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Gutierrez v. Stericycle, Inc.

United States District Court, C.D. California

February 14, 2017

Sergio Gutierrez
v.
Stericycle, Inc.

          PRESENT: THE HONORABLE JOHN A. KRONSTADT, UNITED STATES DISTRICT JUDGE

          CIVIL MINUTES - GENERAL

         Proceedings: (IN CHAMBERS) ORDER RE PLAINTIFF'S MOTION TO REMAND TO STATE COURT (DKT. 16)

         I. Introduction

         On August 14, 2014, Sergio Gutierrez filed this putative class action in the Los Angeles Superior Court against Stericycle, Inc. (“Stericycle”), and Does 1-100 (collectively, “Defendants”). Comp., Dkt. 1-1. Gutierrez died in September 2014. Notice of Removal Ex. A-23, Dkt. 1-23 at 6.

         Defendants demurred to the complaint (Notice of Removal Ex. A-19, Dkt. 1-19) and opposed Gutierrez's Motion for Class Communications to Find a Replacement Class Representative. Notice of Removal Ex. A-23, Dkt. 1-23. On May 26, 2015, Defendants produced a list of 1316 hourly, non-exempt Stericycle employees in California. Decl. of Gregg Lander ¶ 2, Dkt. 16-1.

         On August 28, 2015, Kenneth Moniz and Kevin Henshaw (“Plaintiffs”) replaced Gutierrez as named plaintiffs in this action and a First Amended Complaint (“FAC”) was filed in which they were named. Notice of Removal Ex. B, Dkt. 1-31. Moniz worked as an hourly, non-exempt employee from approximately mid-2013 to October 14, 2014 in Stericycle's Union City, California facility. Id. ¶ 8. Henshaw worked as an hourly, non-exempt employee from approximately April 2006 to April 2014 as an in-state truck driver at Stericycle's Fresno, California facility. Id. ¶ 11.

         Plaintiffs assert the following 14 causes of action: (i) failure to pay all wages due to illegal rounding (id. ¶¶ 37-52; (ii) failure to pay all wages for donning (id. ¶¶ 54-68); (iii) failure to pay overtime wages at the appropriate overtime pay rate (id. ¶¶ 70-78); (iv) failure to provide meal periods (id. ¶¶ 80-92); (v) failure to authorize and permit paid rest periods (id. ¶¶ 94-102); (vi) failure to pay vested vacation pay (id. ¶¶ 104-14); (vii) independent failure timely to furnish accurate itemized wage statements (id. ¶¶ 116-26); (viii) derivative failure timely to furnish accurate itemized wage statements (id. ¶¶ 128-40); (ix) violations of Cal. Lab. Code § 203 (id. ¶¶ 142-47); (x) penalties pursuant to Cal. Lab. Code § 2699 (id. ¶¶ 149-58); (xi) unfair business practices (id. ¶¶ 160-70); (xii) breach of express and/or implied contract (id. ¶¶ 172-77); (xiii) breach of covenant of good faith and fair dealing (id. ¶¶ 179-82); and (iv) declaratory relief (id. ¶¶ 184-88). They seek “recovery for Defendants' violations of California Labor Code [] §§1194, et seq., Labor Code §§200, et seq., Labor Code §§500, et seq., Labor Code §§2698, et seq., California Business and Professions Code [] §§17000, et seq., the applicable Wage Orders issued by the California Industrial Welfare Commission [] and related common law principles.” Id. ¶ 1. Plaintiffs assert that “[t]he acts complained of herein occurred, occur and will occur, at least in part, within the time period from four (4) years preceding the filing of the original Complaint herein, up to and through the time of trial for this matter . . . .” Id. ¶ 3.

