Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00788/USCOURTS-casd-3_17-cv-00788-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332nr Diversity-Notice of Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

EDMUND HOY, an individual 

person, on behalf of himself and all 

others similarly situated,

Plaintiff,

v.

JOHN CLINNIN, et. al.,

Defendant.

Case No.: 17-cv-788-BTM-KSC

ORDER GRANTING 

PLAINTIFF’S MOTION TO 

REMAND AND DENYING AS 

MOOT DEFENDANTS’ MOTION 

TO TRANSFER VENUE

On April 19, 2017, Defendants removed this action from the Superior Court 

of California, County of San Diego. (ECF No. 1.) Pending before the Court are 

Plaintiff’s motion to remand and Defendants’ motion to transfer venue. (ECF 

Nos. 5, 7.) For the reasons discussed below, Plaintiff’s motion to remand is 

granted and Defendants’ motion to transfer venue is denied as moot.

I. BACKGROUND

Plaintiff brought a putative class action for alleged violations of the 

California Business & Professions Code § 17200 (“UCL”) against Defendant 

Linebarger Goggan Blair & Sampson, LLP (“Linebarger”) and its employees. 

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Linebarger is a foreign limited law partnership that represents California 

government agencies in connection with their debt collections. According to the 

Complaint (“Compl.”), as a foreign LLP, Linebarger may only render its services 

in California through active members of the California State Bar who are 

employed by the foreign limited liability law partnership for that purpose. (Compl.

¶ 12.) Plaintiff alleges that Defendants have violated the California Rules of 

Professional Conduct and California Corporations Code because the designated 

California attorneys—Defendants John Clinnin and Timothy O’Reily—have failed 

to supervise Linebarger’s employees in sending out demand letters under the 

Linebarger letterhead to California debtors. (Compl. ¶¶ 14–16.) The Complaint 

seeks both injunctive and restitutionary relief from all Defendants. (Compl. ¶ 43.) 

Defendants removed this action under the Class Action Fairness Act 

(“CAFA”), 28 U.S.C. § 1332(d). 

III. DISCUSSION

A. Motion to Remand

Plaintiff moves to remand, arguing that the Court should decline jurisdiction 

under the local controversy exception under the CAFA. See 28 U.S.C. § 

1332(d)(4). 

CAFA grants federal courts with original diversity jurisdiction over class 

actions comprised of 100 or more persons if the matter in controversy exceeds

the sum or value of $5,000,000 and any member of a class of plaintiffs is a 

citizen of a state different from any defendant. § 1332(d)(2). Under CAFA, only 

“minimal diversity” is required. Serrano v. 180 Connect, Inc., 478 F.3d 1018, 

1020–21 (9th Cir. 2007). Although CAFA grants federal courts with subject 

matter jurisdiction over qualified class actions, it also provides express 

exceptions, including the local controversy exception, to the exercise of that 

jurisdiction. Id. at 1024. The local controversy exception applies if: (1) greater 

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than two-thirds of the members of all proposed plaintiff classes are citizens of the 

State in which the action was originally filed; (2) at least 1 defendant is a 

defendant whose alleged conduct forms a “significant basis” for the claims 

asserted, from whom “significant relief” is sought by members of the proposed 

class, and who is a citizen of the State in which the action was originally filed; (3)

the principal injuries resulting from the alleged conduct or any related conduct of 

each defendant were incurred in the State in which the action was originally filed; 

and (4) no similar class action has been filed against any of the defendants in the 

last three years. § 1332(d)(4). The Ninth Circuit has held that although the 

removing party bears the initial burden of establishing jurisdiction under CAFA, 

the party seeking remand bears the burden of proof as to the applicability of the 

local controversy exception. Serrano, 478 F.3d at 1024. 

