United States District Court, E.D. California
May 30, 2014
CASSANDRA CARAG, individually and on behalf of other members of the general public similarly situated, Plaintiff,
BARNES & NOBLE, INC., a Delaware corporation; BARNES & NOBLE BOOKSELLERS, INC., a Delaware corporation; and DOES 1 through 100, inclusive, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING PLAINTIFF'S MOTION TO STRIKE
JOHN A. MENDEZ, District Judge.
This matter is before the Court on Plaintiff Cassandra Carag's ("Plaintiff") Motion to Remand (Doc. #3) and Motion to Strike (Doc. #4) portions of Defendants Barnes & Noble, Inc. ("Barnes & Noble") and Barnes & Noble Booksellers, Inc.'s (collectively "Defendants") Answer (Doc. #1-1). Defendants opposed the motions (Doc. ##6, 5 respectively). Plaintiff filed replies (Doc. #7, 8).
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
The class action Complaint (Doc. #1-1) was filed in the Sacramento County Superior Court on November 27, 2013. Plaintiff brought the following claims against Defendants on her own behalf, as well as that of other members of the general public similarly situated: (1) Violation of California Labor Code §§ 510 and 1198 (unpaid overtime); (2) Violation of §§ 226.7 and 512(a) (Unpaid Meal Period Premiums); (3) Violation of § 226.7 (Unpaid Rest Period Premiums); (4) Violation of §§ 1194, 1197, and 1197.1 (Unpaid Minimum Wages); (5) Violation of §§ 201 and 202 (Final Wages Not Timely Paid); (6) Violation of § 204 (Wages Not Timely Paid During Employment); (7) Violation of § 226(a) (Non-Compliant Wage Statements); (8) Violation of § 1174(d) (Failure to Keep Requisite Payroll Records); and (9) Violation of California Business & Professions Code §§ 17200, et seq. (Unfair Competition/Unfair Business Practices).
According to the Complaint, Defendants are a national book retailer operating a chain of bookstores. Plaintiff was an hourly-paid, non-exempt employee of Defendants from approximately May 2002 through April 2012. The proposed class is defined as "all current and former California-based... hourly-paid or non-exempt individuals employed by any of the Defendants at a Barnes & Noble' store located within the State of California at any time during the period from four years preceding the filing of this Complaint to final judgment." The Complaint seeks to recover the unpaid overtime compensation, compensation for missed meal and rest periods, payment and penalties for unpaid minimum wages, penalties for untimely payment of wages during employment and final wages, damages for improper wage statements and payroll records, and attorneys' fees.
On February 13, 2014, Defendants removed the action to this Court (Doc. #1) pursuant to 28 U.S.C. § 1332(d), the Class Action Fairness Act of 2005 ("CAFA"). Defendants asserted in their Notice of Removal that the alleged aggregate amount in controversy in this class action exceeds $5, 000, 000, exclusive of interest and costs, thus satisfying the amount in controversy requirement of 28 U.S.C. § 1332(d)(2) and supplying this Court with jurisdiction over the matter. To support their contention, Defendants submitted the declaration of Barnes & Noble's Director of Human Resources Administration (Doc. #1-3), Patricia Woloshin-Williams ("Woloshin-Williams"), in which she states that based on a search of the relevant records she discovered that at least 3, 666 individuals worked as hourly or non-exempt employees at Barnes & Noble in California since November 2013.
A. Request for Judicial Notice
Defendants request the Court judicially notice (Doc. #6-1) three documents pursuant to Rule 201 of the Federal Rules of Evidence. Rule 201 provides that the Court may judicially notice a fact that is not subject to reasonable dispute because it is generally known within the trial court's territorial jurisdiction; or can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.
The first two documents in Defendants' request are the Complaint and the notice of removal in this action. These are clearly documents the Court will rely on in ruling on the motions, and as such, the request is granted as to them.
