Schneider v. Ford Motor Company

Background

Kimberly D. Schneider filed a state-court action against Ford Motor Company and Chino Hills Ford concerning a 2013 Ford Escape she purchased from Chino Hills Ford. She alleged that the vehicle developed defects during the warranty period and that Ford breached express and implied warranties under California’s Song-Beverly Consumer Warranty Act. She alleged damages of “not less than $25,001.00” and sought, among other remedies, a civil penalty of twice her actual damages, attorney fees, and costs.

The defendants removed the case to federal court under the diversity-jurisdiction statute, 28 U.S.C. § 1332. Schneider conceded that the parties were diverse. The dispute concerned the separate requirement that the amount in controversy exceed $75,000. Schneider moved to remand, meaning to return the case to state court.

Court’s Analysis

The court explained that the defendants, as the parties seeking removal, had to prove that federal jurisdiction existed. Because the complaint did not clearly identify what the alleged $25,001 in damages included, the court required the defendants to show by a preponderance of the evidence—that it was more likely than not—that more than $75,000 was at stake.

The defendants argued that the $25,001 represented actual damages and that doubling it for the statutory civil penalty produced $75,003. The court rejected that argument as speculative because the complaint did not say that the $25,001 represented only actual damages. The court also rejected the defendants’ evidence concerning attorney fees. A declaration stating that fees in similar cases regularly approach or exceed $50,000, and a fee demand exceeding $300,000 in another Ford case, did not specifically show that fees in this case were likely to exceed $75,000.

The court considered the vehicle’s total sales price of $37,030.20 and the potential civil penalty of twice actual damages. It then considered a mileage offset, which could reduce the recoverable amount under California law. Using the most recent repair mileage identified by the defendants, the court calculated an offset of $23,434.87, leaving possible actual damages of $13,595.33 and total damages of $40,785.99. The court held that the defendants had not proved by a preponderance of the evidence that the amount in controversy exceeded $75,000.

Ruling

Because the amount in controversy did not exceed $75,000, the court held that it lacked subject-matter jurisdiction over the removed case. Judge Edward J. Davila granted Schneider’s motion to remand, directed the Clerk to remand the action to Santa Clara County Superior Court, and ordered the federal file closed.