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Guilmer Hernandez, Individually, and On Behalf of Other Members of the v. Towne Park

June 22, 2012

GUILMER HERNANDEZ, INDIVIDUALLY, AND ON BEHALF OF OTHER MEMBERS OF THE GENERAL PUBLIC SIMILARLY SITUATED, PLAINTIFF,
v.
TOWNE PARK, LTD., A MARYLAND CORPORATION; BOBBY KUHNS, AN INDIVIDUAL; AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Margaret M. Morrow United States District Judge

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND

On February 28, 2012, Guilmer Hernandez filed this putative wage and hour class action in Los Angeles Superior Court against Towne Park, Ltd., Bobby Kuhns, and certain fictitious defendants.*fn1 On April 4, 2012, Towne Park removed the action, invoking the court's jurisdiction under the general diversity statute, 28 U.S.C. § 1332(a), and the Class Action Fairness Act of 2005 ("CAFA").*fn2 Hernandez has now filed a motion to remand.*fn3 Towne Park opposes the motion.*fn4

Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court finds this matter appropriate for decision without oral argument. The hearing calendared for June 25, 2012, is hereby vacated.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint's Allegations

Hernandez is a resident of Los Angeles, California.*fn5 Towne Park, Ltd., is a Maryland corporation doing business in California.*fn6 Bobby Kuhns was Hernandez's district manager and resides in California.*fn7
The complaint alleges that defendants employed Hernandez and others as guest service associate valets, or in similarly titled positions with similar duties.*fn8 Hernandez seeks to represent a class of "[a]ll non-exempt or hourly paid Guest Service Associate Valets, or [employees] in a similar position with similar duties, who worked for Defendants within four years prior to the filing of this complaint until the date of certification."*fn9 Hernandez was employed as a non-exempt, hourly worker from June 2010 to January 14, 2012, at defendants' Los Angeles business location.*fn10 He alleges on information and belief that employees were not paid for all hours worked because the hours were not recorded or were "erased." Hernandez also alleges that defendants knew or should have known that class members were entitled to, but did not receive, overtime compensation for their work.*fn11 Similarly, he contends that class members were not paid minimum wage for off-the-clock work,*fn12 that they did not receive the meal and rest periods to which they were entitled,*fn13 that they were not timely paid all wages on termination, and that they were the victims of various other violations of the California Labor Code.*fn14 Hernandez asserts that defendants' failure to comply with California law was "willful[ ], knowing[ ], and intentional[ ]," and that they falsely told class members they had been properly paid to increase defendants' profits.*fn15

Hernandez pleads the following state law claims on his own behalf and on behalf of members of the class: (1) failure to pay overtime wages in violation of California Labor Code §§ 510 and 1198; (2) failure to pay minimum wage in violation of Labor Code §§ 1194, 1197, and 1197.1; (3) failure to timely pay wages on termination in violation of Labor Code §§ 201 and 202; (4) failure to provide compliant wage statements to class members in violation of Labor Code § 226(a); and (5) violation of California's Unfair Competition Law ("UCL"), Business and Professions Code § 17200 et seq.*fn16

He seeks "damages, restitution penalties, injunctive relief, and attorneys' fees in excess of twenty-five thousand dollars[ ], but less than five million dollars[ ], exclusive of interests and costs."*fn17 He also reserves the right to seek a larger amount based on "new and different information resulting from investigation and discovery."*fn18 The complaint further states that the total amount in controversy for each class member is less than $75,000, and that the aggregate amount in controversy for the entire class is less than $5 million, exclusive of interest and costs. In his prayer for relief, Hernandez seek unpaid wages and "general and special damages as may be appropriate" on the overtime and minimum wage claims,*fn19 "actual, consequential and incidental losses and damages" on the meal and rest period and wage statement claims,*fn20 civil penalties on the wage statement claims under the Private Attorneys General Act ("PAGA"), California Labor Code § 2698, et seq.,*fn21 and prejudgment interest.

