Porras v. Sprouts Farmers Market, LLC

          Present: The Honorable JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE.

          ORDER: (1) DENYING PLAINTIFFS’ MOTION TO REMAND (DKT. NO. 17); AND (2) VACATING THE AUGUST 1, 2016 HEARING (IN CHAMBERS)

          The Honorable JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE.

         Before the Court is Plaintiffs’ motion to remand the action to California Superior Court for the County of Riverside. (Dkt. No. 17.) The Court finds this matter appropriate for resolution without a hearing. See Fed.R.Civ.P. 78; L.R. 7-15. After consideration of the papers filed in support of, and in opposition to, the motion, the Court DENIES the motion. The August 1, 2016 hearing is VACATED.

         I. BACKGROUND

         This putative class action arises out of a “phishing” scam wherein an employee of Defendant Sprouts Farmers Market (“Sprouts”) inadvertently disclosed the personal financial information of thousands of Sprouts employees to a criminal scammer. Two Sprouts employees, Plaintiffs Beverly Porras and Leticia Stocks (“Plaintiffs”), initiated this putative class action on behalf of current and former Sprouts employees against Defendants Sprouts, SFM, LLC, and fictitious Defendants 1 through 20 (collectively, “Defendants” or “Sprouts”) on April 25, 2016 in California Superior Court for the County of Riverside. (Complaint, Dkt. No. 1-1 at 30.) On April 27, 2016, Plaintiffs filed a First Amended Complaint. (“FAC, ” Dkt. No. 1-1 at 2.) Plaintiffs allege seven causes of action against Sprouts: (1) negligence; (2) breach of implied contract; (3) invasion of privacy by public disclosure of private facts; (4) breach of confidentiality; (5) unjust enrichment; (6) violation of the California Customer Records Act; and (7) Violation of the California Unfair Competition Law. (See FAC.)

         On May 17, 2016, Defendants removed the action to this Court pursuant to the Class Action Fairness Act (“CAFA”). (Notice of Removal, Dkt. No. 1.) On June 13, 2016, Plaintiffs filed a motion to remand the action to state court. (Motion, Dkt. No. 17.) Defendants opposed the motion on June 27, 2016. (Opp., Dkt. No. 23.) Plaintiffs filed a reply memorandum on July 5, 2016. (Reply, Dkt. No. 25.)

         II. LEGAL STANDARD

         CAFA vests federal district courts with original jurisdiction of any class action in which minimal diversity of citizenship exists between at least one member of the putative class and at least one defendant, the class consists of at least 100 members, and the matter in controversy exceeds $5, 000, 000, exclusive of interest and costs. 28 U.S.C. § 1332(d). A defendant seeking to remove a case to a federal court must file in the federal forum a notice of removal “containing a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). A defendant’s notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014). Evidence establishing the amount in controversy is only required when the plaintiff contests, or the court questions, the defendant’s allegation.

         When a plaintiff contests a defendant’s allegation that the amount in controversy exceeds $5 million, a defendant seeking removal must demonstrate, by a preponderance of evidence, that the aggregate amount in controversy exceeds the jurisdictional threshold. Dart Cherokee, 135 S.Ct. at 553-54. A defendant can satisfy this burden by submitting evidence outside the complaint, including affidavits or declarations, or other “summary-judgment-type evidence relevant to the amount in controversy at the time of removal.” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). The amount-in-controversy requirement is “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 removal statutes are construed restrictively, however, and the district court must remand the case if it appears before final judgment that the court lacks subject matter jurisdiction. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); 28 U.S.C. § 1447(c). However, no presumption against removal exists in cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court. Dart Cherokee, 135 S.Ct. at 554.

         III. DISCUSSION

         Plaintiffs contend that Sprouts has failed to prove by a preponderance of the evidence that the amount in controversy is greater than $5 million. (Motion at 1.) Sprouts disagrees, calculating that the amount in controversy in this case is at least $6, 258, 062.25. (Opp. at 2.)

         A. Proposed Class Size

         Plaintiffs seek to represent a class of current and former Sprouts employees in California whose personal or financial information was compromised as a result of the March 2016 data breach. (FAC ¶ 20.) Sprouts contends that such a class consists of 8, 719 persons. (Opp. at 3-4.) In support of this calculation, Sprouts submits the declaration of Jay R. Andrews, Sprouts’ Labor & Employment in-house counsel. (See Andrews Decl., Dkt. No. 23-2.) Andrews declared that in March 2016, the IRS W-2 forms for a number of Sprouts employees were sent to unknown criminals in response to a phishing scam. (Id. ¶ 2.) In response, Sprouts notified the current or former employees that had been affected by the W-2 incident and created a list of the notified employees. (Id. ¶ 3.) The list contained, among other things, the addresses of the current or former employees who had been notified. (Id.) Andrews declared that he personally reviewed the list of the Sprouts employees who were notified of the scamming incident and confirmed that the list contained the names of 8, 719 Sprouts employees with California ...