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In re Motor Fuel Temperature Sales Practices Litigation

United States District Court, Tenth Circuit

June 28, 2013

IN RE: MOTOR FUEL TEMPERATURE SALES PRACTICES LITIGATION.
v.
Costco Wholesale Corp., et al., This Document Relates To: Lerner, et al. C.D. Cal. Case No. 07-1216-GHK-FMO.

MEMORANDUM AND ORDER

KATHRYN H. VRATIL, District Judge.

In Lerner v. Costco Wholesale Corp., D. Kan. Case No. 07-2405-KHV, C.D. Cal. Case No. 07-1216, plaintiffs bring suit against Costco Wholesale Corporation, USA Petroleum Corporation (now known as Dansk Investment Group, Inc.), Chevron USA, Inc., G&M Oil Company, Inc., G&M Oil Co., LLC, United El Segundo, Inc. and World Oil Corporation. Plaintiffs claim breach of the duty of good faith and fair dealing, unjust enrichment, violation of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq., and violation of the California Consumers Legal Remedy Act ("CLRA"), Cal. Civ. Code § 1750 et seq. Under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d)(2), plaintiffs allege "minimal diversity" jurisdiction. This matter is before the Court on Defendants' Motion To Dismiss Complaint For Lack Of Subject Matter Jurisdiction Pursuant To 28 U.S.C. § 1332(d)(4)(B) (Doc. #4526) filed March 15, 2013.[1] Chevron argues that plaintiffs' settlement with Costco and the severance of plaintiffs' claims against Costco bring this case within the "home-state exception" to minimal diversity jurisdiction under CAFA. See 28 U.S.C. § 1332(d)(4)(B). Because Costco is still a defendant in the case, the Court overrules the motion to dismiss.[2]

Procedural And Factual Background

In 2007, plaintiffs brought suit as representatives of a putative class of California residents who purchased motor fuel at a temperature greater than 60 degrees Fahrenheit from defendants in California. The complaint alleged minimal diversity jurisdiction under CAFA, 28 U.S.C. § 1332(d)(2). For purposes of minimal diversity jurisdiction, the class members are residents of California.[3] See Complaint (Doc. #1-2), D. Kan. Case No. 07-2405-KHV, filed August 24, 2007 (originally filed on February 22, 2007 in C.D. Cal. Case No. 07-1216-GHK). Except for Costco, all defendants are citizens of California.

All of the seven original defendants are still in the case, i.e. the Court has not dismissed or entered judgment against any of them, but the procedural posture of the claims against them is different. Costco has settled and the Court has granted final class certification and settlement approval. Memorandum And Order (Doc. #4248) filed April 24, 2012. Plaintiffs' motion for attorney fees against Costco remains pending. See Motion For Award Of Attorneys' Fees, Expenses, And Class Representative Incentive Awards And Memorandum In Support Thereof (Doc. #1820) filed March 23, 2011. Dansk has also settled and the Court has granted conditional class certification and preliminary settlement approval. Memorandum And Order (Doc. #4424) filed September 28, 2012. The remaining defendants have not settled and have filed motions for summary judgment.

At the time Chevron filed this motion to dismiss, the Court had indicated that it intended to sever plaintiffs' claims against the non-settling defendants, i.e. all defendants but Costco and Dansk, in three California cases - Rushing v. Alon USA, Inc., D. Kan. Case No. 07-2300-KHV, N.D. Cal. Case No. 06-7621-PJH, Lerner v. Costco Wholesale Corp., D. Kan. Case No. 07-2405-KHV, C.D. Cal. Case No. 07-1216-GHK-FMO, and Wyatt v. B.P. Am. Corp., D. Kan. Case No. 07-2507-KHV, S.D. Cal. Case No. 07-1754-BTM-JMA. Order (Doc. #4496) filed January 23, 2013 at 1 n.1. Anticipating the severance of Costco, Chevron argued that such a severance would trigger the home-state exception as to the non-settling defendants. See Defendants' Motion To Dismiss Complaint For Lack Of Subject Matter Jurisdiction Pursuant To 28 U.S.C. § 1332(d)(4)(B) (Doc. #4526) at 1, 2, 3, 5, 6, 9, 11. In other words, it argued that once the Court severed the claims against Costco and Dansk, they would "no longer be... in the lawsuit." Id. at 13.[4]

Ultimately, instead of severing plaintiffs' claims against Costco and Dansk, the Court severed plaintiffs' claims against Chevron. It also stayed proceedings as to the other non-settling defendants, and conformed the plaintiffs' claims against Chevron in Rushing, Lerner and Wyatt.[5] See Memorandum And Order (Doc. #4575) filed May 6, 2013 at 2-3, 15 (permitting plaintiffs to conform pretrial orders); Order (Doc. #4535) filed March 27, 2013 (severing plaintiffs' claims against Chevron).[6] After severing plaintiffs' claims against Chevron, the Court certified them for class treatment under Rule 23, Fed.R.Civ.P. Memorandum And Order (Doc. #4539) filed April 5, 2013.

Chevron argues that the Costco settlement and the severance of plaintiffs' claims deprive the Court of jurisdiction under the home-state exception to minimal diversity jurisdiction under CAFA, 28 U.S.C. § 1332(d)(4)(B).

Legal Standards

Federal courts are courts of limited jurisdiction, and as such they must have a statutory or constitutional basis to exercise jurisdiction. Devon Energy Prod. Co., L.P. v. Mosaic Potash , 693 F.3d 1195, 1201 (10th Cir. 2012); K2 Am. Corp. v. Roland Oil & Gas, LLC , 653 F.3d 1024, 1027 (9th Cir. 2011). Ordinarily, the party seeking to invoke federal jurisdiction bears the burden of establishing that such jurisdiction is proper. Devon Energy , 693 F.3d at 1201; K2 Am. Corp. , 653 F.3d at 1027. Mere conclusory allegations of jurisdiction are not enough. United States ex rel. Hafter, D.O. v. Spectrum Emergency Care, Inc. , 190 F.3d 1156, 1160 (10th Cir. 1999); see Harris v. Rand , 682 F.3d 846, 850 (9th Cir. 2012). The party invoking an exception to minimal diversity jurisdiction under CAFA, however, bears the burden of establishing that the exception applies. See Kaufman v. Allstate N.J. Ins. Co. , 561 F.3d 144, 154 (3d Cir. 2009); Serrano v. 180 Connect, Inc. , 478 F.3d 1018, 1024 (9th Cir. 2007); Hat v. FedEx Ground Package Sys Inc. , 457 F.3d 675, 680 (7th Cir. 2006); Frazier v. Pioneer Americas LLC , 445 F.3d 542, 546 (5th Cir. 2006); Evans v. Walter Indus., Inc. , 449 F.3d 1159, 1164 (11th Cir. 2006).

Analysis

The parties agree that when plaintiffs filed suit, the Court had minimal diversity jurisdiction under CAFA. As noted, Chevron argues that plaintiffs' settlement with Costco and the severance of plaintiffs' claims against Costco strip the Court of jurisdiction by bringing this action within the home-state exception to CAFA minimal diversity jurisdiction, 28 U.S.C. § 1332(d)(4)(B).

I. Minimal Diversity Jurisdiction Under CAFA

The minimal diversity jurisdiction provisions of CAFA provide in ...


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