United States District Court, C.D. California
December 29, 2014
PAE Group, LLC. et al.
Justin F. Marquez, Attorneys Present for Plaintiffs.
Michael E. Chase, Attorneys Present for Defendants.
CIVIL MINUTES - GENERAL
GEORGE H. WU, District Judge.
PROCEEDINGS: PLAINTIFF'S MOTION TO REMAND AND REQUEST FOR ATTORNEY'S FEES AND COSTS (10]
Court hears oral argument. The Tentative circulated and attached hereto, is adopted as the Court's Final Ruling. Plaintiffs Motion is DENIED.
Porfiria Yocupicio ("Plaintiff') filed this putative class action in state court against her former employer, a staffing company called Arch Resources Group, LLC ("Arch"),  asserting claims for: (1) missed meal periods, Cal. Lab. Code §§ 226.7, 512; (2) missed rest breaks, id § 226.7; (3) unpaid minimum wages, id. § 1194; (4) unpaid overtime, id. §§ 1194, 1198; (5) unpaid vacation time, id. § 227.3; (6) failure to timely pay temporary employees, id. § 201.3; (7) waiting-time penalties, id. §§ 201-03; (8) inaccurate itemized wage statements, id.§ 226; (9) unfair competition, Cal. Bus. & Prof. Code § 17200; and (10) related penalties under the Private Attorneys General Act of 2004 ("PAGA"), Cal. Lab. Code § 2698 et seq. See First Amended Complaint ("FAC"), Docket No. 1, Ex. A. In November 2014, Arch removed the case to this Court under authority conferred by the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4. See Removal Notice, Docket No. 1. Shortly after removal, Plaintiff filed the now-pending Motion to Remand and Request for Attorney's Fees and Costs ("Mot"). Docket No. 10-1. In addition to Plaintiffs Motion, the Court also has before it Arch's Opposition ("Opp.") and supporting evidence, Docket No. 12, and Plaintiffs Reply, Docket No. 14. For the reasons below, the Court would DENY the motion.
Plaintiff worked for Arch as an hourly-paid, non-exempt employee from October 18, 2012 until September 30, 2013. FAC ¶ 7. After filing her initial Complaint in June 2014, Plaintiff filed the operative FAC in August 2014, alleging that Arch committed various wage-and-hour violations. To vindicate these alleged violations, Plaintiff seeks to recover damages and penalties on behalf of a class consisting of:
All persons employed by Defendant to work in any hourly paid job position in California at any time during the period beginning four years before the filing of the initial complaint in this action and ending when the notice to the Class is sent. For purposes of this definition, "Defendant" means [PAE], [Arch], and any of the fictitiously named defendants... which may include subsidiaries of, or companies owned by, [PAE/Arch.]
FAC ¶ 24. Though Plaintiff purports to represent a class stretching back to 2010, Arch did not employ hourly employees in California until May 15, 2012. See Docket No. 12-1, Declaration of John Colagrande ("Colagrande Deel.") ¶ 2. Since that time, Arch has employed 515 people who fall within the class definition, although 245 of those people no longer work for the company. Id. ¶¶ 2-3.
II. Legal Standard
The right to remove a case to federal court is entirely a creature of statute. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). Ordinarily, it "is presumed that a cause lies outside the limited jurisdiction of federal courts, " Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006), and the Ninth Circuit "strictly construe[s] the removal statute against... jurisdiction, " Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992). But, as the Supreme Court recently explained, the rule is different in CAFA cases. No "antiremoval presumption attends cases invoking CAFA" because "Congress enacted [CAFA] to facilitate adjudication of certain class actions in federal court." Dart Cherokee Basin Operating Co., LLC v. Owens, No. 13-719, ___ U.S. ____, ___ S.Ct. ____, 2014 U.S. LEXIS 8435, at *13-*14 (Dec. 15, 2014). Nonetheless, while there is no antiremoval presumption, a removing defendant still "has the burden of establishing that removal is proper." Gaus, 980 F.2d at 566; see also Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 977 (9th Cir. 2013) ("[T]he proper burden of proof imposed upon a defendant to establish the amount in controversy is the preponderance of the evidence standard"). In CAFA removals, part of that burden includes showing that the amount in controversy exceeds $5 million. 28 U.S.C. §§ 1332(d)(2), 1453; Abrego Abrego, 443 F.3d at 686. If the amount in controversy is indeterminate from the face of the pleading, the defendant must establish the $5 million jurisdictional amount by a preponderance of the evidence. See Guglielmina v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007) ("We have... applied the preponderance [standard] to complaints filed under [CAFA] that do not specify a particular amount in controversy") (citing Abrego Abrego, 443 F.3d at 683).
