United States District Court, S.D. California
July 13, 2015
RITA VARSAM, individually and on behalf of other members of the general public similarly situated, and as aggrieved employees, Plaintiff,
LABORATORY CORPORATION OF AMERICA, DBA LAB. CORP., a Delaware Corporation; and DOES 1 through 100, inclusive, Defendants.
ORDER DENYING MOTION TO REMAND
BARRY TED MOSKOWITZ, Chief District Judge.
Plaintiff has filed a motion to remand this case to state court. For the reasons discussed below Plaintiff's motion to remand is DENIED.
On June 3, 2014, Plaintiff commenced this action in the Superior Court of California, County of San Diego. Plaintiff is suing on behalf of herself and a purported class consisting of "all persons who worked as non-exempt Patient Service Technicians for Defendants in California, within four years prior to the filing of this complaint until date of certification." (Compl. ¶ 16.)
Plaintiff raises eight causes of action against Defendant Laboratory Corporation of America ("LabCorp"): (1) violation of California Labor Code §§ 510 and 1198 (unpaid overtime); (2) violation of California Labor Code §§ 1194, 1197, and 1197.1 (unpaid minimum wages); (3) violation of California Labor Code §§ 226.7 and 512(a) (unpaid meal period premiums); (4) violation of California Labor Code § 226.7 (unpaid rest period premiums); (5) violation of California Labor Code §§ 201 and 202 (wages not timely paid upon termination); (6) violation of California Labor Code § 226(a) (non-complaint wage statements); (7) violation of California Labor Code §§ 2698, et seq. (Private Attorney General's Act or "PAGA"); and (8) violation of California Business & Professions Code §§ 17200, et seq. (unfair and harmful business practices). (Compl. ¶¶ 7-18.) Plaintiff seeks damages, statutory penalties, civil penalties, injunctive relief, and attorney's fees. (Compl. Prayer for Relief ¶ 1.)
On November 17, 2014, Defendant removed this action pursuant to 28 U.S.C. §§ 1332, 1441, 1446, as amended by the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 118 Stat. 4 ("CAFA"). According to the Notice of Removal, Defendant is a citizen of Delaware and North Carolina, and Plaintiff is a citizen of California. (Notice of Removal, ¶¶ 15, 16.) The Notice of Removal also states that the proposed class includes in excess of 100 members and that the amount in controversy exceeds $5, 000, 000. (Notice of Removal, ¶¶ 10, 29.)
Plaintiff moves to remand this action on the ground that Defendant has failed to satisfy its burden of establishing that the amount in controversy exceeds the sum of $5, 000, 000 and that there is minimal diversity of citizenship. The Court finds that Defendant has met its burden of establishing removal jurisdiction under CAFA.
A. Amount in Controversy
1. Governing Law
Under CAFA, the burden of establishing removal jurisdiction rests on the removing party. Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006). A removing defendant need only include a plausible allegation that the amount in controversy exceeds the jurisdictional threshold, and the defendant's amount in controversy allegation should be accepted if not contested by the plaintiff or questioned by the court. Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014). If, however, "defendant's assertion of the amount in controversy is challenged... both sides submit proof and the court decides, by a preponderance of the evidence whether the amount-in-controversy requirement has been satisfied." Dart, 135 S.Ct. at 554 (citing 28 U.S.C. § 1446(c)(2)(B)); Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 978 (9th Cir. 2013). Under the preponderance of the evidence standard, a defendant must establish "that the potential damage could exceed the jurisdictional amount." Rea v. Michaels Stores Inc., 742 F.3d 1234, 1239 (9th Cir. 2014) (quoting Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 397 (9th Cir. 2010)).
This burden is not "daunting" and only requires that the defendant "provide evidence establishing that it is more likely than not ' that the amount in controversy exceeds [$5 million]." Korn v. Polo Ralph Lauren Corp., 536 F.Supp.2d 1199, 1204 (E.D. Cal. Feb. 27, 2008) (emphasis in original). Still, "[a] defendant cannot establish removal jurisdiction by mere speculation and conjecture, with unreasonable assumptions." Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). Claims regarding the amount in controversy under a preponderance of the evidence standard should be "tested by consideration of real evidence and the reality of what is at stake in the litigation, using reasonable assumptions underlying the defendant's theory of damages exposure." Id. at 1198.
