Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02789/USCOURTS-cand-3_07-cv-02789-3/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PEOPLE OF THE STATE OF CALIFORNIA,

acting by and through City Attorney Dennis J.

Herrera,

Plaintiff,

 v.

CHECK ’N GO OF CALIFORNIA, INC. d/b/a

CHECK ’N GO, et al.,

Defendants. /

No. C 07-02789 JSW

ORDER (1) GRANTING MOTION

TO REMAND AND (2) DENYING

MOTION FOR ATTORNEYS’

FEES

Now before the Court are the motions filed by plaintiff the People of the State of

California, acting by and through the San Francisco City Attorney Dennis J. Herrera,

(“Plaintiff”) to remand and for attorneys’ fees. Having carefully considered the parties’

arguments and relevant legal authority, the Court hereby grants the Plaintiff’s motion to remand

and denies the motion for attorneys’ fees. 

BACKGROUND

Dennis Herrera, the City Attorney for the City of San Francisco, filed this action on

behalf of the People of the State of California. (Compl., p.1.) Plaintiff alleges that defendants

Check ’N Go of California d/b/a/ Check ’N Go and Southwestern & Pacific Speciality Finance,

Inc. d/b/a Check ’N Go (collectively, “Check ’N Go”), Avante Teladvance, Inc. d/b/a Check ’N

Go Online (“Check ’N Go Online”), Monetary Management of California, Inc. d/b/a Money

Mart (“Money Mart”), and Moneymart Express, Inc. d/b/a Customcash Online (“Customcash 

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1

 California Finance Code § 22000, et seq.

2

 California Finance Code § 23000, et seq.

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Online”) formed relationships with defendant First Bank of Delaware (“First Bank”) “to engage

in unlawful and deceptive business practices in an attempt to avoid California laws regulating

the provision of deferred deposit loans (also known as ‘payday loans’) and short-term consumer

loans (also known as ‘installment loans’) to customers in California.” (Id., ¶ 1.)

Plaintiff alleges that Check ’N Go and Money Mart offer installment loans with

unconscionable, usurious interest rates and that they offer payday loans at the same place of

business that they offer such installment loans without leave of the California Department of

Corporations. (Id., ¶¶ 18, 23.) Plaintiff also alleges that Check ’N Go, Check ’N Go Online,

and Money Mart purport to market and arrange installment loans on behalf of First Bank and

violate the California Finance Lenders Law1

 by acting as brokers for loans that are not in

compliance with the terms of that law. (Id., ¶¶ 19, 24.) In the alternative, Plaintiff alleges that

Check ’N Go , Check ’N Go Online and Money Mart are the true lenders of the installment

loans and violate California law by making installment loans without a license, offering loans

with usurious interest rates, and/or misleading consumers concerning the identity of the lender. 

(Id., ¶¶ 20, 25.) Plaintiff further alleges unlawful practices by Check ’N Go, Check ’N Go

Online, and Money Mart that are unrelated to the interest rates of the installment loans. (Id., ¶¶

21-22, 26.)

With respect to First Bank, Plaintiff alleges that despite representations by First Bank

that it will stop offering payday and installment loans to consumers through third-party retail

vendors, it has not yet done so. (Id., ¶ 29.) First Bank allegedly violates the California

Deferred Deposit Transaction Law2

 by offering loans through Check ’N Go and Check ’N Go

Online, and by intending to offer loans through Money Mart and Customcash Online, that

require consumers to supply access to their checking accounts as collateral. (Id., ¶ 30.) 

Plaintiff also alleges that First Bank unlawfully aids and abets the violation of the California

Finance Lender Law by permitting Check ’N Go and Money Mart, and their affiliates, to

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purport to broker installment loans for consumers with terms that violate the California Finance

Lender Law.

(Id., ¶ 32.) To the extent that Check ’N Go and Money Mart, and their affiliates, are the true

lenders of the unlawful loans that they purport to broker, Plaintiff alleges that First Bank aids

and abets these unlawful loans because First Bank pretends to be the true lender and thereby

attempts to assist Check ’N Go and Money Mart, and their affiliates, in evading the

requirements of the California Finance Lender Law. (Id., ¶ 33.) Plaintiff further alleges that,

even if First Bank is the true lender of the installment loans offered by Check ’N Go and Money

Mart, and their affiliates, First Bank has “aided and abetted violations of the California Finance

Lender Law by cooperating with brokers who are subject to that law to offer loans that violate

that law.” (Id.)

