561 F.Supp.3d 869
N.D. Cal.2021Background
- Plaintiffs Brian Guthrie and Grady Lee Harris, Jr. filed a putative class action in California state court alleging Transamerica misrepresented certain policy riders as having "no charge," bringing three UCL claims and seeking only equitable restitution.
- Transamerica removed the case to federal court under CAFA; the plaintiffs do not allege they lack an adequate remedy at law and state they will not plead that element.
- In Sonner v. Premier Nutrition Corp., the Ninth Circuit held that federal courts must apply traditional equitable principles to UCL restitution and that a plaintiff must show lack of an adequate remedy at law to obtain equitable restitution.
- Because plaintiffs concede they cannot plead inadequacy of legal remedies, the district court found it lacked equitable jurisdiction to award UCL restitution under Sonner.
- The court concluded that when a federal court lacks equitable jurisdiction over a removed case that began in state court, Supreme Court precedents (notably Cates and Twist, and reinforced by Quackenbush) permit remand to state court rather than dismissal.
- The plaintiffs’ request for attorneys’ fees under 28 U.S.C. § 1447(c) was denied because Transamerica had an objectively reasonable basis to remove the case under CAFA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court may award UCL restitution absent a pleaded lack of adequate remedy at law | Sonner requires lack of adequate remedy; plaintiffs expressly cannot plead that, so federal court lacks equitable jurisdiction | Sonner does not deprive federal courts of subject-matter or equitable jurisdiction over UCL claims | Court: Sonner implicates equitable jurisdiction; because plaintiffs concede adequate legal remedies exist (or cannot allege otherwise), federal court lacks equitable jurisdiction to grant restitution |
| Remedy when federal court lacks equitable jurisdiction over a removed, state-originated claim | Case should be remanded to state court (Cates/Twist/Quackenbush) | Remand would frustrate CAFA and modern merger of law/equity; dismissal is the usual practice | Court: Remand is appropriate under Cates, Twist, and Quackenbush; federal court may remand rather than dismiss when equitable jurisdiction is lacking for a removed case |
| Whether removal was objectively unreasonable (attorneys’ fees under §1447(c)) | Plaintiffs seek fees and costs for removal | Transamerica had a reasonable basis to remove under CAFA and the legal question is novel | Court: Denied fees—removal was objectively reasonable given CAFA jurisdiction and novelty of remand argument |
| Whether Sonner alters subject-matter jurisdiction (as opposed to equitable jurisdiction) | Sonner affects threshold equitable rules, not statutory subject-matter jurisdiction | Sonner does not strip courts of subject-matter jurisdiction over UCL claims | Court: Distinguished subject-matter jurisdiction from equitable jurisdiction; Sonner concerns equitable jurisdiction and remedial limits, not SMJ under CAFA |
Key Cases Cited
- Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020) (federal equitable principles apply to UCL restitution; plaintiff must show inadequacy of legal remedies)
- Cates v. Allen, 149 U.S. 451 (1893) (when federal court lacks equitable jurisdiction over a removed equity bill, remand to state court is appropriate)
- Twist v. Prairie Oil & Gas Co., 274 U.S. 684 (1927) (reiterating Cates that remand may follow when a removed suit is beyond federal equitable jurisdiction)
- Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996) (federal courts may remand or dismiss when abstention or equitable considerations counsel against exercising equitable jurisdiction)
- Schlesinger v. Councilman, 420 U.S. 738 (1975) (distinguishing statutory subject-matter jurisdiction from equitable jurisdiction as a threshold to relief)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (2005) (attorney-fee awards under §1447(c) require that removal lacked an objectively reasonable basis)