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Graham v. IFCO Systems N.A., Inc.

United States District Court, C.D. California

March 3, 2017

Arthur Graham, et al.
v.
IFCO Systems N.A., Inc., et al.

          PRESENT: HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE

          CIVIL MINUTES - GENERAL

         PROCEEDINGS (in chambers): ORDER GRANTING PLAINTIFFS' MOTION TO REMAND [Docket No. 15.]

         Plaintiffs Arthur Graham, Arvis Graham, and Marshall Fairley (collectively "Plaintiffs") filed a Motion to Remand ("Motion") on February 6, 2017. Defendant CHEP Recycled Pallet Solutions ("CHEP" or "Defendant") opposed the Motion ("Opposition") on February 13, 2017.[1] Plaintiffs filed their Reply on February 20, 2017. The Court found this matter suitable for disposition without oral argument and vacated the hearing set for March 6, 2017. See Fed. R. Civ. P. 78(b). For the following reasons, the Court GRANTS Plaintiffs' Motion.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Background

         Plaintiffs bring a class action suit against Defendant, alleging violations of (1) California Labor Code ("CLC") sections 510 and 1198 (unpaid overtime); (2) CLC sections 226.7 and 512(a) (unpaid meal period premiums); (3) CLC section 226.7 (unpaid rest period premiums); (4) CLC sections 1194, 1197 and 1197.1 (unpaid minimum wages); (5) CLC sections 201 and 202 (final wages not timely paid); (6) CLC section 204 (wages not timely paid during employment); (7) CLC section 226(a) (non-compliant wage statements); (8) CLC section 1174(d) (failure to keep requisite payroll records);(9) CLC sections 2800 and 2802 (unreimbursed business expenses); and (10) California Business and Professions Code ("CBPC") sections 17200, et seq. (See Notice of Removal ("Removal") Ex. A, Compl., ECF 1-1.)

         Plaintiffs define the class as "[a]ll current and former hourly-paid or non-exempt employees who worked for any of the Defendant within the State of California at any time during the period from four years preceding the filing of this Complaint to final judgment." (Compl. ¶ 15.) Plaintiffs were employed by Defendant as hourly, non-exempt employees from March or April 2013 until January or February 2014. (Compl. ¶¶ 20-22.)

         Plaintiffs allege that Defendant "engaged in a uniform policy and systematic scheme of wage abuse against their hourly-paid or non-exempt employees within the State of California." (Compl. ¶ 29.) Plaintiffs contend that, with respect to Plaintiffs and all other class members, Defendant failed to pay overtime wages for all hours worked, failed to provide the requisite uninterrupted meal and rest periods, failed to pay at least minimum wages for all hours worked, failed to pay all wages owed to them upon discharge or resignation, and failed to pay all wages within any time permissible under California law. (Compl. ¶¶ 41-45.) Plaintiffs further contend that, with respect to Plaintiffs and class members, Defendant failed to provide complete or accurate wage statements, failed to keep complete or accurate payroll records, failed to reimburse them for business-related expenses and costs, and failed to compensate properly pursuant to California law "in order to increase Defendant's profits." (Compl. ¶¶ 45-49.)

         Plaintiffs aver that the amount of damages for each named Plaintiff is less than $75, 000, including "claims for compensatory damages, restitution, penalties, wages, premium pay, and pro rata share of attorneys' fees." (Compl. ¶ 1.)

         B. Procedural Background

         Plaintiffs filed a Class Action Complaint for Damages in the Superior Court of California, San Bernardino County ("SBSC") on November 30, 2016.[2] (See generally Compl.) On January 17, 2017, Defendant filed an answer to Plaintiffs' Complaint ("Answer") in the SBSC and filed the Removal in federal court. (See Removal, ECF No. 1; Removal Ex. B, Answer, ECF No. 1-2.) On January 25, 2017, Defendant filed an amended notice of removal ("Amended Removal"). (Am. Removal, ECF No. 13.) In the Amended Removal, Defendant alleges that removal is proper because the class size exceeds 100, the parties are diverse, and the amount in controversy exceeds $5, 000, 000. (See generally Am. Removal.) Specifically, Defendant contends that the amount in controversy is $5, 141, 839.00, not including attorney's fees. (Am. Removal ¶ 26.)

         II. DISCUSSION

         Plaintiffs allege that Defendant has failed to establish the diversity of the parties and the amount in controversy by a preponderance of the evidence. (Mot. 2.) Defendant argues that Plaintiffs have not challenged its calculation of the amount of controversy, and, as such, does not need to enter any evidence to support its calculation of the amount in controversy. (Opp'n 1.) Defendant further alleges that, because Plaintiffs have not submitted evidence regarding the amount in controversy, it has met its burden for establishing proper removal. (Opp'n 1.) For the following reasons, the Court GRANTS Plaintiffs' Motion.

