Butt v. 9W Halo Western Opco, L.P. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 WAQAS N. BUTT, individually and No. 2:22-cv-02012 WBS AC on behalf of himself and all 13 others similarly situated, 14 Plaintiff, MEMORANDUM AND ORDER RE: PLAINTIFF’S MOTION TO REMAND 15 v. AND DEFENDANT’S MOTION TO CONSOLIDATE 16 9W HALO WESTERN OPCO, L.P., a Delaware limited liability 17 company doing business as ANGELICA TEXTILE SERVICES; and 18 DOES 1 through 50, inclusive, 19 Defendants. 20 21 ----oo0oo---- 22 Plaintiff Waqas N. Butt initiated this action against 23 defendant 9W Halo Western Opco, L.P., doing business as Angelica 24 Textile Services, under the Private Attorneys General Act of 2004 25 (“PAGA”), Cal. Lab. Code § 2699. (See Compl. (Docket No. 1-2).) 26 Defendant removed the action to this court from the Sacramento 27 County Superior Court. (Docket No. 1.) Defendant moved to 28 consolidate this matter with Butt v. 9W Halo Western Opco, L.P., 1 No. 2:22-cv-01446 WBS AC. (Docket No. 15.) Plaintiff now moves 2 to remand. (Docket No. 18.) 3 I. Discussion1 4 “Under 28 U.S.C. § 1441, a defendant may remove an 5 action filed in state court to federal court if the federal court 6 would have original subject matter jurisdiction over the action.” 7 Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1243 (9th 8 Cir. 2009). 9 A. Federal Question Jurisdiction 10 Federal courts have original jurisdiction over actions 11 arising under federal law. 28 U.S.C. § 1331. Defendant argues 12 that there is a federal question under the Labor Management 13 Relations Act, 29 U.S.C. § 185, because plaintiff was subject to 14 a collective bargaining agreement (“CBA”). Defendant raises this 15 argument for the first time in its opposition brief. (See Def.’s 16 Opp’n (Docket No. 19) at 7.) 17 “[T]he defendant must state the basis for removal 18 jurisdiction in the petition for removal.” O’Halloran v. Univ. 19 of Wash., 856 F.2d 1375, 1381 (9th Cir. 1988). “A defendant 20 seeking to remove a case to federal court must do so within 21 thirty days of being served with the complaint.” ARCO Env’t 22 Remediation, LLC v. Dep’t of Health & Env’t Quality of Mont., 213 23 F.3d 1108, 1117 (9th Cir. 2000). The notice of removal “cannot 24 be amended to add a separate basis for removal jurisdiction after 25 the thirty day period.” Id. (internal quotation marks omitted). 26 27 1 Pursuant to Local Rule 230(g), the court finds it would not benefit from oral argument and accordingly takes the motion 28 under submission upon the record and briefs. 1 The court therefore declines to consider defendant’s federal 2 question argument, which cannot be properly raised at this 3 juncture. See O’Halloran, 856 F.2d at 1381; Marsoobian v. 4 Transamerica Life Ins. Co., No. 1:16-cv-1412 LJO MJS, 2016 WL 5 7173737, at *7 (E.D. Cal. Dec. 9, 2016); Wickens v. Blue Cross of 6 Cal., Inc., No. 15-cv-834 GPC JMA, 2015 WL 4255129, at *2 (S.D. 7 Cal. July 14, 2015).2 8 B. Diversity Jurisdiction 9 Federal courts have original jurisdiction over cases 10 where complete diversity exists between the parties and the 11 amount in controversy exceeds $75,000, exclusive of interest and 12 costs. 28 U.S.C. § 1332(a). There is a “strong presumption” 13 against exercising removal jurisdiction when the amount in 14 controversy is in question, and “[f]ederal jurisdiction must be 15 rejected if there is any doubt as to the right of removal in the 16 first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 17 Cir. 1992) (internal citations omitted). 18 The amount in controversy includes “all relief claimed 19 at the time of removal to which the plaintiff would be entitled 20 if [he] prevails,” Chavez. v. JPMorgan Chase & Co., 888 F.3d 413, 21 418 (9th Cir. 2018), which may include “damages (compensatory, 22 punitive, or otherwise) . . . as well as attorneys’ fees under 23 2 Defendant’s argument on federal question jurisdiction 24 also fails on the merits. Plaintiff asserts claims arising under a state statute that do not “seek[] purely to vindicate a right 25 or duty created by the CBA itself” and do not present an “active dispute over the meaning of [the CBA’s] terms.” See Alaska 26 Airlines Inc. v. Schurke, 898 F.3d 904, 920–21 (9th Cir. 2018), 27 cert. denied 139 S. Ct. 1445 (2019) (internal quotation marks omitted). Accordingly, the Labor Management Relations Act does 28 not preempt plaintiff’s PAGA claims. See id. 1 fee shifting statutes,” Gonzalez v. CarMax Auto Superstores, LLC, 2 840 F.3d 644, 648 (9th Cir. 2016). 