Jessica Aparicio v. Abercrombie & Fitch Stores Inc et al

Filing 18

MINUTE ORDER (IN CHAMBERS) Order to Show Cause Why Action Should Not Be Dismissed for Lack of Subject Matter Jurisdiction by Judge Margaret M. Morrow: On January 16, 2013, Jessica Aparicio filed this putative class action in Los Angeles Superior Cou rt against Abercrombie & Fitch Stores ("Abercrombie") and certain fictitious defendants...........Abercrombie has failed to demonstrate the existence of minimal diversity and has failed to show by a preponderance of the evidence that the jurisdictional amount is satisfied. See Rodriguez v. AT&T Mobility Services LLC, 728 F.3d 975, 981 (9th Cir. 2013). The court accordingly orders Abercrombie to show cause on or before February 18, 2014 why this action should not be remanded to Los An geles Superior Court for lack of subject matter jurisdiction. Plaintiff may file a reply on or be fore February 25, 2014. Abercrombie's failure to respond by February 18, 2014 will result in immediate remand without further notice. (PLEASE REVIEW DOCUMENT FOR FULL AND COMPLETE DETAILS) ( Response to Order to Show Cause due by 2/18/2014.) (lw)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 13-09209 MMM (Ex)

Date February 10, 2014

Title Jessica Aparicio v. Abercrombie & Fitch Stores Inc et at

Present: The Honorable

MARGARET M. MORROW

ANEL HUERTA

N/A

Deputy Clerk

Court Reporter

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

Order to Show Cause Why Action Should Not Be Dismissed for Lack of
Subject Matter Jurisdiction
I. BACKGROUND

A.

Factual and Procedural Background

On January 16, 2013, Jessica Aparicio filed this putative class action in Los Angeles Superior
Court against Abercrombie & Fitch Stores (“Abercrombie”) and certain fictitious defendants.1 On
March 21, 2013, plaintiffs filed a first amended complaint.2 On December 13, 2013, Abercrombie
removed the action to this court, invoking the court’s jurisdiction under the Class Action Fairness Act
(“CAFA”), codified at 28 U.S.C. § 1332(d).3
The original complaint alleges failure to provide rest breaks in violation of California Labor
Code § 226.7; waiting time penalties under California Labor Code § 203; and violation of the Unfair

1

Notice of Removal (“Removal”), Docket No. 1 (Dec. 13, 2013), Declaration of Charles F.
Baker (“Baker Decl.”), Exh. A (“Complaint”).
2

Baker Decl., Exh. L (“FAC”).

3

Removal.

Competition Law, Business and Professions Code § 17200 (“UCL”).4 The first amended complaint
realleges these claims and adds a fourth cause of action under the Private Attorneys General Act of
2004 (“PAGA”), California Labor Code § 2699.5 The first amended complaint defines the purported
class as “[a]ll hourly employees employed by Abercrombie & Fitch Stores, Inc., making less than two
times the minimum wage who have worked a major fraction of a four hour period for one or more
shifts in the State of California from four years prior to the filing of this action through the present.”6
The original and first amended complaints allege that the amount in controversy exceeds $25,0007 and
that the class consists of at least 90 hourly employees.8 Aparicio seeks compensatory damages,
penalties under Labor Code §§ 203 and 2699, interest, restitution under the UCL, costs and attorneys’
fees, and a court order enjoining Abercrombie from failing to provide plaintiffs with proper rest
breaks pursuant to Labor Code §§ 226.7 and 512 and IWC 5-2001.9
B.

