Tayler Ortiz-Dixon v. FedEx Ground Package System, Inc. ( 2023 )

O 1 2 3 4 5 6 7 8 United States District Court 9 Central District of California 10 11 TAYLER ORTIZ-DIXON et al., Case No. 5:23-cv-01140-ODW (SPx) 12 Plaintiff, ORDER DENYING MOTION TO 13 v. REMAND [15]; AND GRANTING 14 STIPULATION TO STAY CASE [25] FEDEX GROUND PACKAGE 15 SYSTEM, INC. et al., 16 Defendants. 17 I. INTRODUCTION 18 On February 27, 2023, Plaintiff Tayler Ortiz-Dixon filed this putative Class 19 Action Complaint in the Superior Court of the State of California, County of San 20 Bernardino, against her employer, Defendant FedEx Ground Package System, Inc. 21 (Notice of Removal (“NOR”) Ex. A (“Compl.”), ECF No. 1.) On June 14, 2023, 22 FedEx removed the instant action on the basis that this Court has jurisdiction under 23 the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). (NOR ¶ 8.) 24 Ortiz-Dixon now moves to remand this action for lack of subject matter jurisdiction. 25 (Mot. Remand (“Motion” or “Mot.”), ECF No. 15.) For the reasons below, the Court 26 DENIES Ortiz-Dixon’s Motion.1 27 28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 On February 27, 2023, Ortiz-Dixon filed this putative class action in San 3 Bernardino County Superior Court. (NOR ¶ 1.) Ortiz-Dixon brings nine claims 4 stemming from FedEx’s alleged violations of the California Labor Code: (1) unfair 5 competition; (2) failure to pay minimum wages; (3) failure to pay overtime wages; 6 (4) failure to provide meal periods; (5) failure to provide rest periods; (6) failure to 7 provide accurate itemized wage statements; (7) failure to reimburse employees for 8 required expenses; (8) failure to pay timely wages; and (9) failure to pay sick pay 9 wages. (See Compl. ¶¶ 46–120.) Ortiz-Dixon seeks to represent all current and 10 former non-exempt employees of FedEx, excluding drivers, whom FedEx employed 11 in California at any time “during the period beginning four (4) years prior” to the 12 filing of the Complaint (the “Class”). (Id. ¶ 4.) The “Class Period” therefore begins 13 on February 27, 2019. (See id.; NOR ¶ 23 n.6.) 14 On June 14, 2023, FedEx removed the action to federal court based on alleged 15 CAFA subject matter jurisdiction. (NOR ¶ 8.) On October 4, 2023, upon the 16 stipulation of the parties, Ortiz-Dixon filed a First Amended Complaint (“FAC”) to 17 add Eddie Ayala as a named plaintiff and class representative. (FAC, ECF No. 24.) 18 Now, Ortiz-Dixon moves to remand the action back to state court on the basis that the 19 aggregate amount in controversy does not meet CAFA’s $5 million jurisdictional 20 threshold. (See generally Mot.) The Motion is fully briefed. (Opp’n, ECF No. 16; 21 Reply, ECF No. 17.) 22 III. LEGAL STANDARD 23 Federal courts have subject matter jurisdiction only as authorized by the 24 Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; Kokkonen v. Guardian Life 25 Ins. Co. of Am., 511 U.S. 375, 377 (1994). “If at any time before final judgment it 26 appears that the district court lacks subject matter jurisdiction, the case shall be 27 remanded.” 28 U.S.C. § 1447(c). 28 1 CAFA vests original jurisdiction in district courts to hear civil actions “in which 2 the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest 3 and costs, and is a class action in which . . . any member of a class of plaintiffs is a 4 citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2)(A); Adams v. 5 W. Marine Prods., Inc., 958 F.3d 1216, 1220 (9th Cir. 2020). CAFA jurisdiction 6 exists only over actions where the number of proposed class members is greater 7 than 100. 28 U.S.C. § 1332(d)(5)(B). 8 Generally, a notice of removal filed in federal court must contain only “a 9 plausible allegation that the amount in controversy exceeds the jurisdictional 10 threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 11 (2014). But where a plaintiff contests, or the court questions, a defendant’s 12 allegations concerning the amount in controversy, both sides submit proof, and the 13 court decides whether the defendant has proven the amount in controversy by a 14 preponderance of the evidence. Id. at 88–89. 