Guerrero v. Nwestco, LLC ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 EDWIN RUIZ GUERRERO, an No. 2:22-cv-01620 WBS JDP individual, on behalf of himself 13 and all others similarly situated, 14 MEMORANDUM AND ORDER RE: Plaintiff, PLAINTIFF’S MOTION TO REMAND 15 v. 16 NWESTCO, LLC, a Colorado Limited 17 Liability Company; and DOES 1 through 100, inclusive, 18 Defendant. 19 20 ----oo0oo---- 21 Plaintiff Edwin Ruiz Guerrero initiated this putative 22 class action against defendant Nwestco, LLC, alleging wage and 23 hour violations under the California Labor Code, California 24 Business and Professions Code, and the Private Attorneys General 25 Act of 2004 (“PAGA”). (See First Am. Compl. (“FAC”) (Docket No. 26 10).) Defendant removed the action to this court from the 27 Sacramento County Superior Court. (Docket No. 1.) Plaintiff now 28 1 moves to remand. (“Mot.” (Docket No. 7).) 2 I. Legal Standards 3 “Under 28 U.S.C. § 1441, a defendant may remove an 4 action filed in state court to federal court if the federal court 5 would have original subject matter jurisdiction over the action.” 6 Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1243 (9th 7 Cir. 2009). Federal courts have original jurisdiction over cases 8 where complete diversity exists between the parties and the 9 amount in controversy exceeds $75,000, exclusive of interest and 10 costs. 28 U.S.C. § 1332(a). There is a “strong presumption” 11 against exercising removal jurisdiction when the amount in 12 controversy is in question, and “[f]ederal jurisdiction must be 13 rejected if there is any doubt as to the right of removal in the 14 first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 15 Cir. 1992) (internal citations omitted). 16 The amount in controversy includes “all relief claimed 17 at the time of removal to which the plaintiff would be entitled 18 if [he] prevails,” Chavez. v. JPMorgan Chase & Co., 888 F.3d 413, 19 418 (9th Cir. 2018), which may include “damages (compensatory, 20 punitive, or otherwise) . . . as well as attorneys’ fees under 21 fee shifting statutes,” Gonzalez v. CarMax Auto Superstores, LLC, 22 840 F.3d 644, 648 (9th Cir. 2016). 23 “In assessing the amount in controversy, [courts] may 24 consider allegations in the complaint and in the notice of 25 removal, as well as summary-judgment-type evidence relevant to 26 the amount in controversy.” Chavez, 888 F.3d at 416. When a 27 plaintiff’s state court complaint does not specify an amount of 28 damages, the removing defendant bears the burden of establishing, 1 by a preponderance of the evidence, that the amount in 2 controversy exceeds $75,000. Sanchez v. Monumental Life Ins. 3 Co., 102 F.3d 398, 404 (9th Cir. 1996). “Under this burden, the 4 defendant must provide evidence establishing that it is more 5 likely than not that the amount in controversy exceeds that 6 amount.” Id. (internal quotation marks omitted). A defendant 7 “need include only a plausible allegation that the amount in 8 controversy exceeds the jurisdictional threshold.” Dart Cherokee 9 Basin Operating Co. v. Owens, 574 U.S. 81, 89 (2014). However, 10 conclusory allegations as to the amount in controversy are 11 insufficient. See Corral v. Select Portfolio Servicing, Inc., 12 878 F.3d 770, 774 (9th Cir. 2017). 13 II. Discussion 14 The named plaintiff in this putative labor class action 15 only disputes that the requisite amount in controversy has been 16 met. (See Mot. at 3.) Defendant argues that the amount in 17 controversy is satisfied based on the damages and penalties 18 associated with plaintiff’s claims and plaintiff’s anticipated 19 attorneys’ fees. (See Def.’s Opp’n. (Docket No. 11) at 2.)1 The 20 court will address each in turn. 21 A. Value of Plaintiff’s Claims 22 23 1 Plaintiff contends that the court should not consider the arguments raised in defendant’s opposition brief because it 24 failed to raise them in its notice of removal. However, “a removing defendant need only allege in its notice of removal that 25 the amount in controversy requirement is met.” Harris v. KM Indus., Inc., 980 F.3d 694, 699 (9th Cir. 2020). On a motion to 26 remand, the court is not required to only consider the notice of 27 removal, but rather can also consider “summary-judgment-type evidence relevant to the amount in controversy.” See Chavez, 888 28 F.3d at 416. 