The final document is a complaint filed in another action in the Los Angeles County Superior Court. Although the Court can judicially notice complaints filed in other courts for the fact that they were therein filed, the Court does not find this document to be materially relevant to the matter before it. Accordingly, Defendants' request as to this other complaint is denied.
B. Motion to Remand
1. Applicable Standard
In her Motion to Remand, Plaintiff contends the Court should remand the matter because Defendants have failed to prove that the amount in controversy exceeds $5, 000, 000, as required for federal jurisdiction under CAFA. MTR at p. 2. She argues Defendants' calculations rely on speculation and unsubstantiated assumptions, and thus Defendants have failed to meet their burden for removing this action.
CAFA gives the district courts original jurisdiction in any civil action where: (1) "the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs, " (2) the action is pled as a class action involving more than 100 putative class members, and (3) "any member of a class of plaintiffs is a citizen of a State different from any defendant." 28 U.S.C. § 1332(d). The first requirement is the only one challenged by Plaintiff here.
Where a state court complaint does not specify an amount of damages to demonstrate federal jurisdiction, "[a] defendant seeking removal of a putative class action must demonstrate, by a preponderance of evidence, that the aggregate amount in controversy exceeds the jurisdictional minimum." Rodriguez v. AT & T Mobility Services LLC , 728 F.3d 975, 976 (9th Cir. 2013); see also Emmons v. Quest Diagnostics Clinical Labs., Inc., 1:13-CV-0474 AWI-BAM, 2014 WL 584393, at *3-4 (E.D. Cal. 2014). "[A] district court may not find a defendant has met the preponderance of the evidence standard based on defendant's mere speculation and conjecture. Calloway v. Affiliated Computer Servs., Inc., 2:13-CV-01648-KJM, 2014 WL 791546, at *7 (E.D. Cal. 2014) (citing Garibay v. Archstone Communities LLC, 539 F.Appx. 763, 764 (9th Cir. 2013)).
To determine whether Defendants have met their burden here, the Court must review "the reliability of the variables [D]efendants use to calculate the amount in controversy as exceeding $5 million." Id . The Ninth Circuit strictly construes removal statutes against removal jurisdiction; federal jurisdiction "must be rejected if there is any doubt as to the right of removal in the first instance.'" Roth v. Comerica Bank , 799 F.Supp.2d 1107, 1115 (C.D. Cal. 2010) (quoting Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992)).
2. Notice of Removal Damages Calculation
In their Notice of Removal, Defendants' primary damage calculation is based on Plaintiff's § 226 claim. Defendants contended that based on Woloshin-Williams' calculation of 3, 666 employees belonging to the class, this claim alone would amount to $14, 664, 000. This figure assumes however that every single member of the class would be entitled to the maximum statutory penalty of $4000. § 226(e)(1).
The Ninth Circuit dealt with similar supporting evidence for removal in Garibay. 539 F.Appx. at 764. There the court observed that the only support for the defendants' calculation of the amount in controversy was "a declaration by their supervisor of payroll, which set forth only the number of employees during the relevant period, the number of pay periods, and general information about hourly employee wages." Id . The court found the district court properly concluded the evidence "was insufficient to support removal jurisdiction under CAFA, " reasoning that beyond the declaration, "the defendants rely on speculative and self-serving assumptions about key unknown variables." Id . The evidence submitted in support of the Notice of Removal is equally insufficient to support removal in the instant case.
