Jorge A Mejia v. DHL Express (USA) Inc et al.

Filing 29

MINUTES (IN CHAMBERS) ORDER re: Plaintiff's Motion to Remand (Dkt. 20) by Judge George H. King denying 20 Motion to Remand Case to State Court: The estimated sum of these three claims is $9,425,514, far more than the $5,000,000 required for CAFA jurisdiction. Accordingly, we have subject matter jurisdiction, and Plaintiff's Motion is DENIED. (see document for further details) (bm)

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

CV 15-890-GHK (JCx)

Title

Jorge Alberto Mejia v. DHL Express (USA), Inc.

Presiding: The Honorable

Date

May 21, 2015

GEORGE H. KING, CHIEF U. S. DISTRICT JUDGE

Beatrice Herrera

N/A

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

(In Chambers) Order re: Plaintiff’s Motion to Remand (Dkt. 20)

This matter is before us on the above-captioned Motion. We have considered the papers filed in
support of and in opposition to this Motion, and deem this matter appropriate for resolution without oral
argument. L.R. 7-15. As the Parties are familiar with the facts, we will repeat them only as necessary.
Accordingly, we rule as follows.
I.

Procedural and Factual Background

On December 2, 2014, Plaintiff Jorge Alberto Mejia (“Mejia”) brought this class action in state
court against Defendant DHL Express (USA), Inc. (“Defendant”) alleging various claims based on
violations of the California Labor Code. (Dkt. 1-1, Compl.) On January 7, 2015, a First Amended
Complaint (“FAC”) was filed, and Defendant was served for the first time shortly thereafter. (Dkt. 1-2,
FAC; Dkt. 1-3, Summons.) On February 6, 2015, Defendant removed this action to federal court on the
basis of CAFA jurisdiction. (Dkt. 1, Notice of Removal (“NOR”).) On March 20, 2015, Plaintiff filed
this Motion to Remand (“Motion”), claiming that we lack jurisdiction because the amount in
controversy does not exceed $5,000,0000. (Dkt. 20.)
Plaintiff alleges that Defendant “adopted and maintained uniform policies, practices and
procedures . . . that violated California’s labor law.” (FAC at ¶ 11.) Among other things, he alleges that
Defendant failed to pay for meal and rest breaks, failed to pay minimum wage, failed to pay hours
worked, failed to supply accurate wage statements, and failed to promptly pay wages owed to class
members at the end of their employment.
II.

Legal Standard

CAFA provides that federal district courts have “original jurisdiction of any civil action in which
the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is
a class action in which” there is minimum diversity between the parties. 28 U.S.C. § 1332(d)(2).
“[U]nder CAFA[,] the burden of establishing removal jurisdiction remains, as before, on the proponent
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E-FILED
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-890-GHK (JCx)

Date

Title

May 21, 2015

Jorge Alberto Mejia v. DHL Express (USA), Inc.