         A. Legal Standard

         Diversity jurisdiction requires complete diversity between all plaintiffs and all defendants, where the amount in controversy exceeds $75, 000. 28 U.S.C. §1332. In cases removed from state court, the removing party always bears the burden of establishing federal jurisdiction, including any applicable amount-in-controversy requirement. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992); see also Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 553 (2014) (quoting 28 U.S.C. § 1446(a)) ("[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.'"). Pursuant to section 1332(d) of the Class Action Fairness Act of 2005 ("CAFA"), federal courts have jurisdiction over class actions if: (1) the class has more than 100 members, (2) the parties are minimally diverse, and (3) the amount in controversy exceeds $5 million. Dart Cherokee, 135 S.Ct. at 551; see also 28 U.S.C. §§ 1332(d)(2), (d)(5). There is no presumption against removal in cases invoking CAFA. Dart Cherokee, 135 S.Ct. at 554.

         B. Diversity

         The Court first analyzes whether the parties are diverse. Both parties aver that Plaintiffs are citizens of the state of California. (See Compl. ¶¶ 5-7; Am. Removal ¶ 11.) Plaintiffs allege that Defendant did not establish diversity because, in its Removal, Defendant alleged the citizenship of CHEP Recycled Pallet Solutions, LLC and not IFCO Systems, N.A., Inc., the party sued. (Mot. 4.) The party seeking removal bears the burden of showing diversity. See Korn v. Polo Ralph Lauren Corp., 536 F.Supp.2d 1199, 1203 (E.D. Cal. 2008) ("Where a party seeks to invoke federal jurisdiction on the basis of diversity of citizenship, the law places the burden of persuasion on the party seeking to invoke the court's jurisdiction.")

         In its Amended Removal, Defendant alleges that it has a sole member, CHEP USA, who is an "unincorporated association organized under the laws of the State of New York with its principal place of business in Georgia." (Am. Removal ¶ 12.) However, an LLC's citizenship is not determined by its principal place of business or its state of incorporation. See Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) ("[A]n LLC is a citizen of every state of which its owners/members are citizens."). Thus, the citizenship of CHEP USA depends on the citizenship of its members/owners. Defendant further alleges that CHEP USA has two general partners, Brambles North American Incorporated ("Brambles") and IFCO Systems North America, LLC ("IFCO"), both of which are incorporated in Delaware with a principal place of business in Georgia. (Am. Removal ¶ 12.) Defendants also aver that IFCO Systems North America, LLC's sole owner is a foreign corporation "and, thus is not a citizen of California." (Am. Removal ¶ 12.) Accordingly, Brambles is a citizen of Delaware and Georgia and IFCO's citizenship is the same as its owner. See Korn, 536 F.Supp.2d at 1203 ("[A] corporation is a citizen in the state of its incorporation, as well as in the state of its principal place of business."). Thus, Defendant is not a citizen of California.

         Plaintiffs further allege that Defendant did not offer any evidence to substantiate its claims concerning the identity and citizenship of the Defendant. (Am. Removal ¶ 12.) Although challenging Defendant's citizenship, Plaintiff offers no evidence disputing Defendant's allegations in either the Complaint or the Motion. (See generally Mot.; Compl.) Defendant does not address Plaintiffs' diversity concerns in its Opposition. (See generally Opp'n.) Here, Defendant unequivocally states the owners, partners, places of incorporation and principal business of the involved parties in the Amended Removal. Cf. Bradford v. Mitchell Bros. Truck Lines, 217 F.Supp. 525, 527 (N.D. Cal. 1963) (finding removal improper where defendant alleges citizenship based upon information and belief and not upon facts). Accordingly, the Court finds that Defendant has met its burden regarding diversity of citizenship.

         C. Amount in Controversy

         The Court next analyzes whether the amount in controversy is met. Plaintiffs challenge several assumptions made by Defendant when calculating the amount in controversy. (See generally Mot.) Plaintiffs further argue that Defendant failed to establish the amount in controversy by a preponderance of the evidence because it did not provide the requisite evidence to support its assumptions or its calculation. (See generally Mot.) Defendant argues that it was not required to submit evidence with its Removal, that it is still not required to submit evidence because Plaintiff has not submitted evidence refuting Defendant's amount-in-controversy calculation, and that it made the calculation in good faith. (Opp'n 2-6.)

         1. The Evidentiary Standard Does Not Require Plaintiffs to Submit Evidence Supporting Their ...


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