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Avila v. Rue21, Inc.

United States District Court, E.D. California

January 7, 2020

MARIA AVILA, individually, and on behalf of other members of the general public similarly situated and on behalf of other aggrieved employees pursuant to the California Private Attorneys General Act, Plaintiff,
v.
RUE21, INC., an unknown business entity, and DOES 1-100, inclusive, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S MOTION TO REMAND UNDER 28 U.S.C. § 1447. (ECF NO. 4)

          LAWRENCE J. O'NEILL, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This is a wage and hour putative class action first initiated by Plaintiff Maria Avila (“Plaintiff”) in the Tulare Superior Court. After Plaintiff filed the operative First Amended Complaint (the “FAC”) for herself, as well as on behalf of other members of the general public similarly situated and on behalf of other aggrieved employees pursuant to the California Private Attorneys General Act (“PAGA”), Defendant Rue21, Inc. (“Defendant”) removed the case to this Court pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), on July 30, 2019. ECF No. 1. “A motion to remand is the proper procedure for challenging removal.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). Seeking to challenge the removal, Plaintiff timely brought the instant Motion to Remand on August 29, 2019, as required by 28 U.S.C. § 1447(c). ECF No. 4. In particular, Plaintiff contends that the removal was untimely and that Defendant has failed to meet its burden of showing by a preponderance of the evidence that the amount in controversy exceeds $5 million as required by CAFA. Id. at i. Defendant filed an Opposition on September 16, and Plaintiff replied on September 23. ECF Nos. 5-6.

         Pursuant to Local Rule 230(g), the Court finds this matter suitable for a decision on the papers. Having considered all of the arguments raised in the parties' submissions, relevant law, and record in this case, the Court GRANTS the Motion.

         II. BACKGROUND

         Defendant allegedly employed Plaintiff as an hourly-paid, non-exempt employee from approximately October 2013 to November 2018. ECF No. 1, Exh. B (“FAC”) ¶ 25. The FAC asserts eleven causes of action against Defendant. Id., FAC at 1-2. The first nine causes of action are based on violations of various sections of the California Labor Code for unpaid overtime, meal and rest periods, minimum wage, and business expenses; for non-compliant with wage statements; and for failure to keep requisite payroll records and to timely pay wages during employment and final wages. Id. The tenth cause of action is for violation of the California Business & Professions Code §§ 17200, et seq., and the eleventh cause of action is for violation of PAGA. Id.

         III. LEGAL STANDARD

         “[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). Under CAFA, “a district court has original jurisdiction over a class action where: (1) there are one-hundred or more putative class members; (2) at least one class member is a citizen of a state different from the state of any defendant; and (3) the aggregated amount in controversy exceeds $5 million, exclusive of costs and interest. Congress enacted CAFA to curb perceived abuses of the class action device which, in the view of CAFA's proponents, had often been used to litigate multi-state or even national class actions in state courts.” Singh v. Am. Honda Fin. Corp., 925 F.3d 1053, 1067 (9th Cir. 2019) (internal quotation marks and citations omitted.) “[N]o antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014).

         “[T]he plaintiff is ‘master of her complaint' and can plead to avoid federal jurisdiction.” Guglielmino v. McKee Foods Corp., 506 F.3d 696, 700 (9th Cir. 2007) (internal citation omitted). Nevertheless, “[t]he burden of establishing removal jurisdiction, even in CAFA cases, lies with the defendant seeking removal.” Washington v. Chimei Innolux Corp., 659 F.3d 842, 847 (9th Cir. 2011) (citation omitted). “A defendant seeking removal must file in the district court a notice of removal ‘containing a short and plain statement of the grounds for removal . . . .'” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (quoting 28 U.S.C. § 1446(a)).

         IV. ANALYSIS

         Plaintiff challenges the instant removal on two grounds. First, she contends that Defendant untimely removed this action after the 30-day time limitation set by 28 U.S.C. §§ 1446(b)(1), (b)(3). ECF No. 4 at 5. Plaintiff also argues that Defendant has failed to prove by a preponderance of the evidence that the amount in controversy exceeds $5 million as required by 28 U.S.C. § 1332(d)(2). Id. at 9-10.