Based on these allegations, Plaintiff asserts a claim under California Business and

Professions Code § 17200 (“Section 17200”) against all Defendants. Plaintiff alleges that the

Defendants violated, or aidded and abetted violations of, the California Deferred Deposit

Transactions Law, the California Finance Lenders Law, and California’s usury law. (Id., ¶ 36.)

A. Applicable Legal Standards. 

“[A]ny 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 ... to the district court of the

United States for the district and division embracing the place where such action is pending.” 

Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 7-8 (1983) (citation

omitted); see also 28 U.S.C. § 1441. However, federal courts are courts of limited jurisdiction. 

See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). An action

originally filed in state court may be removed to federal court only if the district court could

have exercised jurisdiction over such action if initially filed there. 28 U.S.C. § 1441(a);

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). A district court must remand the case if

it appears before final judgment that the court lacks subject matter jurisdiction. 28 U.S.C. 

§ 1447(c). Accordingly, the burden of establishing federal jurisdiction for purposes of removal

is on the party seeking removal. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir.

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 Section 27 provides: 

(a) Interest Rates

In order to prevent discrimination against State-chartered insured depository

institutions ..., if the applicable rate prescribed in this subsection exceeds the rate

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2004); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Moreover, a court must

construe the removal statute strictly and reject jurisdiction if there is any doubt regarding

whether removal was proper. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996); see also

Gaus, 980 F.2d at 566 (“Federal jurisdiction must be rejected if there is any doubt as to the right

of removal in the first instance.”) 

“The presence or absence of federal-question jurisdiction is governed by the ‘wellpleaded complaint rule.’” Caterpillar Inc. v. Williams, 482 U.S. 382, 392 (1987). The wellpleaded complaint rule recognizes that the plaintiff is the master of his or her claim. “[H]e or

she may avoid federal jurisdiction by exclusive reliance on state law.” Id. Thus, under the

well-pleaded complaint rule, federal-question jurisdiction arises where the “complaint

establishes either that federal law creates the cause of action or that the plaintiff’s right to relief

necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd.,

463 U.S. at 27-28. 

While a defense of preemption, also known as “ordinary preemption,” is insufficient to

demonstrate removal jurisdiction, “complete preemption,” which is a corollary to the wellpleaded complaint rule, would be a sufficient basis for removal. Rains v. Criterion Sys., Inc., 80

F.3d 339, 344 (9th Cir. 1996). Under the complete preemption doctrine, the force of certain

federal statutes is considered to be so “extraordinary” that it “converts an ordinary state

common law complaint into one stating a federal claim for purposes of the well-pleaded

complaint rule.” Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987); Rains, 80 F.3d at

344. 

B. Federal Question Jurisdiction Does Not Exist.

Defendants argue that federal question jurisdiction exists because Plaintiff’s claim

against First Bank, which they construe as a state-law usury claim, is completely preempted by

Section 27 of the Federal Deposit Insurance Act (“Section 27”), 12 U.S.C. § 1831d.3

 While it is

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such State bank ... would be permitted to charge in the absence of this subsection,

such State bank ... may, notwithstanding any State constitution or statute which is

hereby preempted for the purposes of this section, take, receive, reserve, and charge

on any loan ... interest at a rate of not more than 1 per centum in excess of the

discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in

the Federal Reserve district where such State bank or such insured branch of a

foreign bank is located or at the rate allowed by the laws of the State, territory, or

district where the bank is located, whichever may be greater.

(b) Interest overcharge; forfeiture; interest payment recovery

If the rate prescribed in subsection (a) of this section exceeds the rate such State bank

... would be permitted to charge in the absence of this section, and such State fixed

rate is thereby preempted by the rate described in subsection (a) of this section, the

taking, receiving, reserving, or charging a greater rate of interest than is allowed by

subsection (a) of this section, when knowingly done, shall be deemed a forfeiture of

the entire interest which the note, bill, or other evidence of debt carries with it, or

which has been agreed to be paid thereon. If such greater rate of interest has been

paid, the person who paid it may recover in a civil action commenced in a court of

appropriate jurisdiction not later than two years after the date of such payment, an

amount equal to twice the amount of the interest paid from such State bank or such

insured branch of a foreign bank taking, receiving, reserving, or charging such

interest. 

