Morand-Doxzon v. Delaware North Companies Sportservice, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 MELISSA MORAND-DOXZON, on Case No. 20-cv-1258 DMS (BLM) behalf of herself, all others similarly 11 situated, and on behalf of the general ORDER DENYING MOTION TO public, REMAND 12 Plaintiff, 13 v. 14 DELAWARE NORTH 15 COMPANIES SPORTSERVICE, INC.; CALIFORNIA 16 SPORTSERVICE, INC.; and DOES 1-100, 17 Defendants. 18 19 20 Pending before the Court is Plaintiff Melissa Morand-Doxzon’s motion to 21 remand this action to the San Diego Superior Court. Defendants Delaware North 22 Companies Sportservice, Inc. and California Sportservice, Inc. filed a response in 23 opposition to Plaintiff’s motion. Plaintiff filed a reply. For the following reasons, 24 the Court denies Plaintiff’s motion. 25 I. 26 BACKGROUND 27 Plaintiff Melissa Morand-Doxzon was formerly employed by Defendants as 1 all others similarly situated, and on behalf of the general public, commenced the 2 present action against Defendants in the San Diego County Superior Court. The 3 Complaint alleges nine claims for relief: (1) failure to pay all straight time wages, 4 (2) failure to pay all overtime wages, (3) failure to provide meal periods, in violation 5 of Cal. Labor Code §§ 226.7 and 512 and the applicable California Industrial 6 Welfare Commission (“IWC”) Wage Order, (4) failure to authorize and permit rest 7 periods, in violation of Cal. Labor Code § 226.7 and the applicable IWC Wage 8 Order, (5) failure to provide suitable resting facilities for meal or rest periods, in 9 violation of Cal. Labor Code § 226.7 and the applicable IWC Wage Orders, (6) 10 knowing and intentional failure to comply with itemized employee wage statement 11 provisions, in violation of Cal. Labor Code §§ 226, 1174 and 1175, and the 12 applicable IWC Wage Order, (7) failure to pay all wages due at the time of 13 termination of employment, in violation of Cal. Labor Code §§ 201-203, (8) 14 violations of the Labor Code Private Attorneys General Act of 2004 (“PAGA”), and 15 (9) violation of unfair competition law, under Cal. Bus. & Prof. Code § 17200 et seq. 16 The proposed class is defined as “[a]ll persons who are employed or have been 17 employed by Defendants in the State of California as hourly, Non-Exempt 18 Employees during the period of the relevant statute of limitations.” (Compl. ¶ 32.) 19 On July 6, 2020, Defendants removed the case to this Court based on (1) the 20 Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332, and (2) Section 301 21 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185. In response 22 to the Notice of Removal, Plaintiff filed the present motion, arguing that this case 23 must be remanded (1) under CAFA’s Local Controversy and Home State 24 Controversy Exceptions, and (2) because Defendants have failed to satisfy their 25 burden of showing that preemption under Section 301 of the LMRA applies to any 26 of Plaintiff’s causes of action.1 27 1 II. 2 LEGAL STANDARD 3 The Class Action Fairness Act was passed by Congress “to permit defendants 4 to remove class actions to federal court if they meet three requirements: there must 5 be minimal diversity of citizenship between the parties; the proposed class must have 6 at least 100 members; and the aggregated amount in controversy must equal or 7 exceed the sum or value of $5 million.” Jordan v. Nationstar Mortg. LLC, 781 F.3d 8 1178, 1182 (9th Cir. 2015) (citing 28 U.S.C. § 1332(d)). Furthermore, “no 9 antiremoval presumption attends cases invoking CAFA,” and its provisions must be 10 interpreted “broadly in favor of removal.” Id. at 1184 (citing Dart Cherokee Basin 11 Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014)). Although the party 12 seeking removal still bears the burden of establishing removal jurisdiction, the party 13 seeking remand bears the burden of showing that an exception to CAFA jurisdiction 14 applies. See, e.g., Mondragon v. Capital One Auto Fin., 736 F.3d 880, 883 (9th Cir. 15 2013); Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1022 (9th Cir. 2007). 16 III. 17 DISCUSSION 18 Plaintiff argues that remand is proper because two exceptions to CAFA 19 jurisdiction apply: the local controversy exception and the home state controversy 20 exception. See 28 U.S.C. § 1332(d)(4). Plaintiff bears the burden of demonstrating 21 that a CAFA exception applies. See Mondragon, 736 F.3d at 883. 