Wicker v. ASC Profiles LLC ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 KIJANA WICKER, individually and on No. 2:19-cv-02443-TLN-KJN behalf of other members of the general 12 public similarly situated 13 Plaintiff, ORDER DENYING PLAINTIFF’S MOTION FOR REMAND 14 v. 15 ASC PROFILES LLC, a Delaware company; STEELSCAPE, LLC, a 16 California company; BLUESCOPE BUILDINGS NORTH AMERICA, 17 INC., a Delaware corporation and DOES 1 through 100, inclusive; 18 Defendant. 19 20 21 This matter is before the Court pursuant to Plaintiff Kijana Wicker’s (“Plaintiff”) Motion 22 to Remand. (ECF No. 8.) Defendant ASC Profiles LLC, Steelscape LLC, Bluescope Buildings 23 North America, Inc. (collectively, “Defendants”) filed an opposition. (ECF No. 12.) Plaintiff 24 filed a reply. (ECF No. 13.) Having carefully considered the briefing filed by both parties, the 25 Court hereby DENIES Plaintiff’s Motion to Remand. (ECF No. 8.) 26 /// 27 /// 28 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 Defendants employed Plaintiff and other individuals as hourly-paid or non-exempt 3 employees within the State of California. (ECF No. 1-3 at 11.) On October 30, 2019, Plaintiff 4 filed this putative class action in Sacramento County Superior Court, asserting the following 5 claims: (1) failure to pay overtime wages, Cal. Lab. Code §§ 510 and 1198; (2) meal period 6 violations, id. §§ 226.7, 512(a); (3) rest break violations, id. § 226.7; (4) failure to pay minimum 7 wages, id. §§ 1194, 1197; (5) failure to timely pay wages upon termination, id. §§ 201, 202; (6) 8 wage statement penalties, id. § 226(a); and (7) unfair business practices, Cal. Bus. & Prof. Code § 9 17200. (See ECF No. 1 at 2, ECF No. 1-3 at 5, 15–25.) 10 On December 5, 2019, Defendants removed the case to this Court pursuant to the Class 11 Action Fairness Act (“CAFA”). (ECF No. 1 at 1–2.) To support their contention that the amount 12 in controversy exceeds the requisite $5 million under CAFA, Defendants assessed Plaintiff’s state 13 court complaint. (See id.; ECF No. 1-3 at 5–29.) On January 6, 2020, Plaintiff moved to remand, 14 challenging Defendants’ calculations. (ECF No. 8.) Defendants submitted an opposition with 15 additional evidence (ECF No. 12), and Plaintiff filed a reply (ECF No. 13). 16 II. STANDARD OF LAW 17 A civil action brought in state court, over which the district court has original jurisdiction, 18 may be removed by the defendant to federal court in the judicial district and division in which the 19 state court action is pending. 28 U.S.C. § 1441(a). CAFA gives federal courts original 20 jurisdiction over certain class actions only if: (1) the class has more than 100 members; (2) any 21 member of the class is diverse from the defendant; and (3) the amount in controversy exceeds $5 22 million, exclusive of interest and costs. See 28 U.S.C. §§ 1332(d)(2), (5)(B). 23 Congress enacted CAFA “specifically to permit a defendant to remove certain class or 24 mass actions into federal court” and intended courts to interpret CAFA “expansively.” Ibarra v. 25 Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). As a general rule, removal statutes are 26 to be strictly construed against removal. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 27 However, “no antiremoval presumption attends cases invoking CAFA.” Dart Cherokee Basin 28 Operating Co. v. Owens, 574 U.S. 81, 89 (2014). Nonetheless, “[i]f at any time before final 1 judgment it appears that the district court lacks subject matter jurisdiction, the case shall be 2 remanded” to state court. 28 U.S.C. § 1447(c). 3 A defendant seeking removal under CAFA must file in the federal forum a notice of 4 removal “containing a short and plain statement of the grounds for removal.” Dart Cherokee, 574 5 U.S. at 83 (quoting 28 U.S.C. § 1446(a)). The notice of removal “need not contain evidentiary 6 submissions,” rather a defendant’s “plausible allegation that the amount in controversy exceeds 7 the jurisdictional threshold” suffices. Id. at 84, 89. When “a defendant’s assertion of the amount 8 in controversy is challenged . . . both sides submit proof and the court decides, by a 9 preponderance of the evidence, whether the amount-in-controversy requirement has been 10 satisfied.” Id. at 88. The parties may submit evidence outside the complaint including “affidavits 11 or declarations or other ‘summary-judgment-type evidence relevant to the amount in controversy 12 at the time of removal.’” Hender v. Am. Directions Workforce LLC, No. 2:19-cv-01951-KJM- 13 DMC, 2020 WL 5959908 *2 (E.D. Cal. Oct. 7, 2020) (citing Singer v. State Farm Mut. Ins. Co., 14 116 F.3d 373, 377 (9th Cir. 1997)). 