         Plaintiffs seek to proceed with the following subclasses:

a. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period to whom Defendants applied a time-rounding policy and practice (the “Rounding Class”);
b. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' donning policies and practices (the “Donning Class”);
c. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who worked more than eight hours per day and/or more than 40 hours per week and whose overtime pay from Defendants was not calculated to include consideration of all applicable forms of remuneration (the “Overtime Rate Class”);
d. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' policies and practices regarding meal periods (the “Meal Period Class”);
e. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' policies and practices regarding rest periods (the “Rest Period Class”);
f. All formerly-employed California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' policies and practices regarding vacation pay (the “Vacation Pay Class”);
g. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' policies and practices regarding itemized wage statements (the “Independent Wage Statement Class”);
h. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' policies and practices regarding itemized wage statements (the “Derivative Wage Statement Class”);
i. All formerly-employed California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period who were subjected to Defendants' policies and practices regarding Labor Code § 203 and the payment of final wages (the “LC 203 Class”);
j. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period regarding whom Defendants have engaged in unlawful, unfair, and/or fraudulent business acts or practices prohibited by Cal. Bus. & Prof. C. § 17200, et seq. (the “17200 Class”);
k. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period with whom Defendants breached express and/or implied employment contracts (the “Contract Class”); and
l. All California citizens employed by Defendants as hourly-paid, non-exempt employees during the appropriate time period with whom Defendants breached the covenant of good faith and fair dealing (the “Good Faith Class”).

Id. ¶ 29. On September 28, 2015, Defendants filed an Answer to the FAC. Notice of Removal Ex. A-28, Dkt. 1-28.

         On October 19, 2015, Defendants removed this action pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d) (“CAFA”). Dkt. 1. In their Notice of Removal, Defendants contend that removal is proper under CAFA because the proposed class exceeds 100 members, minimal diversity of citizenship exists and the aggregated amount in controversy exceeds $5, 000, 000. Dkt. 1 at 6-7.

         Plaintiffs moved to remand (“Motion”). Dkt. 16. Plaintiffs do not dispute that the parties' citizenship is minimally diverse or that there are more than 100 putative class members. However, Plaintiffs argue that remand is required for two reasons. First, the removal was untimely. Second, Defendants have failed to show that the amount in controversy exceeds $5, 000, 000. Id. at 9. Alternatively, Plaintiffs request leave to conduct jurisdictional discovery in order to rebut Defendants' assertion of subject matter jurisdiction. Id. Defendants opposed the Motion ((“Opposition”), Dkt. 24) and Plaintiffs replied ((“Reply”), Dkt. 26).

         A hearing on the Motion was held on March 21, 2016 and it was taken under submission. Dkt. 35. At the hearing, Stericycle's counsel confirmed that it had entered into settlement agreement and releases with certain members of the putative class, and estimated that it may have entered into hundreds of such agreements. Dkts. 36, 37. Consequently, the Court ordered Stericycle to file a declaration setting forth the following information: (i) of the putative class members Stericycle identified, the number who, as of the date of the removal of this action, had entered into a Settlement Agreement with Stericycle as to the putative class claims asserted in this action; and (ii) a copy of the form or forms of such Settlement Agreements. Id. In response, Stericycle's counsel filed a declaration stating that, of the 1385 putative class members, Stericycle had entered into settlement agreements with 723 of its current and former employees on or before the date of removal. Dkt. 38. Stericycle's counsel attached an example of such a settlement agreement. Id. Ex. A.

         Upon reviewing this information, Defendants were ordered to provide the following additional information:

(1) of the 723 Settlement Agreements that have been signed by Defendant's employees or former employees, how many were signed prior to August 14, 2014, when the Complaint (Dkt. 1) in this action was filed; (2) of the $10, 305, 970 amount, which includes $2, 061, 194 in attorneys' fees, that Defendant contends was in controversy as of the date of removal in its Opposition, what separate dollar amounts, exclusive of attorney's fees, did Defendant allocate to the claims of those with whom it: (a) had entered Settlement Agreements, and (b) had not entered Settlement Agreements; (3) whether the amount of attorney's fees presented ($2, 061, 194) would be different if the putative class did not include those with whom the Settlement Agreements were entered, and if so, by what amount; (4) any potential basis on which Defendant contends the enforceability of the Settlement Agreements could be challenged by those with whom it entered them; and (5) any new discussion that addresses the effect of the foregoing matters on the removability of this action.

