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Wardlow v. U-Haul International, Inc.

United States District Court, D. Oregon, Eugene Division

March 30, 2018

WILLIAM WARDLOW, an individual, Plaintiff,
v.
U-HAUL INTERNATIONAL, INC.; and DOES 1 through 50, inclusive, Defendants.

          OPINION AND ORDER

          Ann Aiken, United States District Judge

         Plaintiff William Wardlow is an Oregon citizen and an attorney. Defendant U-Haul International, Inc. is a business incorporated in Nevada with its primary business location in Arizona. Plaintiff filed suit in Deschutes County Circuit Court alleging intentional and negligent misrepresentations and unlawful trade practice by defendant. Defendant removed the case to federal court based on diversity jurisdiction under 28 U.S.C. § 1332(a). Plaintiff moves for an order remanding this case to state court, (doc. 10) Defendant subsequently moved to dismiss the complaint or, in the alternative, stay proceedings and compel arbitration, (doc. 11.)

         For the reasons set forth below, plaintiffs Motion to Remand is DENIED, and defendant's Motion to Stay and Compel Arbitration is GRANTED.

         BACKGROUND

         This case arises from a dispute over a trailer rental. On May 26, 2016, plaintiff called defendant's office in Port Angeles, Washington to inquire about the availability of a 6' x 12' trailer. After confirming the availability of the trailer, plaintiff made a reservation to rent the trailer for May 29, 2016, through defendant's online portal. Plaintiff drove with his family to Port Angeles, Washington on May 27, 2016. On May 28, 2016, plaintiff alleges that he received a call informing him that the trailer he reserved was not available. Due to this unavailability, plaintiff asserts that he had to rent and use a smaller trailer on May 29, 2016. He alleges that this forced him to make a second trip from Sunriver, Oregon to Port Angeles, Washington to move items that would not fit on the first trip. Plaintiff also alleges that items were left behind and not moved due to the lack space in the trailer.

         Plaintiff avers that he was initially unable to serve defendant in Oregon because defendant's status with the Oregon Secretary of State was "inactive, " and its registered agent in Oregon declined to accept service. Wardlow Decl. at ¶ 4. After failed attempts to communicate with defendant's legal department, plaintiff filed his First Amended Complaint listing defendant's two entities in Arizona and Oregon alleging intentional and negligent misrepresentations and unlawful trade practice in Deschutes County Circuit Court. After plaintiff filed a Second Amended Complaint ("SAC"), defendant removed the case to federal court based on diversity jurisdiction.

         Plaintiff filed the present motion to remand, alleging that there is no diversity jurisdiction between the parties. Defendant subsequently moved to dismiss or, in the alternative, stay proceedings and compel arbitration.

         STANDARDS

         A defendant may remove an action filed in state court to federal court if there is diversity or federal question jurisdiction. 28 U.S.C. § 1441(a), (b). If the federal court's jurisdiction is based on diversity rather than a federal question, the action "may be removed only if none of the parties properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b)(2).

         DISCUSSION

         I. Plaintiff's Motion to Remand

         A motion to remand is proper for challenging removal. 28 U.S.C. §§ 1447(c), 1448. Here, plaintiff challenges defendant's removal arguing that this Court lacks subject matter jurisdiction and that diversity jurisdiction has not been established. For district courts to have original subject matter jurisdiction over civil actions through diversity, the matter in controversy should exceed $75, 000 exclusive of interest or costs and the parties must be citizens of different states. 28 U.S.C. § 1332(a).

         A. Amount in Controversy

         In his motion to remand, plaintiff alleges that the amount in controversy is under the required $75, 000 threshold. The amount in controversy depends on the value of the unaggregated individual claims, both for monetary damages and equitable relief. In re Ford Motor Co./Citibank (S.D.), N.A., 264 F.3d 952, 958-59 (9th Cir. 2001). Potential punitive damages are also part of the amount in controversy. Gibson v. Chrysler Corp., 261 F.3d 927, 946 (9th Cir. 2001). Where a statute authorizes an award of attorney fees, the fees are part of the amount in controversy. Gait G/S v. JSS Scanimma, 142 F.3d 1150, 1155-56 (9th Cir. 1998). The Ninth Circuit has not definitively ruled whether prospective, unaccrued attorney fees are part of the amount in controversy when a case is removed. Gonzales v. CarMax Auto Superstores, LLC, 840 F.3d 644, 649 n.2 (9th Cir. 2016). Thus, I examine whether the value of plaintiffs unaggregated claim exceeds the jurisdictional threshold.

         The amounts proffered for compensatory and statutoiy damages are not in controversy. Plaintiff requests compensatory damages in the amount of $1, 400.[1] Plaintiff also prays for statutory damages of $200 for each of defendant's alleged violations of O.R.S § 646.608. Plaintiff alleges 44 distinct violations of the statute, meaning that the total request for statutory damages is $8, 800 (44 violations times $200 per violation).

         Next, I look to plaintiffs potential punitive damages. Oregon law does not allow the pleading of punitive damages in an initial complaint. O.R.S. § 31.725. However, despite Oregon's punitive damages pleading requirements, federal courts may consider the potential for punitive damages when determining the amount in controversy. Gibson, 261 F.3d at 946; See also Culpepper v. Wells Fargo Bank, N.A., 2012 WL 3779038 (D. Or. 2012).

         In reviewing awards for punitive damages for unlawful trade practices, Oregon courts have approved ratios of 3.9:1 between the punitive damage award and the economic damage award. See Allen v. Morgan Drive Away, Inc., HZ Or. 614, 615-16 (1975). I find that applying a ratio of 3.9:1 is appropriate here though Oregon Courts have approved awards involving much higher ratios. See Parrott v. Can Chevrolet, Inc., 331 Or. 537, 564-65 (2001) (upholding a punitive damage award that exceeded economic damages by a ratio of 87:1); Lithia Medford LM, Inc. v. Yovan, 254 Or.App. 307, 328-29 (2012). (upholding a punitive damages award that exceeded the economic damages by a 200:1 ratio)

         Therefore, plaintiffs compensatory and statutory damages applied to the ratio of 3.9:1 yields $40, 800 in potential punitive damages (total of compensatory and statutory damages multiplied by 3.9).

         Next, I consider the amount of plaintiffs attorney fees. When an underlying statute authorizes an award of attorneys' fees, either with mandatory or discretionary language, such fees may be included in the amount in controversy, Missouri State Life Insurance Company v. Jones, 290 U.S. 199, 202 (1933); Gait G/Sv. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998).

         Here, plaintiff seeks an award of pre-removal attorney fees based on Rule 11 of the Federal Rules of Civil Procedure. While preserving arguments as to the reasonableness of plaintiffs fee expenditures or the merit of any of plaintiff s claims, defendants do not dispute the inclusion of pre-removal attorneys' fees in assessing the amount in controversy requirement. Therefore, pre-removal attorneys' ...


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