Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-00004/USCOURTS-cand-4_06-cv-00004-2/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1446 Petition for Removal

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1

U

nite

d

States District C

o

u

rt

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

EDWARD CARPANELLI, et al.,

 Plaintiff(s)

 v.

AMERICAN STANDARD

COMPANIES INC., et al.,

 Defendant(s).

_____________________________/

Coordinated Proceedings Special Title

(Cal. Rule 1550(b))

No. C 06-0004 WDB

ORDER GRANTING PLAINTIFFS'

MOTION TO REMAND ACTION TO

STATE COURT

 BATHROOM FITTINGS CASES /

I. Introduction

This is a coordinated antitrust case brought pursuant to California antitrust and unfair

business practices statutes. Plaintiffs are indirect purchasers of plumbing products. Their

Consolidated Amended Complaint alleges, on their own behalf and on behalf of a class of

similarly situated indirect purchasers, that defendants American Standard and Masco (and

unnamed co-conspirators) have formed an illegal trust or combination to fix, elevate, or

maintain the price levels of plumbing fittings and plumbing fixtures. 

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1

 Defendant Masco did not join in the removal, nor did it file papers in opposition to plaintiffs'

motion to remand. Accordingly, when we reference arguments or concessions made by 'defendant', we

refer only to defendant American Standard.

2

 Lawrence Lang v. American Standard Companies, Inc., San Francisco Superior Court Case

No. 05-438604, filed February 14, 2005; Scott Young v. American Standard Companies, San Francisco

Superior Court Case No. 05-438654, filed February 14, 2005; Aaron Linn v. American Standard

Companies, San Francisco Superior Court Case No. 05-438776, filed February 17, 2005; Judith Barry

v. American Standard Companies, San Francisco Superior Court Case No. 05-438787, filed February

17, 2005.

3

 From this point forward, we use the terms 'price-fixing' or 'fix prices' as shorthand for plaintiffs'

allegation that defendants formed an illegal trust or combination to 'fix, raise, elevate, or maintain the

prices levels of' the relevant products.

4

 Los Angeles Superior Court Case No. BC328849, filed February 15, 2005.

2

On January 3, 2006, defendant American Standard1 removed plaintiffs' coordinated

class action to our Court. On January 11, 2006, plaintiffs filed a motion to remand the case

to state court. The only issue truly disputed by the parties is whether the case was properly

removed under the recently enacted Class Action Fairness Act. 

II. Background

In February of 2005, five separate plaintiffs filed putative class actions in California

state court. Each of these complaints asserts a cause of action for violation of the Cartwright

Act (California's antitrust statute) and a cause of action for violations of the California Unfair

Competition Law (Bus. & Prof. Code § 17200, et. seq.) 

Four of the five complaints -- Lang, Young, Linn, and Barry2 -- accused defendants

American Standard and Masco, in addition to other manufacturers, of conspiring to illegally

fix, elevate, or maintain3 the price levels of plumbing fittings. The fifth complaint, Ed

Carpanelli v. American Standard Companies Inc., et al.,

4

 also accused defendants of

engaging in a price fixing conspiracy. The Carpanelli complaint is different from the other

four complaints, however, in that Carpanelli identified both plumbing fittings and plumbing

fixtures as the products that were the subject of defendants' alleged conspiracy.

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5

 Because it was not completely clear from the parties' written submissions whether defendants

had challenged the Judicial Council's coordination decision, the Court asked defense counsel at the

February 28, 2006, hearing whether defendants had made such a challenge. Defense counsel stated that

defendants had not challenged the Judicial Council's coordination of plaintiffs' cases.

3

The last two complaints to be filed, Linn and Barry, were filed on February 17, 2005 -

one day before the Class Action Fairness Act went into effect. The Class Action Fairness

Act ("CAFA") amends federal diversity jurisdiction and related removal statutes to create

federal jurisdiction over interstate class actions. Under CAFA, defendants may remove to

federal court any action in which the plaintiff class exceeds more than 100 members, the

parties are minimally diverse, and the aggregate amount in controversy exceeds five million

dollars.

