WILLIAM H. ORRICK UNITED STATES DISTRICT JUDGE
ORDER GRANTING MOTION TO REMAND
Re: Dkt. No. 16
WILLIAM H. ORRICK UNITED STATES DISTRICT JUDGE
INTRODUCTION
This case presents an issue that is both novel and settled by a century-old principle. The plaintiffs seek a single remedy under a single statute: equitable restitution under California's Unfair Competition Law (“UCL”). Last year, the Ninth Circuit held in Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), that traditional federal equitable rules apply to UCL restitution; in particular, a plaintiff must demonstrate that she lacks an adequate remedy at law before securing UCL restitution. District courts have understood Sonner to require that, at a minimum, a plaintiff plead that she lacks an adequate remedy at law. The plaintiffs in this case do not plead that they lack legal remedies; in fact, they represent that they will not and cannot do so. Under Sonner, then, I lack equitable jurisdiction over the plaintiffs' claims.
Often, when a federal court finds that it lacks equitable jurisdiction, it dismisses the claim or request for relief. But this case started in state court and was removed to this court, so the plaintiffs argue that I should remand it because the state court is not bound by federal equitable rules. While neither I nor the parties have found a case deciding this issue based on Sonner, United States Supreme Court precedent squarely favors the plaintiffs.
Before the turn of the last century, in Cates v. Allen, 149 U.S. 451 (1893), the Court held that when a federal court lacks equitable jurisdiction over a removed case, the case may be remanded, not dismissed. Three decades later, the Court reiterated the principle in Twist v. Prairie Oil & Gas Co., 274 U.S. 684 (1927). And more recently, in Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996), the Court held that federal courts may remand cases when an abstention doctrine would require them to dismiss or stay the case; that power, the Court explained, arises from a federal court's authority “to decline to exercise its jurisdiction when it is asked to employ its historic powers as a court of equity.” Because I lack equitable jurisdiction over the plaintiffs' claims, their motion to remand the case to state court is granted.
BACKGROUND
Plaintiffs Brian Guthrie and Grady Lee Harris, Jr., filed this putative class action against Transamerica Life Insurance Company (“Transamerica”) in California state court; Transamerica removed it to this court in June 2021. Dkt. No. 1. The Complaint brings three claims, all under the UCL, and seeks only equitable restitution. Dkt. No. 1-1. It alleges, essentially, that Transamerica represented that policy riders for its insurance policies would have “no charge.” Id. This, the plaintiffs claim, would incorrectly lead consumers to believe they were only paying the amount of the premium they would be paying for the underlying policy, which is not true. Id. This motion, however, is not about the allegations of the suit, it is about the fact that the plaintiffs seek only equitable relief under the UCL.
DISCUSSION
The plaintiffs argue that this case must be remanded to state court because I lack equitable jurisdiction over it. See generally Motion to Remand (“Mot.”) [Dkt. No. 16]. For the reasons that follow, I agree.
I. Equitable Jurisdiction
A. Actions in Equity Generally
To explain the resolution of this motion, a little history is necessary. By the time of the drafting of the Constitution, England had developed two relevant court systems: the courts of law and courts of equity. See generally, e.g., Charles T. McCormick, The Fusion of Law and Equity in United States Courts, 6 N.C. L. Rev. 3 (1928); see also, e.g., Ellis v. Davis, 109 U.S. 485, 497 (1883) (examining the distinction). The Constitution, too, recognized the distinction between actions at law and actions in equity. Article III defined the “judicial power” to “extend to all Cases, in Law and Equity” that fell into certain categories. U.S. Const. art. III, § 2. The Seventh Amendment right to a trial by jury in a civil case extended only to “suits at common law, ” saying nothing of equity. U.S. Const. amend. VII. And the Eleventh Amendment restricted the judicial power from reaching “any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI.
As a general matter, actions at law sought money damages while actions in equity sought injunctions or similar orders that compelled or prohibited actions. See Tull v. United States, 481 U.S. 412, 423 (1987). But, then and now, there were other equitable remedies-including some that result in monetary compensation-and the lines were not always sharply drawn. See, e.g., Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 214 (2002) (discussing equitable restitution).
For a time, some American courts, including the federal courts, partially followed the English model and separated actions into those at law and those in equity. But the two types of actions slowly began to merge. See, e.g., Liberty Oil Co. v. Condon Nat. Bank, 260 U.S. 235, 243 (1922) (discussing the “union of laws and equity actions”). And in 1938, the Federal Rules of Civil Procedure were adopted, completing the “merger of law and equity in federal courts.” Crawford Fitting Co. v. J. T. Gibbons, Inc., 482 U.S. 437, 444 (1987). Since then, federal courts have heard claims for remedies at law and claims for equitable remedies in consolidated actions.