B. Notice of Removal

In their notice of removal, defendants invoked the court's jurisdiction under the general diversity statute and CAFA. As respects the former, the notice asserts that the complete diversity requirement is met because Hernandez he allegedly is a California resident, and Towne Park is a Maryland corporation.*fn22 Towne Park contends that Kuhns has been fraudulently joined and that his citizenship should be disregarded for purposes of determining whether the court has diversity jurisdiction to hear the case.*fn23

To demonstrate that the amount in controversy requirement is satisfied, Towne Park cites the allegations in the complaint, which it supplements with the declaration of Beverly Valltos, its vice president of administration and compliance.*fn24 Valltos states that Hernandez worked for Towne Park from June 17, 2010 to January 14, 2012, and voluntarily left the company on that date.*fn25 When he was hired, his hourly wage was $11.55; by the time he left, it had increased to $11.61.*fn26 Based on these figures, and the complaint's allegations, Towne Park offers the following estimates of the amount Hernandez has placed in controversy:

Plaintiff's Claim Amount in Controversy

Unpaid Overtime Wages $8,639.70 Unpaid Minimum Wages and Penalties $30,540.00 Penalties for Failure to Pay Wages Upon Termination

$2,240.72

Penalties for Issuing Inaccurate Wage Statements

$2,250.00

Penalties and Unpaid Wages for Missed Meal and Rest Break Periods under PAGA

$24,297.30

Restitution Under the UCL $16,079.70 Attorneys' Fees $21,011.86 Amount in Controversy Subtotal $105,059.28 Towne Park also invokes jurisdiction under CAFA. The notice of removal asserts that CAFA's minimal diversity requirement is met, since Hernandez is more likely than not a California citizen and Towne Park is a citizen of Maryland.*fn27 Valltos states that during the putative class period, Towne Park employed 2,645 individuals as guest service associate valets, 1,706 of which were terminated or left the company.*fn28 The average class member's length of employment was 66 weeks; his or her average hourly wage was "at least $9.25."*fn29 Class members were paid once every two weeks.*fn30

Valltos reports that, between February 28, 2009 and February 29, 2012, Towne Park employed at least 1,902 putative class members at an average hourly wage of $9.25.*fn31 She states that the average daily wage of a putative class member during this period was "at least $74," and that at least 963 class members were terminated or left over the three years.*fn32 Finally, Valltos asserts that from February 28, 2011 to February 29, 2012, Towne Park employed at least 1,350 class members, at the average hourly wage of $9.12.*fn33 Their average length of employment was 74 weeks.*fn34

Based on these estimates and the allegations in Hernandez's complaint, Towne Park offers the following calculations regarding the amount in controversy on the class claims:

Plaintiff's Claim Amount in Controversy

Unpaid Overtime Wages $9,985,005.48 Unpaid Minimum Wages and Penalties $29,034.030.00

$2,137,860.00

Penalties for Failure to Pay Wages Upon Termination

Penalties for Issuing Inaccurate Wage Statements

$3,442,500.00

Restitution for Missed Meal and Rest Break Periods

$12,491,385.00

PAGA Penalties $20,655,000.00 Restitution Under the UCL $15,386,685,48 Attorneys' Fees $23,283,116.49 Amount in Controversy Subtotal $116,415,582.45

II. DISCUSSION

A. Legal Standard Governing Removal Jurisdiction under CAFA

The parties' primary dispute concerns whether defendants have demonstrated that the court may exercise jurisdiction under CAFA in this case.*fn35 The right to remove a case to federal court is entirely a creature of statute. See, e.g., Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979) ("The removal jurisdiction of the federal courts is derived entirely from the statutory authorization of Congress" (citations omitted)). The removal statute, 28 U.S.C. § 1441, allows defendants to remove when a case originally filed in state court presents a federal question or is between citizens of different states. See 28 U.S.C. §§ 1441(a), (b); see also 28 U.S.C. §§ 1446 (setting forth removal procedures generally); 1453 (setting forth removal procedures for class actions). Only those state court actions that could originally have been filed in federal court may be removed. 28 U.S.C. § 1441(a) ("Except as otherwise expressly provided by Act of Congress, any 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 . . . to the district court of the United States for the district and division embracing the place where such action is pending . . ."); see also, e.g., Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) ("Only state-court actions that originally could have been filed in federal court may be removed to federal court by defendant").

