Vogle v. Archstone Communities, LLC, 2014 WL 463532 (C.D. Cal. Feb. 5, 2014)
A District Court in California refused to exercise federal jurisdiction by aggregating the claims against two defendants. The District Court found that, under CAFA, aggregation of claims against the defendants is permitted only when the defendants were one legal entity, and there was no pleading in the complaint to show that the two defendants in question were a single unit.
Seeking to represent a class of former tenants, who leased apartments from the defendants, Archstone Builders Inc., Archstone Property Management (California), Inc., Archstone–Smith Four, Inc., and Archstone–Smith Two, Inc., the plaintiffs brought an action asserting violations of California Civil Code § 1950.5, unjust enrichment, and violation of California Business and Professions Code §§ 17200 et seq. The plaintiffs alleged that the defendants systematically charged tenants for cleaning, painting, and carpet cleaning at the conclusion of every tenancy, regardless of the apartment’s actual condition. The defendants removed the case to the federal court, pursuant to CAFA.
In support of the removal, the defendants included a declaration of Chris Jenkins, who oversaw the processing of Archstone Defendants’s financial information and electronic data. Jenkins alleged that over the time in question, approximately 69,000 tenants resided in their apartments, paid security deposits of approximately $34 million, and were charged approximately $21 million for apartment cleaning, painting and/or carpet replacement. The plaintiffs filed a motion to remand.
The defendant Archstone Long Beach, L.P. (“LB Defendant”) alleged that this case could be removed because it satisfied the CAFA requirements, including that the amount-in-controversy exceeded $5 million. Because the plaintiffs did not allege an amount-in-controversy, LB Defendant bore the burden of proving by a preponderance of the evidence that the amount-in-controversy had been met.
LB Defendant calculated the amount-in-controversy by aggregating potential damages to all tenants who lived in any of the 70 multi-unit apartment complexes managed by defendant Archstone Communities, LLC (“Archstone Defendant”) not just the ones managed by LB Defendant. The District Court, however, noted that, in order to be potentially liable for damages to all former tenants of Archstone Apartments, LB Defendant would have to be jointly liable with Archstone Defendant or both the defendants would need to be one legal entity. The District Court remarked that it was not persuaded that the facts alleged in complaint were consistent with either joint liability or the existence of one entity. Therefore, the District Court concluded that LB Defendant did not properly calculate its potential liability and did not satisfy the CAFA amount-in-controversy requirement.
The District Court explained that, while CAFA permits aggregation of claims of separate plaintiffs, claims against multiple defendants could be aggregated only when the defendants were liable jointly. The District Court found that, based on the facts in the complaint, there was no factual basis on which to conclude that LB Defendant could be liable for damages owed to any tenants outside the class of tenants who lived in LB Apartment. Therefore, the District Court was not persuaded that potential damages against all Defendants should be aggregated when determining the amount-in-controversy.
Finding that both Archstone Defendant and LB Defendant were not one entity, the District Court ruled that the removal was improper and remanded the case to the state court.