Settlement Discussions Prior to Removal

On November 13, 2013, Aparicio responded to Abercrombie’s request for an opening
settlement demand with an email, which stated that his lawyers had “analyzed the data [Abercrombie]
provided . . . and . . . believe[d] the full exposure, assuming all penalties are awarded, is around 16
million dollars.”10 On November 18, 2013, Abercrombie responded that it did not understand how
Aparicio had calculated such a number, “which ma[de] it difficult to evaluate where to go from here.”
It requested that Aparicio explain “how [she] arrive[d] at a full exposure amount of around 16 million
dollars. . . .”11 Aparicio replied the same day, and provided her damages model, which she asserted
“ha[d] no assumptions, because it [was] based entirely on the data [Abercrombie had] provided. . .
.” Aparicio noted that “[t]he bulk of the damages stem from the claims for penalties pursuant to
Labor Code Section 203 (for former employees only) and PAGA[ because] . . . PAGA

4

Complaint, ¶¶ 30-47.

5

FAC, ¶¶ 31-53.

6

Id., ¶ 21.

7

Complaint at 11.

8

Id., ¶ 23; FAC, ¶ 24.

9

FAC at 9-10 (prayer).

10

Declaration of Natalie M. McLaughlin (“McLaughlin Decl.”), ¶¶ 3, 4; id., Exh. 1.

11

Id., ¶ 5; id., Exh. 2.
2

permits a $100 penalty for the first violation and a $200 penalty for subsequent violations.”12 The
damages model listed the following amounts:13
Rest Break Premium

$

682,848.08

Interest (3/1/14)

$

99,246.82

§ 203

$ 7,105,934.40

§ 2699

$ 8,997,000.00

Total

$16,885,029.30

The damages model appears to calculate rest break damages assuming a class of 3,338 former
employees; an average hourly rate of $8.87; 76,984 shifts worked; and a rest break violation during
100% of the shifts.14 It appears to calculate § 203 damages assuming that all former employees
worked 8 hours per day and none was paid for 30 days following termination.15 The assumptions
underlying the calculation of § 2699 penalties are unclear. Abercrombie’s attorney states in her
declaration that “[d]efendant has not produced data that supports the assumption that all 3,338 former
employees worked eight hours per day and were not paid all wages due for 30 days after
termination.”16
II. DISCUSSION
A.

Legal Standard Governing Removal Jurisdiction

The right to remove a case to federal court is entirely a creature of statute. See, e.g., Libhart
v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979) (“The removal jurisdiction of the
federal courts is derived entirely from the statutory authorization of Congress” (citations omitted)).
The removal statute, 28 U.S.C. § 1441, allows defendants to remove when a case originally filed in
state court presents a federal question or is between citizens of different states. See 28 U.S.C.
§§ 1441(a), (b); see also id., § 1446 (setting forth removal procedures generally); id., § 1453 (setting
forth removal procedures for class actions). Only those state court actions that could originally have

12

Id., ¶ 6; id., Exh. 3.

13

Id.

14

Removal, ¶ 12; McLaughlin Decl., Exh. 3.

15

Removal, ¶ 13; McLaughlin Decl., Exh. 3.

16

McLaughlin Decl., ¶ 8.
3

been filed in federal court can be removed. 28 U.S.C. § 1441(a) (“Except as otherwise expressly
provided by Act of Congress, any civil action brought in a State court of which the district courts of
the United States have original jurisdiction, may be removed by the defendant . . . to the district court
of the United States for the district and division embracing the place where such action is
pending . . .”); see also, e.g., Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only statecourt actions that originally could have been filed in federal court may be removed to federal court
by defendant”).
The Ninth Circuit “strictly construe[s] the removal statute[s] against removal jurisdiction.”
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663
(9th Cir. 1988), and Takeda v. Northwestern Nat’l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)).
“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first
instance.” Id. (citing Libhart, 592 F.2d at 1064). “The ‘strong presumption’ against removal
jurisdiction means that the defendant always has the burden of establishing that removal is proper.”
Id. (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990), and
Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)).
B.