3. Defendants' Opposition to Remand Motion
In their Opposition and the supplemental declaration from Woloshin-Williams (Doc. #6-4), Defendants provide further explanation of their calculations to support their claim that the amount in controversy meets the jurisdictional minimum for removal. Opp. at pp. 5-11. Woloshin-Williams states that she examined records for the period from November 27, 2009 through March 1, 2014, and that she determined Barnes & Noble had 2, 804 current and 7, 666 former non-exempt California employees, totaling 10, 470. She further asserts that the lowest starting wage for the class members was $8 per hour, the average amount of overtime paid to all California hourly employees during the period was 1.35 hours and Plaintiff worked an average of 1.06 overtime hours in the 100 weeks from November 27, 2009 to present. (Defendants have provided no explanation for their use of "100 weeks" as there has been well over 100 weeks from November 27, 2009 to the present.) The declaration also describes certain payment procedures used by Defendants.
a. Waiting Time Penalties
Defendants contend the putative waiting time penalties under § 203 alone amount to over $14 million. Opp. at p. 9. Section 203 provides for a maximum of thirty days of wages for an employee not properly paid. In their calculation, Defendants contend that because Plaintiff has alleged the class members have not been properly paid the full thirty days may be used for "each of the putative class members." The defendants in Garibay similarly assumed that each employee would be entitled to the maximum statutory penalty. 539 F.Appx. at 764. The court rejected the assertion because it was not supported by any evidence. Id . The Defendants here also fail to provide support for their assumption of a maximum penalty. Although some courts in this district have accepted tenuous assumptions in the past, "the Ninth Circuit and Courts in this district have recently rejected Defendants' assumption of the maximum wage penalty (30 days) for waiting time violations as unsupported by the proper evidence." Emmons, 2014 WL 584393, at *7-8; see also Garibay, 539 F.Appx. at 764; Weston v. Helmerich & Payne Inter. Drilling Co., 1:13-CV-01092-LJO, 2013 WL 5274283, at *3-6 (E.D. Cal. 2013).
b. Meal and Rest Break/Minimum Wage Damages
Defendants offer similar contentions regarding Plaintiff's meal and rest break and minimum wage claims. However, Defendants again "rely on speculative and self-serving assumptions about key unknown variables." Garibay, 539 F.Appx. at 764. For example, in their meal and rest break putative damages calculations, Defendants rely on each class member missing fifteen meal breaks per year and suffering three violations of the minimum wage laws per year. Opp. at p. 10. However, Defendants fail to provide any substantive evidence in support of their assumptions including why fifteen meal breaks or three minimum wage violations should be presumed.
c. Overtime Claim Damages
With respect to Plaintiff's overtime claim, Defendants rely on Ms. Woloshin-Williams' declaration that: "Plaintiff... worked an average of 1.06 hours of overtime in the 100 weeks from November 27, 2009 to present. The average amount of overtime paid to all California hourly employees during the claim period is 1.35 hours." Woloshin Williams' Decl. ¶ 8. In their opposition, Defendants contend they have calculated the "overtime pay in controversy based on 106 hours of overtime per putative class member (based on the average of 1.06 hours of overtime Plaintiff worked in the 100 weeks of the statutory period)." Opp at p. 14.
As pointed out by Plaintiff, Defendants' use of 100 weeks is confusing given that neither her employment nor the relevant statutory period was 100 weeks. In addition, there is no logical basis for using the number of overtime hours paid by Defendants to calculate the amount of unpaid overtime in controversy here. As such, Defendants have failed to provide sufficient evidence to meet the preponderance standard for their overtime claim damages.
d. Attorneys' Fees
Finally, Defendants contend the Court should consider the likely attorneys' fees in determining the amount in controversy. Opp. at pp. 10-11. However, since there is insufficient evidence to establish the amount in controversy upon which attorneys' fees would be based "is at least $4 million, " (Opp. at p. 11), Plaintiff's contention is unpersuasive. See Hanlon v. Chrysler Corp. , 150 F.3d 1011, 1029 (9th Cir. 1998) (Twenty-five percent recovery is the "benchmark" level for reasonable attorney's fees in class action cases).
e. Garibay and Marentes
Defendants attempt to distinguish Garibay by pointing out that the declarations describe the methodology used, use a minimum wage rather than an average wage, and provide "actual evidence of Plaintiff's own overtime based on her employment records." Opp. at p. 8. "When applying the preponderance of the evidence standard to California Labor Code claims, many California district courts have refused to credit damage calculations based on variables not clearly suggested by the complaint or supported by evidence, concluding that the calculations are mere conjecture." Roth , 799 F.Supp.2d at 1127. Despite Defendants' attempts to explain how they arrived at their figures for the amount in controversy, the Court finds that the amounts are simply not supported by the evidence before the Court. Therefore, based on the principles established in Garibay, the Court refuses to rely on Defendants' damages calculations here.