         A. Timeliness of Removal

         “Section 1446(b)'s time limit is mandatory [such that] a timely objection to a late petition will defeat removal . . . .” Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 1142 n.4 (9th Cir. 2013) (internal quotation marks and citations omitted). Defendant had 30 days after receipt of the initial pleading, summon, “amended pleading, motion, order or other paper” to remove this action. 28 U.S.C. §§ 1446(b)(2)(B), (b)(3). The Summons, Complaint, and FAC were served by substituted service and by mail on Defendant on May 21, 2019. ECF No. 1, Exh. C (“Proof of Service”). Given that substituted service is considered complete on the 10th day after mailing under California Code of Civil Procedure § 415.20(a), Defendant had, according to Plaintiff, until July 2, 2019 to remove this action. ECF No. 4 at 5-6. Because Defendant did not remove this action until August 15, Plaintiff contends that the removal is untimely under Section 1446(b). Id. at 6. The Court is not persuaded.

         Contrary to Plaintiff's misinterpretation and misapplication of Section 1446(b), the 30-day period for removal “starts to run from defendant's receipt of the initial pleading only when that pleading affirmatively reveals on its face the facts necessary for federal court jurisdiction.” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 690-91 (9th Cir. 2005) (emphasis added) (internal quotation marks and citation omitted). Whether the removability of the FAC is affirmatively revealed on its face is limited to “the four corners of the applicable pleadings, not through subjective knowledge or a duty to make further inquiry.” Id. at 694; see also Kuxhausen, 707 F.3d at 1141 (“Preferring a clear rule, and unwilling to embroil the courts in inquires ‘into the subjective knowledge of [a] defendant,' [the Ninth Circuit has] declined to hold that materials outside the complaint start the thirty-day clock.” (internal citation omitted)). “[E]ven if a defendant could have discovered grounds for removability through investigation, it does not lose the right to remove because it did not conduct such an investigation and then file a notice of removal within thirty days of receiving the indeterminate document.” Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121, 1125 (9th Cir. 2013) (emphasis added).

         Here, the FAC does not specify the total amount in controversy for the proposed class; Plaintiff only pleads her damages as less than $75, 000. ECF No. 1, FAC ¶ 2. Because the FAC does not affirmatively reveal that the aggregated amount in controversy, the 30-day period for removal was never triggered. See, e.g., Rea v. Michaels Stores Inc., 742 F.3d 1234, 1238 (9th Cir. 2014) (“[U]nder the controlling law at the time Michaels received the complaint, it did not ‘affirmatively reveal[ ] on its face the facts necessary for federal court jurisdiction,' so the initial 30-day removal period was never triggered.” (internal quotation marks and citation omitted)).

         Alternatively, while “defendants need not make extrapolations or engage in guesswork; yet the statute ‘requires a defendant to apply a reasonable amount of intelligence in ascertaining removability.' Multiplying figures clearly stated in a complaint is an aspect of that duty.” Kuxhausen, 707 F.3d at 1140 (internal quotation marks and citation omitted). Plaintiff does not explain how multiplying the figures clearly stated in the FAC would affirmatively show that the amount in controversy exceeds $5 million, thereby triggering the 30-day period for removal. ECF No. 4 at 8-9. Nevertheless, the Court notes that Plaintiff alleges her damages are less than $75, 000 and the proposed class is estimated to be greater than 50 individuals. ECF No. 1, FAC ¶¶ 1, 15. Multiplying $74, 999 with 51 individuals equal to approximately $3.82 million damages. This shows that even if Defendant multiplied the stated figures in the FAC, it would not be affirmatively clear that the amount in controversy exceeds $5 million. Defendant has no obligation “to supply information which [Plaintiff] had omitted” from the FAC or consult “its business records to identify a representative valuation.” Kuxhausen, 707 F.3d at 1141. The Court therefore finds that the FAC fails to affirmatively reveal enough information such that it was obvious, when a reasonable amount of intelligence is applied, for Defendant to ascertain the existence of removability. Accordingly, the 30-day period to remove this action under Section 1446(b) has not been triggered.