The plaintiff is not required to submit evidence refuting the defendant's allegations and evidence of the amount in controversy in order to prevail on its motion to remand. Unutoa v. Interstate Hotels & Resorts, Inc., 2015 WL 89512, at *2 (C.D. Cal. Mar. 3, 2015). However, as "master of [her] claim[s], " if the plaintiff wants to avoid removal, she may plead facts narrowing the scope of her claim. Muniz v. Pilot Travel Centers LLC, 2007 WL 1302504, at *4 (E.D. Cal., May 1, 2007).
Defendant has submitted evidence to establish the amount in controversy, including Plaintiff's deposition transcript, the Declaration of Daniel Lontay, and the Declaration of Joseph Martin. Mr. Martin, the Senior Human Resources Information Management Specialist of LabCorp, explains how he compiled relevant time and pay data in connection with another class action lawsuit, Andres, et al. v. Lab Corp ("Andres"), in the Central District of California. (Martin Decl. ¶ 4.) The data included electronic timekeeping records for individuals employed by Defendant LabCorp in California as Patient Service Technicians ("PSTs") between June 2009 and April 2014. (Martin Decl. ¶ 6.) Mr. Lontay, an expert for LabCorp, declares that he reviewed the data from Andres that overlapped with the present action and set forth his calculations of the potential amount in controversy based on that data. (Lontay Decl. ¶ 5.)
In response to these declarations, Plaintiff makes a foundational objection, asserting it is not sufficiently clear that the data upon which Mr. Lontay based his calculations was supplied by Mr. Martin or Defendant LabCorp. Plaintiff argued that without such a connection, both declarations are irrelevant and inadmissible. However, reading the declarations together, it is clear that the data reviewed by Mr. Lontay was provided by Mr. Martin and Defendant LabCorp.
Plaintiff further objects that the declarations improperly reference the Andres action. Although the claims in Andres may be different than those before the Court, those differences do not affect the applicability of the data which overlaps in time and scope with Plaintiff's class claims in this case.
The timekeeping records analyzed by Mr. Lontay together with Plaintiff's allegations, create a basis for reasonable assumptions of Defendant's damage exposure on the violation of California Labor Code §§ 226.7 and 512(a) (unpaid meal period premiums); violation of California Labor Code § 226.7 (unpaid rest period premiums); and the violation of California Labor Code §§ 201 and 202 (wages not timely paid upon termination). The court addresses each of these assumptions in turn.
a. Meal Period Violations
The Complaint alleges that members of the putative class were "required to work for periods longer than five (5) hours without a meal period of not less than thirty (30) minutes" in violation of California Labor Code § 512(a) (Compl. ¶ 53.) When an employer fails to provide a required meal period, it is liable for one additional hour of pay at the aggrieved employee's regular rate of compensation. Cal. Lab. Code § 226.7.
According to LabCorp's records, between June 3, 2010 and April 24, 2014, individuals employed as PSTs in California worked 632, 311 shifts in excess of 6 hours (Lontay Decl. ¶ 14). Out of these 632, 311 shifts, there were 145, 723 shifts where a recorded meal period took place after the fifth hour of a shift, were less than thirty minutes long, or were not recorded at all. (Lontay Decl. ¶ 15.) This data establishes a violation rate of roughly 25%. The average hourly wage of putative class members employed on or after June 3, 2010, is $17.48. (Lontay Decl. ¶ 11.) Thus, based on potential meal period violations there is at least $2, 547, 238 in controversy. (145, 723 shifts × $17.48 hourly wage = $2, 547, 238).
b. Rest Period Violations
The Complaint alleges that members of the putative class were required to "work four (4) or more hours without authorizing or permitting a ten (10) minute rest period per each four (4) hour period worked" in violation of California Labor Code § 226.7. (Compl. ¶¶ 60, 61.)
Defendant supplies calculations for potential violations of rest periods similar to those supplied for potential meal period violations. However, unlike meal periods, which were recorded throughout the relevant time frame, rest periods were no longer recorded in the timekeeping system after April 2012. (Lontay Decl. ¶¶ 6, 13.) Defendant assumes rest period violations occurred for all shifts that did not record a rest period after April 2012. Plaintiff argues that Defendant's assumption of a 100% violation rate is improper. The court agrees that Defendant's assumption of a 100% violation rate is not "grounded in real evidence." See Ibarra, 775 F.3d at 1199. However, there is a basis for reasonably assuming a 25% violation rate.