1 Because class members in a putative labor class action 2 do not seek to “enforce a single title or right in which they 3 have a common and undivided interest,” their claims cannot be 4 aggregated to satisfy the amount in controversy. See Urbino v. 5 Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1122 (9th Cir. 2013). 6 Similarly, multiple employees’ potential PAGA penalties against a 7 single employer cannot be aggregated in calculating the amount in 8 controversy. Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 9 1119 (9th Cir. 2014) (citing Urbino, 726 F.3d 1118). 10 Both parties presented calculations of the expected 11 damages and penalties associated with plaintiff’s individual 12 claims. Defendant provided an estimate of $39,520.15 (Ex. A to 13 Decl. of Walt Whelan (“Def.’s Summ.”) (Docket No. 11-1) at 1-3), 14 while plaintiff provided an estimate of $14,579 (Pl.’s Reply at 15 8). 16 Defendant’s estimates are conclusory and assume various 17 figures with little justification. (See generally Def.’s Summ.) 18 In contrast, plaintiff accurately analyzed the applicable law and 19 corrected significant calculation errors made by defendant. (See 20 Pl.’s Reply at 5-8.) Defendant’s first error was the application 21 of wage penalties based on hours worked instead of pay periods 22 under Cal. Lab. Code § 1197.1. (See Def.’s Summ. at 1.) 23 Plaintiff worked a total of seven pay periods. (Decl. of Sherry 24 Tiller (Docket No. 11-3) at 2.) The correct penalties are $100 25 for the first pay period and $250 for each of the six subsequent 26 pay periods, for a total of $1,600. See Cal. Lab. Code § 27 1197.1(a). Defendant’s calculation of $16,600 (Def.’s Summ. at 28 1) thus overestimates the wage penalties by $15,000. 1 The second error was the application of penalties for 2 “subsequent citations” for wage statement violations under Cal. 3 Lab. Code § 226.3. (See Def.’s Summ. at 2.) Because no “initial 4 citation” was alleged by plaintiff or demonstrated by defendant 5 (see FAC at 17-18; Def.’s Summ. at 2), increased penalties for 6 subsequent citations are inappropriate. See Cal. Lab. Code § 7 226.3; Garcia v. Commonwealth Fin. Network, No. 20-cv-1483 BAS 8 LL, 2020 WL 6886267, at *6 (S.D. Cal. Nov. 24, 2020); Snow v. 9 United Parcel Serv., Inc., No. EDCV-20025 PSG AFM, 2020 WL 10 1638250, at *4 (C.D. Cal. Apr. 1, 2020). The applicable penalty 11 is $250 for each of the seven pay periods, totaling $1,750. See 12 Cal. Lab. Code § 226.3. Defendant’s calculation of $6,250 13 (Def.’s Summ. at 2) therefore overestimates the wage statement 14 penalties by $4,500. Because these penalties are enforceable 15 under PAGA, this error affects the overall calculation of PAGA 16 penalties, discussed in further detail below. 17 Defendant’s third error was the improper inclusion of 18 the Labor and Workforce Development Agency’s (“LWDA”) share of 19 PAGA penalties. (See Def.’s Summ. at 2). Under PAGA, civil 20 penalties recovered by aggrieved employees are distributed as 21 follows: “75 percent to the [LWDA] and 25 percent to the 22 aggrieved employees.” Cal. Lab. Code § 2699(i). While there is 23 a split among district courts on the issue, this court has 24 previously held that the LWDA’s portion of PAGA penalties is not 25 to be considered when calculating the amount in controversy. See 26 Escobar v. Capstone Logistics, LLC, No. 2:20-cv-02501 WBS JDP, 27 2021 WL 913174, at *2-3 (E.D. Cal. Mar. 10, 2021). In Urbino v. 28 Orkin Services of California, Inc., 726 F.3d 1118 (9th Cir. 1 2013), the Ninth Circuit