To meet that burden, a defendant may rely on the allegations in the pleadings, which courts assume true, Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F.Supp.2d 993, 1001 (C.D. Cal. 2002); factual statements in its removal notice and concurrently-submitted, "summary-judgment-type evidence, " Valdezv. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004); Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (endorsing "the... practice of considering facts presented in the removal petition [plus]... summary-judgement-type evidence relevant to the amount in controversy at the time of removal"); and supplemental summary-judgment-type evidence submitted in opposition to a remand motion, Dart Cherokee, 2014 U.S. LEXIS 8435, at *14. Defendants need not "research, state, and prove the plaintiff's claim for damages, " Coleman v. Estes Express Lines, Inc., 730 F.Supp.2d 1141, 1148 (C.D. Cal. 2010), aff'd 631 F.3d 1010 (9th Cir. 2011), particularly since the question asks only what the plaintiff has "put in controversy, " not how much the defendant should truly owe. Lewis v. Verizon Commc ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010). Nonetheless, because the standard is preponderance of the evidence, courts cannot base jurisdictional determinations on "speculative and self-serving assumptions" that are not clearly suggested by the pleadings or supported by evidence. Garibay v. Archstone Communities LLC, 539 Fed.Appx. 763, 764 (9th Cir. 2013); Roth v. Comerica Bank, 799 F.Supp.2d 1107, 1118, 1127 (C.D. Cal. 2010)("[W]hen 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") (emph. added) (collecting cases).
If after reviewing the pleadings and the defendant's summary-judgment-type evidence, a court finds it "more likely than not" that the plaintiff put over $5 million in controversy, remand is unwarranted. Abrego Abrego, 443 F.3d at 689. But if the pleadings and evidence do not establish the threshold jurisdictional amount by a preponderance of the evidence, the case must be remanded to state court. Id. ; Luna v. Kemira Specialty, Inc., 575 F.Supp.2d 1166, 1172 (C.D. Cal. 2008).
Arch seeks to establish the jurisdictional minimum amount in controversy based on various categories of damages and Labor-Code penalties, plus potential future attorney's fees. Removal Notice ¶¶ 73, 76; Opp. at 9:12-23. Plaintiff challenges Arch's calculation, arguing, first, that Arch improperly included PAGA penalties and attorney's fees in the amount-in-controversy calculation, and second, that Arch has not submitted sufficient evidence to show more than $5 million in controversy by a preponderance of the evidence. The Court addresses both arguments in turn below.
A. PAGA Penalties Are Properly Included in the Amount-in-Controversy Calculation
Citing recent Ninth Circuit authority, Plaintiff argues that PAGA penalties cannot be used to establish CAFA's $5 million jurisdictional threshold where the PAGA claim is not asserted on behalf of the putative class. Mot. at 7:14-11:6. Specifically, Plaintiff cites Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117 (9th Cir. 2014), and Hawaii ex rel. Louie v. HSBC Bank Nev., N.A., 761 F.3d 1027 (9th Cir. 2014), for her claim that: "Ninth Circuit Case Law Clearly and Unequivocally Holds That PAGA Penalties Cannot be Used to Establish CAFA Jurisdiction." Mot. at 7:14-11:16.
In truth, neither Baumann, Louie, nor any other Ninth Circuit case stands for that proposition. CAFA jurisdiction has four basic elements: (1) the case is a "class" or "mass" action, (2) the class or mass action consists of 100 or more members, (3) the matter in controversy exceeds $5 million,  and (4) at least one class member and one defendant are citizens of different states. See 28 U.S.C. § 1332(d); Louie, 761 F.3d at 1039 ("CAFA grants district courts original jurisdiction over a class action' if the class has more than 100 members, the amount in controversy [exceeds $5 million] and the parties are minimally diverse"). Baumann and Louie address the first requirement - whether a case qualifies as a "class action." In Baumann, the Ninth Circuit found that a PAGA action that did not invoke California's class action statute,  Cal. Civ. Proc. Code § 382, was not a "class action" as defined in 28 U.S.C. § 1332(d)(1)(B), and thus could not be removed under CAFA. 747 F.3d at 1121-24. In Louie, the Ninth Circuit held that an enforcement action brought by a state attorney general, where the attorney general expressly disavowed filing a class action, was not a "class action" under 28 U.S.C. § 1332(d)(1)(B), and thus could not be removed under CAFA. Louie, 761 F.3d at 1040. In other words, both cases addressed questions about the first CAFA element - what types of cases qualify as CAFA "class actions" - but not the third, though that is the only relevant element here.