Defendants argue that the local controversy exception does not apply in 

this case because Defendant Clinnin, a citizen of California, is not a defendant 

from whom significant relief is sought or whose alleged conduct forms a 

significant basis for the claims asserted by the proposed class. In determining 

whether Plaintiff seeks significant relief from Defendant Clinnin and whether his

conduct forms a significant basis for the claims, the Court may look only to the 

Complaint. See, Coleman v. Estes Exp. Lines, Inc., 631 F.3d, 1010, 1015 (9th 

Cir. 2011).

1. Significant Defendant 

Whether the “significant basis” condition is met requires a “substantive 

analysis comparing the local defendant’s alleged conduct to the alleged conduct 

of all the other, non-local defendants.” Benko v. Quality Loan Serv. Corp., 789 

F.3d 1111, 1118 (9th Cir. 2015) (quoting Kaufman v. Allstate New Jersey Ins. 

Co., 561 F.3d 144, 156 (3d Cir. 2009)). 

Defendants argue that Defendant Clinnin’s conduct does not form a 

significant basis of the proposed class’ UCL claims because Defendant Clinnin 

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cannot as a matter of law be liable under the UCL. Defendant contends that the 

California Rule of Professional Conduct 1–120 cannot serve as the basis for a § 

17200 claim because it is not intended to create a private cause of action. 

However, as Plaintiff notes, in People ex. rel. Herrera v. Stender, 212 Cal. App. 

4th 614, 632 (2012), a California court held that an unlawful UCL claim could be 

based on a violation of the California Rules of Professional Conduct. See also 

Estakhrian v. Obenstine, No. CV 11-3480, 2017 WL 2191622, at * 20 (C.D. Cal. 

Feb. 4, 2017) (granting class certification and finding commonality of issues 

where the plaintiffs’ allegations of California’s professional and ethical rules of 

conduct would establish liability under the UCL). Defendants argue that Plaintiff 

is attempting to circumvent the “bar on asserting claims for violation of the Rules 

of Professional Conduct by recasting the claim as a 17200 violation.” (Opp’n to 

Mtn to Remand, ECF No. 12, 7.) However, as the Herrera Court stated:

The gravemen of the complaint is not to regulate the practice of law but 

rather is to prevent a fraud upon the public. There is a distinction for our 

purposes between trying to regulate professional conduct, which plaintiff is 

not trying to do, and trying to prevent fraud on the public, which plaintiff is 

trying to do.

Herrera, 212 Cal. App. 4th at 640 (internal citation omitted). 

Moreover, even assuming that Defendant Clinnin could not be held liable 

under the proposed class’ unlawful UCL claim, the proposed class still sets forth 

an unfair UCL claim—a separate basis for a UCL violation. See Cel-Tech 

Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 180 (1999) 

(“The statutory language referring to ‘any unlawful, unfair or fraudulent’ practice 

makes clear that a practice may be deemed unfair even if not specifically 

proscribed by some other law.”). 

A review of the Complaint reveals that Defendant Clinnin’s conduct does 

form a significant basis for the proposed class’ claims. Plaintiff alleges that 

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Defendants violated the UCL by engaging in the unlawful practice of law in 

California. It is Linebarger’s California attorneys’, including Defendant Clinnin, 

alleged failure to supervise its debt collectors that forms the basis of the 

unauthorized practice of law. (Compl. ¶ 19–21.) Therefore, Plaintiff carries his 

burden with respect to the “significant basis” requirement. See § 

1332(d)(4)(A)(II)(bb). 

Defendants also argue that Defendant Clinnin is not a defendant from 

whom significant relief is sought. To determine whether Plaintiff seeks significant 

relief from Defendant Clinnin, the Court looks to remedies requested by Plaintiff 

in the Complaint. See Benko, 789 F.3d at 1119. Plaintiff seeks both economic 

and injunctive relief from all Defendants. (Compl. ¶43.) Defendants argue that 

the relief sought is really aimed at Linebarger because it is the party that would 

need to alter or somehow modify its business practices. However, as Plaintiff 

notes, Defendant Clinnin is one of Linebarger’s two practicing attorneys in 

California. The injunction would require Defendant Clinnin to begin supervising 

Linebarger’s debt collectors in sending out demand letters. Therefore, there is 

no indication that an injunction would not affect Defendant Clinnin or that he 

would be incapable of complying with an injunction. See Coleman, 631 F.3d at 

1020 (“There is nothing in the complaint to suggest either that the injunctive relief 

sought is itself insignificant, or that [the plaintiff] would be incapable of complying 

with an injunction.”). 