15 These procedures apply to the amount in controversy requirement in CAFA 16 cases to the same extent they apply to ordinary diversity cases. “Under this system, 17 CAFA’s requirements are to be tested by consideration of real evidence and the reality 18 of what is at stake in the litigation, using reasonable assumptions underlying the . . . 19 theory of damages exposure.” Ibarra v. Manheim Invs., 775 F.3d 1193, 1198 (9th Cir. 20 2015). “[A] defendant cannot establish removal jurisdiction by mere speculation and 21 conjecture, with unreasonable assumptions.” Id. at 1197. 22 IV. DISCUSSION 23 As courts generally analyze diversity jurisdiction based on the factual 24 circumstances existing at the time the plaintiff filed the suit, Dole Food Co. v. 25 Patrickson, 538 U.S. 468, 478 (2003), the Court directs its jurisdictional analysis to 26 the initial complaint. 27 Ortiz-Dixon does not dispute CAFA’s minimum diversity or numerosity 28 elements. (See Mot. 1.) Accordingly, the only aspect of CAFA jurisdiction in dispute 1 here is whether FedEx has shown, by a preponderance of the evidence, that the 2 amount in controversy exceeds CAFA’s $5 million jurisdictional threshold. 3 In her Complaint, Ortiz-Dixon does not allege a specific amount of damages, 4 but states that the aggregate Class claims is below CAFA’s $5 million threshold 5 required for federal jurisdiction. (Compl. ¶ 4.) However, FedEx argues on removal 6 that just three of Ortiz-Dixon’s nine claims put a total of $13,993,916 in controversy 7 using only ten and a half months out of the alleged four-year Class Period (“FedEx’s 8 Calculation Period”). (NOR ¶¶ 23, 46.) 9 A. Challenged Assumptions and Evidence 10 In arguing for remand, Ortiz-Dixon asserts that FedEx (i) uses an unreasonable 11 violation rate; (ii) fails to support its calculations with sufficient competent evidence; 12 and (iii) over-inflates the number of shifts in issue. She contends that, as a 13 consequence, FedEx overstates the total amount in controversy. 14 1. Violation Rate 15 FedEx applies a 20% violation rate to calculate the amount in controversy for 16 Ortiz-Dixon’s missed meal period, missed rest break, and wage statement claims. 17 (NOR ¶¶ 26, 32, 43; Opp’n 6–8.) Ortiz-Dixon contends that the Complaint’s language 18 does not support a 20% violation rate. (Mot. 9–10.) 19 “In determining the amount in controversy, courts first look to the complaint.” 20 Ibarra, 775 F.3d at 1197. To examine the reasonableness of an assumed violation rate, 21 “the Ninth Circuit distinguishes between complaints of ‘uniform’ violations and those 22 alleging a ‘pattern and practice’ of labor law violations.” Dobbs v. Wood Grp. PSN, 23 Inc., 201 F. Supp. 3d 1184, 1188 (E.D. Cal. 2016) (quoting LaCross v. Knight Transp. 24 Inc., 775 F.3d 1200, 1202 (9th Cir. 2015)). If a plaintiff alleges a “uniform” practice 25 of violation and “offers no competent evidence in rebuttal to a defendant’s showing,” 26 courts have found a defendant’s assumption of 100% violation rate reasonable. Id. 27 On the other hand, a plaintiff’s allegations of a “pattern and practice” of violating the 28 Labor Code “does not mean always” violating Labor Code, so the removing party has 1 the “burden to show that its estimated amount in controversy relied on reasonable 2 assumptions” regarding the violation rate, founded in the complaint. Ibarra, 775 F.3d 3 at 1198–99. 4 In her Complaint, Ortiz-Dixon alleges that FedEx has a “policy and practice” of 5 “fail[ing] to provide all the legally required off-duty meal and rest breaks,” (Compl. 6 ¶ 24); FedEx “engages in the practice of requiring” Ortiz-Dixon and the Class “to 7 perform work off the clock[],” (id. ¶ 8); and “[f]rom time to time” requires 8 Ortiz-Dixon and the Class to work during meal or rest breaks, (id. ¶¶ 11–12, 91, 95). 