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Rhodes v. Progressive Casualty Insurance Co.

October 7, 2010

CHAD RHOADES AND LUIS URBINA, PLAINTIFFS,
v.
PROGRESSIVE CASUALTY INSURANCE CO., INC., DEFENDANT.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING REMAND MOTION

Plaintiffs move to remand this case to the Sacramento County Superior Court in California from which Defendant removed it, arguing that the federal court lacks subject-matter jurisdiction under the Class Action Fairness Act of 2005 ("CAFA"). CAFA "vests district courts with 'original jurisdiction of any civil action in which, inter alia, the amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs,' and in which the aggregate number of proposed plaintiffs is 100 or greater, and any member of the plaintiff class is a citizen of a state different from any defendant." Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 997 (9th Cir. 2007) (quoting 28 U.S.C. § 1332(d)(2)). Plaintiffs argue Defendant has failed to satisfy its burden of showing that the amount in controversy exceeds the sum of $5,000,000. Defendant opposes the motion.

I. BACKGROUND

Defendant removed this case to this federal court in an earlier filed action designated as Case No. 2:10-cv-00763-GEB-KJM; following which Plaintiffs filed a First Amended Complaint ("FAC"), and then a remand motion. That remand motion was granted in an order filed on June 10, 2010. (Case No. 2:10-cv-00763-GEB-KJM, Order, June 10, 2010, ECF No. 23.) The June 10, 2010 remand order did not consider Plaintiffs' FAC since the appropriateness of removal "must 'be determined according to [Plaintiffs'] pleading at the time of the petition for removal.'" Thiel v. Southern Pac. Co., 126 F.2d 710, 712 (9th Cir. 1942) (quoting Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939)). After the action designated as Case No. 2:10-cv-00763-GEB-KJM was remanded, Defendant removed the case again based on allegations in Plaintiffs' FAC. (Notice of Removal ("Removal"), ECF No. 1.)

Plaintiffs allege in their FAC that they and the members of the putative class were "employed in the State of California by the Defendant[] to adjust insurance claims and their positions were known as 'Claims Adjuster,' 'Claims Generalist Associate,' or similar titles" during the past four years. (FAC ¶¶ 2, 6.) Plaintiffs and members of the putative class were allegedly "not paid overtime wages for all hours worked" and were not "provided accurate itemized wage statements." Id. ¶ 1.

Plaintiffs allege five claims: (1) failure to pay overtime wages in violation of California Labor Code sections 1194 and 1198, and IWC Order 4-2001; (2) failure to timely pay wages due at termination ("waiting time penalties") in violation of California Labor Code sections 201-203; (3) illegal record keeping in violation of California Labor Code section 226; (4) unfair business practices in violation of California Business and Professions Code sections 17200, et seq.; and (5) statutory penalties in violation of California Labor Code section 558. Id. ¶¶ 22-55.

Plaintiffs also allege that "the individual members of the classes herein have sustained damages under the seventy-five thousand . . . jurisdictional threshold and that the aggregate claim is under the five million dollar . . . threshold, [and argue therefore] removal under the CAFA would be improper." Id. ¶ 5. Plaintiffs state in their prayer for relief: "Plaintiffs are informed and believe that the damages, back-wages, restitution, penalties, interest and attorneys's [sic] fees do not exceed an aggregate of $4,999,999.99 and that Plaintiffs' individual claims do not exceed $74,999.99." Id. 13:19-22.

II. LEGAL STANDARD

"We strictly construe the removal statute against removal jurisdiction. Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citation omitted). Defendant "bears the burden of establishing . . . jurisdiction" under CAFA. Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 686 (9th Cir. 2006).

The Ninth Circuit holding in Lowdermilk, discussed as follows in Guglielmino v. McKee Foods Corp.,506 F.3d 696 (9th Cir. 2007), states the standard governing the remand motion sub judice:

[I]n the CAFA context[,] . . . when a state-court complaint affirmatively alleges that the amount in controversy is less than the jurisdictional threshold, the "party seeking removal must prove with legal certainty that CAFA's jurisdictional amount is met." Two animating principles informed our judgment in Lowdermilk. The first is that federal courts are courts of limited jurisdiction which we will strictly construe. The second principle is that the plaintiff is "master of her complaint" and can plead to avoid federal jurisdiction. Thus, in Lowdermilk, by adopting "legal certainty" as the standard of proof, "we guard[ed] the presumption against federal jurisdiction and preserve[d] the plaintiff's prerogative, subject to the good faith requirement, to forgo a potentially larger recovery to remain in state court."

Guglielmino, 506 F.3d at 699-700 (quoting Lowdermilk, 479 F.3d at 998-1000) (internal citations omitted).

Since Plaintiffs have "pled an amount in controversy less than the $5,000,000, [Defendant] . . . must prove with legal certainty that CAFA's jurisdictional amount is met." Lowdermilk, 479 F.3d at 1000. "The 'legal certainty' standard sets a high bar for the party seeking removal, but it is not insurmountable." Id.

III. DISCUSSION

A. Propriety of the Notice ...


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