Unreported / Non-Citable
Background
Lidia Navaperez and Malaquias Valdivia sued Nissan North America in a California lemon law case under the Song-Beverly Consumer Warranty Act (California Civil Code § 1790 et seq.). Nissan removed the case to the U.S. District Court for the Central District of California, asserting federal diversity jurisdiction on the ground that the amount in controversy exceeded $75,000. A companion case, Amezcua v. Nissan North America (No. 25-3250), presented the identical issue before the same panel the same day.
District Judge David Carter issued a sua sponte order remanding the case to state court. Invoking the observation that Congress has not raised the statutory amount-in-controversy threshold since 1996—nearly three decades ago—Judge Carter reasoned that, adjusted for inflation, the real-world equivalent of the 1996 threshold would be approximately $175,000 today. He concluded that Nissan’s asserted amount, which included civil penalties of up to twice actual damages and attorneys’ fees under Cal. Civ. Code § 1794(d), was “speculative” and fell short of the inflation-adjusted bar he had set.
Nissan appealed, arguing that the district court lacked authority to update the congressionally fixed threshold and had failed to give it a fair opportunity to prove the amount in controversy before remanding.
The Court’s Holding
The Ninth Circuit vacated the remand order and sent both cases back to the district court for further proceedings consistent with the standard framework for evaluating removal jurisdiction.
The court’s analysis was straightforward. The amount-in-controversy threshold for diversity jurisdiction is set by Congress at $75,000 and has not been changed. Courts do not have authority to adjust that statutory floor upward based on inflation or any other judicially created rationale. A district court’s role is to apply the law as Congress wrote it—not to update it to reflect what a reasonable legislature might enact today.
The court also held that Judge Carter applied the wrong legal standard for evaluating what counts toward the amount in controversy. Under Ninth Circuit precedent, the amount encompasses all relief a court may grant if the plaintiff prevails, including civil penalties and attorneys’ fees available under fee-shifting statutes. Song-Beverly Act plaintiffs who prevail may recover actual damages plus civil penalties of up to two times those damages (Cal. Civ. Code § 1794, subd. (c)), as well as attorneys’ fees (id., subd. (d)). Nissan’s notice of removal alleged actual damages of roughly $36,344, with potential civil penalties of up to $72,688 and conservatively estimated attorneys’ fees of $15,000—well over $75,000 in total. The district court could not dismiss those components as speculative without first providing Nissan a fair opportunity to substantiate the amounts through evidence.
Because the district court failed to give Nissan that opportunity before remanding, vacatur was required under Arias v. Residence Inn by Marriott, 936 F.3d 920 (9th Cir. 2019).
Key Takeaways
- The $75,000 diversity jurisdiction threshold is fixed by federal statute and cannot be adjusted for inflation by district courts. This is true even if the real purchasing power of that threshold has declined significantly since 1996.
- In Song-Beverly Act (California lemon law) cases, the amount in controversy includes potential civil penalties of up to two times actual damages and attorneys’ fees—not just the vehicle’s purchase price or repair costs. Courts must account for all available relief when assessing jurisdiction.
- A district court that sua sponte questions whether the amount-in-controversy threshold is met must give the removing defendant a fair opportunity to submit evidence before remanding. A remand without that opportunity is reversible error.
- Manufacturers and other defendants in California consumer warranty cases should include a clear, itemized amount-in-controversy calculation in their removal notices that separately identifies actual damages, civil penalties, and fee estimates, to pre-empt any argument that the amounts are speculative.
- This decision (and its companion, Amezcua v. Nissan, No. 25-3250, vacated the same day) signals that the Ninth Circuit will closely scrutinize district court sua sponte remands that rest on novel or non-statutory jurisdictional theories.
Why It Matters
California Song-Beverly Act litigation—commonly called “lemon law” cases—generates high litigation volume in California state and federal courts, and defendants routinely rely on removal to federal court as a procedural tool. This decision reinforces that the path to federal court remains open whenever the actual damages, civil penalties, and fee exposure plausibly exceed $75,000, which in most lemon law cases involving significant vehicles it will. Defense counsel should treat these cases as presumptively removable and document the jurisdictional math carefully in the removal notice.
More broadly, the decision pushes back on an emerging judicial impulse—visible in a handful of district court rulings—to update or “modernize” statutory thresholds that Congress has left unchanged. The Ninth Circuit’s message is clear: that is a legislative function, not a judicial one. Until Congress raises the $75,000 threshold, any litigant who can plausibly allege that threshold is met gets to stay in federal court.