found that “[t]he state, as the real 2 party in interest [with respect to the LWDA’s share of PAGA 3 penalties], is not a ‘citizen’ for diversity purposes.” See 4 Escobar, 2021 WL 913174, at *3 (quoting Urbino, 726 F.3d at 1122– 5 23). This language “implies that . . . [the state]’s interest is 6 not to be considered.” Id. (quoting Hesselink v. Am. Fam. Life 7 Assurance Co. of Columbus, No. SACV-20-02051 CJC DFM, 2020 WL 8 7768711, at *3 (C.D. Cal. Dec. 30, 2020)). The LWDA’s share of 9 the PAGA penalties associated with plaintiff’s claims should 10 therefore not be included in calculating the amount in 11 controversy. See id. 12 After correcting the calculation of penalties under § 13 226.3, the total available PAGA penalties are $7,254. (See 14 Def.’s Summ. at 2-3; Pl.’s Reply at 8-9.) Plaintiff’s 25% share 15 of those penalties is $1,813.50. Defendant’s calculation of 16 $11,754 therefore overstated the applicable PAGA penalties by 17 $9,940.50. (See Def.’s Opp’n at 2-3; Pl.’s Reply at 9.) 18 Altogether, defendant overestimated the value of the claims by 19 $24,940.50.2 20 In addition to correcting the multiple calculation 21 errors discussed above, plaintiff’s estimate is more than 22 generous to defendant as it incorporates defendant’s factual 23 assumptions (while not conceding that they are accurate). (See 24 Pl.’s Reply at 9.) Accordingly, the court will adopt plaintiff’s 25 26 2 This $24,940.50 figure results from $15,000 in 27 overestimated minimum wage penalties plus $9,940.50 in overestimated PAGA penalties. 28 1 estimate of damages and penalties totaling $14,579.3 In order to 2 satisfy the $75,000 amount in controversy requirement, defendant 3 must therefore establish that plaintiff’s attorneys’ fees are 4 likely to exceed $60,421. 5 B. Attorneys’ Fees 6 “[W]here an underlying statute authorizes an award of 7 attorneys’ fees, either with mandatory or discretionary language, 8 such fees may be included in the amount in controversy,” Shoner 9 v. Carrier Corp., 30 F.4th 1144, 1148 (9th Cir. 2022) (citing 10 Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998), 11 including attorneys’ fees incurred after the time of removal, 12 Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785, 794 13 (9th Cir. 2018). If plaintiff prevails on his wage and hour and 14 PAGA claims, he will be entitled to attorneys’ fees as a matter 15 of right. See FAC; Cal. Lab. Code §§ 218.5, 226, 1194, 2699. 16 Accordingly, the court may consider attorneys’ fees when 17 assessing the amount in controversy. 18 Because this case was brought as a putative class 19 action, the court must first address whether it should consider 20 potential attorneys’ fees as to the entire putative class or as 21 to the single named plaintiff. In Gibson v. Chrysler Corp., the 22 Ninth Circuit addressed this issue in the context of attorneys’ 23 fees sought under Cal. Civ. Proc. Code § 1021.5, which deals with 24 actions enforcing a right that affects the public interest. See 25 261 F.3d 927, 942 (9th Cir. 2001), holding modified on other 26 27 3 This $14,579 figure results from defendant’s original $39,520.15 estimate reduced by $24,940.50 to account for 28 calculation errors, rounded down to the nearest dollar. 1 grounds by Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 2 546 (2005). The Gibson court found that an entire class’s 3 anticipated attorneys’ fees cannot be allocated to a named 4 plaintiff for purposes of satisfying the amount in controversy. 5 See id. at 941. It based this finding on the language of the 6 authorizing statute, which provides that a court may award 7 attorneys’ fees “to a successful party” rather than to a named or 8 representative party. See id. at 942-43 (quoting Cal. Civ. Proc. 9 Code § 1021.5) (emphasis in original). 