of federal jurisdiction.” Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006) (per
curiam). “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.” Id. at 683.
To satisfy this standard, the “defendants’ notice of removal need include only a plausible
allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin
Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014). If the plaintiff or the court contests
defendants allegation, however, “[e]vidence establishing the amount is required.” Id. “In such a case,
both sides submit proof and the court decides, by a preponderance of the evidence, whether the amountin-controversy requirement has been satisfied.” Id. at 554. In proving the amount in controversy, “[t]he
parties may submit evidence outside the complaint, including affidavits or declarations, or other
summary-judgment-type evidence relevant to the amount in controversy at the time of removal.” Ibarra
v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citation and internal quotation
marks omitted). Under this system, a defendant cannot establish removal jurisdiction by mere
speculation and conjecture, with unreasonable assumptions. Id.
Defendant contends that the Supreme Court’s reference to “both sides” submitting proof means
that Plaintiff should have produced affirmative evidence showing that the amount in controversy is not
satisfied with his Motion. We recently rejected a similar argument in our remand order for Erick Lina v.
Barnes & Noble, Inc.:
[W]e do not believe that Dart Cherokee changed anything regarding the relevant
procedure once a party challenges federal jurisdiction. See Manibhadra, Inc. v. Aspen
Ins. UK Ltd., 2014 WL 7246858, at *1-2 (D. Kan. Dec. 17, 2014) (concluding that, with
respect to “the procedure when the plaintiff challenges the defendant’s assertion of the
amount in controversy[,] . . . Dart does not change established [] law”). The Court’s
statement that “when a defendant’s assertion of the amount in controversy is challenged
. . . both sides submit proof” was derived from 28 U.S.C. § 1446 . . . . Dart Cherokee,
135 S. Ct. at 554 (quoting § 1446(c)(2)(B) for the proposition that “removal . . . is proper
on the basis of an amount in controversy asserted . . . if the district court finds, by the
preponderance of the evidence, that the amount in controversy exceeds the [necessary]
amount”). The relevant House Judiciary Committee Report merely states that
“[d]iscovery may be taken with regard to [the jurisdictional threshold]. In case of a
dispute, the district court must make findings of jurisdictional fact to which the
preponderance standard applies.” H.R. Rep. No. 112-10, p. 16 (2011) (emphasis added).
Defendants claim that the Dart Cherokee Court’s use of the phrase “both sides submit
proof” means that both sides must submit proof of the amount of controversy now, but
the Ninth Circuit has made clear that this remains an open question. See Ibarra, 775 F.3d
at 1199-1200 (“Plaintiffs contend, on the other hand, that plaintiffs’ motion to remand
need not include evidence and is allowed to ‘be based on the fact that Defendant’s
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E-FILED
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-890-GHK (JCx)

Date

Title

May 21, 2015

Jorge Alberto Mejia v. DHL Express (USA), Inc.

evidence is insufficient to meet the burden of proof,’ and that requiring plaintiffs to
submit evidence first ‘would fundamentally switch to plaintiffs the burden of defeating
subject-matter jurisdiction.’ The Supreme Court did not decide the procedure for each
side to submit proof on remand, and here we need not decide the procedural issue,
either.”); Unutoa v. Interstate Hotels & Resorts, Inc., 2015 WL 898512, at *2 (C.D. Cal.
Mar. 3, 2015) (“While the Ninth Circuit held that both parties are entitled to submit
summary-judgment-style evidence regarding the propriety of removal, it declined to
decide whether a plaintiff was required to submit evidence refuting the defendant’s
allegations and evidence of the amount in controversy in order to prevail on a motion to
remand.”).
CV 15-281-GHK (CWx), at *4-5 (C.D. Cal. April 1, 2015) (footnote omitted). While Plaintiff may
rebut Defendant’s evidence with his own evidence, he need not do so in order to prevail in his Motion.
III.

Amount in Controversy

In the NOR, Defendant alleges that the amount in controversy is satisfied because the amount
recoverable for three of Plaintiff’s nine claims exceeds in $5,000,000. Those three claims are (1) failure
to provide rest periods in violation of Labor Code § 226.7(b), (2) failure to provide accurate wage
statements in violation of Labor Code § 226(a), and (3) failure to pay waiting time penalties in violation
of Labor Code § 203(a).
A.

Rest Period Violations

California Labor Code § 226.7(b) provides that “[a]n employer shall not require an employee to
work during a meal or rest or recovery period.” The penalty for violation of section 226.7(b) is “one
additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or
rest or recovery period is not provided.” Cal. Lab. Code § 226.7(c). The statute of limitations for a
claim based on any statutory claim in California, other than a penalty or a forfeiture, is three years. See
Cal. Code Civ. Proc. § 338(a).
In its NOR, Defendant submits that it had 722 non-exempt employees in California between
December 2, 2011 and January 15, 2015.1 (NOR at ¶ 28.) Defendant further contends that the average
pay for these employees was $21.40/hour and that the employees collectively worked 314,013
workdays. (Id. at ¶ 28.) As evidence to support these assertions, Defendant provides declarations from

