Lyles v. Santander Consumer USA Inc.

669 F.Supp.3d 469

Jabari Morese LYLES, v. SANTANDER CONSUMER USA INC.

Civil Action No. CCB-21-0566

United States District Court, D. Maryland

Signed April 17, 2023

Cory L. Zajdel, David Matthew Trojanowski, Jeffrey Christopher Toppe, Z Law LLC, Timonium, MD, for Jabari Morese Lyles.

Allison Marie Midei, Laurie Goon Furshman, Duane Morris LLP, Baltimore, MD, for Santander Consumer USA Inc.

MEMORANDUM

Catherine C. Blake, United States District Judge

In this class action lawsuit, Jabari Lyles, on behalf of himself and others similarly situated, alleges that Santander Bank charged unauthorized convenience fees on automobile loan payments in violation of Maryland's Credit Grantor Closed End Credit Provisions. Lyles filed the suit in Maryland state court, but Santander filed a notice of removal to federal court where it was assigned to the undersigned district judge. The parties then filed dueling procedural motions—Lyles to remand to state court and Santander to compel arbitration—which are now pending before the court. The motions have been fully briefed and no oral argument is necessary. See Local Rule 105.6. For the reasons set forth below, the court will grant the motion to remand and deny as moot the motion to compel arbitration.

BACKGROUND

On January 11, 2021, the Maryland Circuit Court for Baltimore City docketed Lyles' class action complaint alleging violations of Maryland's Credit Grantor Closed End Credit Provisions, commonly referred to as "CLEC," against Santander Consumer USA. See Compl., ECF 2. On March 4, 2021, Santander filed a notice of removal to federal court under 28 U.S.C. § 1441(a) and the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). See Notice of Removal, ECF 1 ("Notice").

The next day, on March 5, 2021, the parties filed the two currently pending motions. Lyles moved to remand the case to state court; Santander moved to compel arbitration. See Mot. to Remand, ECF 5; Mot. to Compel Arbitration, ECF 7. The parties fully briefed each motion. See Opp'n to Mot. to Remand, ECF 9; Reply in Support of Mot. to Remand, ECF 11; Opp'n to Mot. to Compel Arbitration, ECF 10; Reply in Support of Mot. to Compel Arbitration, ECF 13.

While the parties were briefing those two motions, Lyles moved to certify a question to the Supreme Court of Maryland, then referred to as the Maryland Court of Appeals, related to the application of CLEC's treble damages provision. See Mot. to Certify, ECF 12. Lyles asserted that the outcome of the question controlled whether the amount in controversy requirement for removing this case to federal court under CAFA had been satisfied. Id. at 6-7. Santander did not oppose the motion. Resp. to Mot. to Certify, ECF 16.

On May 3, 2021, the court granted Lyles' motion to certify a question to the Supreme Court of Maryland. See Order, ECF 17. Two weeks later, on May 17, 2021, the court certified the following question:

If a credit grantor is found to have knowingly violated Credit Grantor Closed End Credit Provisions ("CLEC"), Maryland Code Annotated, Commercial Law §§ 12-1001, et seq., does CLEC § 12-1018(b) require the credit grantor to return three times: (1) all amounts collected by the credit grantor in excess of the principal amount financed; (2) only those amounts collected that the borrower contends violate CLEC (in this case, the convenience fees); or (3) some other amount.

See Certification Order at 1, ECF 19. The court explained that the motion for remand was "wholly dependent on the answer to the question presented for certification." Id. at 3.

The Maryland Supreme Court answered the question on May 13, 2022. It concluded that CLEC "requires a credit grantor to return three times the amount of interest, fees, and charges collected that the borrower contends violate CLEC (in this case, the convenience fees)." Lyles v. Santander Consumer USA Inc., 478 Md. 588, 275 A.3d 390, 394 (2022).

After the Maryland Supreme Court issued its answer to the certified question, Lyles moved to reopen this case. Mot. to Reopen, ECF 21. Santander filed a brief agreeing that the case should be reopened, but reiterating its opposition to the remand motion notwithstanding the Maryland Supreme Court's agreement with Lyles on the certified question. Response to Mot. to Reopen, ECF 26. On June 15, 2022, the court reopened the case. Order, ECF 27. It then ordered supplemental briefing in light of the Maryland Supreme Court's decision. Order, ECF 31.

On July 13, 2022, Santander filed its supplemental response to the remand motion. Suppl. Opp'n to Mot. to Remand, ECF 32. Lyles filed his supplemental reply two weeks later, completing briefing of the motion. Suppl. Reply in Support of Mot. to Remand, ECF 33.

