Barbara Bailey et al v. Redfin Corporation et al

Filing 22

MINUTES (IN CHAMBERS) ORDER by Judge S. James Otero: granting in part 15 Motion to Remand Case to State Court Case. Plaintiffs' request for awardof attorneys' fees and costs is DENIED. Remanded to Los Angeles Superior Court, Case Number BC512191. MD JS-6. Case Terminated. (Attachments: # 1 Transmittal Letter CV103) (shb)

JS-6

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

DATE: January 21, 2015

CASE NO.: CV 14-08959 SJO (MANx)
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Barbara Bailey, et al. v. Redfin Corp.

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PRESENT: THE HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE
Victor Paul Cruz
Courtroom Clerk

Not Present
Court Reporter

COUNSEL PRESENT FOR PLAINTIFFS:

COUNSEL PRESENT FOR DEFENDANT:

Not Present

Not Present

========================================================================
PROCEEDINGS (in chambers): ORDER GRANTING IN PART PLAINTIFF'S MOTION TO
REMAND ACTION TO STATE COURT [Docket No. 15]
This matter is before the Court on a Motion to Remand and for Award of Attorneys' Fees and
Costs ("Motion") brought by Plaintiffs Barbara Bailey ("Bailey") and Evangelyn Lin ("Lin")
(collectively "Plaintiffs"), filed December 18, 2014. Defendant Redfin Corporation ("Defendant")
filed an opposition to the Motion ("Opposition") on December 30, 2014. On January 6, 2015,
Plaintiffs filed a reply supporting the Motion ("Reply"). The Court found the matter suitable for
disposition without oral argument and vacated the hearing set for January 20, 2015. See Fed. R.
Civ. P. 78(b). For the reasons stated below, the Court GRANTS IN PART the instant Motion.
I.

FACTUAL AND PROCEDURAL BACKGROUND

The First Amended Complaint ("FAC") alleges the following. Defendant, a Delaware corporation,
operates an online real estate brokerage and conducts business in California. (Arena Decl. Ex.
A ("FAC") ¶ 4.) Plaintiffs were employed by Defendant in Los Angeles, California as field agents,
conducting home showings, home inspections and open houses of Defendant. (FAC ¶¶ 1, 14.)
Defendant employed Bailey as a field agent from December 2009 until summer of 2012 and Lin
as a field agent from July of 2010 until February of 2013. (FAC ¶ 17-18.)
On June 14, 2013, Plaintiffs filed suit against Defendant in the Superior Court of California for Los
Angeles County. On July 17, 2013, Plaintiffs filed a FAC on behalf of themselves and on behalf
of all other aggrieved employees under the California Private Attorneys General Act of 2004
("PAGA"), California Labor Code § 2698. (See generally FAC.) In the FAC, Plaintiffs alleged that
Defendant violated California law by willfully misclassifying field agents as independent contractors
when they are, in fact, employees. (FAC ¶ 9.) Due to this misclassification of field agents, Plaintiffs
asserted that Defendant violated the following provisions of the California Labor Code: (1) failure
to pay minimum wages, (2) failure to pay overtime, (3) failure to provide uninterrupted 30 minute
meal breaks, (4) failure to provide uninterrupted 10 minute rest breaks, (5) failure to pay all wages
due upon termination, (6) failure to reimburse for expenses incurred in the discharge of duties, and
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Initials of Preparer

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

DATE: January 21, 2015

CASE NO.: CV 14-08959 SJO (MANx)

(7) failure to provide accurate wage statements. (FAC ¶ 9.) Plaintiffs seek unpaid overtime
compensation, wages for missed meal and rest periods, restitution, attorneys' fees and costs,
prejudgment interest, and other relief (FAC 20-23.)
Defendant filed its answer on August 19, 2013. (Notice of Removal Ex. D.) On November 19,
2014, Defendant removed the action to this Court. (See generally Notice of Removal.) In its
Notice of Removal, Defendant alleged that diversity jurisdiction existed under the Class Action
Fairness Act ("CAFA"). (Notice of Removal 4.) In this present Motion, Plaintiffs seek remand to
state court, arguing that no class claims are asserted in the Complaint or FAC and CAFA
jurisdiction does not apply. (See generally Mot.)
II.

DISCUSSION
A.

Legal Standard for Remand

A defendant "desiring to remove any civil action from a state court shall file in the district court of
the United States a notice of removal containing a short and plain statement of the grounds for
removal, together with a copy of all process, pleadings, and orders" served upon such defendant
in such action. 28 U.S.C. § 1446(a). "The notice of removal shall be filed within 30 days after the
receipt by the defendant . . . of a copy of the initial pleading setting forth the claim of relief upon
which such action or proceeding is based." 28 U.S.C. § 1446(b)(2)(B). However, "if the case
stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after
receipt by the defendant...of a copy of an amended pleading, motion, order or other paper from
which it may first be ascertained that the case is one which or has become removable." 28 U.S.C.
§ 1446(c).
"Failure to comply with the requirements of § 1446(b) constitutes a 'defect in removal procedure.'"
Page v. City of Southfield, 45 F.3d 128, 131 (6th Cir. 1995) (citations omitted). "Pursuant to 28
U.S.C. § 1447(c), a district court may remand an action . . . where there are procedural defects
in removal." Washington v. United Parcel Serv., Inc., No. CV 09-01131 DDP, 2009 WL 1519894,
at *1 (C.D. Cal. June 1, 2009).
B.