Plaintiff alleges that she "and class members regularly worked off-the-clock that should have been compensated at an overtime rate, " (Compl. ¶ 40.), and that Defendants also "had a practice and/or policy of requiring Plaintiff and class members" to clock out for rest periods, but did not pay for such periods. (Compl. ¶¶ 54, 61.) Based on these allegations, in addition to evidence regarding the potential violation rate as to meal periods, a 25% violation rate would be a conservative and reasonable assumption. See Oda v. Gucci America, Inc., 2015 WL 93335, at *4 (C.D. Cal. Jan. 7, 2015) (holding that a 50% violation rate assumption was reasonable based on allegations that class members " sometimes did not receive all of their meal periods in a lawful fashion" and that there was a "policy or practice of not paying additional compensation to employees for missed, uninterrupted [sic], and/or timely meal and/or rest periods"); Unutoa, 2015 WL 89512, at *3 (assuming one missed rest period per week where plaintiff alleged class members regularly work during rest breaks).
Defendant's data shows there were 412, 796 shifts where no rest period was recorded. (Lontay Decl. ¶ 13.) Assuming a 25% violation rate, 103, 199 shifts with potential violations put $1, 803, 918 in controversy. ((412, 796 shifts ×.25) x $17.48 hourly wage).
c. Waiting Time Violations
California Labor Code § 203(a) provides that "if an employer willfully fails to pay... any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty" from the date such wages were due until the date paid, to a maximum of 30 days. Cal. Lab. Code § 203(a). The Complaint alleges that:
Defendants wilfully [sic] failed to pay Plaintiff and class members who are no longer employed by Defendants the earned and unpaid wages set forth above, including but not limited to, overtime wages, minimum wages, and meal and rest period premium wages, either at the time of discharge, or within seventy-two (72) hours of their leaving Defendant's employ.
(Compl. ¶ 67.)
According to Defendant's records, there were 782 PSTs terminated between June 3, 2010 and April 24, 2014, and their average daily wage was $136.34. (Lontay Decl. at ¶¶ 16-17.) Defendant assumes the terminated PSTs were owed the maximum penalty of 30 days wages, totaling $3, 198, 536.
It is not unreasonable to assume that when class members "regularly, " worked off-the-clock that should have been compensated at an overtime rate, as a matter of policy and/or practice worked during meal periods, and worked through rest breaks, every class member terminated during that time would have experienced a violation at some time and would not have been paid certain wages. (Compl. ¶ 40.) Other courts have allowed 100% violation rate assumptions in similar situations where plaintiffs alleged a "laundry list" of potential violations. See, e.g., Mejia, 2015 WL 2452755, at *5-6 (allowing 100% violation rate assumptions for both wage statement and waiting time violations). Assuming a much more conservative 25% violation rate to match the assumed violation rates for meal and rest periods, the amount in controversy would still total $799, 634. ($3, 198, 536 ×.25 = $799, 634).
d. Plaintiff's Request for Leave to Supply Evidence
In a footnote, Plaintiff seeks leave to supply the Court with evidence that the amount in controversy is actually less than $5, 000, 000. Plaintiff only vaguely requests leave, failing to specify what evidence would be supplied. The initial hearing was continued from February 6, 2015 to March 6, 2015 so that Plaintiff's deposition could be taken for the purposes of this motion. The hearing was continued twice more to April 17, 2015. Plaintiff has had more than enough time to gather evidence had she wished to present proof that the amount in controversy was less than $5, 000, 000. Plaintiff's request is therefore denied.
e. Amount in Controversy Exceeds $5, 000, 000
The estimated sum of the potential damages for the claims discussed above is $5, 150, 790. This amount does not include Defendant's potential exposure with respect to the remaining claims or attorney's fees. Therefore, the Court is satisfied that the amount in controversy exceeds $5, 000, 000.
B. Diversity of Citizenship
To satisfy minimum diversity for CAFA jurisdiction, at least one plaintiff must be a citizen of a state of which a defendant is not a citizen. 28 U.S.C. §§ 1332(d)(2)(A), 1453. "A person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state." Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). Removing parties are "merely required to allege (not to prove) diversity...." Id . (discussing the necessity of affirmative allegations of diversity to meet the requirements for diversity of citizenship).
Defendant has submitted evidence that it is a citizen of Delaware and North Carolina. (Chakeres Decl. ¶ 2-3; RJN Ex. 1.) Defendant also affirmatively alleged in its Notice of Removal that Plaintiff is a citizen of California. (Notice of Removal ¶ 16.) At this stage, because Defendant is only required to allege, but not prove, diversity of citizenship, the Court finds that CAFA's minimal diversity requirement has been met.
Because Defendant has met its burden of establishing that the amount in controversy is more than $5, 000, 000 and that there is minimal diversity of citizenship, this Court has jurisdiction under CAFA.
Plaintiff's motion to remand is DENIED.
IT IS SO ORDERED.