With this briefing complete, both the motion to remand and the motion to compel arbitration are ripe for review.

LEGAL STANDARDS

As courts of limited jurisdiction, federal district courts "may not exercise jurisdiction absent a statutory basis." Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). "A court is to presume, therefore, that a case lies outside its limited jurisdiction unless and until jurisdiction has been shown to be proper." United States v. Poole, 531 F.3d 263, 274 (4th Cir. 2008) (citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994)). Accordingly, where an action originally filed in state court is removed to federal court and then met with a motion to remand to the state forum, the removing party carries the burden of demonstrating federal jurisdiction. Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004).

Under these principles, removal jurisdiction ordinarily is strictly construed, Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-109, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)), and "[d]oubts about the propriety of removal are to be resolved in favor of remanding the case to state court," Cohn v. Charles, 857 F. Supp. 2d 544, 547 (D. Md. 2012). Congress enacted the Class Action Fairness Act, or "CAFA," to "facilitate adjudication of certain class actions in federal court," however, so "no antiremoval presumption attends cases invoking CAFA." Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).

Nevertheless, a "defendant invoking CAFA to remove a class action from state court must" timely "file a notice of removal in the proper district court" plausibly alleging federal jurisdiction. See Scott v. Cricket Commc'ns, LLC, 865 F.3d 189, 194 (4th Cir. 2017). If the plaintiff challenges removal, the defendant "bears the burden of demonstrating that removal jurisdiction is proper." Strawn v. AT&T Mobility LLC, 530 F.3d 293, 297 (4th Cir. 2008). The defendant must proffer evidence, which the plaintiff may rebut with evidence of its own, providing the basis for removal. See Scott, 865 F.3d at 194. Ultimately, "the court decides, by a preponderance of the evidence, whether" the removing party has established federal jurisdiction. Dart Cherokee, 574 U.S. at 88, 135 S.Ct. 547. As always, the court must remand the case "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c).

ANALYSIS

Under the Class Action Fairness Act—"CAFA"—federal district courts have "jurisdiction over putative class actions with (1) more than 100 class members, (2) an aggregate amount in controversy exceeding $5,000,000, and (3) minimal diversity between the parties." Scott, 865 F.3d at 192 (footnote omitted) (quoting 28 U.S.C. §§ 1332(d)(2), (5)). The parties agree that the putative class here exceeds 100 members with minimal diversity from the defendant, so the court's jurisdiction turns on whether the amount in controversy exceeds $5,000,000. "The key inquiry in determining whether the amount-in-controversy requirement is met is not what the plaintiff will actually recover but 'an estimate of the amount that will be put at issue in the course of the litigation.' " Scott, 865 F.3d at 196 (quoting McPhail v. Deere & Co., 529 F.3d 947, 956 (10th Cir. 2008)). "The amount of this estimate is 'fixed at the time the notice of removal is filed.' " Francis v. Allstate Ins. Co., 869 F. Supp. 2d 663, 667-68 (D. Md. 2012), aff'd, 709 F.3d 362 (4th Cir. 2013) (alterations omitted) (quoting Dennison v. Carolina Payday Loans, Inc., 549 F.3d 941, 943 (4th Cir. 2008)).

At "the time the notice of removal" in this case was filed, see id., the amount in controversy was approximately $3,579,265.60—well short of the CAFA threshold. In his complaint, Lyles alleged three sets of damages: (1) $6,372.67 charged in excess of the principal owed; (2) $15,603.54 in outstanding balance; and (3) $131.40 in unauthorized convenience fees. Compl. ¶¶ 22, 29, 30; see Compl. at 8-9 nn.1-2. As the Supreme Court of Maryland explained in response to the certified question, CLEC's treble damages provision "requires a credit grantor to return three times the amount of interest, fees, and charges collected that the borrower contends violate CLEC (in this case, the convenience fees)." Lyles v. Santander Consumer USA Inc., 478 Md. 588, 275 A.3d 390, 394 (2022). Applying that multiplier to Lyles' third category of damages, unauthorized convenience fees, raises the amount to $394.20. All told, then, the total personal damages Lyles appears to put at issue is $22,370.41.¹ Assuming, as both parties did at the time of removal, that the putative class size is 160 members and that Lyles' damage potential is a suitable proxy for other class members', the total amount at issue is $3,579,265.60.² This amount in controversy falls short of CAFA's $5,000,000 threshold, so the court must remand the case.

Santander offers three rejoinders to this assessment of the amount in controversy. Specifically, it argues that (1) the class size and average potential damages per-p...