Defendants' arguments herein depend, in part, on an isolated section of Marentes v. Key Energy Servs. California, Inc., 1:13-CV-02067-LJO JLT, 2014 WL 814652, at *8-9 (E.D. Cal. 2014). Specifically, Defendants point to the court's statement that the question in cases such as these is not what will ultimately be proven in the course of the litigation but whether the damages relied on by the removing party have been placed at issue by the plaintiff's complaint. Id . The Marentes Court found the defendant's use of the 30-day maximum waiting time penalty for all class members was proper. After restating the requirement that a removing defendant must set forth the underlying facts supporting its figures, the court relied on the defendant's assessment of plaintiff's complaint to accept its calculations. The Marentes court cited to the allegations in the complaint where the plaintiff claimed the defendant "failed to pay the employees their wages, earned and unpaid, within seventy-two (72) hours' of the end of their employment." Id.
Defendants rely on a similar allegation in the Complaint where Plaintiff alleges Defendants "failed to pay the other class members who are no longer employed by Defendants their wages, earned and unpaid, within seventy-two (72) hours of their leaving Defendants' employ." Comp. ¶ 83. Defendants contend, based on Marentes, that the Court can assume each and every class member is owed the maximum statutory amount. However, although the Marentes court found such allegations sufficient to support the assumption that maximum penalties are warranted in such a situation, this is in direct conflict with other court's findings. In Ruby v. State Farm Gen. Ins. Co., C 10-02252 SI, 2010 WL 3069333, at *2-3 (N.D. Cal. 2010), the court dealt with a nearly identical situation. However, the Ruby court rejected the defendant's use of maximum penalties for all class members:
Had plaintiff's allegation been that the terminated employees were never paid, or that they were all paid at least thirty days late, then defendant's estimate might be supportable. However, the allegation in the complaint is simply that defendant "failed to pay Plaintiff and class members who are no longer employed by Defendants their wages... within seventy-two (72) hours of their leaving Defendants' employ." FAC ¶ 70. Reading this allegation on its face, there may well be some class members who would only be entitled to recover penalties for a single day, or in event for less than the thirty-day maximum. Defendant points to nothing indicating that the penalties should be assessed for the full thirty days for every employee who may assert this claim, and its attempt to inflate the amount in controversy by calculating the maximum penalty for every terminated employee is improper.
Ruby, at *2-3; see also Pereira v. Gate Gourmet, Inc., No. 08-07469 MMM(PJWX), 2009 WL 1212802, at *2-3 (C.D. Cal. 2009).
This Court finds the Ruby court's reasoning to be more in line with the principles established by the Ninth Circuit and is not persuaded by Defendants' Marentes' argument.
Defendants have failed to provide a reasonable calculation of the amount in controversy that is based on competent evidence. The estimated damage calculations provided by Defendants are unsupported by the Complaint or Woloshin-Williams's declarations and are thus speculative and self-serving. Accordingly, there is no basis at this time for the Court to find that removal is warranted. Accordingly, the Court grants Plaintiff's Motion to Remand.
As the matter is now remanded back to the Sacramento County Superior Court, Plaintiff's Motion to Strike is more appropriately addressed by that court. Accordingly, it is DENIED WITHOUT PREJUDICE here.
For the reasons set forth above, the Court GRANTS the Plaintiff's Motion to Remand. As the case is remanded back to the Sacramento County Superior Court, Plaintiff's Motion to Strike portions of Defendants' answer is DENIED WITHOUT PREJUDICE.
IT IS SO ORDERED.