In 2005, Congress enacted the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4. CAFA gives district courts original jurisdiction to hear class actions "in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," and "in which[, inter alia,] any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d)(2); see also Luthis v. Countrywide Homes Loans Servicing LP, 533 F.3d 1031, 1033-34 (9th Cir. 2008) ("The Class Action Fairness Act of 2005 § 4(a), 28 U.S.C. § 1332(d)(2), amended the requirements for diversity jurisdiction by granting district courts original jurisdiction over class actions exceeding $5,000,000 in controversy where at least one plaintiff is diverse from at least one defendant. In other words, complete diversity is not required. CAFA also provided for such class actions to be removable to federal court. See 28 U.S.C. § 1453(b). CAFA was enacted, in part, to 'restore the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction.' Pub.L. No. 109-2, § 2(b)(2), 119 Stat. 4, 5 (codified as a note to 28 U.S.C. § 1711)").

Under CAFA, the number of members of all proposed plaintiff classes must exceed 100 in the aggregate. 28 U.S.C. § 1332(d)(5)(B). See also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1020-21 (9th Cir. 2007) ("As a threshold matter, CAFA applies to 'class action' lawsuits where the aggregate number of members of all proposed plaintiff classes is 100 or more persons and where the primary defendants are not 'States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief.' § 1332(d)(5). . . . Once the prerequisites of § 1332(d)(5) are satisfied, CAFA vests federal courts with 'original' diversity jurisdiction over class actions if (1) the aggregate amount in controversy exceeds $5,000,000, and (2) any class member is a citizen of a state different from any defendant. § 1332(d)(2)"); id. at 1021 n. 3 ("The Fifth Circuit characterized § 1332(d)(5) as an 'exception' to CAFA jurisdiction conferred under § 1332(d)(2). . . . We view § 1332(d)(5) somewhat differently. . . . [S]atisfaction of § 1332(d)(5) serves as a prerequisite, rathis than as an exception, to jurisdiction under § 1332(d)(2). This distinction is important because, as we address later, there are 'exceptions' to the statute in which jurisdiction otherwise exists under § 1332(d)(2) but the federal courts eithis may or must decline to exercise that jurisdiction. See, e.g., § 1332(d)(3)-(4)").

The Ninth Circuit "strictly construe[s] the removal statute[s] against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988) and Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1992)). "The 'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (citing Nishimoto v. FedermanBachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990) and Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)).

As the Ninth Circuit has explained, CAFA does not disturb the traditional rule that the burden of establishing removal jurisdiction is on the proponent of federal jurisdiction. Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006) ("We . . . hold that under CAFA the burden of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction").

B. Whether Towne Park Has Met Its Burden of Demonstrating the Existence of CAFA Jurisdiction

1. Minimal Diversity

Minimal diversity exists where any member of a class of plaintiffs is a citizen of a state different from any defendant. 28 U.S.C. §§ 1332(d)(2)(A).*fn36 Hernandez alleges that he is a resident of California.*fn37 The complaint alleges that Towne Park is a Maryland corporation,*fn38 and it offers evidence that its principal place of business is located in that state as well.*fn39 Hernandez does not dispute this. Towne Park has thus shown that Hernandez is a citizen of a different state than at least one defendant. CAFA's minimal diversity requirement is therefore satisfied.

2. Numerosity Requirement

Under CAFA, the number of members of all proposed plaintiff classes must exceed 100 in the aggregate. 28 U.S.C. § 1332(d)(5)(B). Towne Park asserts that the putative class includes approximately 2,645 individuals.*fn40 Although Hernandez contends that this is an "inflated and speculative" estimate of the size of the class, he misinterprets Valltos's declaration. Hernandez apparently believes that Valltos asserts the class has 5,000 members. Valltos breaks down the number of individuals who worked at Towne Park during certain periods of time.*fn41 Hernandez may have ...


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