Approximately four months after plaintiffs filed their five individual lawsuits, on June

21, 2005, the Judicial Council of California determined that the cases should be coordinated

pursuant to California Code of Civil Procedure section 404 et seq. and rules 1520 et seq. of

the California Rules of Court . See Exhibit H to Defendant's Notice of Removal. Defendants

did not challenge the decision by the Judicial Council to coordinate these cases.5

On July 7, 2005, the Presiding Judge of the San Francisco Superior Court assigned the

Honorable Richard A. Kramer to sit as coordination trial judge to hear and determine the

coordinated actions. Exhibit I to Defendant's Notice of Removal. On October 18, 2005,

Judge Kramer issued his First PreTrial Order. This Order apportions duties and

responsibilities among plaintiffs' various attorneys, and designates certain firms to serve as

plaintiffs' co-liason counsel. Exhibit J to Defendant's Notice of Removal. Also on October

18, 2005, Jude Kramer issued a separate order instructing "those plaintiffs filing a

Consolidated Amended Complaint" to do so by December 1, 2005. The Order also sets forth

a deadline by which defendants must file an answer or a demurrer to the Consolidated

Amended Complaint. Exhibit K to Defendant's Notice of Removal.

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6

 Plaintiff Judith Barry is not included in the CAC. 

7

 This information was also solicited from defense counsel at the February 28, 2006, hearing.

8

 In their papers, the parties spend considerable energy arguing about whether the strong

presumption against removal jurisdiction that traditionally exists applies to cases removed under the

CAFA. Because it is not necessary to the resolution of plaintiffs' motion to decide this issue, we decline

4

In response to Judge Kramer's second October 18, 2005, Order, on December 6, 2005,

four of the five plaintiffs6 filed a Consolidated Amended Complaint (hereinafter "CAC").

Plaintiffs' CAC clearly alleges that defendants American Standard and Masco

conspired to fix prices as to both plumbing fittings and plumbing fixtures. The CAC also (i)

removes Grohe America and Delta Faucet as defendants, (ii) divides the plaintiff class into

two sub-classes, (iii) expands the class period to include plaintiffs who purchased plumbing

products through the date of the filing of the CAC, and (iv) otherwise 'refines and

harmonizes' the four individual Complaints.

Defendants did not attempt to challenge the CAC in state court -- they did not file a

demurrer or any other kind of motion taking the position that the California court had erred

under California law in permitting the plaintiffs to file a consolidated complaint.7

Instead of challenging the filing of the CAC in state court, on January 3, 2006,

defendants filed a notice of removal in this court.

II. Propriety of Removal Under Class Action Fairness Act

Defendant removed this case to federal court on the premise that plaintiffs' CAC

commenced a 'new action' under California law. Plaintiffs dispute this premise -- arguing

that their CAC 'relates back' to the filing of the four original complaints and therefore did not

constitute a new action removable under CAFA. The validity of defendant's premise is

dispositive of the outcome of plaintiffs' motion -- that is, if plaintiffs' CAC constitutes a new

action, it follows that the case was properly removed under CAFA. If plaintiffs' CAC instead

'relates back' to the dates on which the original complaints were filed (just prior to the

enactment of CAFA), then the CAFA does not apply and the case was improperly removed.8

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to do so.

9

 Defendant also argues that plaintiffs' expansion of the class period to include the time from the

filing of the initial complaints to the filing of the CAC is a substantive change (in other words, instead

of the relevant class period being, for instance, February 1, 2001, to February 15, 2005, it is now

February 1, 2001 to December 6, 2005). We are not persuaded that a lengthening of the class period by

approximately ten months constitutes a 'substantive change' in the nature of plaintiffs' lawsuits.

5

The parties essentially agree on the standard governing the question of whether

plaintiffs' CAC commenced a new action:

CAFA’s amendments to the federal diversity jurisdiction and removal

statutes ‘apply to any civil action commenced on or after’ the date of CAFA’s

enactment, February 18, 2005. Although the statute itself does not define the

term ‘commenced’, the Ninth Circuit has held that ‘CAFA’s commenced’

language surely refers to when the action was originally commenced in state

court.’ Bush v. Cheaptickets, Inc., 425 F.3d 683, 686 (9th Cir. 2005). ‘A

state’s own laws and rules of procedure determine when a dispute may be

deemed a cognizable legal action in state court.’ 

Under California law, a civil action is ‘commenced by filing a

complaint with the court.’ California’s ‘relation back’ rules likewise

determine whether an amended complaint commences a new action on the date

of its filing, or whether the amended complaint is deemed to relate back to the

filing date of the original complaint. Id.

