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David Tompkins; Individually and On Behalf of Members of the v. C & S Wholesale Grocers

February 24, 2012

DAVID TOMPKINS; INDIVIDUALLY AND ON BEHALF OF MEMBERS OF THE GENERAL PUBLIC SIMILARLY SITUATED, AND AS AGGRIEVED ) EMPLOYEES PURSUANT TO THE PRIVATE ATTORNEY GENERAL ACT ) ("PAGA"),
PLAINTIFFS,
v.
C & S WHOLESALE GROCERS, INC., A VERMONT CORPORATION; TRACEY LOGISTICS, LLC, AN UNKNOWN BUSINESS ENTITY; AND DOES 1 THROUGH 100, INCLUSIVE,
DEFENDANTS.



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

ORDER

On December 9, 2011, Plaintiff filed a motion to remand this case to state court, arguing Defendants "fail to satisfy their heavy burden of proving the amount in controversy with legal certainty . . . ." (Pl.'s Mot. 1:25-26.) Specifically, Plaintiff argues, inter alia, Defendants' amount in controversy calculation is based upon unsubstantiated assumptions. Id. 1:16-24. Defendants oppose the motion, arguing "Defendants have satisfied their burden to show the jurisdictional amount in controversy." (Defs.' Opp'n 1:8-9.) For the reasons stated below, Defendants have not met their burden and Plaintiff's motion to remand will be granted.

I. BACKGROUND

On February 3, 2011, Plaintiff filed a complaint in the Sacramento County Superior Court, comprising three claims under state law. (Compl. ¶¶ 56-102.) Specifically, Plaintiff alleges: (1) failure to pay minimum wages and overtime wages in violation of California Labor Code sections 510 and 1198; (2) civil penalties under California Labor Code Private Attorneys General Act of 2004 ("PAGA"), codified at California Labor Code sections 2698, et seq.; and (3) unfair business practices in violation of the California Unfair Competition Law ("UCL"), codified at California Business and Professions Code sections 17200, et seq. Id. Each of these claims is based on Plaintiff's allegations that Defendants "engaged in a uniform policy and systematic scheme of wage abuse against their 'warehouse supervisors.'" (Complaint ¶ 29.) Plaintiff alleges the scheme involved misclassifying Plaintiff, as well as all warehouse supervisors, "as an 'exempt' employee, and paid him on a salary basis, without any compensation for overtime hours worked, missed meal periods or rest breaks." Id. ¶ 21. Plaintiff also alleges that the amount in controversy "including claims for compensatory damages, interest, and pro rata share of attorneys' fees, is less than $75,000." Id. ¶ 1.

On March 14, 2011, Defendants removed this case to federal court on the basis of diversity jurisdiction. On July 9, 2011, it was remanded to state court after Defendants failed to establish the amount in controversy. On October 26, 2011, Defendants removed this case to federal court for the second time on the basis of diversity jurisdiction. (Notice of Removal ¶¶ 15-16.) Defendants base the removal on "Plaintiff's responses to C&S's written discovery as well as the allegations contained within Plaintiff's Complaint." Id. ¶ 34. Plaintiff subsequently filed a motion to remand, arguing Defendants still have not shown diversity jurisdiction exists. (Pl.'s Mot. 1:24-26.)

II. LEGAL STANDARD

Removal to federal court is only proper under diversity jurisdiction when a case originally filed in state court is between citizens of different states and involves an amount in controversy that exceeds $75,000. 28 U.S.C. § 1332(a). "The removal statute is strictly construed against removal jurisdiction[, and] [t]he defendant bears the burden of establishing that removal is proper." Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009) (internal citations omitted).

The parties dispute the standard by which Defendants must establish the amount in controversy. Plaintiff argues "[i]n order to remand to state court, Defendants must prove to a legal certainty that the amount in controversy exceeds the $75,000 jurisdictional limit." (Pl.'s Mot. 4:14-15.) Defendants counter, arguing they "must show that the amount in controversy is more than $75,000 by a preponderance of the evidence." (Defs.' Opp'n 16:2-3.)

"[T]he preponderance of the evidence standard [is reserved] for situations where a plaintiff seeks no specific amount in damages, and a court is forced to look beyond the complaint to determine whether the suit meets the jurisdictional requirements." Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 998 (9th Cir. 2007) (internal citations omitted). Therefore, the "starting point is whether it is facially apparent from the complaint that the jurisdictional amount is in controversy." Id.

Here, Plaintiff alleges in his complaint as follows: "The amount in controversy for each class representative, including claims for compensatory damages, interest, and pro rata share of attorneys' fees, is less than $75,000." (Complaint ¶ 1.) Therefore, [t]he plain language of the jurisdictional statement encompasses all of the relief that Plaintiff[] seek[s]. The Complaint states the "amount in controversy for each class representative" is less than $75,000 . . . . The words "including [claims for compensatory damages, interest, and pro rata share of attorneys' fees]" do not render the amount in controversy ambiguous. As a matter of plain English, the word "including" indicates that the list is representative, not comprehensive. In contrast, by using the exact words "amount in controversy," Plaintiff[] ha[s] specifically stated that [his] entire potential recovery will fall below the jurisdictional thresholds.

Jones v. ADT Sec. Servs., Inc., 2012 WL 12744, at *3 (C.D. Cal. Jan. 3, 2012).