Defendant's Basis for Removal

The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction," and thus
"federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first
instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). "The strong presumption
against removal jurisdiction means that the defendant always has the burden of establishing that
removal is proper." Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709, 712 (9th Cir.
1990).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

DATE: January 21, 2015

CASE NO.: CV 14-08959 SJO (MANx)

Defendant removed the action on grounds that the Court has diversity jurisdiction pursuant to 28
U.S.C. §§ 1332, 1441, and 1446. CAFA amended section 1332 to add subsection (d). Under
CAFA, the Court may exercise jurisdiction if any member of a class of plaintiffs is diverse from any
defendant, and the aggregated claims of all class members in a class action create an amount in
controversy in excess of $5,000,000.1 28 U.S.C. § 1332(d)(2). The Ninth Circuit held that under
CAFA "the burden of establishing removal jurisdiction remains, as before, on the proponent of
federal jurisdiction.” Abrego, et al. v. Dow Chem. Co., 443 F.3d 676, 687 (9th Cir. 2006). Under
section 1441, a civil action brought in state court of which the district courts have original
jurisdiction may be removed to the district court for the district where such action is pending. 28
U.S.C. § 1441.
Defendant argued that this case may be removed to this Court because there is a diversity of
citizenship among the parties and Plaintiffs provided a written damages calculation establishing
that the amount in controversy exceeds $5,000,000. (See generally Notice of Removal.)
Defendant argued that diversity of citizenship exists between the parties because Plaintiffs are
residents and citizens of California while Defendant is a Delaware Corporation with its principal
place of business and corporate headquarters in Seattle, Washington. (Notice of Removal ¶ 12.)
Furthermore, Defendant asserted that this case was properly removed within 30 days after receipt
of the first document establishing a basis for jurisdiction under CAFA. Defendant alleged that the
first document it received establishing a basis for jurisdiction under CAFA was a damages
calculation sent to Defendant on October 29, 2014, which purportedly showed the amount of
controversy was in excess of $25,000,000. (Notice of Removal ¶ 15.) Defendant asserted that
the case was not removed within 30 days after receipt of the FAC because Defendant could not
tell from the FAC whether the jurisdictional amount of $5,000,000 was met. (Notice of Removal
¶ 14.)
C.

Plaintiffs' Basis for Remand
1.

PAGA Claims Are Not Subject to Removal Under CAFA

Plaintiffs argue that this case should be remanded to state court because their claims do not
trigger CAFA jurisdiction. (Mot.1.) In this case, Plaintiffs allege numerous claims pursuant to the
Labor Code and Business and Professional Code and a single PAGA claim. Plaintiffs' FAC
contains no class allegations, nor does it assert any claims on behalf of a class. (Mem. P. & A.
3.) Instead, Plaintiffs seek civil penalties on behalf of themselves and other aggrieved employees
in their alleged PAGA claims. (Mem. P. & A. 4.)

1

Under 28 U.S.C.Section 1332(d), the term "class action" means any civil action filed under rule 23 of the
Federal Rules of Civil Procedure or similar state statute or rule of judicial procedure authorizing an action to
be brought by one or more representative persons as a class action.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

DATE: January 21, 2015

CASE NO.: CV 14-08959 SJO (MANx)

In Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1122 (9th Cir. 2014), the Ninth Circuit held
that "PAGA actions are not sufficiently similar to Rule 23 class actions to trigger CAFA
jurisdiction." "Unlike Rule 23(c)(2), PAGA has no notice requirements for unnamed aggrieved
employees, nor may such employees opt out of a PAGA action." Id. In a PAGA action, the court
does not inquire into the named plaintiffs and plaintiffs' counsel's ability to fairly and adequately
represent unnamed employees – critical requirements in federal class actions under Rule 23(a)(4)
and (g). Id. PAGA also contains no requirements of "numerosity, commonality, or typicality." Id.
Furthermore, the finality of PAGA judgments distinctly differs from that of class action judgments.
Id. The Federal Rules of Civil Procedure ensure that members of the class who receive notice and
decline to opt out are bound by a judgment. Fed. Rule Civ. Proc. 23(c)(3). In contrast, PAGA
expressly provides that employees retain all rights "to pursue or recover other remedies available
under state or federal law, either separately or concurrently with an action taken under this part."
Cal. Lab. Code § 2699(g)(1). The nature of PAGA penalties is also distinct from damages sought
in Rule 23 class actions. Baumann, 747 F.3d 1117 at 1123. "In class actions, damages are
typically restitution for wrongs done to class members." Id. On the other hand, PAGA actions
primarily seek to "vindicate the public interest in enforcement of California's labor law." Id. "A
PAGA action is at heart a civil enforcement action filed on behalf of and for the benefit of the state,
not a claim for class relief." Id. at 1124. Therefore, Rule 23 and PAGA are more dissimilar than
alike, and Plaintiffs' PAGA claims are not subject to removal under CAFA.
2.