15 When “the defendant relies on a chain of reasoning that includes assumptions to satisfy its 16 burden of proof, the chain of reasoning and the underlying assumptions must be reasonable, and 17 not constitute mere speculation and conjecture.” Id. (citing Ibarra, 775 F.3d at 1197-99). 18 “CAFA’s requirements are to be tested by consideration of real evidence and the reality of what is 19 at stake in the litigation, using reasonable assumptions underlying the defendant’s theory of 20 damages exposure.” Ibarra, 775 F.3d at 1198. Then “the district court must make findings of 21 jurisdictional fact to which the preponderance standard applies.” Dart Cherokee, 574 U.S. at 22 89 (internal citation omitted). 23 III. ANALYSIS 24 The parties here “do not contest CAFA’s jurisdiction requirements of minimum diversity 25 and class numerosity” — the sole dispute is “whether CAFA’s requirement that the amount in 26 controversy exceeds $5 million is met.” See Ibarra, 775 F.3d at 1196–97; Arias v. Residence Inn 27 by Marriot, 936 F.3d 920, 924 (9th Cir. 2019). To determine the amount in controversy, the 28 Court looks first to the complaint. Ibarra, 775 F.3d at 1197. 1 Here, Plaintiff brought a class action and alleges the amount in controversy is less than 2 $75,000. (ECF No. 1-3 at 6.) Relying on the complaint, Defendants’ notice of removal evaluated 3 the alleged unpaid overtime, meal break, and rest period violations and concluded the aggregated 4 amount in controversy exceeds $5 million. (ECF No. 1 at 4–6.) Specifically, Defendants 5 estimated an amount in controversy over $5,886,816, arguing Plaintiff’s first three claims “yield 6 an amount . . . well in excess of CAFA’s requirements.” (Id. at 6.) Defendants submitted the 7 declaration of Amy Hughes, the Director of Compensation and Benefits at BlueScope Buildings 8 North America, Inc., to support their assertions. (ECF No. 1-7.) 9 Plaintiff argues Defendants do not meet their burden because they rely on “unsupported 10 assumptions.” (See generally ECF No. 8, ECF No. 13.) Because Plaintiff challenges Defendants’ 11 estimate, Defendants bear the burden to establish jurisdiction by a preponderance of the evidence. 12 Dart Cherokee, 574 U.S. at 87–88; see also Ibarra, 775 F.3d at 1197. Accordingly, Defendants 13 must present “more than a plausible case to show it satisfies the jurisdictional prerequisite.” 14 Hender, 2020 WL 5959908, at *2. In response to Plaintiff’s challenge, Defendants submitted 15 additional evidence in their opposition.1 (See ECF No. 12.) In their opposition, Defendants 16 calculated the alleged damages for the unpaid overtime, meal and rest break violations, wage 17 statement penalties, waiting-time penalties, and potential attorney’s fees, placing the aggregated 18 amount in controversy at $8,483,752.70. (Id. at 22.) 19 Because the Court finds a reasonable estimate of Plaintiff’s first, second, third, and sixth 20 claims amounts to greater than $5 million, the Court does not need to determine the amount of 21 Plaintiff’s other claims or the attorney’s fees. 22 A. Failure to Pay Overtime Wages (Claim One) 23 Plaintiff alleges Defendants violated California Labor Code § 510’s overtime 24 compensation rules. (ECF No. 1-3 at 27.) Defendants calculated a total amount in controversy of 25 $2,149,599 for unpaid overtime, which they reached by multiplying (a) the number of 26 1 Defendants attach the following evidence in their opposition to Plaintiff’s Motion for 27 Remand (ECF No. 12): the Declaration of Tanya Bennett (ECF No. 12-1); the Declaration of Brenda Eubanks (ECF No. 12-2); the supplemental Declaration of Amy Hughes (ECF No. 12-3); 28 the Declaration of Todd L. Nunn (ECF No. 12-4); and PAGA letters (ECF No. 12-5). 1 workweeks, (b) the average hourly base rate, and (c) 1.5 (representing one overtime violation per 2 week). (ECF No. 12 at 13–14.) Defendants calculated that amount for each company and year. 3 (Id.) Defendants used a 20 percent violation rate based on Plaintiff’s complaint alleging “a 4 pattern and practice” of “Defendants fail[ing] to pay overtime wages to Plaintiff and other class 5 members for all hours worked.” (Id. at 13.) In response, Plaintiff argues Defendants’ calculation 6 is based on “speculation and conjecture” as it “fails to provide any facts relating to the number of 7 overtime hours worked by putative class members or how many employees were even entitled to 8 receive overtime compensation.” (ECF No. 8 at 13.) 