Instead of asking whether this case qualifies as a CAFA "class action, " the real question is whether PAGA penalties count towards the jurisdictional minimum in cases that are unquestionably filed as CAFA "class actions, " but where a PAGA claim is asserted on a non-class, representative basis. Despite Plaintiffs contention that "Ninth Circuit case law clearly and unequivocally holds that PAGA penalties cannot be used to establish CAFA jurisdiction, " the Ninth Circuit actually has not addressed this question. This Court, however, would find that the answer to that question is yes. 28 U.S.C. § 1332(d)(2) provides that a district court "shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs, and is a class action[.]" 28 U.S.C. § 1332(d)(6) states that: "In any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs." Plaintiff reads this language to mean that only "class claims" can be factored into the amount-in-controversy figure, meaning a non-class PAGA claim cannot. Mot. at 8:28-9: 12. But that is not what the statute says. The statute says that courts have jurisdiction over "class actions" where the amount in controversy exceeds $5 million, and that, in "any class action, the claims of individual class members shall be aggregated to determine [the amount in controversy]." As Plaintiff has invoked§ 382, this case is plainly a "class action." Plaintiff, an "individual class member, " is the person asserting the PAGA claim. Since this is a "class action" and the PAGA claim is one brought by an "individual class member, " § 1332(d)(6) instructs that this Court "shall... aggregate [the amount] to determine [the amount in controversy]." See Standard Fire Ins. Co. v. Knowles, ___ U.S. ____ 133 S.Ct. 1345, 1348 (2013) ("[T]he statute tells the District Court to determine whether it has jurisdiction by adding up the value of the claim of each person who falls within the definition of [the] proposed class and determine whether the resulting sum exceeds $5 million"). Plaintiffs ultimate argument-that only class claims should count towards the amount-in-controversy requirement- is not facially illogical given CAFA's stated focus on deterring class action abuses. See Tanoh v. Dow Chem. Co., 561 F.3d 945, 952 (9th Cir. 2009) ("CAFA was designed primarily to curb perceived abuses of the class action device which, in the view of CAFA's proponents, had often been used to litigate multi-state or even national class actions in state courts"). But the only way to reach Plaintiffs result is to ignore the statutory language and misread Baumann and Louie. This Court is not going to adopt that approach.
As a fall back position, Plaintiff argues that the Court can only consider 25% of the potential PAGA penalties when calculating the amount in controversy because 75% goes to the Labor & Workforce Development Agency ("LWDA"), not the putative class members. Mot. at 11:9-12:25. To support this argument, Plaintiff relies on cases involving non-CAFA diversity removals, which apply the anti-aggregation rule, or on cases relying on those non-CAFA, anti-aggregation cases.
For reasons set out in Pagel v. Dairy Farmers of Am., Inc., 986 F.Supp.2d 1151 (C.D. Cal. 2013), this Court finds Plaintiffs authorities unpersuasive. As the district court explained in Pagel, federal courts have long "accepted the general rule that multiple plaintiffs who join together in a single lawsuit to enforce their rights as individuals may not aggregate their claims to satisfy a jurisdictional threshold for the amount in controversy." While this so-called "anti-aggregation" rule is subject to certain exceptions - for example, aggregation is allowed if multiple plaintiffs have a "common and undivided" right or interest against a defendant-the general rule is that "separate and distinct" claims cannot be aggregated to satisfy the jurisdictional amount. See id. at 1155-57.
Before CAFA, the Ninth Circuit held that the anti-aggregation rule supersedes another typical method for calculating the jurisdictional amount in class actions - the "total detriment" or "either viewpoint" rule. Id. at 1159 (citing In re Ford Motor Co./Citibank(S. Dakota), N.A., 264 F.3d 952, 959 (9th Cir. 2001)). Under that rule, the jurisdictional amount can be calculated by focusing on the defendant's total exposure, regardless of source. In finding that the anti-aggregation rule superseded the total-detriment rule, the Ninth Circuit recognized that the total-detriment approach was "basically the same thing as aggregation." Ford Motor Co., 264 F.3d at 959. Because the anti-aggregation rule and total detriment rule conflicted, the Ninth Circuit resolved that the latter must yield. See id. at 958-59 (acknowledging "the inherent conflict between the either viewpoint' rule and the non-aggregation rule... in class action suits, " and determining "that the former must [therefore] yield").
