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White v. Rite of Passage Adolescent Treatment Centers and Schools, Inc.

United States District Court, E.D. California

February 18, 2014

CHARLES WHITE, on behalf of himself and all other aggrieved employees pursuant to Labor Code § 2698 et seq., Plaintiffs,
v.
RITE OF PASSAGE ADOLESCENT TREATMENT CENTERS AND SCHOOLS, INC., Defendant.

FINDINGS AND RECOMMENDATIONS GRANTING PLAINTIFF'S MOTION TO REMAND

BARBARA A. McAULIFFE, Magistrate Judge.

This matter is before the Court on Plaintiff Charles White's Motion to Remand this case to the Calaveras County Superior Court. (Doc. 10). Defendant Rite of Passage Adolescent Treatment Centers and Schools, Inc. and DOES 1 through 10 ("Defendants") oppose the motion. (Doc. 11). The Court deemed the matter suitable for decision without oral argument pursuant to Local Rule 230(g), and vacated the hearing scheduled for January 31, 2014. Having carefully considered the parties' submissions and the record, and for all the reasons set forth below, Plaintiff's Motion to Remand should be GRANTED.[1]

BACKGROUND

On October 17, 2013, Plaintiff filed a representative action under the California Private Attorneys General Act of 2004, Labor Code § 2698 et seq. ("PAGA") on behalf of himself Charles White ("Plaintiff"), other current and former aggrieved employees of Defendant Rite of Passage Adolescent Treatment Centers and Schools, Inc., and the State of California in the Calaveras County Superior Court. Plaintiff's complaint sets forth a single cause of action for civil penalties pursuant to PAGA for alleged wage and hour violations by Defendants. Pl.'s Complaint ("Compl."), Doc. 1, Ex. A at ¶ 4.

Plaintiff began employment with Defendants in October 2007. Compl. ¶ 7. Throughout his employment, Plaintiff alleges that he has been denied accurately itemized wage statements and was untimely compensated by Defendants. Specifically, Plaintiff alleges that the wage statements issued to Plaintiff and the other aggrieved employees do not comply with the provisions of Labor Code § 226(a)(8) because they do not set forth the correct name of the entity of their employer. Compl. ¶ 3. Plaintiff and all other aggrieved employees are employed by Rite of Passage Adolescent Treatment Centers and Schools, Inc., but their wage statements list their employer as "Rite of Passage ACTS." Compl. ¶ 3. Plaintiff also alleges that Defendants fail to comply with Labor Code §§ 204 and 210 because they do not timely issue wages to their California employees within seven calendar days after the final day of each bi-weekly payroll period. Compl. ¶ 4. Instead, Defendants issue wages nine days after the conclusion of each bi-weekly payroll period. Id. Plaintiff's complaint seeks monetary penalties, but does not allege a specific amount of damages sought.

On November 18, 2013, Defendants removed the underlying case to this Court based on diversity jurisdiction. Defendants' Notice of Removal ("NOR"), Doc. 1 at 1. On December 6, 2013, Plaintiff filed the instant motion to remand. (Doc. 10). Plaintiff contends that the amount in controversy is below the threshold for diversity subject matter jurisdiction because Plaintiff's individual claim seeks less than $75, 000 in damages and attorney's fees. Defendants filed an opposition on December 20, 2013 (Doc. 11), and on that same date, Plaintiff filed a reply. (Doc. 13).

PLAINTIFF'S PAGA CLAIM

Pursuant to PAGA, an "aggrieved employee" may bring a civil action personally and on behalf of other current, or former, employees to recover civil penalties for violations of the California Labor Code. CAL. LAB. CODE § 2699(a). PAGA defines an "aggrieved employee" as "any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed." Id. § 2699(c). Seventy-five percent of the civil penalties recovered go to the Labor and Workforce Development Agency, leaving the remaining twenty-five percent for the "aggrieved employees." Id. § 2699(i).

In seeking penalties under PAGA, Plaintiff seeks to recover not only civil penalties under PAGA for himself, but also for the group of more than 189 allegedly aggrieved current employees who worked for Defendants during the applicable three year period. (Doc. 11 at 2); NOR ¶ 38.

Calculating the amount in controversy for Plaintiff's collective PAGA claim, Defendants declare that 189 employees are entitled to an initial violation rate of $100 and that they issued 3, 157 payroll checks during the relevant period that are subject to the heightened rate for "subsequent violations." For example, for the violation of Cal. Labor Code § 204, Defendants find $650, 300.00 is in controversy (189 employees × $100 initial violation 3, 157 pay checks x $200 subsequent violations) and $3, 204, 250.00 for claims under § 226.3 (189 employees × $250 initial violation 3, 157 pay checks × $1, 000 subsequent violations). (Doc. 11 at 3). Assuming that Defendants' estimated PAGA penalties are accurate, Defendants calculate a total of at least $3, 854, 550.00 in controversy. (Doc. 11 at 3).

LEGAL STANDARD

District courts have original jurisdiction of all civil actions between citizens of different States in which "the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs." 28 U.S.C. § 1332(a).[2] This requires complete diversity of citizenship and the presence "of a single plaintiff from the same State as a single defendant deprives the district court of original diversity jurisdiction over the entire action." Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 679 (9th Cir. 2006) (citations omitted). For the purposes of establishing diversity of citizenship, a corporation is deemed to be a citizen of every state in which it has been incorporated and where it has its principal place of business. 28 U.S.C. § 1332(c)(1).

The removal statute provides: "[A]ny civil action brought in a [s]tate court of which the district courts of the United States have original jurisdiction" may be removed by a defendant to a federal district court. 28 U.S.C. § 1441(a). In determining whether diversity of citizenship exists and the removal was proper, the court considers the pleadings filed at the time of removal, Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1085 n.5 (9th Cir. 2009), and the citizenship of Doe defendants is disregarded, 28 U.S.C. § 1441(b).

The Ninth Circuit "strictly construe[s] the removal statute 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); 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. 1979)). Where a case is removed from state court, the removing defendant bears the burden of establishing federal jurisdiction, including the amount in controversy requirement. Abrego Abrego, 443 F.3d at 683. If the district court ...


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