"Where the plaintiff has alleged her facts and pled her damages, and there is no evidence of bad faith, the defendant must not only contradict the plaintiff's own assessment of damages, but must overcome the presumption against federal jurisdiction." Lowdermilk, 479 F.3d at 999. "[T]he familiar legal certainty standard best captures the proof the defendant must produce." Id.; see also Ray v. Wells Fargo Bank, N.A., 2011 WL 1790123, at *3 (C.D. Cal. May 9, 2011) ("The key distinction . . . was that the plaintiffs in Guglielmino did not mention the total amount in controversy, and sought payment which would be outside the realm of damages which could, even assessed by a preponderance of the evidence standard, bring the total amount in controversy beyond the jurisdictional minimum."); Trahan v. U.S. Bank Nat'l Ass'n, 2009 WL 4510140, at *3 (N.D. Cal. Nov. 30, 2009) ("[C]courts have concluded that where a plaintiff expressly states that the claim or the amount in controversy is less than the jurisdictional threshold, the complaint is sufficiently certain and the legal certainty standard applies."). Since "Plaintiff[] ha[s] alleged that [his] case does not meet the diversity jurisdiction thresholds required for federal court, Defendant[s] must establish with legal certainty that the amounts in controversy exceed the statutory minimums." Jones, 2012 WL 12744, at *3.

Defendants also argue, however, "the legal certainty standard cannot apply where Plaintiff's minimum amount in controversy allegations are made in bad faith." (Defs.' Opp'n 20:19-20.) Defendants argue Plaintiff's refusal to answer certain interrogatories, "combined with his explicit admission that he has no knowledge about the number of hours he worked or the amount of damages he is claiming for even his individual claims, demonstrate that neither Plaintiff nor his counsel undertook a reasonable investigation to determine whether the Complaint's jurisdictional allegations were supported by evidence." Id. 21:5-9. Plaintiff rejoins, arguing he did not act in bad faith since he adequately responded to the interrogatories in a timely manner and "Defendants have had ample opportunity to depose Plaintiff, yet chose not to by removing the case again." (Pl.'s Reply 9:8-18.)

In support of their argument, Defendants cite to Butterworth v. Am. Eagle Outfitters, Inc., 2011 WL 4905641 (E.D. Cal. Oct. 14, 2011), arguing "'[b]ad faith' has been found in the removal context where a defendant challenged the jurisdictional allegations with specific facts, and the plaintiff failed to respond with any facts upon which the jurisdictional limitation was based." (Defs.' Opp'n 20:22-25.) However, Defendants have not sufficiently challenged Plaintiff's jurisdictional allegations with specific facts; rather the majority of Defendants' calculations are insufficient to counter Plaintiff's jurisdictional allegations. Further, since Plaintiff is master of his complaint, there is a distinction between acting in bad faith and pleading damages beneath the jurisdictional threshold:

We acknowledge that strict construction of our jurisdiction creates the potential for manipulation of the jurisdictional rules by plaintiffs who may plead for damages below the jurisdictional amount in state court with the knowledge that the claim is actually worth more, but also with the knowledge that they may be able to evade federal jurisdiction by virtue of the pleading.

Lowdermilk, 479 F.3d at 1002. Here, Defendants have not shown Plaintiff's allegations were made in bad faith, and therefore the legal certainty standard applies.

"The legal certainty standard sets a high bar for the party seeking removal, but it is not insurmountable. While the legal certainty standard is difficult to define, at a minimum, Defendants must produce enough evidence to allow a court to estimate with some certainty the actual amount in controversy." Johnson v. U.S. Vision, Inc., 415 F. App'x 841, 841 (9th Cir. 2011). "[A] defendant must set forth the underlying facts supporting its assertion that the amount in controversy exceeds the statutory minimum. In addition to the contents of the removal petition and the allegations in the complaint, the court considers summary-judgment-type evidence relevant to the amount in controversy at the time of removal." Jones, 2012 WL 12744, at *1 (internal citations and quotation marks omitted). "A court cannot base its jurisdiction on a defendant's speculation and conjecture." Id.

III. DISCUSSION

Defendants' Notice of Removal states "Plaintiff's responses to [Defendant] C&S [Wholesale Grocers' ('C&S')] written discovery as well as the allegations contained within Plaintiff's Complaint put into controversy an amount well in excess of $75,000, exclusive of interests and costs." (Notice of Removal ¶ 34.) Plaintiff counters in his motion to remand, arguing Defendants fail to establish to a legal certainty that the amount in controversy exceeds $75,000. (Pl.'s Mot. 1:17-26.)

Defendants' opposition brief supplements the arguments and evidence presented in the Notice of Removal as follows:

Plaintiff's claims on his own behalf place more than $112,425 at issue as follows: Restitution of meal and rest break premiums amount to at least $46,800; civil penalties under PAGA amount to at least $18,900; other civil penalties amount to at least $10,800; overtime amounts to at least $8,775; restitution of Labor Code 203 waiting time penalties amounts to at least $7,150; and attorney fees amount to at least $20,000. (Defs.' Opp'n 5:17-22.) In support of supplementing the Notice of Removal, Defendants contend "[t]he Court may consider information not raised in a removal petition; any new evidence or argument in a defendant's opposition to plaintiff's motion to remand is treated as an amendment to the notice of removal." Id. 7:5 n.8. Plaintiff does not respond to this argument. Therefore, the Court will "construe[] [Defendants'] opposition [brief] as an amendment to its notice of removal" under 28 U.S.C. § 1653. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002) (citing ยง 1653); see also Lyon v. W.W. Grainger Inc., 2010 WL 1753194, at *3 (N.D. Cal. Apr. 29, 2010) ("This order, however, ...


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