         As the Ninth Circuit explained in Roth, “[i]f plaintiffs think that their action may be removable and think, further, that the defendant might delay filing a notice of removal until a strategically advantageous moment, they need only provide to the defendant a document from which removability may be ascertained. Such a document will trigger the thirty-day removal period, during which defendant must either file a notice of removal or lose the right to remove.” Roth, 720 F.3d at 1126 (citation omitted). Plaintiff has failed to provide Defendant with any such document here beyond the FAC for Defendant ascertain the removability of this action. See Levanoff v. SoCal Wings LLC, 22015 WL 248338, at *1-2 (C.D. Cal. Jan. 16, 2015) (holding that the Statement of Damages providing that a total of $8.16 million in damages for the proposed class triggered the 30-day period). The Court, therefore, cannot say Defendant has “ignored pleadings or other documents from which removability may be ascertained and [sought] removal only when it becomes strategically advantageous for it to do so.” Roth, 720 F.3d at 1125. Defendant's removal of this action is, for the above reasons, timely.

         B. Establishing that the Amount in Controversy Exceeds $5 Million

         Furthermore, Plaintiff argues that Defendant has failed to show by a preponderance of the evidence that the amount in controversy exceeds $5 million as required by Section 1332(d)(2). ECF No. 4 at 9-10. Section 1332(d)(6) specifies that “[i]n any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs.” 28 U.S.C. § 1332(d)(6). Plaintiff contends that “Defendant is required to produce ‘summary-judgment-type evidence' of the amount in controversy if . . . it is indeterminate from the face of the complaint that the jurisdictional threshold is met.” ECF No. 6 at 3; see also ECF No. 4 at 1. But Defendant disputes that this is the correct burden for a removing party and insists that “a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” ECF No. 5 (internal quotation marks omitted) (quoting Dart Cherokee, 135 S.Ct. at 554)).

         “The amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019) (internal quotation marks and citation omitted). “[W]hen a defendant seeks federal-court adjudication, the defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court. [A] defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Id. at 924-25 (emphasis added). “Yet, when the defendant's assertion of the amount in controversy is challenged by plaintiffs in a motion to remand, the Supreme Court has said that both sides submit proof and the court then decides where the preponderance lies. Under this system, CAFA's requirements are to 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.” Ibarra, 775 F.3d at 1198 (emphasis added).

         Having reviewed the FAC and Notice of Removal, ECF No. 1, the Court finds that Defendant has provided plausible allegations showing that the amount in controversy exceeds the jurisdictional threshold. The Notice of Removal alleges that the average hourly and overtime rates of non-exempt employees in California similar to Plaintiff are $11.12 and $16.68, respectively. ECF No. 1 (“Notice of Removal”) ¶ 29. Plaintiff proposes a class of all former and current hourly-paid or non-exempt employees of Defendant in California from February 6, 2015 to final judgment. Id., FAC ¶ 13. Defendant claims that 2, 660 of its employees in at least 28 stores in California fall within the proposed class. Id. (“Notice of Removal”) ¶ 30. Based on these numbers, Defendant calculates Plaintiff's maximum potential liability as follows:

Claims

Estimated Amounts in Controversy Beginning from February 6, 2015 to Final Judgment

Unpaid Overtime Claim (1st Claim)

28 stores x $16.68 in overtime hourly rate x 2, 118 unpaid overtime hours = $989, 190.72 Id. ¶ 29

Unpaid Meal Period Claim (2nd Claim)

28 stores x $11.12 in average hourly rate x 2, 118 shifts where meal periods were not provided = $659, 460.48 Id. ¶ 33

Unpaid Rest Period Claim (3rd Claim)

28 stores x $11.12 in average hourly rate x 3, 177 shifts where rest periods were not provided = $989, 190.72 Id. ¶ 35

Unpaid Minimum Wage Claim (4th Claim)

28 stores x $9 in minimum hourly wage x 2, 118 hours where minimum wage was not paid = $533, 736 Id. ¶ 37

Statutory Penalty Claim for Failure to Pay Minimum Wage (4th Claim)

2, 660 employees x ($100 for the initial failure to timely pay minimum wage $250 for a subsequent failure to pay each employee minimum wage)[1] = $931, 000 Id. ¶ 38

Statutory Penalty Claim for Failure to Pay Final Wages that Were Earned but Unpaid Within 72 Hours of Leaving Defendant's Employment (5th Claim)

1, 459 employees x $2, 668.80 ($11.12 in average hourly rate x 8 hours/day x 30 days maximum) = $3, 893, 779.20 Id. ¶ 40

TOTAL

$7, 996, 357.12 (exclusive of attorneys' fees)


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