Price v. McGee Air Services, Inc. ( 2023 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DARUIS PRICE, Case No. 23-cv-02705-HSG 8 Plaintiff, ORDER DENYING MOTION TO REMAND 9 v. Re: Dkt. No. 11 10 MCGEE AIR SERVICES, INC., 11 Defendant. 12 13 Pending before the Court is Plaintiff Darius Price’s motion to remand based on lack of 14 subject matter jurisdiction. Dkt. No. 11. The Court heard argument on the motion. For the 15 reasons detailed below, the Court DENIES the motion. 16 I. BACKGROUND 17 Plaintiff initially filed this putative class action in San Mateo Superior Court in January 18 2023. See Dkt. No. 1-1, Ex. A. Plaintiff amended the complaint in March 2023, alleging that 19 Defendant McGee Air Services, Inc. improperly rounded employees’ time records such that they 20 were not paid for all hours worked. See Dkt. No. 1-1, Ex. K (“FAC”) at ¶ 10. Moreover, Plaintiff 21 contends that employees’ workloads sometimes prevented them from taking proper rest periods, 22 and Defendants failed to include bonuses and other pay when calculating meal period premiums. 23 Id. at ¶¶ 11–12. Based on these allegations, Plaintiff brings multiple claims for: (1) failure to pay 24 minimum wages; (2) failure to pay meal period premiums at the regular rate of compensation; and 25 (3) rest period violations; as well as derivative claims for (4) wage statement violations; 26 (5) waiting time penalties; (6) violations of California’s Unfair Competition Law; and (7) PAGA 27 Civil Penalties. Id. at ¶¶ 22–53. 1 damages based on these claims. Nevertheless, Defendant removed this action to federal court in 2 May 2023. See Dkt. No. 1. The parties dispute whether removal was proper. Specifically, 3 Plaintiff argues that Defendant has not adequately established that the $5 million amount-in- 4 controversy requirement for jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”), 5 28 U.S.C. § 1332(d), is met here. See Dkt. No. 11. 6 II. LEGAL STANDARD 7 A suit may be removed from state court to federal court only if the federal court would 8 have had subject matter jurisdiction over the case. See 28 U.S.C. § 1441(a); see Caterpillar Inc. v. 9 Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions that originally could have been filed 10 in federal court may be removed to federal court by the defendant.”). “If at any time before final 11 judgment it appears that the district court lacks subject matter jurisdiction, the case shall be 12 remanded.” 28 U.S.C. § 1447(c). 13 CAFA vests district courts with original jurisdiction over civil actions in which the amount 14 in controversy exceeds $5 million, there is minimal diversity of citizenship between the parties, 15 and the action involves at least 100 class members. See 28 U.S.C. § 1332(d). Under CAFA, “the 16 claims of the individual class members shall be aggregated to determine whether the matter in 17 controversy exceeds the sum or value of $5,000,000.” 28 U.S.C. § 1332(d)(6). A defendant 18 claiming federal jurisdiction under CAFA bears the burden of establishing that the amount in 19 controversy exceeds $5 million by a preponderance of the evidence. Ibarra v. Manheim 20 Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). 21 III. DISCUSSION 22 The only issue here is whether Defendant has established by a preponderance of the 23 evidence that the $5 million amount-in-controversy requirement is met. See Dkt. No. 11. 24 In support of its opposition to the motion to remand, Defendant submitted a declaration 25 from its Managing Director of Finance, Marie Underwood. See Dkt. No. 12-1 (“Underwood 26 Decl.”). The declaration provides high-level information such as the number of McGee’s non- 27 exempt employees in California from February 2021 onward; the number of workweeks worked 1 from their employment since February 2021. See id. at ¶¶ 3–11. Ms. Underwood also confirms 2 that McGee always paid its non-exempt employees in California at least the California minimum 3 wage rate, and that McGee used the same timekeeping system since at least February 2021. Id. at 4 ¶¶ 9, 11. Based largely on this declaration, Defendant urges that the amount in controversy here 5 “easily exceeds” $5 million. See Dkt. No. 12 at 8. 6 Although Defendant’s showing is hardly overwhelming, the Court finds that it has 7 established by a preponderance of the evidence that the amount in controversy based on the 8 alleged waiting time penalties alone exceeds $5 million. 9 Under California Labor Code § 203(a), “[i]f an employer willfully fails to pay . . . any 10 wages of an employee who is discharged or who quits, the wages of the employee shall continue 11 as a penalty from the due date thereof at the same rate until paid or until an action therefor is 12 commenced; but the wages shall not continue for more than 30 days.” Cal. Labor Code § 203(a). 13 The California Court of Appeal has explained that § 203 “is designed to compel the prompt 14 payment of earned wages . . . .” Mamika v. Barca, 68 Cal. App. 4th 487, 492 (Cal. Ct. App. 15 1998), as modified (Dec. 11, 1998) (quotation omitted). Accordingly, the statute “mandates a 16 penalty equivalent to the employee’s daily wages for each day he or she remained unpaid up to a 17 total of 30 days.” Id. at 493. 