9 Allegations that a defendant engages in alleged conduct, but “does not 10 necessarily always” engage in the alleged conduct, are generally considered “pattern 11 and practice” allegations. Ibarra, 775 F.3d at 1198–99. For this type of allegations, 12 courts often find violation rates of 20% reasonable. See, e.g., Kincaid v. Educ. Credit 13 Mgmt. Corp., No. 2:21-cv-00863-TLN (JDPx), 2022 WL 597158, at *4 (E.D. Cal. 14 Feb. 28, 2022) (finding a 20% meal period and rest period violation rate reasonable 15 based on plaintiff’s “pattern and practice” allegations); Olson v. Becton, Dickinson & 16 Co., No. 19-cv-865-MMA (BGSx), 2019 WL 4673329, at *4 (S.D. Cal. Sept. 25, 17 2019) (finding a 25% violation rate reasonable in light of the plaintiff’s “pattern and 18 practice” allegations). Having reviewed Ortiz-Dixon’s allegations and the cases 19 referenced above, the Court finds Ortiz-Dixon’s specific factual allegations in this 20 case sufficient to support the reasonableness of a 20% violation rate. 21 Ortiz-Dixon argues that her use of “from time to time” language in the 22 Complaint makes a 20% violation rate unreasonable. (Mot. 10–12.) For example, 23 Ortiz-Dixon alleges that “from time to time” she was “interrupted by work 24 assignments while clocked out” for her meal break, (Compl. ¶ 8); “from time to time” 25 she worked “in excess of four (4) hours without being provided at least (10) minutes” 26 rest break, (id. ¶ 12); and “from time to time” FedEx failed to provide “complete and 27 accurate wage statements,” (id. ¶ 14). However, Ortiz-Dixon uses “from time to time” 28 allegations coupled with “pattern and practice” allegations throughout the Complaint 1 to describe the frequency of FedEx’s alleged violations. She fails to explain in her 2 Motion why the language “from time to time” should override the “pattern and 3 practice” of violations. Further, she does not explain how “from time to time” might 4 mean something different than “pattern and practice,” or why “from time to time” 5 results in a lower violation rate than “pattern and practice” allegations, particularly as 6 she uses the language together. As such, Ortiz-Dixon fails to disturb the Court’s 7 conclusion that a 20% violation rate, in this case, is reasonable.2 8 2. Evidence 9 Next, Ortiz-Dixon contends that FedEx fails to provide sufficient competent 10 evidence to support its assertion that the amount in controversy exceeds $5 million. 11 (Mot. 10–12.) 12 When a plaintiff contests the defendant’s asserted amount in controversy, the 13 defendant must establish the amount in controversy by a preponderance of evidence. 14 Dart Cherokee, 574 U.S. at 88–89. The parties may support the amount in 15 controversy by way of affidavits, declarations, or other summary-judgment-type 16 evidence. Ibarra, 775 F.3d. at 1197. 17 Here, FedEx asserts the total amount in controversy for Ortiz-Dixon’s missed 18 meal period, missed rest break, and wage statement claims is $13,993,916. (NOR 19 ¶ 46.) FedEx supports its calculations using employment data from its Human 20 Resources Department (“HR”) and calculations based thereon by economist Ariel 21 Kumpinsky. (NOR Ex. E (Decl. Shea Winston (“Winston Decl.”)) ¶¶ 9–11, ECF 22 No. 1); NOR Ex. D (Decl. Ariel Kumpinsky (“Kumpinsky Decl.”)) ¶¶ 4–9, ECF 23 No. 1.)3 Kumpinsky is the Director of Stout Consulting, holds a master’s degree in 24 25 2 FedEx also demonstrates that a 10% violation rate results in an amount in controversy that exceeds the jurisdictional threshold, using only the meal break, rest break, and wage statement claims. 26 (Opp’n 11 (calculating the three claims at a 10% violating rate for a total of $6,897,392.50).) 3 FedEx relies on declarations of Winston and Kumpinsky that were filed in a parallel wage-and- 27 hour putative class action against FedEx, Depina v. FedEx Ground Package System, Inc., Case 28 No. 3:23-cv-156-TLT (N.D. Cal.). The parties acknowledge that the proposed class here may be subsumed by the class in Depina. (See Stip. Stay, ECF No. 25.) By extension, FedEx’s employment 1 economics, a bachelor’s degree in economics and business economics, and has twelve 2 years of expertise in analyzing complex economic data, including employment-related 3 data. (Kumpinsky Decl. ¶¶ 2–3.) The Court finds Kumpinsky’s analysis credible 4 based on his experience and education. 