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Rachner v. Network Funding, L.P.

United States District Court, C.D. California

November 16, 2017

Gary Rachner et al
Network Funding, L.P., et al




         Before the Court is a Motion to Remand filed by Plaintiffs Gary Rachner and Nick Green. (Mot., Doc. 12.)[1] Defendant Network Funding, L.P. opposed the Motion, and Plaintiff did not file a reply. (Opp., Doc. 16.) The Court finds this matter appropriate for decision without oral argument. Fed.R.Civ.P. 78(b); C.D. Cal. R. 7-15. Accordingly, the hearing set for November 17, 2017, at 2:30 p.m., is VACATED. Having read and considered the parties' briefs, the Court DENIES Plaintiffs' Motion.

         I. BACKGROUND

         A. Allegations in the First Amended Complaint

         Whether removal is proper is determined solely on the basis of the pleadings filed in state court, and any post-removal amendments to the pleadings do not affect whether a case was removable. Williams v. Costco Wholesale Corp., 471 F.3d 975, 976 (9th Cir. 2006) (per curiam). Accordingly, the following factual allegations are taken from the first amended complaint (“FAC”) filed in state court. (FAC, Doc. 1-5.)

         Plaintiffs seek to represent a class of individuals employed by Defendant Network Funding during the four years prior to the filing of the instant Complaint. (Id. ¶¶ 4, 8.) Plaintiffs and the proposed class were non-exempt employees entitled to minimum wage and overtime compensation under the Industrial Welfare Commission Order and the California Labor Code. (Id. ¶¶ 18-20.) Defendant failed to pay Plaintiffs and the proposed class the minimum wage for all hours worked and overtime wages by “(a) failing to use the correct ‘regular rate of pay' to calculate the applicable overtime premium due each Plaintiff and [class] members; (b) failing to record and pay Plaintiff and [class] members for all mandatory off the clock work time spent responding to emails and telephone calls on their personal cell phones; and (c) failing to record and pay each Plaintiff and [class] members for all hours worked in the office.” (Id. ¶ 24.)

         On May 9, 2017, Plaintiffs filed the instant action in Orange County Superior Court against Defendant. (Compl., Doc. 1-3.) On June 19, 2017, Plaintiffs filed the FAC alleging (1) failure to pay overtime wages in violation of California Labor Code sections 510 and 1194; (2) failure to reimburse expenses in violation of Labor Code section 2802; (3) failure to pay waiting time penalties in violation of Labor Code sections 201 and 202; (4) failure to provide accurate itemized wage statements in violation of Labor Code section 226(a); (5) failure to pay minimum wage in violation of Labor Code section 1197; and (6) violation of the California Unfair Competition Law (UCL). (Id. ¶¶ 17-53.) Neither the original Complaint nor the FAC stated the amount of damages sought. On August 14, 2017, Defendant removed the action to this Court on the grounds of diversity jurisdiction. (Notice of Removal, Doc. 1.) Plaintiffs now move to remand to state court.

         B. Defendant's Calculations in the Notice of Removal

         In its Notice of Removal, Defendant stated that the amount-in-controversy for at least one of the named Plaintiffs exceeds the jurisdictional minimum. (Notice of Removal ¶ 28.) This determination was based on communications between the parties in preparation for a mediation that was scheduled to take place on August 4, 2017.[2] (Id. ¶¶ 31-33.) Specifically, Plaintiffs' Counsel sent a spreadsheet to Defendant's Counsel stating the amount of damages claimed by each of the named Plaintiffs. (Hart Decl. Ex. A, Doc. 16-1.) Plaintiffs' Counsel also sent a later email in response to Defendant's Counsel's inquiry, estimating that Plaintiffs' attorneys' “fees from inception to get through mediation and class approval” were approximately $150, 000 “without any Lodestar multiplier.” (Baker Decl. Ex. A, Doc. 12-2.) The email further estimated that fees through trial “could be up to $500, 000.” (Id.)

         Plaintiffs' spreadsheet calculated Plaintiff Rachner's compensatory damages as follows: 1) unpaid overtime wages at $35, 969.85[3]; 2) unreimbursed business expenses at $1, 040; 3) waiting time penalties at $22, 168.39; and 4) wage statement penalties at $1, 600. (Id.) In the Notice of Removal, Defendant calculated that Rachner would be entitled to additional liquidated damages in the amount of $8, 460 for unpaid minimum wages based on his alleged 864 hours of unpaid overtime. (Notice of Removal ¶ 39.) Plaintiffs did not contest Defendant's calculation of the liquidated damages in their Memorandum. (Mem., Doc. 12-1.) Thus, Defendant calculates Plaintiff Rachner's total damages, exclusive of attorneys' fees, at $69, 238.24.[4] (Opp. at 21-22.)

         Based on the calculations and estimates in these communications, Defendant removed the case to this Court. (Notice of Removal ¶ 32.)


         Generally, subject matter jurisdiction is based on the presence of a federal question, see 28 U.S.C. § 1331, or complete diversity between the parties, see 28 U.S.C. § 1332. Thus, “[a] defendant may remove an action to federal court based on federal question jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). A federal court has diversity jurisdiction under 28 U.S.C. § 1332 if the amount in controversy exceeds $75, 000 and the parties to the action are citizens of different states. See 28 U.S.C. § 1332(a). Section 1332 “requires complete diversity of ...

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