12 U.S.C. § 1831d.

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undisputed that state-law usury claims against state-chartered banks such as First Bank are

preempted by Section 27, the parties vigorously debate whether the preemptive force of Section

27 is so strong that it completely preempts state-law usury claims against state-charted banks

and converts such claims to claim arising under federal law. However the Court need not

resolve this issue, because Plaintiff’s complaint does not state a state-law usury claim against a

state-chartered bank. 

Section 27 only regulates the interest rates of loans. 12 U.S.C. § 1831d. In its

complaint, Plaintiff alleges that Check ’N Go, Money Mart, and their affiliates, none of which

are state-charted banks, have engaged in the following unlawful and unfair business practices in

violation of California Business and Professions Code § 17200: (1) making loans that violate

California’s usury laws (Compl., ¶¶ 2, 20, 25), or in the alternative, acting as a broker in

California on loans that violate California’s usury laws (Id., ¶¶ 1, 19, 24); and (2) engaging in

other practices, wholly unrelated to interest rates (Id., ¶¶ 3, 18, 21-22, 26). Plaintiff alleges that

First Bank engaged in unlawful and unfair business practices by aiding and abetting Check ’N

Go and Money Mart’s above described practices. (Id., ¶¶ 30, 32-34.) Specifically, Plaintiff

alleges that if Check ’N Go and Money Mart are the true lenders of the loans bearing excessive

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interest rates, First Bank provided its name to aid and abet Check ’N Go and Money Mart’s

evasion of California law restricting such loans. (Id., ¶ 33.) If, in the alternative, First Bank is

the true lender of the loans, then it aided and abetted Check ’N Go and Money Mart’s unlawful

brokering of these loans. (Id., ¶ 32.) Significantly, Plaintiff does not allege that First Bank

violated California law by making loans bearing excessive interest rates. In fact, Plaintiff

concedes in the complaint that state-charted banks, such as First Bank, are exempt from the

limits and requirements of the California Finance Lenders Law and expressly disavows that it

asserts any state-law usury claim against First Bank. (Compl., ¶ 16; Reply at 3.)

Other courts similarly have held that Section 27 did not preempt claims where the

plaintiff did not directly assert a usury claim against a state-chartered bank. See, e.g. People of

the State of New York v. County Bank of Rehoboth Beach, No. 1:03-CV-1320 (N.D.N.Y. May

25, 2004) (attached as Exhibit D to the Declaration of Peter J. Keith (“Keith Decl.”)) (finding

no federal question jurisdiction where plaintiff alleged usury claims against non-bank

defendants and asserted the state-bank aided non-bank defendants in committing usury); see

also Saxton v. Capitol One Bank, 392 F. Supp. 2d 772, 783 (S.D. Miss. 2005) (rejecting

defendant’s characterization of claims as ones for usury against state bank where plaintiff

challenged the allegedly deceptive and improper manner in which the rates and fees were

charged); Cross-Country Bank v. Klussman, 2004 WL 966289, at *5 (N.D. Cal. Apr. 30, 2004) 

(remanding action because plaintiff’s claims did not challenge the rate of interest charged by a

state bank, but rather, alleged that state banks misrepresented the nature and costs of their

services); Partin v. Cableview, Inc., 948 F. Supp. 1046, 1049 (S.D. Ala. 1996) (same). 

In contrast, in Jenkins v. First American Cash Advance of Georgia, LLC, 400 F.3d 868

(11th Cir. 2005), a case relied on by Defendants, the complaint directly and unambiguously

stated a usury claim against a national bank. Id. at 873 n.3. The plaintiff argued that her usury

claims were brought “primarily” against non-national bank and did not even argue that she was

not bringing a usury claim against the national bank. Id. Moreover, her complaint expressly

named the national and non-national bank as defendants and charged them both with usury. Id.;

see also Forness v. Cross County Bank, 2006 WL 240535, at *3-4 (S.D. Ill. Jan. 13, 2006)

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(finding claims against state-charted bank preempted where plaintiffs indicated that they

“mainly” challenged practices other than the interest rate charged, thus implying that they did in

fact challenge the interest rate). That is not the case here.

Defendants argue, with no supporting authority, that by alleging that First Bank aided

and abetted other Defendants’ unlawful acts, including usury, Plaintiff is in essence bringing a

usury claim directly against First Bank. (Opp. at 3-4.) As Plaintiff argues, Defendants’

argument rests on conflating the allegations against Check ’N Go and Money Mart into the ones

against First Bank. However, under California law, aiding and abetting is distinct from

committing the primary underlying violation. See Neilson v. Union Bank of Cal., 290 F. Supp.