5 FedEx used the HR data and Kumpinsky’s calculations to determine a 6 reasonable violation rate, the number of shifts in issue, the number of wage statements 7 in issue, minimum and average wage rates, and the applicable statutory penalty 8 amount. (See Opp’n 5–6.) FedEx supports each of these figures with declaration 9 testimony, and it calculates the amount in controversy using the supporting data and 10 economist calculations. (NOR ¶¶ 27–29, 32–35, 43–45; Kumpinsky Decl. ¶¶ 7–9; 11 Winston Decl.¶¶ 9–11.) This evidence is competent and sufficient to support FedEx’s 12 amount in controversy assertions. See Lewis v. Verizon Commc’ns, Inc., 627 F.3d 13 395, 397 (9th Cir. 2010) (holding that a declaration or affidavit may satisfy the burden 14 of proving the amount in controversy by a preponderance of the evidence). 15 Finally, although Ortiz-Dixon argues otherwise, FedEx need not “produce 16 business records setting forth the precise number of employees in [the] putative 17 class . . . and the precise calculation of damages alleged to meet its burden regarding 18 the amount in controversy.” See Long v. Destination Maternity Corp., No. 15-cv- 19 2836-WQH-RBB, 2016 WL 1604968, at*6 (S.D. Cal. Apr. 21, 2016) (alterations in 20 original; internal quotation marks omitted); see also Muniz v. Pilot Travel Ctrs. LLC, 21 No. CIV. S-07-0325 FCD EFB, 2007 WL 1302504, at*4–5 (E.D. Cal. May 1, 2007) 22 (“There is no obligation by defendant to support removal with production of extensive 23 business records to prove or disprove liability and/or damages . . . at this premature 24 25 26 data referenced in the Depina declarations applies to Ortiz-Dixon’s allegations against FedEx here. In any event, FedEx also submits the Supplemental Declaration of Ariel Kumpinsky with its 27 Opposition, in which Kumpinsky attests to the same employment data and analysis and specifically 28 applies it to this case. (See Suppl. Decl. Ariel Kumpinsky ISO Opp’n (“Kumpinsky Suppl. Decl.”), ECF No. 16-1.) 1 (pre-certification) stage of the litigation.”). The evidence FedEx submits here is 2 sufficiently competent to support its burden on removal. 3 3. Overinflated Shifts 4 Finally, Ortiz-Dixon contends that FedEx overinflates the total number of shifts 5 in issue. (See Mot. 9.) 6 A defendant attempting to establish an amount in controversy by a 7 preponderance of the evidence may do so based on assumptions, but those 8 assumptions must be reasonable in light of the allegations. Ibarra, 775 F.3d. at 1199. 9 Further, “when the defendant relies on a chain of reasoning that includes 10 assumptions . . . , the chain of reasoning and its underlying assumptions must be 11 reasonable.” LaCross, 775 F.3d at 1201 (citing Ibarra, 775 F.3d at 1199). 12 Upon removal, FedEx initially calculated the amount in controversy using 13 (a) 902,630 shifts over six hours (relevant to meal breaks), and (b) 1,965,362 shifts 14 over three and a half hours (relevant to rest breaks), based on FedEx’s business 15 records. (NOR ¶¶ 27, 33.) Ortiz-Dixon challenges FedEx’s use of the number of 16 shifts, as opposed to the number of workdays, because multiple shifts can occur during 17 the same workday. (Mot. 9.) 18 In response to Ortiz-Dixon’s argument, FedEx revised its calculations to 19 address her concerns. (Opp’n 10.) Kumpinsky recalculated the total number of shifts 20 in issue by requiring at least twelve hours between shifts, to eliminate the possibility 21 of multiple shifts being counted on the same day. (Kumpinsky Suppl. Decl. ¶¶ 6–7.) 22 FedEx revised its estimated amount in controversy based on these reduced number of 23 shifts: (a) 880,947 shifts over six hours (relevant to meal breaks) and (b) 1,920,668 24 shifts over three and a half hours (relevant to rest breaks). (Opp’n 10–11; Kumpinsky 25 Suppl. Decl. ¶¶ 6–7.) 