Flores v. Chevron Corp., 2:11-cv-02551, 2011WL 2160420 (C.D. Cal. May 31, 2011)

Consumers who purchased gas from Chevron stations in California between January 1, 2011 and February 19, 2011 may have gotten more for their four dollars a gallon than expected, but the defendants got zip…zip codes, that is.

John Flores, the plaintiff, filed a complaint on behalf of “all persons in the State of California who . . . purchased gasoline from [a named defendant].” According to the petition, the named defendants required class plaintiffs to enter their zip codes at electronic station terminals as a condition of payment. The defendants allegedly recorded and used this information to the plaintiffs’ detriment in violation of California’s Song Beverly Act (“SBA”) and Unfair Competition Law (“UCL”).

The defendants removed the case to the Central District of California under CAFA, and the plaintiff filed a motion to remand based on CAFA’s local controversy exception.

The district court remanded the case to California state court for two independent reasons.

First, the defendants failed to establish that CAFA’s $5 million aggregate amount in controversy requirement had been satisfied. A party who removes a case pursuant to CAFA bears the burden of establishing subject matter jurisdiction. If a complaint does not specify an amount of damages, the burden falls on the removing defendant to establish by a preponderance of the evidence that CAFA’s amount in controversy requirement is satisfied.

The Chevron defendants, however, fell short in meeting this burden. While the plaintiff did not allege a specific amount in controversy, he sought civil penalties ranging from $250-$1,000 for each of the defendants’ alleged violations of California law. The defendants attempted to establish the $5 million threshold by submitting a declaration that more than 5,000 credit card transactions had been processed at various gas pumps between February 22, 2010 and February 28, 2011. The district court, however, found this declaration insufficient because it did not coincide with the time of the alleged violations, and because it assumed without analysis that the maximum $1,000 civil penalty would be awarded for each violation.

Second, the court agreed with the plaintiff that CAFA’s local controversy exception, 28 U.S.C. § 1332(d)(4)(A), applied. This exception may apply when more than two-thirds of the class are citizens of the state in which the action was originally filed. The complaint only stated that the class consisted of “all persons of the state of California,” without specifying that two-thirds of the plaintiffs resided in California. The court, however, followed other California district courts and found that if a complaint asserts a claim on behalf of “California purchasers,” then at least two-thirds of the class plaintiffs are citizens of California. Thus, since the action was filed in California state court and at least two-thirds of the class consisted of California citizens, this requirement was satisfied.  

CAFA’s local controversy exception also requires that the class seek significant relief from at least one local defendant whose conduct forms a significant basis for the claims asserted. When analyzing this prong of the local controversy exception, a district court may only look to the allegations asserted in the complaint. Accordingly, the court looked only to the complaint to determine that the plaintiffs sought significant relief from two California defendants whose alleged conduct formed a significant basis for the claims asserted.

Ultimately, the named defendants ran out of gas, and the plaintiff carried his burden in proving all of the local exception requirements. Accordingly, the district court was obligated per § 1332(d)(4)(A) to decline jurisdiction and remand the case to California state court.

By: Mark Deethardt