3 “In assessing the amount in controversy, [courts] may 4 consider allegations in the complaint and in the notice of 5 removal, as well as summary-judgment-type evidence relevant to 6 the amount in controversy.” Chavez, 888 F.3d at 416. When a 7 plaintiff’s state court complaint does not specify an amount of 8 damages, the removing defendant bears the burden of establishing, 9 by a preponderance of the evidence, that the amount in 10 controversy exceeds $75,000. Sanchez v. Monumental Life Ins. 11 Co., 102 F.3d 398, 404 (9th Cir. 1996). “Under this burden, the 12 defendant must provide evidence establishing that it is more 13 likely than not that the amount in controversy exceeds that 14 amount.” Id. (internal quotation marks omitted). A defendant 15 “need include only a plausible allegation that the amount in 16 controversy exceeds the jurisdictional threshold.” Dart Cherokee 17 Basin Operating Co. v. Owens, 574 U.S. 81, 89 (2014). However, 18 conclusory allegations as to the amount in controversy are 19 insufficient. See Corral v. Select Portfolio Servicing, Inc., 20 878 F.3d 770, 774 (9th Cir. 2017). 21 Plaintiff disputes that the requisite amount in 22 controversy has been met. Defendant argues that the amount in 23 controversy is satisfied based on the penalties associated with 24 plaintiff’s claims and plaintiff’s anticipated attorneys’ fees. 25 The court will address each in turn. 26 1. Value of Plaintiff’s Claims 27 Defendant’s notice of removal states that plaintiff 28 alleges nine PAGA violations, for which plaintiff would be 1 entitled to penalties for the initial violation and for each 2 subsequent violation. Defendant states that during the PAGA 3 period, running from May 28, 2021 to November 7, 2022 (the date 4 of removal), there were 74 pay periods, and calculates 5 plaintiff’s penalties based on that assumption. (See Notice of 6 Removal (Docket No. 1) at 9.) However, as plaintiff points out, 7 plaintiff’s final date of employment was June 3, 2021, and 8 therefore plaintiff worked a maximum of two pay periods during 9 the PAGA period. (See Decl. of Gennea Moore (Docket No. 1-3) ¶ 10 4.) Assuming defendant’s figures of $1,050 in penalties for the 11 initial violations and $2,700 in penalties for each subsequent 12 pay period in which there were violations (see Notice of Removal 13 at 9), plaintiff’s total PAGA penalties are $6,450.3 14 Under PAGA, civil penalties recovered by aggrieved 15 employees are distributed as follows: “75 percent to the Labor 16 and Workforce Development Agency [“LWDA”] . . . and 25 percent to 17 the aggrieved employees.” Cal. Lab. Code § 2699(i). While there 18 is a split among district courts on the issue, this court has 19 previously held that the LWDA’s portion of PAGA penalties is not 20 to be considered when calculating the amount in controversy. See 21 Guerrero v. Nwestco, LLC, No. 2:22-cv-01620 WBS JDP, 2022 WL 22 16961124, at *2 (E.D. Cal. Nov. 16, 2022); Escobar v. Capstone 23 Logistics, LLC, No. 2:20-cv-02501 WBS JDP, 2021 WL 913174, at *2- 24 3 (E.D. Cal. Mar. 10, 2021). In Urbino v. Orkin Services of 25 California, Inc., 726 F.3d 1118 (9th Cir. 2013), the Ninth 26 Circuit found that “[t]he state, as the real party in interest 27 3 This $6,450 figure results from $2,700 multiplied by 28 two pay periods, plus $1,050. 1 [with respect to the LWDA’s share of PAGA penalties], is not a 2 ‘citizen’ for diversity purposes.” See Escobar, 2021 WL 913174, 3 at *3 (quoting Urbino, 726 F.3d at 1122–23). This language 4 “implies that . . . [the state]’s interest is not to be 5 considered.” Id. (quoting Hesselink v. Am. Fam. Life Assurance 6 Co. of Columbus, No. SACV-20-02051 CJC DFM, 2020 WL 7768711, at 7 *3 (C.D. Cal. Dec. 30, 2020)). The LWDA’s share of the PAGA 8 penalties associated with plaintiff’s claims should therefore not 9 be included in calculating the amount in controversy. See 10 Guerrero, 2022 WL 16961124, at *2; Escobar, 2021 WL 913174, at 11 *2-3. 12 Plaintiff’s 25% share of the $6,450 in PAGA penalties 13 is $1,612.50. To satisfy the $75,000 amount in controversy 14 requirement, defendant must therefore establish that plaintiff’s 15 attorneys’ fees are likely to exceed $73,378.50. 