Under California law, an amended complaint relates back to the filing

date of the initial complaint when: (1) the amended complaint involves the

same general set of facts as the original; (2) it seeks relief for the same injuries

as the original; and (3) it refers to the same instrumentality as the original. An

amendment that merely ‘corrects a misnomer’ generally will satisfy these

criteria, whereas one that ‘substantively changes the nature of the action’ will

not.

Defendant’s Opposition, pp. 7, 8 (some citations omitted).

The parties disagree as to whether the CAC 'substantively' altered the nature of the

actions. Defendant's primary argument9 is that plaintiffs' initial complaints alleged that the

defendants were engaged in a conspiracy to fix the prices of only bathroom (and kitchen)

fittings. The CAC, by contrast, charges that the defendants were engaged in a conspiracy to

fix the prices of bathroom fittings and bathroom fixtures. 

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6

Defendant emphasizes that the terms 'fittings' and 'fixtures' describe two very different

types of products -- fittings are defined in the CAC as the "metal trim components that are

used in conjunction with Plumbing Fixtures, such as faucets, showerheads, taps, mixers,

handles, heaters, valves, and drains." CAC, ¶ 5. Fixtures, in contrast, are defined as "the

fixed receptacles that receive water at the point of use, such as sinks, lavatories, toilet bowls,

toilet tanks, and non-whirlpool bathtubs." CAC, ¶ 4.

Defendant argues that the expansion of the alleged price-fixing conspiracy to include

fixtures as well as fittings substantively alters the nature of the action. Defendant points out

that, in addition to changing the product definition, this change also expands the plaintiff

class and by definition expands the agreements upon which the alleged conspiracy must have

been based. In addition, defendant points out that two of the defendants named in most of

plaintiffs' original complaints (Grohe America and Delta Faucet) were dropped from the

CAC - allegedly because they manufacture fittings but not fixtures.

Plaintiffs (at least in their moving papers) appear to argue that all four of the initial

complaints included sufficient references to plumbing fixturesto adequately place defendants

on notice that fittings and fixtures were included within the scope of the alleged conspiracy.

To resolve the parties' dispute, we turn to the source of that dispute - the original four

complaints. After carefully reviewing the complaints, we have reached the conclusion that

both parties are overreaching. Despite plaintiffs' assertions to the contrary, we believe that

three of the four complaints -- Lang, Young, and Linn - did not put defendants on notice that

the scope of the alleged conspiracy included plumbing fixtures as well as plumbing fittings.

Fixtures are not included in the product definitions, nor in the class definitions. In fact, the

only explicit reference to fixtures in these complaints is in their respective sections describing

defendants' business enterprises. Moreover, we must reject the notion that tacking the term

'and related products' onto a list of plumbing fittings implicitly suggested that the target

products included plumbing fixtures as well as plumbing fittings. In sum, we believe that

the description of defendants' respective business enterprises as including plumbing fixtures

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7

is insufficient, standing alone, to fairly put defendants on notice that fixtures are included as

target products.

We find, however, that it is defendant who is overreaching with respect to the

Carpanelli complaint. In the Carpanelli complaint, the targets of the alleged conspiracy are

described more than twenty times as 'plumbing fixtures and fittings'. Plaintiff Carpanelli is

described as an indirect purchaser of 'plumbing fixtures and fittings'. Furthermore, the class

definition encompasses "all persons or entities in the state of California who indirectly

purchased plumbing fixtures and fittings products." Carpanelli, ¶ 23.

Defendant argues that inferences can be drawn from sources outside of the Carpanelli

complaint as well as from the complaint itself that would logically lead one to conclude that,

despite what it says, the complaint actually encompassed only an alleged fittings conspiracy.

For instance, defendant argues that the complaint should be read in conjunction with the

other four original complaints - which allege clearly only fittings conspiracies.

We disagree with the emphasis that defendant places on outside materials. The best

and most reliable way to ascertain the scope of the Carpanelli complaint is by reviewing the

complaint itself. It also strikes us as a dubious proposition that a complaint filed by one

plaintiff represented by a particular lawyer in a certain court should be interpreted in

conjunction with other complaints filed by other plaintiffs with different representation in

another court.

Defendant next argues that the fact that Grohe America (a manufacturer of fittings but

not fixtures who is named as a defendant in the Carpanelli complaint) was omitted from the

CAC demonstrates that the Carpanelli complaint originally targeted only manufacturers of

fittings (and therefore only alleged a fittings conspiracy). We agree that this theory could

offer one explanation for the removal of Grohe from the CAC. Defendant has not persuaded

us, however, that this is the only explanation for Grohe's removal -- or even the most likely.