22 A. Local Controversy Exception 23 The local controversy exception provides that district courts shall decline 24 jurisdiction where (1) “more than two-thirds of the plaintiffs are citizens of 25 California”; (2) “at least one defendant from whom significant relief is sought and 26 whose alleged conduct forms a significant basis for the claims is a California 27 1 citizen”; (3) “the principal injuries about which Plaintiffs complain were suffered in 2 California”; and (4) “no similar class action has been filed against any of the 3 defendants in the preceding three years.” Bridewell-Sledge v. Blue Cross of 4 California, 798 F.3d 923, 929 (9th Cir. 2015); 28 U.S.C. § 1332(d)(4)(A). This 5 exception is intended to be applied narrowly, “particularly in light of the purposes 6 of CAFA.” Benko v. Quality Loan Service Corp., 789 F.3d 1111, 1116 (9th Cir. 7 2015). Here, the first and second prongs are in dispute. As discussed below, Plaintiff 8 meets the second prong, but fails to meet the first prong, which are addressed in turn 9 below. 10 1. Significant Defendant 11 CAFA provides that a case shall be remanded if, among other things, at least 12 one defendant from whom significant relief is sought and whose alleged conduct 13 forms a significant basis for the claims is a California citizen. A corporation is 14 deemed to be a citizen of every State by which it has been incorporated and of the 15 State where it has its principal place of business. 28 U.S.C. § 1332(c)(1) (emphasis 16 added). To determine a corporation’s “principal place of business,” courts apply the 17 “nerve center” test, which deems the principal place of business to be the state in 18 which the corporation’s officers direct, control, and coordinate the corporation’s 19 activities. The Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). In practice, the 20 “principal place of business” should normally be the place where the corporation 21 maintains its headquarters. Id. at 93. 22 Here, Plaintiff first contends that California Sportservice, Inc. (“California 23 Sportservice”) is a California citizen because the California Secretary of State’s 24 website states that California Sportservice’s “jurisdiction” is “California,” and 25 because the “Notice to Employee” provided to Plaintiff stated that the “physical 26 address” of California Sportservice’s “main office” is “100 Park Boulevard, San 27 Diego, CA 92101.” (P’s Mot. at 10.) Defendants argue that Plaintiff has not met 1 Plaintiff submits no evidence of the corporation’s principal place of business. On 2 the contrary, Plaintiff states in her Complaint that California Sportservice is 3 “headquartered in Buffalo, New York.” (D’s Opp. at 12; Compl. ¶ 3.) It may very 4 well be that California Sportservice’s principal place of business is in Buffalo, New 5 York. But as noted earlier, a corporation is also deemed to be a citizen of the State 6 in which it is incorporated. In her Reply, Plaintiff provides a copy of California 7 Sportservice’s Articles of Incorporation, which shows that it is incorporated in 8 California. (P’s Mot. at 3.) Therefore, California Sportservice is a corporation with 9 California citizenship. 10 The next issue is whether California Sportservice’s conduct constitutes “a 11 significant basis” of Plaintiff’s claims and whether Plaintiff seeks “significant relief” 12 from California Sportservice. To determine this, courts must look only to the 13 complaint rather than to extrinsic evidence. Coleman v. Estes Exp. Lines, Inc., 631 14 F.3d 1010, 1016 (9th Cir. 2011). 15 First, to determine if the basis for the claims against California Sportservice 16 is “significant” or “important or fairly large in amount or quantity,” a comparison 17 must be made between the allegations against California Sportservice and the other 18 Defendant, Delaware North Companies Sportservice, Inc. (“Delaware North”). See 19 Benko, 789 F.3d at 1118 (to determine “significant basis” of claims against a 20 defendant, allegations against defendant in question must be compared to allegations 21 made against other defendants). CAFA clarifies that examination of a defendant’s 22 “basis” must be made in the context of the overall “claims asserted.” Id. Here, 23 Plaintiff’s Complaint alleges that California Sportservice employed Plaintiff and the 24 putative class members, and violated their wage and hour rights in a number of ways. 25 (Compl. ¶¶ 1, 5.) Plaintiff makes the same allegations against both California 26 Sportservice and Delaware North. (Id.) Defendants argue that Plaintiff does not 27 meet her burden to establish that California Sportservice’s conduct forms a 1 conduct between California Sportservice and Delaware North. (D’s Opp. at 14.) 