10 Here, the relevant California Labor Code sections are 11 analogous because they do not specify that only a named or 12 representative party is entitled to attorneys’ fees. See Cal. 13 Lab. Code § 218.5 (court shall award attorneys’ fees “to the 14 prevailing party”); Cal. Lab. Code § 226 (“an employee suffering 15 injury” is entitled to attorneys’ fees); Cal. Lab. Code § 1194 16 (“any employee” that suffered a violation is entitled to 17 attorneys’ fees); Cal. Lab. Code § 2699 (“[a]ny employee who 18 prevails in any action” is entitled to attorneys’ fees). See 19 also Canela v. Costco Wholesale Corp., 971 F.3d 845, 850 (9th 20 Cir. 2020) (indicating that Gibson rule applies in the class 21 action and PAGA contexts); Magee v. Iconix Waterworks (US) Inc., 22 No. 2:20-cv-00840 KJM DB, 2020 WL 4188607, at *3 (E.D. Cal. July 23 21, 2020) (applying Gibson in putative class action involving 24 claims under Cal. Lab. Code § 218.5); Davenport v. Wendy’s Co., 25 No. 2:13-cv-02159 GEB, 2013 WL 6859009, at *2 (E.D. Cal. Dec. 24, 26 2013) (applying Gibson in putative class action involving claims 27 under Cal. Lab. Code §§ 226, 1194, and 2699). The court will 28 therefore consider attorneys’ fees only as to the single named 1 plaintiff.4 2 The parties’ briefing assumes that attorneys’ fees 3 should be calculated as if the action were to proceed as to a 4 single plaintiff. (See Def.’s Opp’n at 6; Pl.’s Reply at 9-13.) 5 However, that is not the approach required by the Ninth Circuit. 6 Rather, plaintiff’s pro rata share of the class-wide attorneys’ 7 fees should be used in calculating the amount in controversy. 8 See Canela, 971 F.3d at 850 (explaining that the Ninth Circuit 9 “consider[s] a successful party’s pro rata share of attorneys’ 10 fees in assessing whether her claim meets the jurisdictional 11 threshold”) (citing Gibson, 261 F.3d at 942). As a result, 12 defendant must establish that plaintiff’s pro rata share of the 13 class-wide attorneys’ fees is likely to exceed $60,421. 14 In cases involving a “common fund” that is distributed 15 to class members, district courts can award attorneys’ fees based 16 on either a percentage of the total fund or a lodestar 17 calculation that incorporates reasonable valuations of the hours 18 expended and the hourly rate. Hanlon v. Chrysler Corp., 150 F.3d 19 1011, 1029 (9th Cir. 1998). “The reasonableness of attorneys’ 20 fees, when such fees are unascertainable on the face of the 21 complaint, can be calculated by looking to other attorneys’ fees 22 awards in similar cases.” Garnett v. ADT LLC, 74 F. Supp. 3d 23 1332, 1337 (E.D. Cal. 2015) (Shubb, J.) (citing Garcia, 2014 WL 24 2468344, at *5; Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th 25 4 Even if a class is ultimately not certified, this action could proceed as a representative action under PAGA. As 26 the foregoing analysis indicates, only the plaintiff’s pro rata 27 share of attorneys’ fees for a PAGA claim--which are provided for by Cal. Lab. Code § 2699--is considered when calculating the 28 amount in controversy. 1 Cir. 2005)). In determining what constitutes a reasonable 2 attorneys’ fee, district courts may rely on “their own knowledge 3 of customary rates and their experience concerning reasonable and 4 proper fees.” Oth Ingram v. Oroudjian, 647 F.3d 925, 928 (9th 5 Cir. 2011). A district court’s evaluation of the likelihood of 6 settlement is also a relevant consideration in determining future 7 attorneys’ fees. See Fritsch, 899 F.3d at 795. 8 If the lodestar method is used to calculate attorneys’ 9 fees, plaintiff’s pro rata share would be insufficient to satisfy 10 the amount in controversy. Defendant estimates that the putative 11 class contains 70 members. (Notice of Removal (Docket No. 1) at 12 2.) Assuming for purposes of this inquiry that all 70 class 13 members would receive an equal share of the common fund and thus 14 should be allocated an equal share of the attorneys’ fees, 15 plaintiff’s counsel would need to be awarded $4,229,4705 as a 16 “reasonable” attorneys’ fee award. See Buchanan v. Aramark 17 Campus, LLC, No. 19-cv-00384 VKD, 2019 WL 3302164, at *7 (N.D. 18 Cal. July 23, 2019) (applying similar calculation in determining 19 total requisite attorneys’ fees based on plaintiff’s pro rata 20 share). 