Dkt. 39. Plaintiffs were given an opportunity to respond. Id. The parties filed these briefs. Dkts. 42, 43. Thereafter, the matter was taken under submission. For the reasons stated in this Order, the Motion is DENIED.

         II. Factual Background

         A. Case History

         The Notice of Removal states that, based on Plaintiffs' allegations, the time period relevant to the claims began on August 14, 2010 (four years before the original Complaint was filed) and would last “up to and through the time of trial.” FAC, Notice of Removal Ex. B, Dkt. 1-31 ¶ 3. Whether there is jurisdiction over a removed action is determined based on the facts as of the time of removal. Consequently, Defendants stated that they considered the period from August 14, 2010 to August 28, 2015, which was approximately 10 weeks prior to the removal. The Notice of Removal states that during this time, there were 1350 hourly, non-exempt Stericycle employees in California. Notice of Removal, Dkt. 1 at 9.

         B. Defendants' Estimates in the Removal

         1. First Cause of Action: Unpaid Wage Claim ($1, 374, 960)

         In the FAC, Plaintiffs allege that Stericycle rounded employees' wages, “usually down, ” so that class members were “paid less than they would have been paid had they been paid for actual time recorded rather than ‘rounded' time.” FAC, Notice of Removal Ex. B, Dkt. 1-31 ¶ 44(b). Plaintiffs allege that the alleged “rounding down” of wages:

. Was “a matter of established company policy and procedure”;
. Was “consistently” practiced “at each and every one of the individual facilities owned and/or operated by [Stericycle]”;
. Was a matter of “corporate policy” and “uniform company policy and practice”; and
. Stericycle's “pattern, practice and uniform administration of corporate policy regarding illegal employee compensation” resulted in Stericycle not paying “the full amount of wages owing” to class members and not “pay[ing] the legal minimum wage” to class members.

Id. ¶¶ 44-48.

         Plaintiffs seek (a) “the full amount of the straight time compensation due and owing, ” (b) “the full amount of overtime compensation due and owing” and (c) "liquidated damages . . . in an amount equal to the wages unlawfully unpaid and interest thereon.” Id. ¶¶ 48-49; Prayer for Relief ¶¶ (b)-(d). Plaintiffs also seek interest and attorneys' fees and costs. Id. ¶¶ 51-52.

         In the Notice of Removal, Defendants estimated that, based on Plaintiffs' unpaid wages claim, the amount in controversy was approximately $1.4 Million. Notice of Removal, Dkt. 1 at 10. Defendants stated that this estimate was based on the following assumptions:

. Only 25% of the putative class members suffered from the alleged illegal rounding down. Id.
. The rounding down occurred on only one-half of their respective work days. Id. . The rounding down amounted to one-quarter hour of worktime on each occasion. Id.
. The average wage of hourly, non-exempt employees was more than $17. Id.
. These hourly workers worked five days per week and worked an average of 48 weeks per year. Id.

         Given these assumptions, Defendants calculated that there were approximately 1200 work days during the period between August 14, 2010 and August 28, 2015. Thus, for 337 hourly, non-exempt employees, working 480 days, and suffering the alleged loss of one-quarter of an hour of paid work time, the amount of alleged unpaid wages was $687, 480. Adding liquidated damages of $687, 480, Defendants estimated that the total amount in controversy for the unpaid wage claim is $1, 374, 960. Id.

         2. Second Cause of Action: Unpaid Donning Time ($1, 374, 960)

         Plaintiffs allege that class members were not paid for the time spent each day to put on (or “don”) required “uniforms, equipment and/or safety gear.” Class members were allegedly required to don uniforms, special equipment and safety gear “before clocking in for work” each day. FAC, Notice of Removal Ex. B, Dkt. 1 -31 ¶ 61. They also allege that this refusal to pay for donning time:

. was “a matter of established company policy and procedure;”
. was “consistently” practiced “at each and every one of the individual facilities owned and/or operated by [Stericycle];”
. was a matter of “corporate policy” and “uniform company policy and practice;” and
. Stericycle's “pattern, practice and uniform administration of corporate policy” not to pay for daily donning time resulted in Stericycle not paying “the full amount of wages owing” to class members and not ...

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