No Basis to Claim Removal Under Non-CAFA Diversity Jurisdiction

Plaintiffs also allege that if Defendant argues that this case is removable under the non-CAFA
diversity provisions of 28 U.S.C. § 1332, such removal is improper because it is untimely and
Defendant cannot establish that the amount of controversy is met. (Mem. P. & A. 4.)
First, Plaintiffs argue that Defendant's removal of this case was untimely because it exceeded the
one-year limit on removal from the time the action is commenced in diversity cases pursuant to
28 U.S.C. § 1446(c)(1). (Mem. P. & A. 5.) This case was filed in June 2013 and Defendant filed
its Notice of Removal in November 2014. (Mem. P. & A. 5.) Therefore, Defendant's removal was
well beyond the one-year limit under section 1446. (Mem. P. & A. 5.) Furthermore, Plaintiffs argue
that Defendant's argument in its Notice of Removal, that it could not have known that the potential
value of Plaintiff's PAGA claims exceeded $5,000,000 until it received potential damage
calculations in October 2014, was not credible. (Mem. P. & A. 5.) Both Plaintiffs' counsel and
Defendant's counsel regularly handle issues involving California employment law and the Labor
Code, including PAGA, and as such the parties and their attorneys are well aware of the potential
value of PAGA penalties. (Mem. P. & A. 5.) Therefore, Defendant was on notice of the potential
value of those claims as of July 2013, when the FAC was filed. See Nunez v. Ricoh Am. Corp.,
No. 11-1177, 2011 U.S. Dist. LEXIS 133677, at *7 (C.D. Cal. Nov. 16, 2011) ("On January 4,
2011, Plaintiffs properly added their PAGA claim and thus, if this claim is indeed a basis for
removal, Defendant could have ascertained that the amount in controversy was satisfied on
January 4, 2011."). In addition, Defendant should have been aware of the potential value of
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

DATE: January 21, 2015

CASE NO.: CV 14-08959 SJO (MANx)

Plaintiffs' claims because Defendant set job duties for Plaintiffs and the aggrieved employees,
assigned work to them, and established a compensation scheme for them. (Mem. Pts. Auth. 5.)
Second, Plaintiffs allege that Defendant cannot aggregate PAGA claims for purposes of
establishing diversity jurisdiction. (Mem. P. & A. 6.) Plaintiffs argue that Defendant
misrepresented that the amount in controversy in this case exceeded $25,000,000. (Mem. P. &
A. 6.) This case was mediated jointly with Galen v. Redfin Corp., Case No. RG 13-663672
(Alameda County Superior Court), in an attempt to achieve a resolution of the claims in both
cases. (Mem. P. & A. 6.) Thus, Plaintiffs assert that the damages analysis Defendant provided
in its Notice of Removal reflects the figures of joint damages for two separate cases, pending in
two different courts, and alleging distinct claims. (Mem. P. & A. 6.) The damages analysis includes
potential class damages of $14,267,671.41 in the Galen matter and separately includes potential
PAGA penalties of $11,483,265.50, which are the potential penalties at issue in this case. (Arena
Decl. Ex. B.) Therefore, Defendant misrepresented the amount in controversy in its Notice of
Removal. In addition, the Ninth Circuit held that PAGA penalties cannot be aggregated for
purposes of establishing diversity jurisdiction. Urbino v. Orkin Servs. of Cal., 726 F.3d 1118, 112022 (9th Cir. 2013). Based on the information above, Defendant's removal of this case was
improper, and the Court remands this case to the Superior Court of California, County of Los
Angeles.

D.

Award of Attorneys' Fees and Costs

In their Motion to Remand, Plaintiffs request an award of attorneys' fees and costs. Pursuant to
28 U.S.C. Section 1447(c), "[a]n order remanding the case may require payment of just costs and
any actual expenses, including attorney fees, incurred as a result of the removal." "Absent
unusual circumstances, courts may award attorneys' fees under section 1447(c) only where the
removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin
Capital Corp., 546 U.S. 132, 141 (2005). Here, the Court finds that Defendant had an objectively
reasonable basis for seeking removal. Therefore, Plaintiffs' Motion is denied with respect to
Plaintiff's request for attorneys' fees and costs.
III.

RULING

For the foregoing reasons, the Court GRANTS IN PART the Motion to Remand and REMANDS
this case to the Superior Court of California, County of Los Angeles. Plaintiffs' request for award
of attorneys' fees and costs is DENIED. This matter shall close.
IT IS SO ORDERED.

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