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Springsted v. Valenti Motors, Inc.

United States District Court, D. Connecticut

May 20, 2016

KIRK A. SPRINGSTED and SANDRA KOOREJIAN, Plaintiffs,
v.
VALENTI MOTORS, INC., VOLKSWAGEN GROUP OF AMERICA, INC., and VOLKSWAGEN AKTIENGESELLSCHAFT, Defendants.

          RULING ON MOTION TO REMAND AND MOTION TO STAY

          Janet Bond Arterton, U.S.D.J.

         Plaintiffs Kirk. A. Springsted and Sandra Koorejian brought this suit against Defendants Valenti Motors, Inc., Volkswagen Group of America, Inc., and Volkswagen Aktiengellschaft in state court, alleging breach of the implied warranty of merchantability (Counts One and Three), breach of express warranty (Count Two), fraud by concealment (Count Four), and violations of the Connecticut Unfair Trade Practices Act ("CUTPA") (Count Five). On February 9, 2016, Defendants removed the case to this Court, alleging that the Court has jurisdiction pursuant to Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308 (2005), or alternatively, pursuant to the Magnuson-Moss Warranty Act ("MMWA"), 15 U.S.C. § 2310(d)(3)(B). (Notice of Removal [Doc. # 1].) Plaintiffs now move [Doc. # 8] to remand the case to state court and for attorneys' fees for work in connection with their motion. Defendants oppose Plaintiffs' motion and additionally seek a stay [Doc. #15] pending transfer of this case to the Multi-District Litigation court. For the following reasons, Plaintiffs' motion is granted and Defendants' motion is denied as moot.

         I. Factual Background

         Plaintiffs allege the following facts in their Complaint. (See CompL, Ex. 1 to Notice of Removal.) In 2015, the Environmental Protection Agency ("EPA") issued a Notice of Violation ("NOV"), detailing the use of "sophisticated software in the Volkswagen and Audi diesel vehicles sold by Volkswagen" to "detect[] when the vehicle is undergoing official emissions testing and turn[] full emissions controls on only during the test." (Id. ¶ 9.) "[A]t all other times that the vehicle is running, the emissions controls are suppressed." (Id.) "Consequently, these Volkswagen vehicles meet emissions standards in the laboratory or state testing station, but during normal operation emit nitrogen oxides at up to 40 times the standard allowed under United States law and regulations." (Id.) "The software produced and used by Volkswagen is a 'defeat device' as defined by the Clean Air Act." (Id.)

         "According to the EPA NOV, Volkswagen installed its 'defeat device' in ... the 2013 Volkswagen Passat TDI, " which was nonetheless "marketed ... as [a] CleanDiesei' vehicle[]." (Id. ¶¶ 12-13.) Plaintiffs purchased this vehicle in May 2013 "on the reasonable, but mistaken, belief that their Vehicle complied with United States emissions standards, was properly EPA certified, and would retain all of its operating characteristics throughout its useful life, " and "because of the 'CleanDiesei' system, as represented through advertisements and representations made by Volkswagen and Valenti." (Id. ¶¶ 20-21.)

         Plaintiffs allege that the Vehicle "is inherently defective in that it does not comply with federal and state emissions standards, rendering certain safety and emissions functions inoperative; and the CleanDiesei engine system was not adequately designed, manufactured, and tested." (Id. ¶28.) Plaintiffs additionally accuse Volkswagen of fraudulently concealing material facts about the Vehicle, including whether it complied "with federal and state clean air law and emissions regulations, " to Plaintiffs' detriment. (Id. ¶ 29.) Finally, Plaintiffs claim that Volkswagen violated CUTPA by: "knowingly and intentionally concealing from Plaintiffs that the Vehicle suffered from a design defect"; "marketing the Vehicle as possessing function and defect-free, EPA compliant CleanDiesel engine systems"; "purposefully installing an illegal 'defeat device' in the Vehicle to fraudulently obtain EPA certification and cause the Vehicle to pass emissions tests when in truth and fact it did not pass such tests"; "violating federal laws, including the Clean Air Act"; and "violating other Connecticut laws, including Connecticut laws governing vehicle emissions and emission testing requirements." (Id. ¶ 37.)

         II. Discussion

         A. Subject Matter Jurisdiction

         "Where, as here, jurisdiction is asserted by a defendant in a removal petition, it follows that the defendant has the burden of establishing that removal is proper." United Food & Comm. Workers Union v. CenterMark Props. Meriden Square, 30 F.3d 298, 301 (2d Cir. 1994). A case may only be removed to a federal court if it could have been brought there initially; in other words, the case must fall under the court's original jurisdiction. See 28 U.S.C. § 1441(a) ("Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending."). District courts have original jurisdiction to hear federal questions, that is, "civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. "For statutory purposes, a case can 'aris[e] under' federal law in two ways[:]" (1) "when federal law creates the cause of action asserted, " and (2) much more rarely, as explained by the Supreme Court in Grable, "when a claim finds its origins in state rather than federal law" but turns on the resolution of a federal question. Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013).

         Plaintiffs contend that this Court lacks jurisdiction to hear this case because the complaint alleges only state law claims. (Mot. Remand at 1.) Defendants respond by asserting two bases of jurisdiction: Grable and the Magnuson-Moss Warranty Act. The Court addresses each argument in turn.

         1. Grable

         The Supreme Court describes the facts and holding of Grable as follows:

Grable involved real property belonging to Grable & Sons Metal Products, Inc. (Grable), which the Internal Revenue Service (IRS) seized to satisfy a federal tax deficiency. Grable received notice of the seizure by certified mail before the IRS sold the property to Darue Engineering & Manufacturing (Daure). Five years later, Grable sued Darue in state court to quiet title. Grable asserted that Darue's record title was invalid because the IRS had conveyed the seizure notice improperly. The governing statute, 26 U.S.C. § 6335(a), provides that "notice in writing shall be given ... to the owner of the property ... or shall be left at his usual place of abode or business. . . ." Grable maintained that § 6335(a) required personal service, not service by certified mail.
Darue removed the case to federal court. Alleging that Grable's claim of title depended on the interpretation of a federal statutory provision, i.e., § 6335(a) of the Internal Revenue Code, Darue invoked federal-question jurisdiction under 28 U.S.C. § 1331. We affirmed lower court determinations that the removal was proper. "The meaning of the federal tax provision, " we said, "is an important issue of federal law that sensibly belongs in a federal court." Whether Grable received notice adequate under § 6335(a), we observed, was "an essential element of ...

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