Whether Removal Was Timely

28 U.S.C. § 1446(b) governs the timing of removal. It provides that a defendant has thirty
days to file a notice of removal once it learns that an action is removable. See 28 U.S.C. §1446(b).
This thirty day period begins to run “‘from defendant’s receipt of the initial pleading only when that
pleading affirmatively reveals on its face’ the facts necessary for federal court jurisdiction.” Harris
v. Bankers Life & Cas. Co., 425 F.3d 689, 690-91 (9th Cir. 2005) (quoting Chapman v. Powermatic,
Inc., 969 F.2d 160, 163 (5th Cir.1992), and citing Lovern v. Gen. Motors Corp., 121 F.3d 160, 162
(4th Cir. 1997) (“[W]e will allow the court to rely on the face of the initial pleading and on the
documents exchanged in the case by the parties to determine when the defendant had notice of the
grounds for removal, requiring that those grounds be apparent within the four corners of the initial
pleading or subsequent paper”)).
If the amount in controversy is not clear on the face of the initial pleading, however, the
thirty-day period for removal does not “begin ticking until a defendant receives ‘a copy of an amended
pleading, motion, order or other paper’ from which it can determine that the case is removable.”
Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1250 (9th Cir. 2006) (quoting 28 U.S.C.
§1446(b)). By focusing on the objective facts contained in documents exchanged by the parties, this
bright-line rule aims to bring “bring certainty and predictability to the process and avoids
gamesmanship in pleading” on the part of the plaintiff. Harris, 425 F.3d at 697.
A document reflecting a settlement demand in excess of the jurisdictional minimum constitutes
“other paper” sufficient to provide notice that a case is removable; consequently, it triggers the thirty
day window under § 1446(b). Babasa v. Lenscrafters, Inc., 498 F.3d 972, 974-75 (9th Cir. 2007)
(citing Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (“[a] settlement letter is relevant
4

evidence of the amount in controversy if it appears to reflect a reasonable estimate of the plaintiff’s
claim”); Ambriz v. Luxury Imports of Sacramento Inc., No.C08-01004 JSW, 2008 WL 1994880, *2
(N.D. Cal. May 5, 2008) (“Because Chase failed to remove this action within thirty days of receiving
the settlement demand letter, Chase’s removal was untimely”); Krajca v. Southland Corp., 206
F.Supp.2d 1079, 1081-82 (D. Nev. 2002) (“[T]he Ninth Circuit decision in Cohn v. Petsmart, Inc.
clarified the law with respect to the use of settlement letters as probative of the amount in
controversy”); Del Real v. Healthsouth Corp., 171 F.Supp.2d 1041, 1043 (D. Ariz. 2001) (“[A]s to
whether a demand letter is admissible as evidence, many courts have ruled that even if the initial
pleading in a case does not support the amount in controversy requirement for diversity jurisdiction,
defendants may use a variety of documents, including a written settlement demand, as ‘other paper,’
to determine if the case is removable”). See also Chase v. Shop 'N Save Warehouse Foods, Inc., 110
F.3d 424, 428-30 (7th Cir. 1997) (“Chase has asserted the value of her claim by making a settlement
offer for over twice the jurisdictional amount, by refusing Shop ‘N Save’s request to admit that she
would not seek more than $50,000 in damages, and by specifically alleging a laundry list of serious
and disabling injuries that will result in present and future damages”); Burns v. Windsor Ins. Co., 31
F.3d 1092, 1097 (11th Cir. 1994) (“Plaintiff . . . has offered to settle the case for $45,000. While
this settlement offer, by itself, may not be determinative, it counts for something. Defendant also
offered no proof that plaintiff’s prayer is grossly inconsistent with her alleged damages”); Wilson v.
Belin, 20 F.3d 644, 651 n. 8 (5th Cir. 1994) (“Because the record contains a letter, which plaintiff’s
counsel sent to defendants stating that the amount in controversy exceeded $50,000, it is ‘apparent’
that removal was proper”).
Here, neither the original nor first amended complaint alleged an amount in controversy that
indicated the jurisdictional threshold was met. The original complaint merely states that damages
exceeded $25,000. Nor did either complaint allege a class size exceeding 100; rather, each complaint
alleged only that the class exceeded 90 members. Thus, the thirty day period did not begin to run
upon the filing of either complaint. Furthermore, there is no evidence that there was any “other
paper” that would have triggered the thirty day period prior to Aparicio’s emails on November 13 and
18. Assuming, therefore, that Aparicio’s November 13 email constitutes “other paper” that triggered
the thirty day period, Abercrombie’s removal on December 13 was within thirty days and was timely.
C.