2d 1101, 1134-35 (N.D. Cal. 2003) (analyzing California law). The court in Neilson explained: 

[A]n aider and abettor does not ‘adopt as his or her own’ the tort of the primary

violator. Rather, the act of aiding and abetting is distinct from the primary

violation; liability attaches because the aider and abettor behaves in a manner that

enables the primary violator to commit the underlying tort. ... [A]iders and

abettors do not agree to commit, and are not held liable as joint tortfeasors for

commiting, the underlying tort... .” 

Id. at 1134-35. As summarized by Plaintiff, the primary violations it alleges are either the

making of a usurious loan by a non-bank entity, if Check ’N Go and Money Mart are the true

lenders, or violations of California’s brokering law. Under neither of Plaintiff’s theories do

they assert that the primary violation is the making of a usurious loan by a state-charted bank. 

(Reply at 7.) Accordingly, even if Section 27 would completely preempt state-law usury claims

against a state-charted bank, Plaintiff does not allege such a claim, and thus, federal question

jurisdiction does not exist.

C. Diversity Jurisdiction Does Not Exist.

Alternatively, Defendants argue that this Court has diversity jurisdiction over this action

because the amount in controversy exceeds $75,000 and the parties are completely diverse. The

parties dispute whether Plaintiff, and real party in interest, is the State or the City of San

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 Plaintiff also argues that diversity jurisdiction does not exist because “[t]wo

defendants appear to be California-based operating companies.” (Mot. at 12 n.4.) 

Defendants counter that Plaintiff waived that argument by pleading that Defendants’ places

of business are outside of California. (Opp. at 10 n.13.) Because the Court finds that

Plaintiff, and the real party in interest, is the State, the Court need not address whether

complete diversity would exist if the City were the real party in interest.

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Francisco.4

 To determine if diversity jurisdiction exists, courts must examine the citizenship of

the real parties to the controversy, not the citizenship of nominal or formal parties. Navarro

Sav. Ass’n v. Lee, 446 U.S. 458, 460-461 (1980). If the State is the real party in interest in this

action, diversity jurisdiction does not exist because “a State is not a ‘citizen’ for purposes of the

diversity jurisdiction.” See Moor v. County of Alameda, 411 U.S. 693, 717 (1973); see also

People v. Steelcase, Inc., 792 F.Supp. 84, 86 (C.D. Cal. 1992) (“[F]or diversity purposes, a state

is not a citizen of itself. Therefore, it cannot sue or be sued in a diversity action.”).

Here, pursuant to California Business and Professions Code §§ 17204 and 17206(a),

Dennis Herrera, City Attorney for the City of San Francisco (“Herrera”) brought this action in

the name of the People of the State of California. In Steelcase, the court was faced with the

similar issue as presented here and concluded that when the district attorney filed an action

pursuant to those provisions of the California Business and Professions in the name of the

People of the State of California, the State was the proper plaintiff, and the real party in interest,

and thus, diversity jurisdiction did not exist. Id. at 85-86; cf Nguyen v. Superior Court, 49 Cal.

App. 4th 1781, 1789 (1996) (finding that the District Attorney of San Mateo County acted on

behalf of the State when it filed a red light abatement action “in the name of the People of the

State of California” pursuant to California Penal Code § 11226); People v. Bhakta, 135 Cal.

App. 4th 631, 638, 641 (2006) (holding that California Penal Code § 11226 and California

Business and Professions Code §§ 17204, 17260(a) provide city and district attorneys with

equal status and authority to bring actions in the name of the People of the State of California

and to represent the people of the State in such actions).

Defendants’ attempt to distinguish Steelcase and Nguyen based on the fact that these

cases involved district attorneys rather than city attorneys is unpersuasive. California Business

and Professions Code § 17204 provides in pertinent part: “Actions for any relief pursuant to this

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5 California Code of Civil Procedure § 731 provides, in pertinent part: “...A civil

action may be brought in the name of the people of the State of California to abate a public

nuisance ... by the district attorney of any county in which such nuisance exists, or by the city

attorney of any town or city in which such nuisance exists, and each of said officers shall

have concurrent right to bring such action for a public nuisance existing within a town or

city, and such district attorney, or city attorney, of any county or city in which such nuisance

exists must bring such action whenever directed by the board of supervisors of such county

or whenever directed by the legislative authority of such town or city.”

