Unreported / Non-Citable
Background
Mary Powell sued Mercedes-Benz USA in California state court for warranty defects under the Song-Beverly Consumer Warranty Act. Mercedes-Benz removed. Judge Anne Hwang issued a sua sponte Order to Show Cause why the case should not be remanded for lack of subject-matter jurisdiction. Mercedes-Benz responded; Powell did not file a response.
The Court’s Holding
Judge Hwang remanded the case to Los Angeles Superior Court, finding Mercedes-Benz had not met its burden by a preponderance of the evidence. Mercedes-Benz’s actual-damages estimate failed to account for several California Civil Code § 871.27 statutory offsets — third-party-supplied equipment and services, negative equity, manufacturer’s rebate, and unpaid interest or financing costs — that took effect January 1, 2025. The court explained that under Mitchell v. Blue Bird Body Co., “actual price paid or payable” includes all amounts plaintiffs become legally obligated to pay when they agreed to buy the vehicle, but Mercedes-Benz did not discuss these offsets at all in its actual-damages calculation.
On civil penalties, Mercedes-Benz relied on Powell’s conclusory willfulness allegation: “Plaintiff is entitled, in addition to the amounts recovered, a civil penalty of up to two times the amount of actual damages for Mercedes-Benz USA, LLC’s willful failure to comply with its responsibilities under the Act.” That generic allegation, without supporting specific facts, was insufficient to establish that civil penalties of $124,012 should be added to the amount in controversy. Because both the actual-damages and civil-penalty estimates were speculative, Mercedes-Benz could not satisfy the $75,000 threshold.
Key Takeaways
- Removing defendants in Song-Beverly cases must address all applicable statutory offsets under Cal. Civ. Code § 871.27 — including the new offsets effective January 1, 2025 (third-party equipment, negative equity, manufacturer’s rebate, unpaid interest).
- Conclusory willfulness allegations alone do not support adding the maximum civil penalty (twice actual damages) to the amount-in-controversy calculation.
- Defendants must provide specific factual support — not just citation to the complaint’s boilerplate — to justify civil-penalty inclusion.
- Plaintiffs who do not respond to OSC orders may still benefit from the court’s sua sponte analysis if defendants’ submissions are inadequate.
- The 2025 Cal. Civ. Code § 871.27 amendments expanded the statutory offsets that apply to Song-Beverly damages calculations, making removal more difficult in some cases.
Why It Matters
This decision applies the same skeptical approach to civil penalties seen in other recent Central District remand orders (e.g., Lewis v. GM and Sanchez v. GM by Judge Wilson). It also highlights the importance of the new January 2025 § 871.27 offset categories, which removing defendants must address in any Song-Beverly notice of removal.
For defense counsel, the lesson is to systematically apply every available statutory offset and to support civil-penalty inclusion with specific factual allegations from the complaint or supporting evidence — not just boilerplate willfulness recitations.