Whether this Case Was Properly Removed under 28 U.S.C. § 1332
1.

Legal Standard Governing CAFA Jurisdiction

In 2005, Congress enacted the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119
Stat. 4. CAFA gives district courts original jurisdiction to hear class actions “in which the matter in
controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs,” and “in which[,
inter alia,] any member of a class of plaintiffs is a citizen of a State different from any defendant.”
28 U.S.C. § 1332(d)(2); see also Luthis v. Countrywide Homes Loans Servicing LP, 533 F.3d 1031,
1033-34 (9th Cir. 2008) (“The Class Action Fairness Act of 2005 § 4(a), 28 U.S.C. § 1332(d)(2),
amended the requirements for diversity jurisdiction by granting district courts original jurisdiction
5

over class actions exceeding $5,000,000 in controversy where at least one plaintiff is diverse from
at least one defendant. In other words, complete diversity is not required. CAFA also provided for
such class actions to be removable to federal court. See 28 U.S.C. § 1453(b). CAFA was enacted,
in part, to ‘restore the intent of the framers of the United States Constitution by providing for Federal
court consideration of interstate cases of national importance under diversity jurisdiction.’ Pub.L.
No. 109-2, § 2(b)(2), 119 Stat. 4, 5 (codified as a note to 28 U.S.C. § 1711)”).
Under CAFA, the number of members of all proposed plaintiff classes must exceed 100 in the
aggregate. 28 U.S.C. § 1332(d)(5)(B). See also Serrano v. 180 Connect, Inc., 478 F.3d 1018, 102021 (9th Cir. 2007) (“As a threshold matter, CAFA applies to ‘class action’ lawsuits where the
aggregate number of members of all proposed plaintiff classes is 100 or more persons and where the
primary defendants are not ‘States, State officials, or other governmental entities against whom the
district court may be foreclosed from ordering relief.’ § 1332(d)(5). . . . Once the prerequisites of
§ 1332(d)(5) are satisfied, CAFA vests federal courts with ‘original’ diversity jurisdiction over class
actions if (1) the aggregate amount in controversy exceeds $5,000,000, and (2) any class member is
a citizen of a state different from any defendant. § 1332(d)(2)”); id. at 1021 n. 3 (“The Fifth Circuit
characterized § 1332(d)(5) as an ‘exception’ to CAFA jurisdiction conferred under § 1332(d)(2). . . .
We view § 1332(d)(5) somewhat differently. . . . [S]atisfaction of § 1332(d)(5) serves as a
prerequisite, rather than as an exception, to jurisdiction under § 1332(d)(2). This distinction is
important because, as we address later, there are ‘exceptions’ to the statute in which jurisdiction
otherwise exists under § 1332(d)(2) but the federal courts either may or must decline to exercise that
jurisdiction. See, e.g., § 1332(d)(3)-(4)”).
As the Ninth Circuit has explained, CAFA does not disturb the traditional rule that the burden
of establishing removal jurisdiction is on the proponent of federal jurisdiction. Abrego Abrego v. The
Dow Chemical Co., 443 F.3d 676, 685 (9th Cir. 2006) (“We . . . hold that under CAFA the burden
of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction”).
2.