26 Ortiz-Dixon does not contest the reasonableness of FedEx’s shift reductions and 27 thus concedes the issue. (See generally Reply.) The Court finds FedEx’s reduction to 28 the estimated number of shifts in issue eliminates the possibility of multiple shifts on 1 the same day, making the underlying chain of reasoning behind these assumptions 2 reasonable. Further, the reduction results in a more conservative estimate of total 3 shifts in issue. As the assumptions are reasonable and based in FedEx’s employment 4 data, the Court finds that the reduced number of shifts FedEx uses to calculate the 5 revised amount in controversy is not unreasonable or overinflated. 6 B. Amount in Controversy 7 Having found the challenged assumptions reasonable and supported by 8 competent evidence, all that remains is arithmetic. After reviewing the resulting 9 calculations, the Court finds that Ortiz-Dixon’s rest break claim alone satisfies the 10 jurisdictional threshold. Therefore, the Court need not address the remaining claims.4 11 With respect to rest break violations, employers who fail to provide an 12 employee the required rest period “shall pay the employee one additional hour of pay 13 at the employee’s regular rate of compensation” for each rest period not provided in a 14 workday. Cal. Lab. Code § 226.7(c); Naranjo v. Spectrum Sec. Servs., 13 Cal. 5th 93, 15 101 (2022). An employer is required to provide employees a ten-minute break every 16 four hours or major fraction thereof, for all shifts of at least three and one-half hours. 17 Brinker Rest. Corp. v. Superior Ct, 53 Cal. 4th 1004, 1029 (2012) (finding employees 18 are entitled to ten minutes’ rest for shifts from three and one-half to six hours in 19 length). Thus, to determine the amount in controversy for a rest break violation, 20 courts multiply the employee’s hourly wage by the number of shifts that exceed three 21 and a half hours, with number of shifts reduced by the reasonable violation rate. See, 22 e.g., Ogaz v. Honeywell Int’l, Inc., No. 5:21-cv-739-JFW (KKx), 2021 WL 2822401, 23 at *5 (C.D. Cal. July 7, 2021) (calculating rest break claim amount in controversy by 24 multiplying the number of shifts of four hours or more by the average hourly wage by 25 25% violation rate). 26 27 28 4 See Arias v. Residence Inn by Marriott, 936 F.3d 920, 928 n.5 (9th Cir. 2019) (noting the district court need not calculate an amount in controversy beyond finding the jurisdictional threshold met). 1 Based on its employment records, FedEx determined that during FedEx’s 2 || Calculation Period it employed at least 30,585 putative class members, (Kumpinsky 3 || Supple. Decl. 4 5), and these employees worked 1,920,668 shifts over three and a half 4|| hours, (id. § 7). Although the average hourly wage of the employees during the 5 || FedEx’s Calculation Period was $19.25, FedEx rests its amount in controversy 6 | calculations on the more conservative minimum hourly wage of $15.00. (See id. □ 8; Opp’n 5.) Using these figures, the amount in controversy for only the rest break claim 8 | during FedEx’s Calculation Period is $5,762,004 = (1,920,668 shifts x 20% violation 9 || rate) x $15.00 minimum hourly wage. 10 As this figure exceeds the jurisdictional threshold of $5 million, the Court 11 || concludes that it possesses CAFA subject matter jurisdiction over this action. 12 Vv. CONCLUSION 13 For the reasons discussed above, the Court DENIES Plaintiff's Motion to 14 || Remand. (ECF No. 15.) 15 As the Court finds that it possesses subject matter jurisdiction, it GRANTS the 16 || Parties’ Joint Stipulation, (ECF No. 25), and STAYS this action pending class 17 || certification in the prior-filed matter, Depina v. FedEx Ground Package System, Inc., 18 || Case No. 3:23-cv-00156-TLT (N.D. Cal.). The Court sets a Status Conference Re: 19 | Status of Depina on August 19, 2024, at 1:30 p.m. Seven days before the Status 20 || Conference, the parties must submit a Joint Report updating the Court as to the status 21 || of Depina and whether the stay in this action should remain in place. 22 23 IT IS SO ORDERED. 24 = 25 December 7, 2023 Tay a ee 7 OTIS D. WRIGHT, I 08 UNITED STATES DISTRICT JUDGE