18 Here, Defendant argues that it is reasonable to assume that every discharged or quitting 19 employee had at least some allegedly unpaid wages, and therefore would be entitled to waiting 20 time penalties for up to 30 days if Plaintiff were to prevail. See Dkt. No. 12 at 15–16. The Court 21 agrees that this is a reasonable extrapolation from the Underwood Declaration and the allegations 22 in the complaint. Plaintiff alleges, for example, that Defendant required employees to clock in and 23 out using an electronic or digital timekeeping system, which recorded the hours that employees 24 worked to the minute. See FAC at ¶ 10. Plaintiff further alleges that Defendant had a policy and 25 practice of rounding these time records in a way that underestimated the number of hours that 26 employees worked. Id. For example, the FAC alleges that on a single day in March 2022, 27 Plaintiff clocked in at 3:56 p.m. and clocked out for the day at 12:32 a.m. Id. However, 1 underpaying Plaintiff by 6 minutes. Id. Plaintiff further alleges that during this specific week, 2 Defendants “underpaid Plaintiff by about 18 minutes due to this rounding/time-shaving practice.” 3 Id. The Underwood Declaration confirmed that Defendant “used the same timekeeping system to 4 record [employees’] hours worked since at least February 7, 2021.” See Underwood Decl. at ¶ 11. 5 And Plaintiff contends that the failure to pay employees for all their time is a common question 6 that “stem[s] from Defendants’ policies and/or practices applicable to each individual class 7 member . . . .” FAC at ¶¶ 18, 26. Plaintiff suggests that underpayment was so pervasive that it is 8 appropriate to certify a “waiting time class” of former employees. Id. at ¶ 15. 9 Although Defendant does not present evidence of the exact amount of time employees 10 were purportedly undercompensated, the Court does not find this level of detail necessary given 11 the nature of this particular claim. A reasonable interpretation of the FAC is that Defendant’s 12 rounding policy affected every putative class member at least once during the course of their 13 employment such that at the time employees quit or were discharged, they were not paid all their 14 owed wages. Accord Amezcua v. CRST Expedited Inc., No. 4:22-CV-06501-YGR, 2023 WL 15 2002085, at *6–7 (N.D. Cal. Jan. 31, 2023) (“It is not unreasonable to assume that a ‘policy’ that 16 plaintiff alleges was enforced was enforced most of the time.”) (collecting cases); Salonga v. Aegis 17 Senior Communities, LLC, No. 22-CV-00525-LB, 2022 WL 1439914, at *4–6 (N.D. Cal. May 6, 18 2022) (finding a 100% violation rate reasonable for waiting time penalty claims for terminated 19 employees). For purposes of assessing the amount at issue in the lawsuit, the waiting time 20 penalties under § 203 thus would apply to any employee who quit or was discharged during the 21 relevant timeframe. 22 Defendant calculates waiting time penalties as follows: 23 24 • Employees were all paid at least California’s minimum wage of $14 an hour from 25 February 2021 to December 2021, and $15 an hour from January 2022 onward. 26 See Underwood Decl. at ¶ 9. And employees generally worked 8 hour workdays. 27 See id. at ¶ 5. 1 • Between February and December 2021, 566 putative class members quit or were 2 discharged. Id. at ¶ 10. And between January 2022 and December 22, 2022 (33 3 days prior to the filing of this action), at least 895 putative class members quit or 4 were discharged. Id. 5 • 566 discharged or quitting employees x $14 per hour x 8 hours per day x 30 days = 6 $1,901,760. 7 • 895 discharged or quitting employees x $15 per hour x 8 hours per day x 30 days = 8 $3,222,00. 9 • $1,901,760 + $3,222,00 = $5, 123, 760.00 10 11 Although Plaintiff urges that Defendant has not sufficiently substantiated its assumptions, 12 Plaintiff does not substantively dispute the calculations above. See Dkt. No. 14 at 3–7. And 13 having reviewed the record in detail, this does not appear to be a case in which Defendant is 14 simply pulling assumptions “out of thin air,” at least as it relates to the waiting time penalties. See 15 Rutledge v. Healthport Technologies, LLC, No. 16-cv-06920-VC, 2017 WL 728375, at *1 (N.D. 16 Cal. Feb. 24, 2017) (citing LaCross v. Knight Transportation Inc., 775 F.3d 1201, 1202–03 (9th 17 Cir. 2015)). The Court finds that Defendant’s calculations are based on sufficient information 18 provided in Ms. Underwood’s declaration and on reasonable assumptions drawn from the 19 allegations in the FAC. Defendant has therefore met its burden of establishing the $5 million 20 amount in controversy by a preponderance of the evidence. 21 IV. CONCLUSION 22 The Court DENIES the motion to remand. The Court further SETS a case management 23 conference on December 5, 2023, at 2:00 p.m. All counsel shall use the following dial-in 24 information to access the call: 25 Dial-In: 888-808-6929; 26 Passcode: 6064255 27 All attorneys and pro se litigants appearing for a telephonic case management conference are 1 deputy. For call clarity, parties shall NOT use speaker phone or earpieces for these calls, and 2 || where at all possible, parties shall use landlines. The Court further DIRECTS the parties to meet 3 and confer and submit a revised joint case management statement, including a proposed case 4 schedule through a class certification hearing, by November 28, 2023. 5 IT IS SO ORDERED. 6 || Dated: 11/1/2023 Atarpurerd 3. Sb □□ 8 HAYWOOD S. GILLIAM, JR. 9 United States District Judge 10 11 12 © 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28