Leticia Sanchez v. Res-Care Inc et al

Filing 30

ORDER by Judge R. Gary Klausner remanding case to Los Angeles Superior Court, Case number BC526175 Case Terminated. Made JS-6 (Attachments: # 1 CV 103 TRANSMITTAL LETTER) (shb)

JS-6

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

CV 13-09415 RGK (SHx)

Title

Sanchez v. Res-Care, Inc. et al.

Present: The
Honorable

Date

February 28, 2014

R. GARY KLAUSNER, U.S. DISTRICT JUDGE

Sharon L. Williams (Not Present)

Not Reported

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:
I.

(IN CHAMBERS) Order re: Plaintiff’s Motion to Remand (DE 12)

FACTUAL BACKGROUND

On November 20, 2013, Leticia Sanchez ("Plaintiff"), a certified nursing assistant, filed a class
action against her former employer, Res-Care, Inc. and RSCR California, Inc. ("Defendants") in state
court.1 Plaintiff claims that Defendants violated applicable Industrial Wage Commission Wage Orders,
California Business and Professions Code §§ 17200, et seq., and California Labor Code §§ 204
("Unpaid Wages Claim"); 1194 and 1194.2 ("Minimum Wage Claim"); 510 ("Overtime Claim"); 512
("Meal and Rest Claim"); 201 and 203 ("Discharge Payment Claim"); 226 ("Inaccurate Paystub
Claim"); and 2699 ("PAGA Penalties").
On December 20, 2013, Defendants removed the action to federal court. Defendants' Notice of
Removal states that this Court has subject matter jurisdiction pursuant to the Class Action Fairness Act
("CAFA").
Currently before the Court is Plaintiff's Motion to Remand. Because the Court finds that
Defendants have failed to satisfy their burden as to the amount in controversy, the Court GRANTS
Plaintiff's Motion.

1

Plaintiff filed her Original Complaint on October 30, 2013. On November 20, 2013, Plaintiff then filed her
First Amended Complaint.
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II.

JUDICIAL STANDARD

Removal jurisdiction is governed by statute. See 28 U.S.C. §§ 1441, et seq. The Ninth Circuit
has held unequivocally that the removal statute is strictly construed against removal. Ethridge v. Harbor
House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Where there is any doubt as to whether removal is
proper remand is appropriate. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). The removing
party always bears the burden of establishing that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564,
566 (9th Cir. 1992). The enactment of CAFA does not alter this rule. Serrano v. 180 Connect, Inc., 478
F.3d 1018, 1021 (9th Cir. 2007) ("[When enacting CAFA] Congress intended to maintain the historical
rule that it is the proponent's burden to establish a prima facie case of removal jurisdiction.").
III.

DISCUSSION

Plaintiff argues that Defendants cannot satisfy their burden of showing that the amount in
controversy surpasses the $5,000,000 threshold. The Court agrees.
"Where the complaint does not specify the amount of damages sought, the removing defendant
must prove by a preponderance of the evidence that the amount in controversy requirement has been
met. Under this burden, the defendant must provide evidence that it is more likely than not that the
amount in controversy satisfies the federal diversity jurisdictional amount requirement." Abrego Abrego
v. The Dow Chemical Co., 443 F.3d 676, 683 (9th Cir. 2006) (citations and internal quotations omitted).
To establish the amount in controversy, Defendants assert the following amounts: 1) Minimum
Wage Claim: $454,409.28; 2) Overtime Claim: $340,806.96; 3) Discharge Payment Claim: $489,402; 4)
Inaccurate Paystub Claim: $570,550; 5) Meal and Rest Claim: $2,272,046.40; 6) Attorney's fees at 33%
of the foregoing: $1,361,980.70; and 7) PAGA Penalties: $5,705,500.
After reviewing Defendants' calculations, the Court finds that Defendants have made
assumptions not reasonably supported by any factual basis. Because the Meal and Rest Claim, PAGA
Penalties, and Attorney's Fees comprise the bulk of the amount in controversy, the Court limits its
review to those items. As discussed below, the Court finds that, even if the amounts are correct as to all
other claims, adjustments to the Meal and Rest Claim, PAGA Penalties, and Attorney's Fees bring the
amount in controversy below the requisite $5,000,000 threshold.
A.