In passing CAFA, however, Congress specifically disavowed the anti-aggregation rule for CAFA class actions, and with it, the justification for rejecting the total detriment approach. Absent that justification, this Court, like many others, sees no reason why it should not measure the amount in controversy by the total potential detriment to the defendant, regardless of its source; indeed, as that approach measures what the defendant will have to pay if Plaintiff proves up her pleading, it is undoubtedly a fair measure of what the plaintiff has put "in controversy." See also, e.g., Pagel, 986 F.Supp.2d at 1159 ("The either viewpoint' rule is not used in diversity class actions because it would subvert the anti-aggregation rule. It does not follow that the... rule is prohibited in CAFA cases. The opposite is true: the long line of precedent tracing back to [ Mississippi & MR. Co. v. Ward, 67 U.S. 485 (1862)] endorsing the use of the either viewpoint' rule to assess the amount in controversy applies with equal force in CAFA cases. The reason for the prohibition on the rule having vanished, the rule should continue to be used to measure the value of the thing sought to be accomplished by the action.") (quoting Ridder Bros., Inc. v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944) (quotations omitted)); Arens v. Popcorn, Ind., LLC, No. 14-CV-1323-SC, 2014 U.S. Dist. LEXIS 81651, at *6-*7 (N.D. Cal. June 16, 2014) ("Determining the amount in controversy in a CAFA case requires application of the either-viewpoint rule") (collecting cases); Quintana, 2013 U.S. Dist. LEXIS 58289, at *11-*12, 2013 WL 1736671 (N.D. Cal. Apr. 22, 2013) ( "Guglielmina supports inclusion of the PAGA claims in the amount-in-controversy evaluation. In that case, the Ninth Circuit noted that because recovery of [back payment of health benefits and taxes and an accounting of moneys due] would entail payment by' the defendant, the court was convinced that they must be included within any amount-in-controversy calculation.' It is true that Guglielmina did not involve removal under CAFA, but the statute itself further supports that PAGA claims should be part of the amount-in-controversy analysis. CAFA instructs... that the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs.' Plaintiffs are members of the class they seek to represent, and so their PAGA representative claims must be included in the court's aggregation of claims for determination of whether CAFA jurisdiction exists.") (citations omitted); Schiller v. David's Bridal, Inc., No. 10-CV-616-AEI, 2010 U.S. Dist. LEXIS 81128, at *25 (E.D. Cal. July 14, 2010) ("[T]he question is not how much Plaintiff or the class will ultimately recover; the amount in controversy is calculated based upon the amount put into controversy by the complaint, regardless of how the recovery is divided. Thus, it makes little difference whether the LWDA shares in the recovery - Plaintiff, by alleging PAGA penalties, has put 100% of the PAGA penalties in controversy."); Berry v. American Express Pub. Corp., 381 F.Supp.2d 1118, 1123 (C.D. Cal. 2005), disagreed with on other grounds by Abrego Abrego, 443 F.3d at 685 ("Given the explicit statutory change allowing aggregation of claims in class actions... finding the amount of controversy from the aggregate cost to defendants does not circumvent any non-aggregation principles"); Rippee v. Boston Mkt. Corp., 408 F.Supp.2d 982, 984 (S.D. Cal. 2005) (concluding that CAFA reinstated the total detriment rule for class actions). And, while the Senate Committee Report is not necessarily a definitive guide to what CAFA means,  it further confirms the propriety of using the total detriment approach under CAFA. See S.Rep. 109-14, at *42-*43 (2005), reprinted at 2005 U.S.C.C.A.N. 3, at *40-*41 ("[T]he Committee intends that a matter be subject to federal jurisdiction under this provision if the value of the matter in litigation exceeds $5, 000, 000 either from the viewpoint of the plaintiff or the viewpoint of the defendant, and regardless of the type of relief sought (e.g., damages, injunctive relief, or declaratory relief).... Some courts have held that jurisdiction does not exist [if the amount in controversy exceeds $5 million from the defendant's perspective], because they have reasoned that assessing the amount in controversy from the defendant's perspective was tantamount to aggregating damages. Because [current§ 1332(d)(6)] explicitly allows aggregation for purposes of determining the amount in controversy in class actions, that concern is no longer relevant.").
The Court would include the entire PAGA penalty in its amount-in-controversy calculation.
