Natividad Ausencio v. LVI Services, Inc. et al

Filing 13

MINUTE ORDER IN CHAMBERS by Judge Percy Anderson: As the Ninth Circuit has explained, in actions removed pursuant to CAFA, a plaintiff may challenge a defendant's assertion of the amount in controversy. If Plaintiff wishes to waive his objectio ns to whether Defendants' allegations concerning the amount in controversy are sufficient, Plaintiff must file a Notice of Waiver of Challenge to Amount in Controversy by no later than January 20, 2015. Should Plaintiff desire to return to Los A ngeles Superior Court, Plaintiff is not required to file a response to this Order. If Plaintiff does not file a Notice of Waiver of Challenge to Amount in Controversy by January 20, 2015, the Court shall conclude that Plaintiff in fact challenges the sufficiency of Defendants' allegations concerning the amount in controversy. Defendants shall then have until January 26, 2015, to file a response to this Order. Additionally, to determine if CAFA's local controversy exceptions apply, Defendants shall, no later than January 20, 2015, file with the Court evidence properly establishing the citizenship of NorthStar Group Holdings, LLC. See document for details. (smo)

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

CV 15-124 PA (PJWx)

Title

Natividad Ausencio v. LVI Services, Inc., et al.

Present: The Honorable

Date

January 15, 2015

PERCY ANDERSON, UNITED STATES DISTRICT JUDGE

Stephen Montes Kerr

Not Reported

N/A

Deputy Clerk

Court Reporter

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

IN CHAMBERS — COURT ORDER

Before the Court is a Notice of Removal filed by defendants LVI Serices, Inc. and Northstar
Group Holdings, LLC (collectively “Defendants”). Defendants allege that this Court possesses diversity
jurisdiction pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d) over the putative
class action commenced by plaintiff Natividad Ausencio (“Plaintiff”) on behalf of himself and a class of
similarly situated individuals for purported wage and hour claims. Plaintiff originally filed his
Complaint in Los Angeles Superior Court on September 26, 2014. According to the Notice of Removal,
Defendants were served with the Summons and Complaint on December 8, 2014. Defendants filed their
Notice of Removal on January 7, 2015.
A defendant may remove a civil action filed in state court if the action could have originally been
filed in federal court. 28 U.S.C. §1441. The removal statutes are construed restrictively, so as to limit
removal jurisdiction. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S. Ct. 868, 872, 85
L. Ed. 1214, 1219 (1941); see also Abrego v. Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006). The
district court must remand the case if, before final judgment, it appears that the court lacks subject matter
jurisdiction. 28 U.S.C. §1447(c). There is a “strong presumption” against removal jurisdiction. Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The burden of establishing federal jurisdiction for
purposes of removal is on the party seeking removal. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117
(9th Cir. 2004). “Where doubt regarding the right to removal exists, a case should be remanded to state
court.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).
CAFA provides that district courts have original jurisdiction over any class action in which
(1) the amount in controversy exceeds $5 million dollars, (2) any plaintiff class member is a citizen of a
state different from any defendant, (3) the primary defendants are not states, state officials, or other
government entities against whom the district court may be foreclosed from ordering relief, and (4) the
number of plaintiffs in the class is at least 100. 28 U.S.C. §§ 1332(d)(2), (d)(5). The amount in
controversy requirement excludes only “interest and costs”; thus attorneys’ fees are included in the
calculation of the amount in controversy. 28 U.S.C. § 1332(a); Guglielmino v. McKee Foods Corp., 506
F.3d 696, 700 (9th Cir. 2007).

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

CV 15-124 PA (PJWx)

Date

Title

January 15, 2015

Natividad Ausencio v. LVI Services, Inc., et al.