16 2. Attorneys’ Fees 17 “[W]here an underlying statute authorizes an award of 18 attorneys’ fees, either with mandatory or discretionary language, 19 such fees may be included in the amount in controversy,” Shoner 20 v. Carrier Corp., 30 F.4th 1144, 1148 (9th Cir. 2022) (citing 21 Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998), 22 including attorneys’ fees incurred after the time of removal, 23 Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785, 794 24 (9th Cir. 2018). If plaintiff prevails on his PAGA claims, he 25 will be entitled to attorneys’ fees as a matter of right. See 26 Cal. Lab. Code § 2699. Accordingly, the court may consider 27 attorneys’ fees when assessing the amount in controversy here. 28 Only plaintiff’s pro rata share of attorneys’ fees is 1 appropriately considered. In Gibson v. Chrysler Corp., the Ninth 2 Circuit addressed this issue in the context of attorneys’ fees 3 sought under Cal. Civ. Proc. Code § 1021.5, which deals with 4 actions enforcing a right that affects the public interest. See 5 261 F.3d 927, 942 (9th Cir. 2001), holding modified on other 6 grounds by Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 7 546 (2005). The Gibson court found that an entire class’s 8 anticipated attorneys’ fees cannot be allocated to a named 9 plaintiff for purposes of satisfying the amount in controversy. 10 See id. at 941. It based this finding on the language of the 11 authorizing statute, which provides that a court may award 12 attorneys’ fees “to a successful party” rather than to a named or 13 representative party. See id. at 942-43 (quoting Cal. Civ. Proc. 14 Code § 1021.5) (emphasis in original). 15 PAGA is analogous because it does not specify that only 16 a named or representative party is entitled to attorneys’ fees. 17 See Cal. Lab. Code § 2699 (“[a]ny employee who prevails in any 18 action” is entitled to attorneys’ fees). Consistent with this 19 interpretation, the Ninth Circuit has indicated that the Gibson 20 rule applies in the PAGA context. See Canela v. Costco Wholesale 21 Corp., 971 F.3d 845, 850 (9th Cir. 2020). District courts, 22 including this court, have also applied Gibson to PAGA claims. 23 See, e.g., Guerrero, 2022 WL 16961124, at *2; Davenport v. 24 Wendy’s Co., No. 2:13-cv-02159 GEB, 2013 WL 6859009, at *2 (E.D. 25 Cal. Dec. 24, 2013). 26 The court will therefore consider only plaintiff’s pro- 27 rata share of anticipated attorneys’ fees. As a result, 28 defendant must establish that plaintiff’s pro rata share of the 1 attorneys’ fees is likely to exceed $73,378.50. 2 In cases involving a “common fund” that is distributed 3 to class members, district courts can award attorneys’ fees based 4 on either a percentage of the total fund or a lodestar 5 calculation that incorporates reasonable valuations of the hours 6 expended and the hourly rate. Hanlon v. Chrysler Corp., 150 F.3d 7 1011, 1029 (9th Cir. 1998). “The reasonableness of attorneys’ 8 fees, when such fees are unascertainable on the face of the 9 complaint, can be calculated by looking to other attorneys’ fees 10 awards in similar cases.” Garnett v. ADT LLC, 74 F. Supp. 3d 11 1332, 1337 (E.D. Cal. 2015) (Shubb, J.) (citing Garcia, 2014 WL 12 2468344, at *5; Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th 13 Cir. 2005)). In determining what constitutes a reasonable 14 attorneys’ fee, district courts may rely on “their own knowledge 15 of customary rates and their experience concerning reasonable and 16 proper fees.” Oth Ingram v. Oroudjian, 647 F.3d 925, 928 (9th 17 Cir. 2011). 18 Defendant states that there are more than 2,000 19 aggrieved employees included in this action. (Notice of Removal 20 at 5.) For purposes of this inquiry, the court assumes that 21 there are 2,000 aggrieved employees and allocates the attorneys’ 22 fees equally between them. Based on these assumptions, 23 plaintiff’s counsel would need to be awarded more than 24 $146,757,000 as a “reasonable” attorneys’ fee award.4 See 25 Buchanan v. Aramark Campus, LLC, No. 19-cv-00384 VKD, 2019 WL 26 3302164, at *7 (N.D. Cal. July 23, 2019) (applying similar 27 4 This $146,757,000 figure results from $73,378.50 in 28 attorneys’ fees multiplied by 2,000 employees. nnn nnn ne en een I Om IO III EE OSE ISS ESI OO EE 1 calculation in determining total requisite attorneys’ fees based 2 on plaintiff’s pro rata share). Defendant has provided no reason 3 to believe that attorneys’ fees in this unextraordinary PAGA 4 action would reach such an absurdly high amount. 5 Accordingly, the court finds that defendant has not 6 | proven by a preponderance of the evidence that the $75,000 amount 7 in controversy threshold is satisfied and has therefore failed to 8 overcome the presumption in favor of remand.° 9 IT IS THEREFORE ORDERED that plaintiff’s motion to 10 remand (Docket No. 18) be, and the same hereby is, GRANTED. This 11 case is hereby REMANDED to the Superior Court of the State of 12 California, in and for the County of Sacramento. 13 IT IS FURTHER ORDERED that defendant’s motion to 14 consolidate (Docket No. 15) is DENIED as moot. 15 | Dated: January 13, 2023 Lyd ak. 2 16 WILLIAM B. SHUBB 7 UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 ° The court need not address plaintiff’s argument that defendant’s notice of removal was not timely filed as it would 28 | not alter the outcome.