Whether a remedy sounds in law or equity still matters. One reason is that, as noted, the Seventh Amendment guarantees the right to a jury trial only to actions at law, not equity. Even in modern times, determining which side of the line an action f 5"> Cates involved a case removed “on the ground of diverse citizenship.” Id. at 459. At the time, the removal statute provided that,
if, in any suit removed from a state court to a circuit court of the United States, it shall appear to the satisfaction of said circuit court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court, the said circuit court shall proceed no further therein, but shall dismiss the suit, or remand it to the court from which it was removed, as justice may require, and shall make such order as to costs as shall be just.
Id. at 459-60 (internal quotation marks and alterations omitted) (quoting Act of March 3, 1875, 18 Stat. 470). And, the Court said that, under a later act, “a circuit court may remand a case upon deciding that it was improperly removed.”
Id. at 460 (citing Act of March 3, 1887, 24 Stat. 553). Though the court had subject matter jurisdiction based on diversity of citizenship, “the nature of the controversy was such that the suit was not properly cognizable in the circuit court for the reasons heretofore given.”
Id. Accordingly, the Court held that “[u]nder the acts of congress [the lower] court was not compelled to dismiss the case, but might have remanded it, and we may therefore direct it to do now what should have been done in the first instance.”
Id. at 460-61.
The plaintiffs argue that the same result should obtain here. Because Cates, no matter how long ago decided, is as binding as any Supreme Court precedent, I agree with the plaintiffs that remand is permitted and appropriate. As in Cates, the court possesses diversity jurisdiction. As in Cates, the claim is outside of the court's equitable jurisdiction. Accordingly, as in Cates, the case will be remanded to state court-a court that must follow California's rules on equitable relief, not the federal ones.
The plaintiffs' argument on this front begins and ends with Cates, but there is other support for their position as well. Nearly three decades after Cates, the Supreme Court reiterated its holding that if a removed suit is “beyond the equitable jurisdiction of the federal court” but “may be granted by the state court, ” remand should follow. Twist v. Prairie Oil & Gas Co., 274 U.S. 684, 690 (1927). For that holding, it relied on Cates. Id.
Another line of modern jurisprudence supports the plaintiffs' view. The remand statute generally contemplates two situations in which cases are remanded: when the court lacks subject matter jurisdiction and when there was a defect in the removal procedure. See 28 U.S.C. § 1447(c). But the Supreme Court has held that courts can also remand cases when a federal abstention doctrine would require them to dismiss or stay the case if filed in federal court originally. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 717-18 (1996). Although the abstention doctrines and the boundaries of equitable jurisdiction are not the same, they are related. The abstention doctrines originally stemmed from the authority of a federal court “to decline to exercise its jurisdiction when it is asked to employ its historic powers as a court of equity.” Id. At 718 (internal quotation marks and citation omitted). And though the doctrines apply more broadly now, the underlying principle was originally attention to the public-interest consequences of employing the power of the injunction. See Id. Accordingly, the Court has explained that:
In Thermtron Prod., Inc. v. Hermansdorfer, the Court appeared to say that the only grounds for remand were those spelled out in the statute. 423 U.S. 336, 344 (1976). The Court has since walked back that reading in no uncertain terms. Quackenbush, 517 U.S. at 721; Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 355 (1988) (“The language from Thermtron that petitioners cite, viewed in isolation, is admittedly far-reaching, but it loses controlling force when read against the circumstances of that case.”). Thermtron itself addressed only the situation in which the district court remanded because its docket was crowded.
We have thus held that
in cases where the relief being sought is equitable in nature or otherwise discretionary, federal courts not only have the power to stay the action based on abstention principles, but can also, in otherwise appropriate circumstances,
decline to exercise jurisdiction altogether by either dismissing the suit or remanding it to state court.
Id. at 721 (emphasis added).
Quackenbush-not even arguably a relic of the bygone past, as Transamerica attempt to paint
Cates-supports the view that remand is appropriate here.
Transamerica has several counterarguments. First, it contends that remanding these claims would flout Congress's intent in passing the Class Action Fairness Act (“CAFA”), the statute under which this case was removed. Oppo. 14. It is true that Congress enacted CAFA out of concern that “certain requirements of federal diversity jurisdiction . . . had functioned to keep cases of national importance in state courts rather than federal courts.” Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161, 165 (2014) (internal quotation marks, alteration, and citation omitted). But CAFA did so in two specific ways: it “replaced the ordinary requirement of complete diversity of citizenship among all plaintiffs and defendants with a requirement of minimal diversity, ” and it “grant[ed] federal jurisdiction over class and mass actions in which the aggregate amount in controversy exceeds $5 million.” Id. at 165-66 (emphasis added, internal citations omitted). None of that has to do with equitable jurisdiction. Congress did not purport to alter traditional equitable rules.
