remand ["Corveleyn Decl."] ¶ 4; see also Landis Aff. ¶ 3 & Ex. B (affidavit of service as to defendant Manheim).) An attorney for the defendants thereafter contacted plaintiff's counsel by phone on April 23, and followed up on the call with an April 28 letter setting forth defense counsel's understanding that plaintiff's counsel had agreed to file an Amended Complaint to correct plaintiff's failure to "properly identify the defendants" in the original complaint. (See Corveleyn Decl. ¶ 5 & Ex. A (April 28, 2009, letter); Supp. Aff. of Michael H. Landis in Support of Pl.'s Mot. to Remand ["Landis Supp. Aff."] ¶¶ 2-3.) The letter noted that the "proper party" to the matter was "a Michigan corporation authorized to transact business in Pennsylvania known as Manheim's Pennsylvania Auction Services, Inc. d/b/a/ Manheim Philadelphia formerly d/b/a Hatfield Auto Auction located at 2280 Bethlehem Pike, Hatfield, Pennsylvania 19440," and that "[t]he other defendant, 'Manheim,' that is named in the Complaint had no involvement with the allegations set forth in the Complaint." (Corveleyn Decl. ¶ 5 & Ex. A.)

In response to the April 28 letter, plaintiff's counsel called defense counsel on May 1 and told him that plaintiff was not willing to withdraw the complaint against Manheim. (Landis Supp. Aff. ¶ 4 & Ex. B (plaintiff's counsel's notes of May 1 phone call).) Counsel for the parties spoke again on May 4, at which time defense counsel notified plaintiff's counsel that "Manheim" is a fictitious name under which a corporate entity known as "Manheim Auctions, Inc." conducts business. (Id. ¶ 5; Landis Aff., Ex. C (May 4, 2009, letter from defense counsel to plaintiff's counsel referencing phone conversation earlier that day).) The parties again discussed the possibility of plaintiff filing an amended complaint.*fn3 Later that same day, defense counsel wrote to plaintiff's counsel, confirming the proper corporate name for "Manheim" and requesting notification from plaintiff's counsel regarding counsel's intentions regarding the filing of an amended complaint. (Landis Aff., Ex. C.) The letter also referenced defense counsel's willingness to accept service of process, in the event plaintiff were to file an amended complaint. (Id.)

On May 14, plaintiff's counsel wrote to defense counsel, confirming plaintiff's agreement "to file a First Amended Complaint which identifies Manheim Auctions, Inc. as a defendant," and enclosing a proposed stipulation permitting the amendment. (Id., Ex. D (May 14, 2009, letter); Corveleyn Decl. ¶ 8.) On June 24, plaintiff filed the stipulation, executed by counsel for both parties, and the amended complaint in the Court of Common Pleas and served both documents, together with plaintiff's first request for production, on defendants' counsel by mail. (Landis Aff. ¶¶ 6-7 & Exs. E-G; see also Corveleyn Decl. ¶ 9.) The amended complaint named as defendants "Manheim Auctions, Inc." and "Manheim's Pennsylvania Auction Services, Inc." (Landis Aff., Ex. F ["Am. Compl."].) Defense counsel received the amended complaint on June 27, 2009, and defendant MAI filed a notice of removal on July 27, 2009.*fn4 (Id. ¶¶ 10-11.)

On August 25, 2009, plaintiff filed the instant motion to remand. Plaintiff argues that remand is warranted because the notice of removal was untimely and because MAI has failed to establish a basis for federal subject matter jurisdiction. In particular, plaintiff argues that MAI has failed to demonstrate that the action satisfies the $5 million amount in controversy requirement for diversity jurisdiction in a class action. See 28 U.S.C. § 1332(d)(2).

II. Legal Standards

Removal and remand of class actions are governed by 28 U.S.C. § 1453, which incorporates, with certain exceptions, the procedures set forth at 28 U.S.C. §§ 1446 and 1447. "[A]ny defendant" in a class action of which the federal district courts have original jurisdiction may remove the case to the appropriate federal district court "without regard to whether any defendant is a citizen of the State in which the action is brought" and "without the consent of all defendants." Id. § 1453(b). Following removal, the plaintiff may move to remand the case based on a defect in the removal procedure or for lack of subject matter jurisdiction. See id. § 1447(c). A motion to remand on the basis of a procedural defect must be filed within thirty days after the filing of the notice of removal, but if it appears "at any time before final judgment . . . that the district court lacks subject matter jurisdiction, the case shall be remanded." Id. "The removal statutes 'are to be strictly construed against removal and all doubts should be resolved in favor of remand.'" Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987)).

III. Discussion

A. Subject Matter Jurisdiction -- Diversity

Although plaintiff's motion to remand the case is based primarily on the untimeliness of the notice of removal, because the timeliness of that notice depends on whether the original complaint was removable, see 28 U.S.C. § 1446(b), the court will first consider plaintiff's argument that defendants have failed to establish a basis for federal subject matter jurisdiction. Defendants contend that removal was proper because this case falls within the district courts' diversity jurisdiction. (Defs.' Opp'n 3-5; see also Notice of Removal ¶ 11 (allegations regarding number of class members and amount in controversy).) Pursuant to § 1332(d), and with certain exceptions not applicable here, the district courts have original diversity jurisdiction of any class action in which (1) "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," (2) "any member of a class of plaintiffs is a citizen of a State different from any defendant," and (3) "the number of members of all proposed plaintiff classes in the aggregate" is 100 or greater. 28 U.S.C. § 1332(d)(2), (5).

In this case, the existence of diversity jurisdiction turns on whether, aggregating the claims of individual class members, the amount in controversy "exceeds the sum or value of $5,000,000, exclusive of interest and costs." 28 U.S.C. § 1332(d)(2), (6).*fn5 MAI's notice of removal was deficient in that it alleged that the amount in controversy exceeded the $75,000 threshold for individual actions rather than the $5 million requirement for class actions. (Notice of Removal ¶ 11 ("The Plaintiff alleges 500 class members, each with a claim comparable to the Plaintiffs in the amount of $578.79 with total claims of $289,395.00, an amount in excess of $75,000.00.").) Because defendants now argue that the amount in controversy exceeds $5 million in their opposition to the motion to remand, the court will construe the opposition as an amendment to MAI's notice of removal. See Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002) (construing opposition to motion to remand explaining the basis for defendant's allegation that the amount in controversy exceeded $75,000 and evidence ...


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