Minimal Diversity

Minimal diversity exists where any member of a class of plaintiffs is a citizen of a state
different from any defendant. 28 U.S.C. §§ 1332(d)(2)(A). Section 1332(c)(1) provides that “a
corporation shall be deemed to be a citizen of every State and foreign state by which it has been
incorporated and of the State or foreign state where it has its principal place of business.” 28 U.S.C.
§ 1332(c)(1).
A person is a citizen of the state in which she has her domicile, i.e., a permanent home where
she intends to remain or to which she intends to return. See Gilbert v. David, 235 U.S. 561, 569
(1915); Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) (“A person’s domicile is
her permanent home, where she resides with the intention to remain or to which she intends to
return”). A person’s residency does not determine her citizenship for purposes of diversity
jurisdiction. Kanter, 265 F.3d at 857 (“[T]he diversity jurisdiction statute, 28 U.S.C. § 1332, speaks
6

of citizenship, not of residency. To be a citizen of a state, a natural person must first be a citizen of
the United States. The natural person’s state citizenship is then determined by her state of domicile,
not her state of residence. A person’s domicile is her permanent home, where she resides with the
intention to remain or to which she intends to return. A person residing in a given state is not
necessarily domiciled there, and thus is not necessarily a citizen of that state”); see also Weible v.
United States, 244 F.2d 158, 163 (9th Cir. 1957) (“Residence is physical, whereas domicile is
generally a compound of physical presence plus an intention to make a certain definite place one’s
permanent abode, though, to be sure, domicile often hangs on the slender thread of intent alone, as
for instance where one is a wanderer over the earth. Residence is not an immutable condition of
domicile”).
Aparicio does not allege her citizenship, stating only that she is a resident of California.17 The
notice of removal likewise alleges only that Aparicio is a resident of California.18 This is insufficient
to establish citizenship. Because Abercrombie has failed adequately to allege Aparicio’s citizenship,
and has not alleged the citizenship of any other class member, it has failed to carry its burden of
showing that the citizenship of the parties is minimally diverse. See Kanter, 265 F.3d at 857 (“In this
case, neither Plaintiffs’ complaint nor Pfizer’s notice of removal made any allegation regarding
Plaintiffs’ state citizenship. Since the party asserting diversity jurisdiction bears the burden of proof,
Pfizer’s failure to specify Plaintiffs’ state citizenship was fatal to Defendants’ assertion of diversity
jurisdiction”); HSBC Bank USA, NA v. Valencia, No. 09–CV–1260–OWW–JLT, 2010 WL 546721
*5 (E.D. Cal. Feb. 10, 2010) (“The complaint and the notice of removal fail to indicate Plaintiff’s
state of citizenship, and this too is fatal to Defendants’ assertion of diversity jurisdiction”). The court,
therefore, is unable to determine that CAFA’s minimal diversity requirement is satisfied.
3.

Numerosity Requirement

Under CAFA, the number of members of all proposed plaintiff classes must exceed 100 in the
aggregate. 28 U.S.C. § 1332(d)(5)(B). The damages model estimates that the class consists of 3,338
former employees and 2,999 current employees.19 Thus, the numerosity requirement is satisfied.
4.

Amount in Controversy

“A settlement letter is relevant evidence of the amount in controversy if it appears to reflect
a reasonable estimate of the plaintiff’s claim.” Cohn, 281 F.3d at 840. A plaintiff’s damage estimate
will not establish the amount in controversy, however, if it appears to be only a “bold optimistic
prediction.” Molina v. Lexmark Intern., Inc., No. CV 08-04796 MMM (FMx), 2008 WL 4447678,
17

Complaint, ¶ 7; FAC, ¶ 8.

18

Removal, ¶ 27.