21 Even if the court adopts defendant’s suggested billing 22 rate of $700 per hour,6 the result is a total of 6,042.1 attorney 23 5 This $4,229,470 figure results from $60,421 in 24 attorneys’ fees multiplied by 70 class members. 25 6 Defendant requested that the court take judicial notice of a declaration filed in support of an attorneys’ fees motion by 26 plaintiff’s counsel Jonathan Melmed in a different labor class 27 action, Curtis Markson et al. v. CRST Int’l, Inc. et al., No. 5:17-cv-01261 SB SP. (Ex. A to Def.’s Req. for Judicial Notice 28 (“Melmed Decl.”) (Docket No. 11-5 at 4-24.) Defendant’s request 1 hours.7 Comparable class actions typically settle prior to 2 trial, with under 500 attorney hours expended. See, e.g., 3 Torchia v. W.W. Grainger, Inc., 304 F.R.D. 256, 273 (E.D. Cal. 4 2014) (Thurston, J.) (487.85 hours expended prior to approval of 5 settlement in 2000-member labor class action); Vasquez v. Coast 6 Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) 7 (Wanger, J.) (295 hours expended prior to approval of settlement 8 in 177-member labor class action). And even if the instant case 9 were to go to trial, defendant has provided no evidence 10 indicating that it would require the expenditure of 6,000 hours. 11 By comparison, another judge in this court previously found that 12 4,016.74 hours was a reasonable amount billed in a case litigated 13 through trial that consolidated five separate wage and hour class 14 actions and involved three certified classes represented by 15 multiple law firms. See In re Taco Bell Wage & Hour Actions, 222 16 F. Supp. 3d 813, 837 (E.D. Cal. 2016) (Boone, J.). 17 Alternatively, using a percentage-based calculation of 18 attorneys’ fees would be similarly insufficient. Percentage- 19 based attorneys’ fees typically constitute 20-30% of the common 20 fund. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 21 2002). For the requisite attorneys’ fees of $4,229,470 to 22 23 for judicial notice (Docket No. 11-5) is hereby GRANTED. See Burbank–Glendale–Pasadena Airport Authority v. City of Burbank, 24 136 F.3d 1360, 1364 (9th Cir. 1998). This document indicates that Attorney Melmed’s hourly 25 billing rate is $700 (Melmed Decl. at 15), which plaintiff does not seem to dispute (see generally Pl.’s Reply). 26 27 7 This 6,042.1 hour figure results from $4,229,470 total requisite attorneys’ fees divided by a $700 hourly rate. 28 eee eee ee I EIEN IRD IEEE IIE I OS IONE ES ESE EISEN III EES eee 1 constitute 30% of the common fund, the total fund would need to 2 be worth $14,098,233. By contrast, assuming for these purposes 3 that all class members’ claims are worth the same as the named 4 plaintiff’s claims, the total value of the class claims would be 5 only $1,020,530.8 There is no reason to believe that the class- 6 wide attorneys’ fees, whether awarded under the lodestar or 7 percentage method, would reach the requisite amount of 8 $4,229,470. 9 Accordingly, the court finds that defendant has not 10 proven by a preponderance of the evidence that the $75,000 amount 11 in controversy threshold is satisfied and has therefore failed to 12 overcome the presumption in favor of remand. 13 IT IS THEREFORE ORDERED that plaintiff’s motion to 14 remand (Docket No. 7) be, and the same hereby is, GRANTED.° This 15 case is hereby REMANDED to the Superior Court of the State of 16 California, in and for the County of Sacramento. 17 | Dated: November 15, 2022 dtd, : 4k. 18 WILLIAM B. SHUBB 19 UNITED STATES DISTRICT JUDGE 20 21 22 23 24 29 8 This $1,020,530 figure results from $14,579 multiplied 26 by 70 class members. 27 2 The court will not address plaintiff’s evidentiary objections (Docket No. 12-1) as they would not alter the court’s 28 | ruling even if sustained. 12