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chapter shall be prosecuted exclusively ... by the Attorney General or any district attorney ...

[or] by any city attorney of a city, or city and county, having a population in excess of 750,000

... in the name of the people of the State of California ....” Cal. Bus. & Prof. Code § 17204. 

California Business and Professions Code § 17206(a) provides that acts of unfair competition

are subject to a civil penalty of up to $2,500 for each violation, “which shall be assessed and

recovered in a civil action brought in the name of the people of the State of California by the

Attorney General, by any district attorney, ... [or] by any city attorney of a city, or city and

county, having a population in excess of 750,000 ...” Cal. Bus. & Prof. Code § 17206(a). 

These statutes do not give district attorneys any more power than city attorneys of cities with a

population of more than 750,000 to bring such a suit. Notably, the court in California v. M & P

Investments, 213 F. Supp. 2d 1208 (E.D. Cal. 2002), the case on which Defendants rely so

heavily, did not distinguish between district and city attorneys in its analysis. The court noted

that “there are limitations on public prosecutors’ (like district attorneys and city attorneys)

authority vis a vis the State of California.” M & P Investments, 213 F. Supp. 2d at 1215 (citing

People v. Hy-lond Enterprises, Inc., 93 Cal. App. 3d 734 (1979)).

The Court finds Defendants’ reliance on M & P Investments, for the proposition that the

City is the real party in interest, is misplaced for several reasons. First, in determining whether

a city attorney represents the State when he files a suit on behalf of the People of the State of

California pursuant to California Code of Civil Procedure § 731,5

 the court in M & P

Investments conflated two distinct concepts - whether a city attorney has authority under the

statute to sue on behalf of the State and if so, what is the scope of such authority. In support of

its conclusion, the court relied on Hy-Lond. Significantly, the court in Hy-Lond addressed only

the later issue, i.e. the scope of the district attorney’s authority when he filed an action on behalf

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of the people of the State of California. Hy-Lond, 93 Cal. App. 3d at 739. The district attorney

in Hy-Lond stipulated to a judgment with the defendant covering facilities in twelve counties

and granting the defendant “absolution for all its past sins” for all its facilities in these twelve

counties and “immunity for future actions for unfair competition with respect to future alleged

violations of the law and regulations.” Id. at 749. The court held that the authority conferred

on district attorneys under California Business and Professions Code §§ 17204 and 17535 did

not include the right to restrain the powers of other state agents, as the district attorney had, and

thus, the stipulated judgment exceeded the scope of the district attorney’s authority. Id. at 752. 

Similar to Hy-Lond, the court in M & P Investments was determining the scope of the

city attorney’s authority to restrain the State. The proposed environmental injunction at issue in

M & P Investments provided that California Department of Toxic Substances Control

(“DTSC”), a state agency that was not a party to the lawsuit, serve as the lead enforcement

agency to ensure compliance with the terms of the injunction and “enjoined DTSC in various

aspects of its duties in that capacity.” M & P Investments, 213 F. Supp. 2d at 1213 (emphasis in

original). However, the court in M & P Investments was also examining whether the State, in

the action filed by the city attorney on behalf of the People of the State of California, was the

real party in interest. This Court finds that the issue of whether the scope of the particular

proposed injunction exceeded the city attorney’s authority is a distinct legal issue from whether

the city attorney had the authority to represent the State in any capacity in the lawsuit. In the

present action, the scope of any injunction sought by Plaintiff is not yet before the Court. 

However, even if it were, such an issue should be analyzed separately from whether 

Herrera has authority under California Business and Professions Code §§ 17204 and 17206(a)

to sue on behalf of the State.

Second, the city attorney in M & P Investments expressly conceded that he did not

represent the State. Id. at 1213. In fact, all parties and the State Attorney General agreed that

the city attorney “(by virtue of CCP § 731) [did] not represent the State of California in an

action filed “in the name of the people of the State of California” to abate a public nuisance

under state law.” Id. Instead, the city attorney took the unique position that it represented all

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 The city attorney represented that: (1) the DTSC determined with the city attorney

that an abatement action order was necessary; (2) the city attorney consulted with the DTSC

regarding a temporary restraining order and approvals were obtained from “the executive

levels of government;” (3) the DTSC had the responsibility and authority over the site

investigation; and (4) Lodi and the State were communicating almost daily. Id. at 1212 n.12. 