19

McLaughlin Decl., Exh. 3.
7

*4 (C.D. Cal. Sept. 30, 2008) (quoting Surber v. Reliance Nat’l Indem. Co., 110 F.Supp.2d 1227,
1232 (N.D. Cal. 2000)). Aparicio’s November 13 email does not explain how she arrived at a
damages estimate of more than $16 million. Based on the present record, therefore, the court cannot
find that the settlement demand reflected a “reasonable estimate” of class damages. See Owens v.
Westwood College Inc., No. CV 13–4334–CAS–(FFMx), 2013 WL 4083624, *3 (C.D. Cal. Aug.
12, 2013) (“Here, the May 15 letter does not offer any explanation for how plaintiff calculated the
$1.5 million demand ‘reasonable estimate’ of plaintiff’s claim, and thus could not be ‘relevant
evidence of the amount in controversy,’” quoting Cohn, 281 F.3d at 840).
In her email, Aparicio asserted that the November 18 damages model made “no assumptions,
because it [was] based entirely on the data [Abercrombie] provided. . . .” Abercrombie’s attorney,
however, contends that it did “not produce[ ] data that supports the assumption that all 3,338 former
employees worked eight hours per day and were not paid all wages due for 30 days after
termination.”20 Further, she contends that Abercrombie cannot discern how Aparicio calculated
PAGA penalties. The damages model identifies no other source that purportedly supports the figures
set forth in the model. Because Aparcio identifies Abercrombie’s data as the sole source supporting
her damages model, and Abercrombie contends that its data does not support the model, the court is
unable to conclude that the model sets forth a “reasonable estimate”as opposed to a “bold optimistic
prediction” regarding damages. Accordingly, Abercrombie does not appear to have established, by
a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold.21

20

McLaughlin Decl., ¶ 8.

21

As noted, Aparicio seeks to recover penalties under PAGA, California Labor Code § 2699.
That statute states:
“Notwithstanding any other provision of law, any provision of this code that provides
for a civil penalty to be assessed and collected by the Labor and Workforce
Development Agency . . . may, as an alternative, be recovered through a civil action
brought by an aggrieved employee on behalf of himself or herself and other current or
former employees pursuant to the procedures specified in Section 2699.3.” Id.,
§ 2699(a).
Under PAGA, “[f]or all provisions of this code except those for which a civil penalty is specifically
provided,” an aggrieved employee may seek civil penalties of “one hundred dollars ($100) for each
aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each
aggrieved employee per pay period for each subsequent violation” from an employer that employs
more than one employee. Id., § 2699(f). Aparicio’s damages model calculates that Abercrombie’s
Labor Code violations generated $8,997,000 in potential PAGA damages.
Seventy-five percent of the civil penalties recovered under PAGA are awarded to the Labor
and Workforce Development Agency (“LWDA”); “aggrieved employees” can recover only 25
percent of the penalties. See CAL. LAB. CODE § 2699(I) (“[C]ivil penalties recovered by aggrieved
employees shall be distributed as follows: 75 percent to the Labor and Workforce Development
Agency for enforcement of labor laws and education of employers and employees about their rights
and responsibilities under this code, to be continuously appropriated to supplement and not supplant
the funding to the agency for those purposes; and 25 percent to the aggrieved employees”). Some
8

