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John Urbino, For Himself and On Behalf of Other Current and Former v. Orkin Services of California

October 5, 2011

JOHN URBINO, FOR HIMSELF AND ON BEHALF OF OTHER CURRENT AND FORMER EMPLOYEES, PLAINTIFFS,
v.
ORKIN SERVICES OF CALIFORNIA, INC., A DELAWARE CORPORATION; ROLLINS, INC., A DELAWARE CORPORATION; AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Cormac J. Carney United States District Judge

O

I. INTRODUCTION

ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION

Plaintiff John Urbino brought this representative action against Orkin Services of California, Inc. and Rollins, Inc. (collectively, "Defendants") for violations of the California Labor Code as an aggrieved employee, on behalf of himself and other current and former employees, under the Labor Code Private Attorneys General Act of 2004 ("PAGA"), Cal. Lab. Code §§ 2698--2699, in Los Angeles Superior Court. Defendants subsequently removed the action to this Court based on diversity jurisdiction. Defendants now move to compel arbitration of Plaintiff's PAGA claim based on a written arbitration agreement between Plaintiff and Defendants. At the same time, Plaintiff moves to remand the action, alleging that there is no diversity jurisdiction because the amount in controversy does not exceed $75,000.

Because there is complete diversity of citizenship and Defendants have shown more likely than not that the projected total amount in controversy exceeds $75,000, as calculated by aggregating the claims of the aggrieved employees under the "common and undivided" exception to the anti-aggregation rule, Plaintiff's motion to remand is DENIED. Defendants' motion to compel arbitration is also DENIED because the arbitration agreement contains an unconscionable PAGA arbitration waiver, rendering the agreement unenforceable under California law.

II. BACKGROUND

Plaintiff worked for Defendants as a nonexempt, hourly-paid employee in Los Angeles from June 2005 until July 2010. (Compl. ¶¶ 4, 8; Decl. of J. Blandford in Supp. Pet. to Compel Arbit. ¶ 3.) Defendants are incorporated in Delaware and provide pest control services in the State of California, including in Los Angeles County. (Compl. ¶¶ 5--6.) At the time of his hire, Plaintiff signed an arbitration agreement (the "Agreement"), which also incorporated Defendants' Dispute Resolution Policy ("DRP"). (Decl. of J. Blandford in Supp. Pet. to Compel Arbit. ¶¶ 3--4 & Exh. A; Defs.' Notice of Errata Re Decl. J. Blandford, Exh. 1. ) Under the Agreement, executed on June 17, 2005, Plaintiff agreed "to arbitrate any dispute, claim or controversy regarding or arising out of [his] employment." (Decl. of J. Blandford in Supp. Pet. to Compel Arbit., Exh. A.) The Agreement also stated that the arbitral procedures would be governed by the Federal Arbitration Act ("FAA"). (Id.) The Agreement further contains the following limitation on arbitration proceedings: any arbitration proceeding under this Agreement will not be consolidated or joined with any action or legal proceeding under any other agreement or involving any other employees, and will not proceed as a class action, private attorney general action or similar representative action.

(Id.) The DRP also includes the same provision. (See Defs.' Notice of Errata Re Decl. J. Blandford, Exh. 1, at 12.) On June 21, 2011, Plaintiff filed this instant PAGA action against Defendants in Los Angeles Superior Court, alleging that Defendants deprived him and other current and former nonexempt employees of their rightful meal periods, overtime and vacation wages, and accurate itemized wage statements, in violation of various sections of the California Labor Code. (Compl. ¶¶ 1--4, 16.) Specifically, pursuant to California Labor Code § 2699(f), Plaintiff, as an aggrieved employee, on behalf of himself and other current and former employees, seeks civil penalties for Defendants' purported violations of California Labor Code §§ 2699(f), 558, 226.3, 1174.5, and 1197.1. (Id. ¶ 18.)*fn1

On August 5, 2011, Defendants removed the action to this Court based on diversity jurisdiction. (Dkt. No. 1; Defs.' Notice of Removal ¶¶ 5--25.) On August 15, 2011, Defendants moved to compel arbitration. (Dkt. No. 12.) At the same time, Defendants filed a counterclaim for declaratory relief against Plaintiff under 28 U.S.C. § 2201, requesting a judicial declaration that Mr. Urbino's claims are subject to the parties' Agreement and DRP; that all of Mr. Urbino's claims against Defendants be resolved in the arbitral forum; and that Mr. Urbino be prohibited from bringing any claims under PAGA. (Defs.' CounterClaim ¶ 13; Dkt. No. 14.) On September 2, 2011, Plaintiff moved to remand the action based on lack of subject matter jurisdiction. (Dkt. No. 21.) The Court continued Defendants' motion to compel arbitration to coincide with Plaintiff's motion to remand, scheduled for October 3, 2011. (Ct. Order, Dkt. No. 28, Sept. 15, 2011.) On September 29, 2011, the Court took Defendants' motion to compel arbitration and Plaintiff's motion to remand under submission. (Ct. Order, Dkt. No. 31, Sept. 29, 2011.)

III. PLAINTIFF'S MOTION TO REMAND

The Court has proper subject matter jurisdiction over this action because there is complete diversity of the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1).

A. Legal Standard

A civil action brought in a state court, but over which a federal court may exercise original jurisdiction, may be removed by the defendant to a federal district court. 28 U.S.C. § 1441(a). However, "[a] suit may be removed to federal court under 28 U.S.C. § 1441(a) only if it could have been brought there originally." Sullivan v. First Affiliated Sec., Inc., 813 F.2d 1368, 1371 (9th Cir. 1987); Infuturia Global Ltd. v. Sequus Pharmaceuticals, Inc., 631 F.3d 1133, 1135 n.1 (9th Cir. 2011) ("[A] federal court must have both removal and subject matter jurisdiction to hear a case removed from state court.")The burden of establishing subject matter jurisdiction falls on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) ("Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.") A federal court can assert subject matter jurisdiction over cases that (1) involve questions arising under federal law or (2) are between diverse parties and involve an ...


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