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August 29, 2003


The opinion of the court was delivered by: Richard Seeborg, Magistrate Judge


On June 26, 2003, plaintiffs filed a motion to remand the present action to Santa Clara Superior Court. Defendant America Online, Inc. ("AOL") filed an opposition brief, and plaintiffs filed a reply. The parties appeared for oral argument on August 20, 2003. The Court allowed the parties to submit post-hearing briefs related to the application of Cal. Labor Code § 1194.2 to the present dispute. Both parties submitted supplemental briefs on August 26, 2003. The Court has considered the record in this case, the briefs submitted and the arguments of counsel. For the reasons set forth below, plaintiffs' motion to remand is granted, defendant's motion for leave to file supplemental citation of authority is denied as moot, and plaintiffs' motion to strike is granted. [ Page 2]


Plaintiffs have filed suit challenging the compensation provided by AOL pursuant to its Community Leader program. Under that program, AOL users received free/discounted AOL service in exchange for performing a variety of functions, including: chat room and message board monitoring, website maintenance, technical support, and training and supervision of other Community Leaders. Plaintiffs maintain that they should be paid regular and overtime wages pursuant to the California Labor Code for engaging in these activities. Plaintiffs also seek waiting penalties, statutory interest on unpaid wages, and liquidated damages. In addition, plaintiffs allege unfair competition pursuant to Cal. Bus. & Prof. Code § 17200.

Plaintiffs originally filed a putative class action in Santa Clara Superior Court on October 22, 2001. On November 20, 2001, defendants removed the case to federal district court based on diversity jurisdiction, and plaintiffs filed a motion to remand. On March 21, 2002, Judge Whyte issued an order remanding the case to state court, ruling that defendants had not demonstrated by a preponderance of the evidence that the amount-in-controversy requirement had been fulfilled based on the damages asserted by the named plaintiffs. The remand order also rejected the argument that the amount-in-controversy requirement was satisfied under plaintiffs' Section 17200 claim. On May 1, 2002, defendant filed a First Amended Complaint ("FAC") stating that "the claims for each individual plaintiff and/or class member do not exceed $75,000 each, excluding interest, costs and attorney's fees." (Preamble to the FAC.) Between August 1, 2002 and October 21, 2002, discovery was placed on hold while settlement negotiations ensued.

More than one year after the FAC was filed, defendants deposed two of the named plaintiffs regarding their damages.*fn1 They testified regarding the hours they worked for which they seek compensation. An on-the-spot valuation by defendant's counsel seemed to reflect damages exceeding $75,000. Defendant asked plaintiffs Foster and Ball if they were limiting their claims, and both deponents stated that they were not. Based on this testimony, defendants re-removed the case to this Court on June [ Page 3]

5, 2003, alleging diversity jurisdiction under 28 U.S.C. § 1332.*fn2 Plaintiffs then filed the present motion to remand.


"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States." 28 U.S.C. § 1332(a) (1). "A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).


Plaintiffs' remand motion is premised on three arguments, two procedural and one substantive. First, plaintiffs argue that this Court is without jurisdiction to reconsider or otherwise review the original remand order issued by Judge Whyte. Second, plaintiffs contend that defendant's removal is untimely under 28 U.S.C. § 1446(b). Third, they argue that defendant is unable to demonstrate that the amount-in-controversy exceeds $75,000 for any named plaintiff. The Court finds that the present removal is barred procedurally by the operation of § 1446(b) and that defendant has failed to establish by a preponderance of the evidence the existence of the requisite amount-in-controversy.

A. Jurisdiction to Review the Prior Remand Order

Plaintiffs contend that this Court must grant the present remand motion because to do otherwise would amount to a de facto review of Judge Whyte's previous order remanding this case to Santa Clara Superior Court. Pursuant to 28 U.S.C. § 1447(d), "[a]n order remanding a case to the State court from [ Page 4]

which it was removed is not reviewable on appeal or otherwise. . . ." Plaintiffs read this section categorically to prohibit successive remand motions regardless of the circumstances. However, such a rule does not represent the state of the law in the Ninth Circuit. See Kirkbride v. Continental Casualty Co., 933 F.2d 729, 732 (9th Cir. 1991) ("A defendant who fails in an attempt to remove on the initial pleadings can file a removal petition when subsequent pleadings or events reveal a new and different ground for removal.") (citation and internal quotations omitted). While it is true that 28 U.S.C. ยง 1447(d) would bar review of a second removal petition that was identical to the original removal petition, such a circumstance is not presented here. Rather, defendant alleges that subsequent events in the litigation have shed light on the amount-in-controversy in a manner that was not ...

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