At the hearing on the preliminary injunction, the court expressed its understanding that the

State was the moving party on the motion. Neither the city attorney nor the DTSC, whose

counsel was present, objected or corrected the court’s perception. Id. at 1212-13. The city

attorney, in support of the preliminary injunction, stated that it represented the collaborative

efforts of Lodi and the DTSC. Id. at 1213. Then, two days before the hearing on the form of

the proposed injunction, the DTSC submitted a letter asserting its position that the court did

not have jurisdiction over it and objecting to the preliminary injunction. Id. at 1211.

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the people of the State of California as an entity separate from the State. The court rejected the

city attorney’s position. Id. at 1216. Thus, the court determined that there were only two

possible answers to the question of who was the proper plaintiff to an action brought under CCP

§ 731 “in the name of the people of the State of California” by the city attorney: (1) the City of

Lodi (“Lodi”), or (2) the State of California, a position which no one urged. Id. In contrast

here, Herrera directly argues that by filing the suit on behalf of the People of the State of

California, he filed this action on behalf of the State. Moreover, the California Attorney

General has not objected the Herrera’s authority to do so.

Third, the court in M & P Investments clearly was moved by the particular facts before

it. Notably, the city attorney filed the action on behalf of both the Lodi and the People of the

State of California (“the People”). Thus, both Lodi and the People were purportedly plaintiffs. 

Some defendants had filed counterclaims against Lodi and accused Lodi of being responsible

for the contamination over which it was suing the defendants. Moreover, the city attorney and a

state agency, the DTSC, had misrepresented that the State was involved in and had approved of

the city attorney’s litigation efforts.6

 No such similar facts are present here. Hererra has not

filed this action on behalf of the City as a separate plaintiff, Defendants have not accused the

City of any misconduct, and neither the Herrera nor any representatives from state agencies

have made misrepresentations regarding other state agencies’ involvement in the litigation. For

all the above reasons, the Court finds M & P Investments is not persuasive.

Defendants also argue that the five factor test under which courts determine whether

Eleventh Amendment Immunity applies should be applied to the determination of citizenship

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for purposes of diversity jurisdiction, and that under this test, the Herrera is not acting as an arm

of the State. (Opp. at 12-13.) The five factors test in determining whether an entity is a state

agency for Eleventh Amendment purposes is as follows: “(1) whether a money judgment would

be satisfied out of state funds, (2) whether the entity performs central governmental functions,

(3) whether the entity may sue or be sued, (4) whether the entity has the power to take property

in its own name or only the name of the state, and (5) the corporate status of the entity.” Befitel

v. Global Horizons, Inc., 461 F. Supp. 2d 1222 (D. Haw. 2006) (quoting Belanger v. Madera

Unified School Dist., 963 F.2d 248, 250-51 (9th Cir.1992)). If the issue before the Court were

whether the City, as an entity, is a state agency or an arm of the State, perhaps it would be

appropriate to apply this test. However, the issue here is whether Herrera, when he filed suit on

behalf of the People of the State of California, was acting on behalf of the State or the City. 

Accordingly, the Court finds this test is inapplicable here.

The Court thus finds that Defendants have not met their burden to demonstrate that the

City is the real party in interest. Accordingly, Defendants have not shown that diversity

jurisdiction exists.

D. Plaintiff’s Motion for Attorneys’ Fees.

Pursuant to 28 U.S.C. § 1447(c), Plaintiff requests an award of attorneys’ fees and costs

incurred as a result of Defendants’ allegedly improper removal. “An order remanding the case

may require payment of just costs and any actual expenses, including attorney fees, incurred as

a result of the removal.” 28 U.S.C. § 1447(c). To determine whether to award costs and fees

under § 1447(c), this Court has a “great deal of discretion.” Morris v. Bridgestone/Firestone,

Inc., 985 F.2d 238, 240 (9th Cir. 1993). Although it was not ultimately persuaded by

Defendants’ arguments, the Court does not find that removal was frivolous or motivated by bad

faith. The Court therefore declines to exercise its discretion to award Plaintiff’s fees and costs

under § 1447(c).

CONCLUSION

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For the foregoing reasons, the Court (1) GRANTS Plaintiff’s motion to remand and (2)

DENIES Plaintiff’s motion for attorneys’ fees. This case is remanded to the Superior Court of

California for the County of San Francisco. The Clerk shall transfer the file forthwith.

IT IS SO ORDERED.

Dated: August 20, 2007 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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