“[U]nder CAFA the burden of establishing removal jurisdiction remains, as before, on the
proponent of federal jurisdiction.” Abrego, 443 F.3d at 685. Thus, Defendants bear the burden to
establish that this Court has jurisdiction over Plaintiff’s claims. Jurisdiction cannot be based on
speculation. See Lowdermilk v. U.S. Bank Nat’l Assoc., 479 F.3d 994, 1002 (9th Cir. 2007), overruled
on other grounds by Rodriguez v. AT&T Mobility Servs., LLC, 728 F.3d 975, 977, 980 (9th Cir. 2013).
“Conclusory allegations as to the amount in controversy are insufficient.” Matheson, 319 F.3d at
1090-91. A plaintiff seeking to represent a putative class can not evade federal jurisdiction by
stipulating that the amount in controversy falls below the jurisdictional minimum. Standard Fire Ins. Co.
v. Knowles, 133 S. Ct. 1345, 1350, 185 L. Ed. 2d 439 (2013). The Ninth Circuit recently held that
Standard Fire has so undermined the reasoning of Lowdermilk that the latter has been effectively
overruled. Therefore, a defendant seeking removal of a putative class action must demonstrate, by a
preponderance of evidence, that the aggregate amount in controversy exceeds the jurisdictional
minimum. Rodriguez, 728 F.3d at 981.
“[A] defendant cannot establish removal jurisdiction by mere speculation and conjecture, with
unreasonable assumptions.” Ibarra v. Manheim Invs., Inc., __ F.3d __, No. 14-56779, 2014 WL
7495131, at *3 (9th Cir. Jan. 8, 2015); see also id. (“[I]f a defendant wants to pursue a federal forum
under CAFA, that defendant in a jurisdictional dispute has the burden to put forward evidence showing
the amount in controversy exceeds $5 million, to satisfy the other requirements of CAFA, and to
persuade the court that the estimate of damages in controversy is a reasonable one.”). Where there is a
challenge to a removing defendant’s assertion that the amount in controversy is satisfied, “a damages
assessment may require a chain of reasoning that includes assumptions. When that is so, those
assumptions cannot be pulled from thin air but need some reasonable ground underlying them.” Id. at
*5.
When determining the amount in controversy, the Court must assume that the allegations in the
complaint are true and that a jury will return a verdict in plaintiff’s favor on all of the claims in the
complaint. Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D.
Cal. 2002). “The ultimate inquiry is what amount is put ‘in controversy’ by the plaintiff’s complaint, not
what a defendant will actually owe.” Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205
(E.D. Cal. 2008); see also Rippee v. Boston Mkt. Corp., 408 F. Supp. 2d 982, 986 (S.D. Cal. 2005).
“[T]he amount-in-controversy inquiry in the removal context is not confined to the face of the
complaint.” Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004). The contents of the notice
of removal and supplemental evidence provided after the removal petition has been filed may be
considered to determine whether the defendant has adequately shown that the amount in controversy has
been met. See Abrego, 443 F.3d at 690; Cohn v. Petsmart, Inc., 281 F. 3d 837, 840, 840 n.1 (9th Cir.
2002). A court may also “consider any ‘summary-judgment-type evidence relevant to the amount in
controversy at the time of removal.’” Valdez, 372 F.3d at 1117 (quoting Matheson, 319 F.3d at 1090).
The only named defendants in Plaintiff’s Complaint are LVI Services, Inc. and Northstar Group
Holdings, LLC. Plaintiff seeks to represent a class consisting of: “Any and all persons who have been
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-124 PA (PJWx)

Date

Title

January 15, 2015

Natividad Ausencio v. LVI Services, Inc., et al.

employed by Defendants as hourly-paid employees in California at any time from September 25, 2010 to
the date of class certification, or as ordered by the Court.” The Complaint estimates that the class
consists of approximately 2,000 members. According to the Notice of Removal, Defendants “deny that
they employed Plaintiff or any of the putative class members . . . but rely upon the allegation [of the
number of class members] for the purposes of removal.” In support of their Notice of Removal,
Defendants have submitted the Declaration of Kamal Sookram. According to Mr. Sookram, who is a
Vice President of Administration for NorthStar Group Services, Inc.,1/ “Defendant LVI Services, Inc.
and Defendant NorthStar Group Holdings, LLC2/ have never employed Plaintiff or any of the putative
class members.”
Multiplying any estimated value for purported wage and hour violations, based on reasonable
assumptions, committed by Defendants would result in an amount in controversy of $0.00 because,
according to the evidence submitted by Defendants in support of their Notice of Removal, the class size
of employees employed by them in California is zero. In an attempt to satisfy the amount in controversy
requirement, Defendants do not rely on the zero employees they contend to have employed in California,
but on 891 employees employed by TEG/LVI Environmental Services, Inc., LVI Environmental
Services, Inc., NCM Contracting Group, LP, and NCM Demolition and Remediation, LP (collectively
“LVI Environmental Services Companies”). None of the LVI Environmental Services Companies are
named defendants in Plaintiff’s Complaint. According to Mr. Sookram, defendant LVI Services, Inc.
(now NorthStar Group Services, Inc.) is the parent company of each of the four companies that together
constitute the LVI Environmental Services Companies.
Importantly, the Complaint, Notice of Removal, and the evidence in support of the Notice of
Removal do not allege, or provide any basis for treating the employees of the LVI Environmental
Services Companies as Defendants’ employees for purposes of determining the amount in controversy.

