United States District Court, N.D. California, San Jose Division
MELVYN LETULIGASENOA, Individually and on behalf of similarly situated and aggrieved employees of Defendants in the State of California Plaintiffs,
INTERNATIONAL PAPER COMPANY; TIN, INC., which will do business in California as TEMPLE-INLAND, INC., and DOES 1 through 50, Inclusive, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND [RE: DOCKET NO. 19]
EDWARD J. DAVILA, District Judge.
Presently before the court is Plaintiff Melvyn Letuligasenoa's ("Plaintiff") motion to remand this case to Santa Clara County Superior Court. Docket Item No. 19. Plaintiff filed this putative class action in that court against Defendants International Paper Company ("IP") and Tin, Inc., doing business as Temple-Inland, Inc. ("TIN") (collectively, "Defendants") alleging violations of various wage and hour provisions of the California Labor Code, representative claims under the Private Attorneys General Act ("PAGA") and violation of the California Business and Professions Code. Defendants removed the case to this court under the Class Action Fairness Act ("CAFA"). Through the instant motion, Plaintiff seeks remand on the basis that Defendants have not made a sufficient showing that there is more than $5, 000, 000 in controversy as required by CAFA. The court found this matter suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b) and previously vacated the hearing. Having carefully reviewed the parties' briefing, and for the following reasons, the court GRANTS Plaintiff's Motion to Remand.
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant IP and Defendant TIN are in the paper and packaging industry. Decl. of Alice S. Wang in Supp. of Removal ("Wang Decl.") Ex. A ¶ 7, Docket Item No. 5. Defendant TIN was acquired by Defendant IP on February 13, 2012. Id . ¶ 16. The acquisition included Defendant TIN's California employees. Decl. of Kathleen McJunkin in Supp. of Removal ("McJunkin Decl.") ¶ 10, Docket Item No. 2. The acquisition also included at least two TIN facilities in California: the Gilroy Bay Sheets facility and the Gilroy Container facility. Id . Plaintiff worked as a non-exempt employee at the Gilroy Bay Sheets facility. See id. ¶ 7.
On October 4, 2013, Plaintiff filed this case in Santa Clara County Superior Court, alleging that Defendants, collectively, engaged in a systematic pattern of wage and hour violations under the Labor Code and the Industrial Labor Commission Wage Orders ("IWC") in order to "increase their level of productivity." Wang Decl. Ex. A ¶ 3, Dkt. No. 5. Specifically, Plaintiff alleges the following claims: (1) failure to provide mandated meal periods in violation of Labor Code §§ 226.7, 512, 1198 and the "Meal Periods" Section of the IWC Wage Order; (2) failure to provide mandated meal periods in violation of Labor Code §§ 226.7, 1198 and the "Rest Period" Section of the IWC Order; (3) failure to pay minimum and regular wages in violation of Labor Code §§ 1197, 1198 and the "Minimum Wages" Section of the IWC Wage Order; (4) failure to pay overtime wages in violation of Labor Code §§ 510, 1198 and the "Days and Hours Worked" Section of the IWC Wage Order; (5) failure to pay vested vacation wages in violation of Labor Code § 227.3; (6) failure to timely pay all wages due upon separation of employment in violation of Labor Code §§ 201, 202, 1198 and the "Minimum Wages" Section of the IWC Wage Order; (7) failure to maintain and provide accurate itemized wage statements in violation of Labor Code §§ 226, 1198, and the "Records" Section of the IWC Wage Order; (8) failure to maintain and provide accurate records in violation of Labor Code §§ 1174, 1198 and the "Records" Section of the IWC Wage Order; (9) representative claims under PAGA; and (10) violation of California Business and Professions Code § 17200, et. seq. Id . ¶¶ 51-162.
Plaintiff brings these claims on behalf of himself and eleven putative classes of similarly situated current and former exempt and non-exempt employees of Defendants. Id . Plaintiff identifies the putative classes as: (a) the Temple-Inland Vacation Class; (b) the International Paper Vacation Class; (c) the Temple-Inland Meal Period Class; (d) the International Paper Meal Period Class; (e) the Temple-Inland Rest Period Class; (f) the International Paper Rest Period Class; (g) the Temple-Inland Off-the-Clock Class; (h) the International Paper Off-the-Clock Class; (i) the Temple-Inland Wage Statement Class; (j) the International Paper Wage Statement Class; and (k) the Temple-Inland and/or International Paper Final Paycheck Class. Id . ¶ 47. Additional details of each class are provided below where relevant to the analysis.