As to the restitutionary relief, Defendant argues the relief Plaintiff seeks can 

only be obtained from Linebarger because it is the entity which allegedly 

obtained the funds as part of the purportedly unlawful and unfair business 

practices. However, as the Ninth Circuit has noted, “a defendant from whom 

significant relief is sought” does not mean a “defendant from whom significant 

relief may be obtained.” Coleman, 631 F.3d at 1015. On the allegations in the 

Complaint, Defendant Clinnin can be liable for restitution. See Meister v. 

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Mensinger, 230 Cal. App. 4th 381, 398 (2014). There is nothing in the CAFA to 

indicate “a congressional intent to turn a jurisdictional determination concerning 

the local defendant’s ‘alleged conduct’ into a mini-trial on the merits of the 

plaintiff’s claims.” Coleman, 631 F.3d at 1017. Thus, Plaintiff also carries his 

burden with respect to the “significant relief” requirement of the local controversy 

exception. See § 1332(d)(4)(A)(II)(aa). 

In Benko, the Ninth Circuit supported its finding that the local controversy 

exception applied by turning to the Senate Judiciary Committee’s findings 

pertaining to the local controversy exception1. 789 F.3d at 1119. The Court here 

follows the same approach. It is undisputed that all of the proposed class 

members are California citizens and that the underlying alleged misconduct are 

violations of the California Rules of Professional Conduct and the California 

Corporations Code. Defendant Clinnin is one of two Defendants that allegedly 

failed to supervise Linebarger’s debt collectors which resulted in the 

unauthorized practice of law. Plaintiff has, therefore, met his burden to show that 

this case qualifies for the local controversy exception. 

B. Request for Sanctions 

Plaintiffs also moves to recover attorneys’ fees and costs related to the 

removal. 

Under 28 U.S.C. §1447(c), a district court remanding a removed case to 

state court “may require payment of just costs and any actual expenses, 

including attorney fees, incurred as a result of the removal.” The standard for 

awarding attorneys’ fees should turn on the reasonableness of the removal and 

 

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“The Committee Report stated that ‘[t]his provision is intended to respond to concerns that class actions with a 

truly local focus should not be moved to federal court under this legislation because state courts have a strong 

interest in adjudicating such disputes . . . [A} federal court should bear in mind that the purpose of each of these 

criteria is to identify a truly local controversy—a controversy that uniquely affects a particular locality to the 

exclusion of all others.” Benko, 789 F.3d at 1119 (quoting S.Rep. No. 109–14, 39, 2005 U.S. Code Cong. & 

Admin. News 3, 38.). 

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should only be awarded under §1447(c) “where the removing party lacked an 

objectively reasonable basis for seeking removal.” Martin v. Franklin Capital 

Corp., 546 U.S. 132, 141 (2005). Where an objectively reasonable basis exists, 

however, fees should be denied. Id. 

Though the Court ultimately holds that the local controversy exception 

applies to this case, its application is not so obvious so as to render the grounds 

for removal unreasonable. Accordingly, Plaintiff’s request for attorneys’ fees is 

DENIED. 

IV. CONCLUSION 

For the reasons discussed above, the Court GRANTS Plaintiff’s motion to 

remand (ECF No. 5), and REMANDS this action to the San Diego Superior 

Court. Plaintiff’s request for attorneys’ fees is DENIED. Defendants’ motion for 

transfer of venue (ECF No. 7) is DENIED as moot.

IT IS SO ORDERED. 

Dated: June 22, 2017

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