courts have held that the fact the LWDA shares in the recovery is irrelevant in assessing the amount
in controversy. See Schiller v. David’s Bridal, Inc., No. 1:10-cv-00616 AWI SKO, 2010 WL
2793650, *8 (E.D. Cal. July 14, 2010) (holding that a plaintiff seeking PAGA penalties places 100%
of the penalty amount in controversy); Urbino v. Orkin Services, CV 11-06456 CJC (PJWx), Docket
No. 33 (Oct. 5, 2011) (“This Court agrees with the Thomas court and finds that the amount in
controversy in a PAGA claim is predicated on the total amount of civil penalties sought by the
aggrieved employees”); Thomas v. Aetna Health of California, Inc., No. 1:10–cv–01906–AWI–SKO,
2011 WL 2173715, *19 (E.D. Cal. June 2, 2011) (“[T]he amount at stake in a PAGA claim is
predicated on the total amount of the penalties that can be sought by the aggrieved employees as the
proxy of the LWDA”).
Other courts, however, have concluded that only the 25 percent of the penalties recoverable
by the aggrieved employees should be considered for purposes of the amount in controversy
requirement. See Smith v. Brinker Int’l, Inc., No. C 10-0213 VRW, 2010 WL 1838726, *2, 5 (N.D.
Cal. May 5, 2010) (including only 25 percent of the total recovery possible under PAGA in
calculating the amount in controversy); Pulera v. F & B, Inc., No. 2:08-cv-00275 MCE DAD, 2008
WL 3863489, *4 (E.D. Cal. Aug. 19, 2008) (“The amounts recoverable by Plaintiff based on her
PAGA claims are separate and distinct from the amounts recoverable by the State of California via
the LWDA, and therefore these amounts may not be aggregated”).
While the court acknowledges the split in authority, on balance it finds the reasoning of the
Smith and Pulera courts more persuasive. The courts’ disagreement concerns the “common and
undivided interest” exception to the general rule that “aggregated claims of multiple claimants cannot
form the basis of the amount in controversy.” Pulera, 2008 WL 3863489 at *3. The Thomas and
Urbino courts relied heavily on the view that PAGA was designed to vindicate a collective, rather than
an individual, right. The Thomas court compared PAGA to a shareholder derivative action, where
“the corporation sustains the primary injury. . . . As a result, the shareholders step into the shoes
of the corporation and assert its interests – they have no individual right to recovery.” Thomas, 2011
WL 2173715 at *17. The Urbino court agreed with this analysis, stating that “a PAGA action is
essentially a law enforcement action designed to benefit the public, not to compensate aggrieved
employees.” Id. at 14.
The analogy those courts draw is apt, but it does not tell the whole story. As the Pulera court
noted, the aggregation of employees’ individual rights does not compel their aggregation with the
rights of a state agency, the LWDA. Citing Troy Bank of Troy, Ind., v. G.A. Whitehead & Co., 222
U.S. 39, 40 (1911), the Pulera court observed that the “common and undivided interest” exception
relies on the notion that “neither [party] can enforce [the claim] in the absence of the other.” Pulera,
2008 WL 3863489 at *3. Under PAGA, “[h]owever, the LWDA can choose to enforce those claims
itself, regardless of the employee’s involvement,” just as employees can, if the LWDA approves, sue
without any direct involvement by the agency. The statute thus permits either the LWDA or the
aggrieved employees to act independently to enforce the Labor Code. Id. This cuts against
aggregating the agency’s claims with the employees’ claims, even if the employees’ individual claims
should be aggregated under the “common and undivided interest” exception. Consequently, the court
concludes that only 25 percent of the recovery possible on Aparicio’s PAGA cause of action can be
included in calculating the amount in controversy. Thus, even if Aparicio’s damage model were a
reasonable estimate of damages (a conclusion, as noted, the court cannot reach), the amount in
9

See Prevett v. Diamond Auto Glass, Inc., No. CV-05-179-RHW, 2005 WL 2346958, *2 (E.D. Wash.
Sept. 26, 2005) (“ Where doubt regarding the right to removal exists, the case should be remanded
to state court,” citing Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir.
2003), and Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996)).
III. CONCLUSION
Abercrombie has failed to demonstrate the existence of minimal diversity and has failed to
show by a preponderance of the evidence that the jurisdictional amount is satisfied. See Rodriguez
v. AT&T Mobility Services LLC, 728 F.3d 975, 981 (9th Cir. 2013). The court accordingly orders
Abercrombie to show cause on or before February 18, 2014 why this action should not be remanded
to Los Angeles Superior Court for lack of subject matter jurisdiction. Plaintiff may file a reply on
or be fore February 25, 2014. Abercrombie’s failure to respond by February 18, 2014 will result
in immediate remand without further notice.

controversy on Aparicio’s PAGA claim would be $2,249,250 ($8,997,000 x 25 percent). Adding this
sum to Aparicio’s estimate of rest break damages equals $2,932,098.08, less than the $5 million
threshold. The court cannot include interest in determining the amount in controversy. 28 U.S.C.
§ 1332(d)(2). Because rest break and PAGA damages fall below the jurisdictional minimum, and
Abercrombie itself asserts that the damages model does not provide a “reasonable estimate” of the
waiting time penalties, the court would be unable to conclude that the amount in controversy
requirement is satisfied even were it to use the figures in Aparicio’s damages model as a starting
point.
CV-90 (12/02)

CIVIL MINUTES - GENERAL

10

Initials of Deputy Clerk AH