1/

According to Mr. Sookram, defendant NorthStar Group Services, Inc. is the current name
of defendant LVI Services, Inc.
2/

The Court notes that the Notice of Removal has not properly alleged the citizenship of
NorthStar Group Holdings, LLC. Specifically, although acknowledging that the citizenship of a limited
liability company is the citizenship of its members, the Notice of Removal only alleges that the two
members of NorthStar Group Holdings, LLC are NCM Group Holdings, LLC and LVI Group
Investments, LLC “which are duly organized and validly existing under and pursuant to the laws of the
state of Delaware.” To the extent that the members of NorthStar Group Holdings, LLC are themselves
limited liability companies, Defendants must allege the citizenship of the members of NCM Group
Holdings, LLC and LVI Group Investments, LLC, and if any of the members of those entities are
themselves LLC, then the Notice of Removal must properly allege their citizenship, as well.
Defendants’ failure to properly allege the citizenship of NorthStar Group Holdings, LLC makes it
impossible for the Court and Plaintiff to determine if CAFA’s local controversy exceptions apply. See
28 U.S.C. § 1332(d)(4).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-124 PA (PJWx)

Date

Title

January 15, 2015

Natividad Ausencio v. LVI Services, Inc., et al.

Defendants have not provided any support for why the employees of separate companies that it
distinguishes from Defendants, and which Defendants contend are not their employees, should
nevertheless be regarded as their employees for purposes of calculating the amount in controversy. In
this way, Defendants have not supported the amount in controversy with “a chain of reasoning that
includes assumptions” with “some reasonable ground underlying” those assumptions. Ibarra, 2014 WL
7495131, at *5. Instead, and in light of the general rule that parent companies are not liable for the
actions of their subsidiaries, Defendants’ use of the employees of its subsidiaries to satisfy CAFA’s
amount in controversy requirements is insufficient to meet the removing party’s burden to establish the
Court’s jurisdiction. See United States v. Bestfoods, 524 U.S. 51, 61, 118 S. Ct. 1876, 1884, 141 L. Ed.
2d 43 (1998) (“It is a general principle of corporate law deeply ‘ingrained in our economic and legal
systems’ that a parent corporation (so-called because of control through ownership of another
corporation’s stock) is not liable for the acts of its subsidiaries.”).
As the Ninth Circuit has explained, in actions removed pursuant to CAFA, a plaintiff may
challenge a defendant’s assertion of the amount in controversy. Once a plaintiff challenges a
defendant’s assertion, “both sides submit proof and the court then decides where the preponderance lies.
Under this system, CAFA’s requirements are to be tested by consideration of real evidence and the
reality of what is at stake in the litigation, using reasonable assumptions underlying the defendant’s
theory of damages exposure.” Ibarra, 2014 WL 7495131, at *3.
If Plaintiff wishes to waive his objections to whether Defendants’ allegations concerning the
amount in controversy are sufficient, Plaintiff must file a Notice of Waiver of Challenge to Amount in
Controversy by no later than January 20, 2015. Should Plaintiff desire to return to Los Angeles Superior
Court, Plaintiff is not required to file a response to this Order.3/ If Plaintiff does not file a Notice of
Waiver of Challenge to Amount in Controversy by January 20, 2015, the Court shall conclude that
Plaintiff in fact challenges the sufficiency of Defendants’ allegations concerning the amount in
controversy. Defendants shall then have until January 26, 2015, to file a response to this Order.
Additionally, to determine if CAFA’s local controversy exceptions apply, Defendants shall, no later than
January 20, 2015, file with the Court evidence properly establishing the citizenship of NorthStar Group
Holdings, LLC.
IT IS SO ORDERED.

3/

Nothing in this Order precludes Plaintiff from filing a timely Motion to Remand on the
grounds raised in this Order or any other grounds Plaintiff may wish to raise.
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