Defendants removed the case to this court on November 13, 2013 under CAFA. Notice of Removal ("Removal"), Docket Item No. 1. Plaintiff filed the instant Motion to Remand on December 13, 2013. Docket Item No. 19. Defendants filed an Opposition to Plaintiff's Motion to Remand on December 27, 2013. Docket Item No. 24. Plaintiff filed a Reply on January 1, 2014. Docket Item No. 28. The parties do not dispute that CAFA's minimal diversity and minimal class size requirements are met. Rather, Plaintiff seeks remand solely on the ground that Defendants have not made a sufficient showing that there is more than $5, 000, 000 in controversy as required to establish federal jurisdiction under CAFA.
II. LEGAL STANDARD
A defendant may remove a civil action filed in state court to a federal district court so long as the district court could have exercised original jurisdiction over the matter. 28 U.S.C. § 1441(a). The federal removal statute provides that if, at any time before judgment, it appears that the district court lacks subject matter jurisdiction over a case previously removed from state court, the case must be remanded. 28 U.S.C. § 1447(c). The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992); see also Ethridge v. Harbor House Rest. , 861 F.2d 1389, 1393 (9th Cir. 1988). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id . "The strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id.
Under CAFA, a federal district court may exercise jurisdiction over a class action where (1) the amount in controversy exceeds $5, 000, 000; (2) any member of the plaintiff class is a citizen of a different state from any defendant; (3) the primary defendants are not states, state officials or other government entities against whom the district court may be foreclosed from ordering relief; and (4) the class has at least 100 members. 28 U.S.C. §§ 1332(d)(2), (d)(5). "[U]nder § 1332(d)(6), the claims of class members are aggregated to determine whether the amount in controversy exceeds $5, 000, 000." Abrego Abrego v. Dow Chem. Co. , 443 F.3d 676, 684 (9th Cir. 2006). Here, the parties only dispute whether CAFA's first requirement-an amount in controversy exceeding $5, 000, 000-is met.
To ascertain the amount in controversy, a court must first look to the complaint. Lewis v. Verizon Commc'ns, Inc. , 627 F.3d 395, 399 (9th Cir. 2010). When, in the context of removal, the amount in controversy is contested and it is unclear or ambiguous from the face of the complaint whether the requisite amount in controversy has been pled, the removing defendant must establish by a preponderance of the evidence that the amount in controversy exceeds $5, 000, 000. Guglielmino v. McKee Foods Corp. , 506 F.3d 696, 699 (9th Cir. 2007); see also Lowdermilk v. U.S. Bank Nat'l Ass'n , 479 F.3d 994, 998 (9th Cir. 2007) ("[W]hen the plaintiff fails to plead a specific amount of damages, the defendant seeking removal must prove by a preponderance of the evidence that the amount in controversy requirement has been met.'"), overruled on other grounds. CAFA's amount in controversy requirement cannot be met through "speculation and conjecture." Lowdermilk , 479 F.3d at 1002. Rather, the removing defendant must proffer "summary-judgment-type evidence relevant to the amount in controversy at the time of removal." Abrego Abrego , 443 F.3d at 690 (quoting Singer v. State Farm Mut. Auto Ins. Co. , 116 F.3d 373, 377 (9th Cir. 1997)). "A defendant must set forth the underlying facts supporting its assertion that the amount in controversy exceeds the statutory minimum." Roth v. Comerica Bank , 799 F.Supp.2d 1107, 1126 (C.D. Cal. 2010) (citations omitted). "In measuring the amount in controversy, a court must assume that the allegations of the complaint are true and that a jury will return a verdict for the plaintiff on all claims made in the complaint." Kenneth Rothschild Trust v. Morgan Stanley Dean Witter , 199 F.Supp.2d 993, 1001 (C.D. Cal. 2002) (internal quotations and citation omitted). Courts should resolve any doubts as to removability in favor of remanding the case to state court. Gaus , 980 F.2d at 566.