After considering all of defendant's arguments, we must acknowledge that we do not

believe that defendant's reading of the Carpanelli complaint is completely irrational. Some

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10 We do not mean to suggest that counsel conceded - at any point - that the Carpenelli complaint

includes an alleged fixture conspiracy. Rather, the merger argument discussed above was an alternative

argument offered by defense counsel when it became clear that the Court believed that Carpanelli is

fairly read as encompassing fixtures as well as fittings.

8

of the more subtle inferences drawn by defendant do support a reading of the complaint as

targeting only fittings. That being said, we cannot find that a complaint that explicitly asserts

that the conspiracy reached fixtures and fittings, that refers to fixtures and fittings more than

twenty times, that includes indirect purchasers of fixtures in the class definition, and that

defines fixtures in one section of the complaint as including sinks, bathtubs, and toilets, did

not put defendant on notice that fixtures were included in the scope of the alleged conspiracy.

If defendant believed that the complaint's description of the scope of the conspiracy was

ambiguous, it should (and presumably would) have promptly requested clarification -- either

informally or through motion practice in state court, where the case was pending. But

defendant did neither -- over a period of many months.

Accordingly, we find that the Carpanelli complaint included sufficient references to

plumbing fixtures to adequately place defendant on notice that fixtures were included within

the scope of the alleged conspiracy. We therefore find that the CAC did not substantively

alter the nature of the Carpanelli action - and thus relates back to February 15, 2005 -- when

the Carpanelli complaint was filed.

At the hearing, defense counsel argued that it was unfair to find that the entire CAC -

which encompasses the former Lang, Young, and Linn complaints as well as the Carpanelli

complaint, relates back when only Carpanelli included fixtures in the scope of the

conspiracy.10 Defense counsel also appeared to argue more broadly that it was unfair to

combine Carpanelli, a fittings and fixtures case, with the other three fittings cases.

Defendant, however, provides us with no authority (nor have we independently been

able to locate any) for the proposition that we can either ignore the Carpanelli complaint or

somehow unhinge that complaint from the three other complaints merged in the CAC. 

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9

The problem with defendant's position is that the decisions it really challenges are

decisions made at the state court level -- that is, the decision made by the California Judicial

Council, under applicable state law, to coordinate the original five actions and the decision

made by Judge Kramer, also under applicable state law, to permit plaintiffs to merge their

complaints into a consolidated complaint. If defendant wants to make the argument that it

is not fair to consolidate Carpanelli with the other complaints, we believe that the place to

make that argument is state court - not here.

Defendant removed the CAC as a whole -- and we will accordingly treat it as such.

Any other decision on our part would, in essence, second-guess the actions taken by the

Judicial Council and by Judge Kramer. 

To reiterate, we find that the CAC did not substantively alter the nature of the

Carpanelli action - and thus relates back to February 15, 2005 -- when the Carpanelli

complaint was filed. This date was before the effective date of the CAFA - and therefore the

case was not removable under CAFA. Accordingly, we must GRANT plaintiffs' motion to

remand the case to state court.

III. Attorneys Fees

The final issue we must resolve is whether plaintiffs are entitled to an award of

attorneys fees in connection with defendant's removal of this case to federal court. The

Supreme Court recently set forth the standard for awarding fees when a federal court

remands a case to state court. "Absent unusual circumstances, courts may award attorney's

fees under § 1447(c) only where the removing party lacked an objectively reasonable basis

for seeking removal." Martin v. Franklin Capital Corporation, 126 S.Ct. 704, 711 (2005).

Defendant argues that it had an objectively reasonable basis for seeking removal, and

that the Court should therefore decline to award fees. Given that the law of removal under

the CAFA is in its developmental stages, and that, as plaintiff concedes, "this case presents

a unique situation, in that none of the cases dealing with this issue involved four individual

complaints being consolidated into one", see Plaintiff's Reply Brief, p. 9, we do not believe

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10

it is accurate to characterize defendant's removal as lacking an 'objectively reasonable basis'.

Accordingly, we DECLINE to award attorneys fees to plaintiffs.

IT IS SO ORDERED. 

Dated: March 3, 2006 

WAYNE D. BRAZIL

United States Magistrate Judge

Copies to:

All parties, WDB, stats

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