2 But the Ninth Circuit has held that a plaintiff’s complaint can allege the same 3 violations of law against both defendants and still make a sufficient showing that the 4 conduct of the defendant in question forms a significant basis for the claims asserted 5 on behalf of the putative class. See Coleman, 631 F.3d at 1020. Simply because 6 Plaintiff’s complaint makes the same allegations against both Defendants does not 7 make her allegations against California Sportservice insignificant. Therefore, 8 California Sportservice’s conduct constitutes “a significant basis” for Plaintiff’s 9 claims. 10 Next, to determine if Plaintiff seeks “significant relief” from California 11 Sportservice, the court is required to look to the remedies requested by Plaintiff in 12 her Complaint. See Benko, 789 F.3d at 1119 (citing Coleman, 631 F.3d at 1020). 13 Here, Plaintiff’s Complaint seeks monetary relief for “unpaid wages, overtime, meal 14 and rest period compensation, penalties, injunctive and other equitable relief, and 15 reasonable attorneys’ fees and costs.” (Compl. ¶ 21.) Plaintiff’s Complaint also 16 seeks “injunctive relief, restitution, and disgorgement of all benefits” that California 17 Sportservice enjoyed from its “failure to pay all straight time wages, overtime wages, 18 and meal and rest period compensation” and penalties for California Sportservice’s 19 failure to provide accurate itemized wage statements, failure to pay all wages owed 20 at the termination of employment, and violation of the Labor Code Private Attorneys 21 General Act of 2004 (Compl. ¶¶ 22, 107, 116-120, 125.) Defendants again argue 22 that Plaintiff fails to show that she is seeking “significant relief” from California 23 Sportservice because Plaintiff does not differentiate how much she is seeking from 24 California Sportservice as compared to Delaware North. (D’s Opp. at 13.) But just 25 as in Coleman, where the Ninth Circuit found that the plaintiff sought sufficient 26 relief against the local defendant in question even though the plaintiff sought 27 damages equally from both defendants involved, there is nothing in Plaintiff’s 1 relief sought is insignificant. See Coleman, 631 F.3d 1010 at 1020. Accordingly, 2 Plaintiff’s Complaint seeks “significant relief” from California Sportservice. 3 2. Citizenship of Plaintiffs 4 CAFA also provides that a case shall be remanded if, among other things, 5 greater than two-thirds of the prospective class members are citizens of the state 6 where the action was filed. Mondragon, 736 F.3d at 883-884. The statute does not 7 provide that remand may be based simply on a plaintiff’s allegations, when they are 8 challenged by the defendant. Id. at 884. A district court makes factual findings 9 regarding jurisdiction under a preponderance of the evidence standard. Id. 10 Here, simply based on Plaintiff’s class definition, she alleges that two-thirds 11 of the prospective class members are local state citizens. (P’s Mot. at 9.) Defendants 12 state that potential class members in this case (1) resided in 16 different states outside 13 of California, during their employment and/or after their employment ended, (2) 14 included many citizens of other states who took up temporary residence in California 15 for seasonal employment during the summer, and (3) included some who were not 16 United States citizens. (D’s Opp. at 8-9.) Plaintiff does not provide any evidence to 17 the contrary. By not doing so, Plaintiff fails to show that more than two-thirds of 18 the prospective class members are citizens of California.2 Therefore, the local 19 controversy exception does not apply. 20 B. Home State Controversy Exception 21 The home state controversy exception provides two bases for remand – one 22 that is mandatory and another that is within the district court’s discretion. Adams v. 23 West Marine Prods, Inc., 958 F.3d 1216, 1220 (9th Cir. 2020). Under the mandatory 24 home state exception, the district court must decline jurisdiction if “two-thirds or 25 26 2 Should the Court find that Plaintiff has not met her burden of showing that two- thirds of the prospective class members are citizens of California, Plaintiff requests 27 the Court deny Plaintiff’s motion without prejudice to allow Plaintiff to refile after 1 more of the members of all proposed plaintiff classes in the aggregate, and the 2 primary defendants, are citizens of the State in which the action was originally filed.” 