9 The Court finds Defendants’ use of the 20 percent violation rate is reasonable. Indeed, 10 “other courts have approved, persuasively, a 20 percent violation rate when a plaintiff, as plaintiff 11 does here, alleges a ‘pattern and practice’ of defendants’ failing to provide overtime 12 compensation.” Hender, 2020 WL 5959908, at *8 (citations omitted) (finding defendants’ 13 calculation based on a 20 percent violation rate, “a conservative estimate allowing for the 14 possibility that not every putative class member worked overtime”). Moreover, Defendants “need 15 not provide information proving up their liability to demonstrate the amount in controversy,” as 16 “such a requirement would contradict precedent.” Id.; see Arias, 936 F.3d at 927 (finding 17 “assumptions made part of the defendant’s chain of reasoning need not be proven; they instead 18 must only have ‘some reasonable ground underlying them’”); see also Cavada v. Inter-Cont’l 19 Hotels Grp., Inc., No. 19-cv-1675-GPC(BLM), 2019 WL 5677846, at *4 (S.D. Cal. Nov. 1, 2019) 20 (“Defendants are not required to ‘comb through [their] records to identify and calculate the exact 21 frequency of violations’ and essentially prove the alleged violations”). 22 Defendants’ reliance on the 20 percent violation rate, based on Plaintiff’s complaint 23 alleging Defendants’ “pattern and practice” of failing to pay overtime wages, is a reasonable 24 assumption. Accordingly, the Court considers Defendants’ estimate of $2,149,599 in unpaid 25 overtime compensation as part of the amount in controversy for CAFA jurisdiction purposes. 26 /// 27 /// 28 /// 1 B. Meal and Rest Period Violations (Claim Two and Three) 2 Plaintiff alleges Defendants violated California Labor Code’s meal and rest period rules. 3 (ECF No. 1-3 at 17–20.) Defendants calculated a total amount in controversy of $2,866,133 for 4 the meal and rest period violation claims, which they reached by multiplying (a) the number of 5 workweeks by (b) the average hourly base rate (by company and year) for both a meal period and 6 a rest break violation. (ECF No. 12 at 16–17.) Defendants argue Plaintiff’s allegation of 7 Defendants’ “pattern and practice” of violating class members’ meal and rest breaks supports a 8 violation rate of one meal period violation per week (a 20 percent violation rate) and one rest 9 break violation per week (a 10 percent violation rate). (Id. at 14–15.) Additionally, Defendants 10 rely on PAGA letters which allege Defendants “routinely required [Plaintiff] and other hourly- 11 paid or non-exempt aggrieved employees to interrupt, cut short, and/or delay their meal and/or 12 rest breaks.” (Id. at 16.) 13 Plaintiff again argues Defendants’ calculation is “implausible because it is based entirely 14 on unsupported assumptions.” (See ECF No. 8 at 8–12.) Plaintiff argues Defendants fail to 15 provide any evidentiary support regarding “how frequently putative class members missed meal 16 periods, were offered late meal periods, or were offered meal periods of a duration shorter than 17 required by law.” (Id. at 11; ECF No. 13 at 2.) Plaintiff also contends Defendants failed to 18 indicate how long putative class members worked per shift, which undercuts Defendants’ 19 argument that putative class members were even eligible for a meal and rest period. (Id.) 20 Here, persuasive authority supports Defendants’ calculation of one missed meal break and 21 one missed rest break per week based on Plaintiff’s allegation that Defendants had “a policy and 22 practice” of denying employees meal and rest breaks. Nunes v. Home Depot U.S.A., Inc., No. 23 2:19-cv-01207-JAM-DB, 2019 WL 4316903, at *2 (E.D. Cal. Sept. 12, 2019) (finding 24 defendant’s assumption of one missed meal break and one missed rest break per week to be 25 reasonable based on plaintiff’s allegation that defendant had a “uniform policy, practice, and 26 procedure” of restricting rest breaks); see also Hender, 2020 WL 5959908, at *6 (finding other 27 courts throughout the circuit also apply a 20 percent violation rate for purposes of calculating the 28 amount in controversy for meal and rest break claims). For example, the court in Nunes 1 employed a similar calculation as Defendants here to determine meal and rest break violations by 2 “multipl[ying] the relevant values (number of workweeks x average hourly pay x one violation 3 per week for each claim).” Nunes, 2019 WL 4316903, at *3. Moreover, meal and rest period 4 violations can occur with both full-time and part-time employees, which further supports 5 Defendants’ assumption of a 20 percent violation rate. See Hender, 2020 WL 5959908, at *6. 