Here, Plaintiff does not allege a specific amount in controversy in his complaint. Therefore, the court must determine whether Defendants have established by a preponderance of the evidence that the amount in controversy exceeds $5, 000, 000. The court will do so by analyzing the scope of the allegations in the Plaintiff's complaint, addressing the manner in which Defendants estimate the categories of potential damages, examining the reasonableness of the variables used, and addressing Defendants' argument that the ultimate amount in controversy would actually be much higher than the calculations below.
a. Defendants' Estimate of Potential Damages
In support of their Notice of Removal, Defendants provide the declaration of Human Resources Specialist Kathleen McJunkin. See Dkt. No. 2. In her declaration, Ms. McJunkin reports about the number of exempt and non-exempt employees during the relevant time period from the Gilroy Bay Sheets facility. Id . ¶ 11. Based on these single-facility numbers, Defendants estimated the amount in controversy to be: $1, 474, 834.80 for meal period penalties; $1, 474, 834.80 for rest period penalties; $245, 805.80 for unpaid wages; $471, 000 for minimum wage civil penalties; $122, 902.90 for unpaid overtime premium; $184, 354.35 of liquidated damages for unpaid wages; $92, 177.18 of liquidated damages for unpaid overtime premium; $195, 000 for Section 558 penalties; $421, 574.40 for waiting time penalties for non-exempt employees; $133, 872 for waiting time penalties for exempt employees; $189, 000 for pay stub penalties; $204, 000 for PAGA penalties; and $1, 302, 339 for attorneys' fees. Decl. of Christopher C. Hoffman in Supp. Of Removal ("Hoffman Decl.") ¶ 49, Docket Item No. 3. Thus, according to Defendants' calculations at the time of removal, the total amount in controversy just with respect to the Gilroy Bay Sheets facility was $6, 511, 695.28. Id.
Defendants modified their amount-in-controversy estimate in response to information contained in Plaintiff's Motion to Remand. Particularly, Defendants expanded the waiting-time penalties class from 10 exempt and 78 non-exempt employees at Gilroy Bay Sheets facility to 316 former employees from across all TIN facilities. Opp'n at 7:6-16, Dkt. No. 24. As a result, the waiting time penalties calculation increased from $421, 574.40 to $1, 707, 916.80. Id. at 7:10-16. Defendants also reduced their calculation of the meal period class and rest period class damages based on Plaintiff's argument that the meal period class was limited to employees in the "production department." Id. at 3:6-8. Defendants estimated the modified amount in controversy to be: $1, 403, 671.60 for meal period penalties; $1, 403, 671.60 for rest period penalties; $233, 945.27 for unpaid wages; $447, 450 for minimum wage civil penalties; $116, 972.63 for unpaid overtime premium; $175, 458.95 of liquidated damages for unpaid wages; $87, 729.48 of liquidated damages for unpaid overtime premium; $185, 250 for Section 558 penalties; $1, 707, 916.80 for waiting time penalties for non-exempt employees; $133, 872 for waiting time penalties for exempt employees; $179, 550 for pay stub penalties; $48, 450 for PAGA penalties; and $1, 530, 984.58 for attorneys' fees. Supplemental Declaration of Christopher C. Hoffman in Supp. of Def. Opp'n ("Hoffman Supp. Decl.") ¶ 51, Dkt. No. 24-3. The total amount in controversy under this revised estimate is $7, 654, 922.91. Id.
In its analysis, the court will refer to Defendants' original amount in controversy estimates because the key underlying assumptions and calculations are essentially the same in the original and revised amounts and, as discussed below, these assumptions do not suffice to meet Defendants' burden. However, because there is a substantial discrepancy between the original and revised amounts of the non-exempt waiting time penalties, the court will address both estimates only for this category. To determine the scope of the allegations, the court will only consider Plaintiff's complaint and not the class limits Plaintiff asserts in his Motion to Remand. See Harris v. Bankers Life & Cas. Co. , 425 F.3d 689, 694 (9th Cir. 2005) ("removability under § 1446(b) is determined through examination of the four corners of the applicable pleadings, not through subjective knowledge or a duty to make a further inquiry"); see also St. Paul Mercury Indem. Co. v. Red Cab Co. , 303 U.S. 283, 294 (1938) ...