Meal and Rest Claim

Plaintiff alleges that "Defendants adopted and maintained uniform policies, practices, and
procedures governing the working conditions of, and payment of wages to, to [sic] Plaintiff and the rest
of the class." (Pl. First Am. Compl. 15.) With regard to Plaintiff's Meal and Rest Claim, Plaintiff alleges
that "Plaintiff and class members did not receive all of their meal periods in a lawful fashion.
Furthermore, not all rest periods were given timely, if at all." (Pl. First Am. Compl. 33.)
In determining the amount in controversy for this claim, Defendants assert that a reasonable and
conservative estimate is $2,272,046.40 with associated Attorney's Fees of 33 percent, or $749,775.31.
To support these figures, Defendants introduce evidence that 458 employees were employed during the
four-year class period, and the average hourly wage for employees in similar positions as Plaintiff was
$9.54 an hour, although Plaintiff was paid only $9.00 an hour. (Defs.' Decl. 5, 6.) In performing its
calculations, however, Defendants assume five missed meal and five missed rest periods per week for
fifty-two weeks.

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Upon closer inspection, the Court finds no factual basis to support Defendants' assumption. In its
defense, Defendants cite to an unpublished district court case, Jasso v. Money Mart Express, Inc., 2012
WL 699465 (N.D. Cal. March 1, 2012). Jasso, however, stands only for the proposition that it was
reasonable to assume one missed meal and rest period each, per week, given the uniform and systematic
scheme alleged by the plaintiff. Here, the Court finds no allegations making Defendants' assumption of
five missed meal and five missed rest periods reasonable. In light of Defendants' failure to offer any
factual basis as to the actual number of violations, it would be appropriate to find that Defendants failed
to satisfy their burden and attribute no amount in controversy to this claim.
Defendants ask this Court to find guidance in Jasso. Even if the Court did so, and applied the
same one meal and one rest period assumption, the amount in controversy for this claim would be
significantly reduced. Specifically, the amount in controversy for the Meal and Rest Claim would be
$454,409.28. Assuming the reasonableness of Defendants' 33 percent in Attorney's Fees, the fees
associated with this claim would be $149,955.06. The amount in controversy for the Meal and Rest
Claim, along with associated Attorney's Fees, would total only $604,364.34, over $2,400,000 less than
Defendants' estimate.
B.

PAGA Penalties

Defendants calculate $5,705,500 as the aggregate amount of potential PAGA penalties.
Defendants argue that this total aggregated amount should be included as part of the amount in
controversy. The Court disagrees.
The Court has found no binding law squarely addressing whether PAGA penalties may be
aggregated to the total amount in controversy to reach CAFA's amount in controversy requirement. But
for the following reasons, the Court holds that such claims may not be aggregated under CAFA, at least
not as to penalties due to the state, rather than to individual class members.
The $5,705,500 in potential PAGA penalties are not "claims of individual class members," as
required by 28 U.S.C. § 1332(d)(6). If the representative plaintiff prevails in a PAGA claim, the
aggrieved employees are statutorily entitled to only 25 percent of the civil penalties, while the remaining
75 percent is paid to the state. Urbino v. Orkin Servs. of Calif., Inc., 726 F.3d 1118, 1121 (9th Cir.
2013). The reasoning of Urbino suggests that the entirety of PAGA penalties do not constitute claims of
individual plaintiffs because the "primary benefit" of such penalties "inure[s] to the state." Id. at 1123
(holding that PAGA penalties are not included for purposes of 1332(a) amount in controversy
requirement). Given that the state is not a "class member" and PAGA penalties are not "claims of
individual class members," as required by 28 U.S.C. § 1332(d)(6), it would stand to reason that none of
the penalties should be included to meet the $5,000,000 amount in controversy requirement. See Urbino,
726 F.3d at 1123 ("The state, as the real party in interest, is not a 'citizen' for diversity purposes").
However, as the Court has previously acknowledged in prior cases, the actual labor code
violations are individual claims of the class members. As such, the Court has stated, without making any
finding, that including the 25 percent of the penalties (i.e., the amount that inures to the individuals) into
the amount in controversy may have legal basis. See Controulis v. Anheuser-Busch, LLC, 2013 WL
6482970 (C.D. Cal. November 20, 2013).
Assuming (1) Defendants' method of calculating penalties is correct, and (2) it is appropriate to
include 25 percent of that total, the amount in controversy for Plaintiff's PAGA Claim is $1,426,375.

C.
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Total Amount in Controversy
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Based on the foregoing, the amount in controversy related to Plaintiff's Meal and Rest and
PAGA Claims total $2,030,739.34. Assuming Defendants' calculations and assumptions as to all other
claims are correct, the total amount in controversy is $4,498,113.10.2 Because this amount does not
exceed $5,000,000, the Court finds no subject matter jurisdiction and remands the case to state court.
IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiff’s Motion to Remand.
IT IS SO ORDERED.
:
Initials of Preparer

2

($454,409.28 + $340,806.96 + $489,402 + $570,550 + $454,409.28) + (($454,409.28 + $340,806.96 +
$489,402 + $570,550 + $454,409.28) x .33) + $1,426,375 = $4,498,113.10
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