Brinkley v. Monterey Financial Services, Inc., 2016 WL 4886934 (S.D. Cal. Sept. 15, 2016).

A district court in California ordered the parties to conduct jurisdictional discovery to determine if two-thirds of the class members (consisting of members from the states of California and Washington) were from the state of California, so it could ascertain if CAFA’s local controversy exception applied to this action.

The plaintiff, Tiffany Brinkley, filed this action in the Superior Court of the California for the County of San Diego, asserting causes of action against the defendant Monetary Financial Services, Inc., for violations of California Penal Code §§ 630, et. seq., Washington Rev. Code §§ 9.73, et. seq., and California Business & Professions Code § 17200, et. seq., based on the defendant’s alleged unlawful recording and/or monitoring of telephone calls. The plaintiff sought, among other things, to certify a putative class including all persons who, while physically located or residing in California and Washington, made or received one or more telephone calls with the defendant in the class period and did not receive notice at the beginning of the call that their conversation may be recorded or monitored.

The defendant filed an answer to the complaint and subsequently filed a motion to compel arbitration. The trial court ordered to arbitrate the claims and dismissed the class claims, which the state appellate court affirmed. Meanwhile, the parties jointly stipulated to waive their rights to arbitrate and agreed to litigate. The plaintiff responded the defendant’s first set of admissions, where among other things, she claimed that she was a resident of Tukwila, Washington.

The defendant removed the action to the federal court, and the plaintiff moved to remand.

The plaintiff did not dispute that she was resident of the state of Washington, that there existed diversity in this action, or that the class consisted of over 100 members. The plaintiff contended that the defendant’s Notice of Removal was untimely, that the defendants waived their right to remove the case, and that the amount-in-controversy was indeterminate.

As to the timeliness, the plaintiff argues that the defendant removed the action in violation of the 30-day time limit of 28 U.S.C. § 1446(b). While the complaint was filed on October 15, 2013, the defendant argued that the plaintiff’s complaint was indeterminate as to citizenship and that the defendant received notice from the plaintiff affirmatively revealing her citizenship only on April 19, 2016.

Here, the plaintiff alleged in her complaint that she was a natural person and a resident of Tukwila, Washington. The complaint asserted causes of action against the defendant for alleged violations of both California and Washington state laws. The plaintiff sought to certify a putative class that included members residing in both states. In addition, on March 24, 2014, the plaintiff submitted a declaration in support of her opposition to the defendant’s motion to compel arbitration stating that she was a resident of the state of Washington. The District Court, however, found that this declaration did not state the plaintiff’s domicile or citizenship, and it was indeterminate as to citizenship. The District Court found that the defendants were not put on notice of the plaintiff’s citizenship until April 19, 2016, when she stated that she was a “citizen” of Washington. Because the defendant filed its Notice of Removal within 30-days from April 19, 2016, the District Court concluded that the Notice of Removal was timely.

The plaintiff next contended that remand was appropriate because the defendants waived their rights to remove by taking substantial offensive and defensive action in the state court action. The District Court noted that a party may waive the right to remove to the federal court where, after it was apparent that the case is removable, the defendant takes actions in the state court that manifested his or her intent to have the matter adjudicated there and to abandon his or her right to a federal forum. The District Court remarked that here, the complaint was indeterminate as to citizenship, and only after the defendant obtained the plaintiff’s admission regarding citizenship on April 19, 2016 did the defendant file a Notice of Removal in the District Court. The District Court found not record that the defendant took subsequent actions after it was apparent that the case was removable. Accordingly, the District Court concluded that a waiver of the right of removal was not clear or unequivocal in this case.

As to the amount-in-controversy, the District Court observed that California Penal Code § 637.2 provides statutory damages of up to $5,000 per violation of §§ 632 or 632.7. The declaration of the defendant’s President and CEO Chris Hughes established that the defendant recorded well over 5,000 calls to/from individuals living in and calling from California along during the class period. His declaration stated that over the course of a four-year period preceding the filing of the complaint, the defendant recorded well over 5,000 calls from well over 1,000 different persons who were physically located or residing in California and/or Washington. Accordingly, the defendant contended that the amount-in-controversy exceeded $5 million.

The plaintiff also contended that the local controversy, the home state exceptions, and the discretionary dismissal provision of CAFA each applied to this matter and prevented this Court from exercising CAFA jurisdiction.

The District Court observed that the plaintiff’s proposed class included citizens from both California and Washington. The defendants offered evidence regarding the individuals who received calls through Chris Hughes’ declaration–however, there was no evidence in the record of the physical location of the 1,000 different persons. The District Court remarked that the evidence may show that most class members were from California and California’s statutory damages provision applied to this matter, and the amount-in-controversy may exceed $5 million. On the other hand, the District Court remarked that the evidence may also show that the two-thirds of the class members were citizens of California, and a CAFA exception may apply to prevent federal jurisdiction.

Accordingly, the District Court ordered the parties to conduct jurisdictional discovery before it could rule on amount-in-controversy and the CAFA exception issues.

-Melissa M. Grand