United States District Court, N.D. California
[Copyrighted Material Omitted]
For Payal Patel, an individual and on behalf of all persons similarly situated, Plaintiff: Aparajit Bhowmik, Kyle Roald Nordrehaug, Norman B. Blumenthal, LEAD ATTORNEYS, Blumenthal, Nordrehaug & Bhowmik, La Jolla, CA.
For Nike Retail Services, Inc., Defendant: Casey Jean Teele McCoy, Jonathan Douglas Meer, Sheryl Lyn Skibbe, LEAD ATTORNEYS, Seyfarth Shaw LLP, Los Angeles, CA.
ORDER GRANTING MOTION TO REMAND
JON S. TIGAR, United States District Judge.
Defendant Nike Retail Services, Inc. removed this action from the Alameda County Superior Court on diversity jurisdiction grounds. ECF No. 1. Plaintiff Payal Patel now moves to remand it. ECF No. 12. At issue is whether the federal " amount in controversy" requirement has been satisfied. The matter came for hearing on May 8, 2014.
The Court will grant the motion.
A. Procedural and Factual History
Plaintiff alleges that she was employed by Defendant as an Assistant Store Manager from November 2010 to August 2013. Complaint ¶ 4 (Exh. A to Notice of Removal, ECF No. 1). In November 2013, she brought an action against her former employer, asserting claims under California's Unfair Competition Law, Cal. Bus. & Prof. Code § § 17200, et seq., failure to pay overtime compensation in violation of Cal. Labor § § 510, 1194 & 1198, failure to provide accurate wage statements in violation of Cal. Labor Code § 226, failure to make timely wage payments in violation of California Labor Code § § 201-03, and a cause of action pursuant to California Private Attorney General Act (" PAGA" ), Cal Lab. Code § 2698, et seq.
Defendant removed to this Court, asserting diversity jurisdiction over this action. Plaintiff now moves to remand.
B. Legal Standard
" [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). " A defendant may remove an action to federal court based on federal question jurisdiction or diversity jurisdiction." Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. § 1441).
To invoke federal diversity jurisdiction under 28 U.S.C. § 1332(a), a matter must 'exceed the sum or value of $75,000.'" Urbino v. Orkin Servs. of California, Inc., 726 F.3d 1118, 1121 (9th Cir. 2013). If the district court determines that it lacks jurisdiction, the action should be remanded back to the state court. Martin v. Franklin Capital Corp., 546 U.S. 132, 134, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005). " Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992). The court " resolves all ambiguity in favor of remand." Hunter, 582 F.3d at 1042.
Defendant asserts, and Plaintiff does not deny, that Defendant is a citizen only of Oregon and that Plaintiff is a citizen of California. Notice of Removal, ¶ ¶ 6-12. However, Plaintiff disputes whether Defendant has established that at least $75,000 is in controversy.
Plaintiff does not specify what damages she is entitled to for each specific cause of action she brings. She alleges overall that " [t]he amount in controversy for the PLAINTIFF individually does not exceed the sum or value of $75,000." Complaint ¶ 24. However, under California law, a plaintiff is not limited to the amount set forth in his or her complaint. Damele v. Mack Trucks, Inc., 219 Cal.App.3d 29, 41-42, 267 Cal.Rptr. 197 (1990).
In the Notice of Removal, Defendant calculates the amount Plaintiff is seeking for meal and rest period penalties as at least $38,464.80 and the amount Plaintiff is seeking for untimely wages as at least $6,962.40. Plaintiff does not dispute these amounts, and the court agrees that they are appropriate. But Plaintiff does dispute Defendant's argument that Plaintiff's other claims place at least $29,572.80 in controversy.
To resolve this dispute, the Court first discusses the applicable standard of proof, see Part III-A, infra. and then considers whether Plaintiff is legally required to seek less than $75,000, see Part III-B, infra. With those issues out of the way, determining the amount in controversy requires the Court to answer three questions:
1. How to determine the amount the proper amount Plaintiff has put in controversy with her allegation that she was " regularly" required to work uncompensated overtime, and for the amount she may elect to recover for the enhanced penalties available for " subsequent," knowing, Labor Code violations. See III-C, infra.
2. Whether the amount in controversy for a PAGA cause of action is the total amount of penalties attributable to an individual plaintiff, or whether the amount in controversy should be reduced by 75% to reflect the fact that 75% of PAGA penalties are paid to California's Labor & Workforce Development Agency rather than the individual plaintiff. See III-D, infra.
3. What amount of attorney's fees should be attributed to the amount in controversy. See III-E, infra.
Surprisingly, none of these questions have well-established answers.
A. Standard of Proof
To begin with, the Court must address the proper standard of proof for establishing the amount in controversy. Relying primarily upon a CAFA case, Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 999 (9th Cir. 2007), Plaintiff argues that the amount in controversy must be proven to a " legal certainty." Lowdermilk acknowledged that the " preponderance of the evidence" standard applies " when the plaintiff fails to plead a specific amount of damages." Id. at 998. But " [w]here the plaintiff has alleged her facts and pled her damages, and there is no evidence of bad faith, the defendant must not only contradict the plaintiff's own assessment of damages, but must overcome the presumption against federal jurisdiction." Id. at 999 (citing
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 293, 290, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). " We think that the familiar 'legal certainty' standard best captures the proof the defendant must produce." Lowdermilk, 479 F.3d at 999.
The Ninth Circuit recently held " that Lowdermilk has been effectively overruled [by Standard Fire Ins. Co. v. Knowles, U.S., 133 S.Ct. 1345, 185 L.Ed.2d 439 (2013)], and that the proper burden of proof imposed upon a defendant to establish the amount in controversy is the preponderance of the evidence standard." Rodriguez v. AT & T Mobility Servs. LLC, 728 F.3d 975, 977 (9th Cir. 2013). Upon close review, however, this overruling appears to be limited to the specific situation presented in those cases: class actions removed pursuant to CAFA.
More importantly, however, the answer to this question is now a matter of statute. In 2011, Congress amended the federal removal statute to specify that, where the underlying state practice " permits recovery of damages in excess of the amount demanded . . . removal of the action is proper on the basis of an amount in controversy asserted . . . if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds the amount specified in section 1332(a)." Pub. L. 112-63, December 7, 2011, 125 Stat. 758, § 103(b)(3)(C) (codified at 28 U.S.C. § 1446(c)(2) (emphasis added)). The legislative history indicates that Congress acted to eliminate the " legal certainty" standard that courts previously applied in situations when state law permits recovery in excess of the amount demanded in the complaint:
Proposed new paragraph 1446(c)(2) allows a defendant to assert an amount in controversy in the notice of removal if the initial pleading seeks non-monetary relief or a money judgment, in instances where the state practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded. The removal will succeed if the district court finds by a preponderance of the evidence that the amount in controversy exceeds the amount specified in 28 U.S.C. s 1332(a), presently $75,000.
[. . .]
In adopting the preponderance standard, new paragraph 1446(c)(2) would follow the lead of recent cases. See McPhail v. Deere & Co., 529 F.3d 947 (10th Cir. 2008); Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006). As those cases recognize, defendants do not need to prove to a legal certainty that the amount in controversy requirement has been met. Rather, defendants may simply allege or assert that the jurisdictional threshold has been met.
Discovery may be taken with regard to that question. In case of a dispute, the district court must make findings of jurisdictional fact to which the preponderance
standard applies. If the defendant establishes by a preponderance of the evidence that the amount exceeds $75,000, the defendant, as proponent of Federal jurisdiction, will have met ...