6 Requiring Defendants to provide specific evidentiary support would “run afoul of the 7 Ninth Circuit’s ruling in Arias, [which] overrul[ed] the district court’s imposition of a 8 requirement on defendants to ‘prove it actually violated the law at the assumed rate,’ when in fact 9 ‘assumptions made part of the defendant’s chain of reasoning need not be proven.’” Id. (citing 10 Arias, 936 F.3d at 927). 11 Accordingly, the Court considers Defendants’ estimate of $2,866,133 in meal and rest 12 period violations as part of the amount in controversy for CAFA purposes. 13 C. Wage Statement Penalties (Claim Six) 14 Plaintiff further alleges Defendants failed to provide employees with accurate wage 15 statements. (ECF No. 1-3 at 22–23.) Under California law, when an employer fails to provide an 16 accurate wage statement, an employee may seek penalties of $50 for the initial pay period in 17 which a violation occurs and $100 for each violation in a subsequent pay period, not to exceed an 18 aggregate penalty of $4,000 per employee. Cal. Lab. Code § 226(e). 19 Defendants calculate a total amount in controversy of $737,100 for the alleged inaccurate 20 wage statements. (ECF No. 12 at 20–21.) In order to calculate this amount, Defendants 21 determined the number of putative class members who worked during the relevant one-year 22 limitation period and the wage statements issued for that year. (Id.) Defendants then multiplied 23 the number of employees by the $50 initial violation amount and multiplied the remainder of the 24 workweeks by the $100 violation amount (by company). (Id.) In support of their calculations, 25 Defendants relied on Plaintiff’s complaint which alleges “Defendants failed to provide complete 26 or accurate wage statements.” (Id.) Plaintiff argues Defendants’ calculation is inaccurate since 27 the complaint states that, “Plaintiff and other class members (but not all) are entitled to recover.” 28 (ECF No. 13 at 6.) Plaintiff therefore contends, “Defendant[s] completely ignore[] the plain 1 language of the allegations which unequivocally states that not all putative class members 2 received non-compliant wage statements.” (Id.) 3 In the instant case, the Court finds Defendants have shown it is more likely than not that 4 the amount in controversy for wage statement penalties is $737,100. The wage statement penalty 5 calculation “suffice[s] for removal for the same reasons as d[oes] defendants’ calculation for 6 overtime wages and meal and rest violations.” Hender, 2020 WL 5959908, at *6 (citing Dart 7 Cherokee, 574 U.S. at 81). Because the previous meal and rest break estimates are reasonable, “it 8 is reasonable to assume class members suffered at least one violation (e.g. one missed meal or 9 rest break) per pay period.” See Nunes, 2019 WL 4316903, at *2–3 (holding a 100 percent 10 violation rate as a reasonable assumption); see also Cavada, 2019 WL 5677846, at *8 (finding 11 that “since one missed meal and rest period was reasonable, that would mean that every wage 12 statement was inaccurate and subject to penalties”). Therefore, because it is more likely than not 13 that putative class members each suffered one meal and one rest break violation per week, then 14 Defendants’ 100 percent wage statement violation rate against each terminated class member is 15 reasonably supported by the evidence. 16 Accordingly, the wage statement penalties calculation is based on a reasonable 17 assumption. The Court considers Defendants’ estimate of $737,100 in wage statement penalties 18 as part of the amount in controversy for CAFA purposes. 19 In sum, Defendants’ calculations in the Notice of Removal, supported by the 20 aforementioned briefs and declarations, reasonably and appropriately yield an amount in 21 controversy of $5,752,832 for Plaintiff’s first, second, third, and sixth claims. Therefore, the 22 Court finds Defendants have proven by a preponderance of the evidence that the amount in 23 controversy in this case exceeds $5 million as required by CAFA. 24 /// 25 /// 26 /// 27 /// 28 /// 1 IV. CONCLUSION 2 For the reasons set forth above, the Court DENIES Plaintiff’s Motion to Remand. (ECF 3 | No. 8.) The parties are ORDERED to file a joint status report within twenty (20) days of the 4 || electronic filing of this Order to aid the Court with the issuance of an amended scheduling order. 5 ITIS SO ORDERED. 6 | DATED: March 29, 2021 7 /) 8 “ bn 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28