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Hines v. KFC U.S. Properties

February 16, 2010


The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge


Plaintiff Domonique Hines ("Hines") moves to remand this action to state court. Defendant KFC U.S. Properties, Inc. ("KFC") moves for a convenience transfer to the Central District of California. All motions are opposed. Pursuant to Local Rule 7.1(d)(1), this matter is appropriate for decision without oral argument. For the reasons set forth below, both motions are denied. The court also instructs Plaintiff to obtain from chambers a hearing date on her motion for class certification, see L.R. 7.1(e)(1), and to file the motion for class certification within 30 days of entry of this order.


On October 2, 2009 Hines commenced a putative class action in the Superior Court for the County of San Diego. KFC, the only defendant, timely removed the action to federal court based upon the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. §1332. Plaintiff is a citizen of California who seeks to represent a class of similarly situated plaintiffs, identified as current or former employees of KFC in the State of California. (Compl. ¶2). The court notes that the Complaint fails to identify any class period. KFC asserts that it is incorporated in Delaware with its principal place of business in Kentucky. (Notice of Removal ¶8).

The Claims

In broad brush, Plaintiff alleges that KFC acted in furtherance of its "policies and practices of not paying Plaintiffs all wages earned and due, through methods and schemes which included but are not limited to, failing to pay overtime premiums; failing to provide rest and meal periods; failing to properly maintain records; failing to provide accurate itemized statements for each pay period; and requiring, permitting or suffering the employees to work off the clock, in violation of California Labor Code and Industrial Welfare Commission ("IWC") Orders. (Compl. ¶6). Plaintiff brings this action on behalf of potentially 14,200 class members who were employed by KFC during the period October 2, 2005 through October 2, 2009. Based upon the complaint's allegations, Plaintiff alleges seven claims for (1) failure to provide meal periods in violation of Cal. Labor Code §226.7; (2) failure to provide rest periods in violation of Cal. Labor Code §226.7; (3) failure to pay overtime compensation in violation of Cal. Labor Code §510, 1194; (4) failure to pay minimum wages in violation of Cal. Labor Code §§1194, 1197; (5) failure to pay all wages due to discharged or quitting employees in violation of Cal. Labor Code §§201-203; (6) failure to provide employees accurate itemized statements in violation of Cal. Labor Code §226, 1174, 1174.5; and (7) unfair business practices in violation of Cal. Bus. & Prof. Code §17200 et seq.

The Archila Action

On October 14, 2008 counsel for Plaintiff herein, the firm of Rastegar & Matern, commenced a wage and hour case against KFC in the Central District of California before Judge Manuel Real. The named Plaintiff, Kenny Archila ("Archila"), alleged the same seven causes of action, in addition to a claim seeking a civil penalty pursuant to Cal. Labor Code §2699. The Archila complaint was similarly filed as a putative class action in state court and subsequently removed by KFC. (Sugg Decl. ¶3). The parties conducted substantial discovery in the Archila action, engaged in motion practice, and retained and conducted expert discovery. On July 7, 2009, Judge Real dismissed the class allegations for failure to timely comply with the Local Rules in moving for class certification. (Sugg Decl. Exh. 2).

On the eve of trial, August 18, 2009, the parties filed a joint motion for dismissal of the action with prejudice. (Sugg Decl. Exh. 6). In the joint motion, plaintiff Archila sought to preserve his right to appeal certain dismissed claims, including the denial of the motion for class certification. The parties anticipate completing briefing on the issues on appeal prior to June 2010.


Motion to Remand

Plaintiff argues that this action must be remanded to state court pursuant to 28 U.S.C. §1447 because the court lacks diversity jurisdiction as KFC is a citizen of California. This argument is not persuasive.

Pursuant to 28 U.S.C. §1332(c)(1), "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." To determine a corporation's "principal place of business," the Ninth Circuit has applied several different but related tests to assist district courts in assessing the principal place of business of a corporation: the "nerve center test," the "place of operations test," and the "total activities test." Davis v. HSBC Bank Nevada, 557 F.3d 1026, 1028 (9th Cir. 2009); Tosco Corp. v. Communities for a Better Env't, 236 F.3d 495, 499 (9th Cir. 2001); Industrial Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1094 (9th cir. 1990). In applying these tests, the purpose remains the same: "avoid[ing] the effects of prejudice against outsiders." Industrial Tectonics, 912 F.2d at 1094. The burden of demonstrating removal jurisdiction rests with the party asserting federal jurisdiction. Gaus v. Miller, Inc., 980 F.2d 564, 566 (9th Cir. 1991).

Applying any of these tests, the court concludes that Kentucky is KFC's principal place of business. Under the "nerve center test," the court considers relevant factors such as the location of the corporate/executive offices, the location of the administrative and financial offices, the location of records, the location of the corporation's home office, and the site where day-to-day control is exercised. Here, KFC's corporate headquarters are located in Louisville, Kentucky as are 30 of its corporate officers. (Yeaker Decl. ...

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