3 28 U.S.C. § 1332(d)(4)(B). Under the discretionary home state exception, the 4 district court “may, in the interests of justice and looking at the totality of the 5 circumstances, decline to exercise jurisdiction” when more than one-third of the 6 putative class, and the primary defendants, are citizens of the state where the action 7 was originally filed.” 28 U.S.C. § 1332(d)(3). There are six factors for the district 8 court to consider when deciding whether to decline jurisdiction under the 9 discretionary home state exception.3 28 U.S.C. § 1332(d)(3)(A)-(F). As noted, 10 Plaintiff bears the burden of demonstrating that a CAFA exception applies. See 11 Adams, 958 F.3d at 1221. 12 Here, as discussed above, Plaintiff does not provide any evidence regarding 13 the citizenship of the prospective class members and therefore the Court is unable to 14 find that at least two-thirds of the class members are citizens of California. 15 Therefore, Plaintiff fails to show that the mandatory home state exception applies. 16 Plaintiff further argues that the discretionary home state exception should 17 apply because more than one-third of the class members are California citizens. 18 However, Plaintiff does not provide any evidence in support and instead relies on 19 “common sense judgments.” (P’s Mot. at 19; P’s Reply at 6.) To meet the burden 20 of showing that a CAFA exception applies, Plaintiff “must provide some facts in 21 evidence from which the district court may make findings regarding class members’ 22 citizenship” and such a finding must be based on more than mere “guesswork.” 23 Adams, 958 F.3d at 1221 (citations omitted). Because Plaintiff fails to show that 24 more than one-third of the class members are California citizens, the discretionary 25 home state exception does not apply. 26 27 3 The Court need not address these six factors because Plaintiff fails to show that 1 Finally, Plaintiff argues the foregoing exception applies because California 2 Sportservice is the only “primary defendant” and Delaware North is merely a 3 “secondary defendant.” (P’s Mot. at 17-18.) CAFA does not define “primary 4 defendant.” See Singh v. Am. Honda Fin. Corp., 925 F.3d 1053, 1067 (9th Cir. 5 2019). The Ninth Circuit has held that a court analyzing whether a defendant is a 6 “primary defendant” should first assume that all defendants will be found liable. Id. 7 at 1068. The court should then consider whether the defendant is sued directly or 8 alleged to be directly responsible for the harm to the proposed class, as opposed to 9 being vicariously or secondarily liable. Id. The court should also consider the 10 defendant’s potential exposure to the class relative to the exposure of other 11 defendants. Id. Courts should not treat these considerations as exhaustive or apply 12 them mechanistically. Id. The inquiry is whether a defendant is a “principal, 13 fundamental, or direct” defendant. Id. (quoting Vodenichar v. Halcon Energy 14 Props., Inc., 733 F.3d 497, 504 (3d Cir. 2013)). CAFA requires remand under the 15 home state exception only if all primary defendants are citizens of the alleged home 16 state. Id. 17 Here, Plaintiff argues that California Sportservice, which is a citizen of 18 California, is the only primary defendant because it employed Plaintiff and is a 19 subsidiary of Delaware North. (P’s Mot. at 17.) Defendants argue that both 20 California Sportservice and Delaware North are “primary defendants” in this case 21 because Plaintiff alleges in her Complaint that both Defendants employed her and 22 are equally liable to the potential class. (D’s Opp. at 16.) Defendants argue the 23 home state controversy exception does not apply because Delaware North, one of 24 the primary defendants, is not a citizen of California. (Id.) The Court agrees with 25 Defendants. As discussed earlier, Plaintiff does not differentiate between California 26 Sportservice and Delaware North in her Complaint. Plaintiff states that she and other 27 putative class members were employed by both Defendants (Compl. ¶ 1.), makes the 1 |}relief from both Defendants (Compl. ¥§] 21-22.). Because Plaintiff does not 2 || differentiate between the two Defendants in her Complaint, the Court finds that both 3 || California Sportservice and Delaware North are “primary defendants.” Since it does 4 ||not appear that Delaware North is a citizen of California, the home state exception — 5 || mandatory or discretionary — does not apply. 6 IV. 7 CONCLUSION 8 For the foregoing reasons, Plaintiff's motion for remand is denied. 9 IT IS SO ORDERED. 10 11 ||Dated: November 2, 2020 ins ym. 44) 12 Hon. Dana M. Sabraw 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28