B. Attorney's Fees Are Properly Included in the Amount-In-Controversy Calculation
The Court would also include attorney's fees equal to 25% of the total recovery in its amount-in-controversy figure. Plaintiff argues that "the only fees to be considered as part of the amount in controversy calculation are those incurred as of... removal." See Mot. at 16:10-23 (quotations omitted). But several of Plaintiff's claims provide for fee-shifting. In similar scenarios, including in cases upon which Plaintiff relies, the Ninth Circuit has held that a court may properly include in its amount-in-controversy calculation attorney's fees equal to 25% of the total recovery. Garibay, 539 Fed.Appx. at 764 ("Although [Defendant] correctly notes that 25% recovery is the benchmark' level for reasonable attorney's fees in class action cases, and that such fees are properly included in calculations of the amount in controversy, [Defendant] has not established by a preponderance of the evidence that the underlying amount upon which those fees would be based is at least $4 million, as would be required to meet the... minimum") (citing Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 1000 (9th Cir. 2007), over'd on other grounds by Knowles, 133 S.Ct. 1345).
The Court would thus include a 25% fee award in its amount-in-controversy calculation.
C. Arch Has Demonstrated At Least $5 Million by a Preponderance of the Evidence
Even if PAGA penalties and attorney's fees are included in the amount-in-controversy figure, Plaintiff contends that Arch has failed to demonstrate $5 million in controversy by a preponderance of the evidence. To support this position, Plaintiff advances essentially two arguments. First, she suggests that inconsistencies between the evidence supporting Arch's Removal Notice and that supporting the Opposition call Arch's evidence into question. Reply at 2:5-4:16, 6:18-27. Second, Plaintiff argues that Arch improperly assumed a 100% violation rate for her claims. Id. at 4:7-6: 17.
The Court would reject Plaintiffs arguments. To support its amount-in-controversy figure, Arch offered a declaration from its COO, John Colagrande. Colagrande's declaration explains that Arch has only had California hourly employees since May 15, 2012. Id. ¶ 2. The declaration then recounts each project that Arch has staffed since May 15, 2012, each project's length, the number of employees who worked on each project, the number of shifts worked on each project, the lengths of the shifts worked, and the number of terminated employees. See id ¶¶ 3, 6-26. These figures are supported by exhibits containing summary payroll records; with its Opposition, Arch also provided Plaintiff with all 2, 200 pages of punch data for the class period. See Docket No. 12-2; Docket No. 12-3, Declaration of Michael E. Chase ("Chase Decl."), ¶ 4. Colagrande's declaration also explains that Arch assumed a $9 hourly rate for each employee, though many employees made more, since $9 is the minimum hourly wage. Id. ¶ 4. While Plaintiff lobs vague attacks at Arch's amount-in-controversy evidence, the Court finds it thorough. Indeed, Plaintiffs inability to identify specific deficiencies in the declaration or supporting evidence leads the Court to find that Arch's evidence is reliable and sufficient to support removal, provided, of course, that it uses acceptable parameters.
As for parameters, Plaintiff contends that Arch's amount-in-controversy evidence wrongly assumes a 100% violation rate, citing various cases for the proposition that: "federal courts may not assume a 100% violation rate unless that assumption is supported by the specific allegations of the [C]omplaint or the defendant's evidence." Reply at 4:17-6:3. This Court fully agrees with that proposition. But it is unhelpful to Plaintiff in this case since she did allege 100% violation rates.
The FAC alleges that putative class members did not receive meal or rest breaks "at all." See FAC ¶ 8 ("Defendants' policy and practice was for Plaintiff and the Class to work through meal periods and to not provide them the opportunity to take any meal periods at all"); id. if 9 ("Defendants' policy and practice was for Plaintiff and the Class to work through rest periods and to not provide them the opportunity to take any rest periods at all"). Many claims derive from the failure to provide meal and rest periods, meaning it is appropriate to apply a 100% violation-rate to those claims as well; other claims allege that Arch has a policy and practice of not maintaining accurate wage statements and records. Id. ¶¶ 109-11. In other words, Plaintiffs allegations provide sufficient support to apply a 100% violation rate, and Arch has properly applied that rate to well-supported facts about persons employed during the class period. Altamirano v. Shaw Indus., No. 13-CV-939-EMC, 2013 U.S. Dist. LEXIS 84236, at *19 (N.D. Cal. June 14, 2013) (aptly summarizing litany of district court and Ninth Circuit cases: "Overall, with some exceptions, most of the cases conducting this analysis appear to allow the defendant to assume a 100% violation rate [if] such an assumption is supported directly by, or reasonably inferred from, the allegations in the complaint").
Accordingly, the Court would conclude that Arch has carried its burden to support removal.
The Court would DENY the motion.