Next, Transamerica argues that Cates has no bearing in the modern day because it predated the merger of law and equity. See Oppo. 15-18; supra Section I.A (discussing the merger). Cates does predate the merger. It also includes some discussion related to courts exercising authority on their “law side” versus their “equity side.” But its core and relevant holding was that, because the federal court lacked equitable jurisdiction, the case should be remanded to state court. Indeed, the reason that the federal court lacked that jurisdiction was that the plaintiff had not exhausted its legal remedies. And that reading-not Transamerica's-is the understanding the Supreme Court itself later gave Cates. See Twist, 274 U.S. at 690. In any event, none of this would address Twist. It also would not address Quackenbush, and the strong parallel between a lack of equitable jurisdiction and the born-of-equity abstention doctrines.
I recognize that, upon finding they cannot award equitable relief under traditional equitable rules, courts usually dismiss those claims or requests for relief. But that practice does not mean it is required when the case began in state court. Cates, Twist, and Quakenbush counsel otherwise. Transamerica has not pointed to, and I have not found, any authority that holds or suggests remand is prohibited.
A dismissal for lack of equitable jurisdiction, moreover, is not a dismissal on the merits. See supra Section I.B; see, e.g., Schlesinger, 420 U.S. at 754 (holding that, just because there was subject matter jurisdiction, it did not mean “that the District Court properly could reach the merits” because “there remain[ed] the question of equitable jurisdiction”); Kama, 394 F.3d at 1237-38 (explaining that “Kama argues only the merits of his motion and fails to address the threshold issue of whether the district court abused its discretion in declining to exercise its equitable jurisdiction” and “we can only reach the merits of his motion if the district court abused its discretion when it declined to exercise its equitable jurisdiction”). Accordingly, though the issue is not squarely before me, it seems that plaintiffs could simply refile their claims in state court if they were dismissed in federal court on this ground. (Sonner, to put a fine point on it, was refiled in state court after the Ninth Circuit affirmed dismissal. See Mullins v. Premier Nutrition Corp., No. 13-CV-01271-RS, 2021 WL 1134386, at *3 (N.D. Cal. Feb. 24, 2021) (declining to enjoin state proceeding).) Remand achieves the same outcome more efficiently.
The Supreme Court once stated that “[w]hether a suitor is entitled to equitable relief in the federal courts, other jurisdictional requirements being satisfied, is strictly not a question of jurisdiction in the sense of the power of a federal court to act. It is a question only of the merits; whether the case is one for the peculiar type of relief which a court of equity is competent to give.” Di Giovanni v. Camden Fire Ins. Ass'n, 296 U.S. 64, 69 (1935). That lone statement does not change my conclusion. It cuts against the significant authority I rely on, including Schlesinger, a Supreme Court cases decided more recently. Further, Di Giovanni, in context, was largely assessing whether a lack of equitable jurisdiction deprived the court of subject matter jurisdiction, so its reference to “the merits” is better read to mean “not concerning subject matter jurisdiction.” And the case that Di Giovanni cited for this statement underlines this; it was entirely concerned with differentiating subject matter jurisdiction and equity jurisdiction. See Commonwealth of Pennsylvania v. Williams, 294 U.S. 176, 181-82 (1935). Notably, it did not hold the latter to be a determination on the merits.
Re-filing also creates a risk that another district court explained in a related context. There, the court found that the plaintiff lacked Article III standing to pursue injunctive relief in federal court but thought it might have standing in state court. See Machlan v. Procter & Gamble Co., 77 F.Supp.3d 954, 960 (N.D. Cal. 2015). If it did not remand the case, the court explained, it “could become stuck in a perpetual loop of (1) plaintiffs re-filing in state court, followed by (2) removal by defendants and then (3) dismissal by this Court.” Id. at 961. The same risk exists here. Neither law nor logic requires that result, and precedent suggests the contrary approach.
III. Attorney's Fees and Costs
The plaintiffs also seek fees and costs. The request is denied. Under Section 1447, “[a]n 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). “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. Conversely, when an objectively reasonable basis exists, fees should be denied.” Martin v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). The issue is committed to the discretion of the district court. Id. Here, Transamerica had an objectively reasonable basis to remove the case. The plaintiffs admit that subject matter jurisdiction was proper under CAFA and their specific argument for remand is, as noted above, novel.
CONCLUSION
The case is REMANDED to the Superior Court of Alameda County.
IT IS SO ORDERED.