Verastegui v. Ford Motor Company

Background

Steve M. Verastegui filed a state-court lawsuit against Ford Motor Company and Chino Hills Ford. He alleged that Ford violated California’s Song-Beverly Consumer Warranty Act and committed fraud by omission. He also alleged that Chino Hills Ford negligently repaired his 2010 Ford Focus. The complaint alleged defects involving, among other things, the engine, powertrain control module, throttle body, air conditioning, and battery.

The defendants removed the case to federal court based on diversity jurisdiction. Diversity jurisdiction allows a federal court to hear certain disputes between citizens of different states when more than $75,000, excluding interest and costs, is at stake. Verastegui moved to remand, meaning he asked the federal court to return the case to state court. The parties did not meaningfully dispute that complete diversity existed; the court stated that Ford was a citizen of Delaware and Michigan, Chino Hills Ford was a citizen of Nevada, and Verastegui was a California resident.

Amount in Controversy

The dispute concerned whether the amount-in-controversy requirement was met. Verastegui’s complaint alleged damages of at least $25,001 and sought the remedies available under California Civil Code section 1794, including the vehicle’s entire contract price. The court noted that the contract price was $36,580. It interpreted the complaint as seeking actual damages separate from civil penalties, rather than treating the stated damages figure as already including the penalties.

The complaint also sought a civil penalty of twice the actual damages. The court treated the possible civil penalty as part of the amount in controversy and concluded that the complaint placed more than $50,000 in civil penalties in dispute. Adding that amount to the vehicle’s contract price already put more than $75,000 in controversy. The court also noted that attorney’s fees were recoverable under the Song-Beverly Act and could be included in the calculation, although it did not need to rely on the defendants’ estimate of those fees.

The court acknowledged that federal courts in the district had differing views about whether maximum civil penalties should be considered when determining the amount in controversy. It adopted the view that they should be considered here because the complaint placed those penalties in dispute. Applying the more-likely-than-not standard, the court found that the defendants had proved that the amount-in-controversy requirement was satisfied.

Order

The court concluded that both diversity of citizenship and the amount-in-controversy requirement for federal subject-matter jurisdiction under 28 U.S.C. § 1332(a) had been established. Judge Beth Labson Freeman denied Verastegui’s motion to remand. The opinion did not decide whether Verastegui would ultimately prevail on his warranty, fraud, or negligent-repair claims.