Judge Maame Ewusi-Mensah Frimpong, in the Central District of California granted a motion to remand a putative class action against B.S.D. Capital, Inc. (doing business as Lendistry) back to Los Angeles County Superior Court. The case centers on alleged data privacy violations and other claims arising from Lendistry’s administration of a COVID-19 relief grant program.
The plaintiffs, representing a class of California grant applicants, allege that Lendistry, under contract with the Governor’s Office, administered the Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program in a manner that violated state privacy laws. Specifically, plaintiffs allege that Lendistry’s website and application process enabled a third-party bank verification partner to access applicants’ bank accounts without consent, allegedly for data mining and monetization purposes.
The lawsuit asserts sixteen causes of action under California law, including breach of contract, negligence, multiple statutory privacy violations, invasion of privacy, civil conspiracy, and unfair competition. The putative class is defined as all persons in California who applied for the grant during the relevant period.
Lendistry removed the case to federal court under the Class Action Fairness Act (CAFA), arguing that the amount in controversy exceeded $5 million and that the parties were minimally diverse. Plaintiffs moved to remand, challenging both the amount in controversy and the existence of minimum diversity.
Minimum diversity can be established when any member of the plaintiff class is a citizen of a state different from any defendant. Id. The citizenship of the proposed class of plaintiffs is determined based on the complaint by the date that the case became removable. Broadway Grill, Inc. v. Visa Inc., 856 F.3d 1274, 1277 (9th Cir. 2017). Defendants, as the moving party for removal, bear the burden of establishing minimum diversity with at least one member of the plaintiff class. Sanchez v. Ameriflight, LLC, 724 F. App’x 524, 526 (9th Cir. 2018). An allegation of minimum diversity may be based on information and belief. Carolina Cas. Ins. Co. v. Team Equip., Inc., 741 F.3d 1082, 1087 (9th Cir. 2014). However, a defendant cannot “establish removal jurisdiction by mere speculation and conjecture.” Ibarra, 775 F.3d at 1197. Jurisdictional allegations are sufficient in the absence of factual or applied challenge. Ehrman v. Cox Commc’ns, Inc., 932 F.3d 1223, 1227 (9th Cir. 2019).
The court found that Lendistry had established the amount in controversy requirement, based on statutory damages sought and the alleged size of the class.
The Court finds that each plaintiff requests statutory damages of $5,000 for count six and count seven of the “Causes of Action.” Compl. ¶¶ 445, 436. Lendistry points out that the Plaintiffs believe the putative class consists of “thousands of California businesses and California residents.” NOR ¶ 15. Lendistry alleges that while “thousands” means more than 1,000, even if Lendistry calculated the total number of the putative class as 2,000 and multiplied that number by the damages sought by each member of the putative class for only the CIPA violations, the calculated amount in controversy would far exceed $5 million. NOR at 8. The Court finds that even if the total number of the putative class was 1,000, and only count six and count seven were included in determining the amount in controversy, it would still exceed the $5 million minimum ($5,000 statutory damages x two counts x 1,000 putative class members = $10 million).
The court then determined that Lendistry failed to meet its burden to show minimum diversity.
The Court finds that Lendistry has failed to show that there is minimum diversity by a preponderance of the evidence. The Complaint defines the putative class as “all persons in California who submitted an application to Lendistry for a grant.” Compl. ¶ 224. The “Natural Persons Subclass” of the main putative class is defined as “all Natural Persons who submitted on behalf of a business or nonprofit an application to Lendistry for a grant.” Id. ¶ 228. While the class definitions themselves do not define or specify the citizenship of the putative class, the Complaint does allege that “Plaintiffs, all putative class members, and Defendant itself are citizens of this state.” Id. ¶ 4. In light of the Plaintiffs’ explicit allegation that all parties, including the members of the putative class, are California citizens, the Court finds Lendistry’s argument that the Plaintiffs’ class definition necessarily includes non-Californians unavailing and not founded on the Complaint.
The complaint explicitly alleged that all plaintiffs, putative class members, and the defendant were citizens of California, and Lendistry did not provide evidence to the contrary. As a result, the court concluded that federal jurisdiction under CAFA was lacking.
ONISKO AND SCHOLZ, LLP, on behalf of themselves & all others similarly situated; PAUL SCHOLZ, on behalf of themselves & all others similarly situated; CINDY SCHOELEN, on behalf of themselves & all others similarly situated, Plaintiffs, v. B.S.D. CAPITAL, INC., doing business as LENDISTRY, Defendant., No. 2:24-CV-10314-MEMF-SK, 2025 WL 1755146 (C.D. Cal. June 24, 2025).
