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Urbino v. Orkin Services of California, Inc.

United States Court of Appeals, Ninth Circuit

August 13, 2013

John Urbino, for himself and on behalf of other current and former employees, Plaintiff-Counter-Defendant-Appellee,
v.
Orkin Services of California, Inc., a Delaware corporation, and Rollins, Inc., a Delaware corporation, Defendants-Counter-Claimants-Appellants John Urbino, for himself and on behalf of other current and former employees, Plaintiff-Counter-Defendant-Appellant,
v.
Orkin Services of California, Inc., a Delaware corporation, and Rollins, Inc., a Delaware corporation, Defendants-Counter-Claimants-Appellees John Urbino, for himself and on behalf of other current and former employees, Plaintiff-Appellant,
v.
Orkin Services of California, Inc., a Delaware corporation, and Rollins, Inc., a Delaware corporation, Defendants-Appellees

Argued and Submitted March 5, 2013—Pasadena, California

Appeal from the United States District Court for the Central District of California Cormac J. Carney, District Judge, Presiding D.C. No. 2:11-cv-06456-CJC-PJW, No. 11-57002 D.C. No. 2:11-cv-06456-CJC-PJW, D.C. No. 2:11-cv-06456-CJC-PJW OPINION

Theodore R. Scarborough (argued), Robert N. Hochman, and Tacy F. Flint, Sidley Austin LLP, Chicago, Illinois; John E. Lattin, Fisher & Phillips LLP, Irvine, California; Christopher C. Hoffman, Fisher & Phillips LLP, San Diego, California, for Defendants-Appellants/Cross-Appellees (No. 11-56944, 11-57002), Defendants-Appellees (12-55064).

Kenneth H. Yoon (argued) and Stephanie E. Yasuda, Law Offices of Kenneth H. Yoon, Los Angeles, California; Peter M. Hart and Amber S. Healy, Law Offices of Peter M. Hart, Los Angeles, California, for Plaintiff-Appellee/Cross-Appellant (No. 11-56944, 11-57002), Plaintiff-Appellant (12-55064).

Before: Michael Daly Hawkins, Sidney R. Thomas, and Andrew D. Hurwitz, Circuit Judges.

SUMMARY[*]

Diversity Jurisdiction

The panel held that the federal courts lacked subject mater jurisdiction over this California dispute, vacated the district court's order denying plaintiff's motion to remand, and directed the district court to return the matter to state court for resolution.

Under California's Private Attorneys General Act of 2004 ("PAGA"), if the state agency declines to investigate labor code violations, an aggrieved employee may commence an action against the employer. Plaintiff filed a representative PAGA action, and defendants removed the matter to federal court on the basis of diversity, based on evidence that the aggregated claims of the individual employees could result in liability in excess of the minimum jurisdictional requirements under 28 U.S.C. § 1332(a)(1). The panel held that the recoveries at issue cannot be aggregated to meet the amount in controversy requirement, and therefore there was no federal diversity jurisdiction.

Judge Thomas dissented because he would conclude that claims under PAGA can be aggregated in determining whether diversity jurisdiction exists, and therefore the district court properly exercised diversity jurisdiction.

OPINION

HAWKINS, Senior Circuit Judge

This interlocutory appeal deals with a unique statute concerning the claims of California residents against the owners and operators of California-based enterprises. Brought originally in state court, it has been removed to federal court on the theory that the individual claims, when aggregated, meet the minimum requirements of diversity jurisdiction. We have jurisdiction to review the district court's refusal to remand the dispute back to state court. Because we determine that the recoveries at issue cannot be aggregated to meet the amount in controversy requirement, we vacate the district court order and remand with instructions to return the dispute to the California courts for resolution.[1]

I. BACKGROUND

With passage of the Private Attorneys General Act of 2004 ("PAGA"), the California Legislature fundamentally altered the state's approach to collecting civil penalties for labor code violations. Though the Labor and Workforce Development Agency ("LWDA") retained primacy over private enforcement efforts, under PAGA, if the LWDA declines to investigate or issue a citation for an alleged labor code violation, an aggrieved employee may commence a civil action "on behalf of himself or herself and other current or former employees" against his or her employer. Cal. Lab. Code § 2699(a); Arias v. Super. Ct., 209 P.3d 923, 930 (Cal. 2009). If the representative plaintiff prevails, the ...


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