1

Plaintiff suggests that there was something inappropriate about Defendant including in its
estimate time after the date of the filing of the FAC. But Plaintiff chose to define the class period in the
FAC as running up “until the date of certification,” not the date of filing. (See FAC at ¶ 7.) Including
post-filing time is not inconsistent with the allegations in the FAC.
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E-FILED
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-890-GHK (JCx)

Date

Title

May 21, 2015

Jorge Alberto Mejia v. DHL Express (USA), Inc.

its employees and its attorney.2 (Nugen Decl. at ¶ 4, Lloyd Decl. at ¶ 3, Devaux Decl. at ¶ 6.)
Assuming a violation occurred each workday, 314,013 multiplied by $21.40 equals $6,719,878.20.
(NOR at ¶ 29.)
Plaintiff argues that this calculation overstates the amount in controversy because it is
unreasonable to assume a “100% violation rate.” Whether a removing defendant may assume a “100%
violation rate” depends on the allegations in the plaintiff’s complaint. In Lewis v. Verizon Commc’ns,
Inc., the Ninth Circuit concluded that where the plaintiff alleged that the defendant billed customers for
services without authorization, the defendant was free to include 100% of its billings for such services in
its estimate of the amount in controversy since the plaintiff did “not attempt[] to demonstrate, or even
argue, that the claimed damages are less than the total billed.” 627 F.3d 395, 400 (9th Cir. 2010). In
Ibarra v. Manheim Investments, Inc., the Ninth Circuit concluded that the removing defendant could not
assume a 100% violation rate where the plaintiff had alleged only that the defendant had a “pattern and
practice” of committing wage-and-hour violations, and the class representative had experienced
violations only on “multiple occasions,” not every occasion. 775 F.3d 1193, 1198 (9th Cir. 2015). In
LaCross v. Knight Transportation Inc., the Ninth Circuit held that the removing defendant could assume
a 100% violation rate where plaintiff had alleged that the defendant missclassifed truck drivers as
independent contractors because all of drivers “allegedly should have been classified as employees
rather than as independent contractors.” 775 F.3d 1200, 1202 (9th Cir. 2015).
The only Ninth Circuit case that arguably stands for the proposition that there is a bright-line
rule forbidding a removing defendant from assuming a 100% violation rate is Garibay v. Archstone
Communities LLC, 539 Fed. Appx. 763, 764 (9th Cir. 2013) (criticizing a removing defendant for
assuming, in the context of a wage-and-hour class action, that “every single member of the class would
be entitled to recover penalties for every single pay period” and for failing to provide evidence to justify
its assumption that there were two rest period violations per work week). As it is unpublished, Garibay
has no precedential weight. See 9th Cir. R. 36-3 (“Unpublished dispositions and orders of this Court are
not precedent, except when relevant under the doctrine of law of the case or rules of claim preclusion or
issue preclusion.”). Moreover, to the extent that Garibay demands that removing defendants submit
evidence of their liability—i.e., evidence of a violation rate— to establish jurisdiction, it is inconsistent
with Lewis. See 627 F.3d at 400 (“The amount in controversy is simply an estimate of the total amount
in dispute, not a prospective assessment of defendant’s liability. To establish the jurisdictional amount,
Verizon need not concede liability for the entire amount, which is what the district court was in essence
demanding by effectively asking Verizon to admit that at least $5 million of the billings were
‘unauthorized’ within the meaning of the complaint.”) (emphasis added); see also Patel v. Nike Retail
Servs., Inc., _ F. Supp. 3d _, 2014 WL 3611096, at *6 n.4 (N.D. Cal. July 21, 2014) (“[T]his Court
acknowledges that it cannot fully reconcile the Lewis approach with the approach apparently taken by
2

Plaintiff objects to the declarations from Defendant’s counsel on the ground that he lacks
personal knowledge. (Reply at 6-12.) This objection is OVERRULED because Defendant’s
employees provided company records to counsel, and he had personal knowledge of these records after
reviewing them. (See Nugen Decl. at ¶ 4; Lloyd Decl. at ¶ 3.)
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E-FILED
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-890-GHK (JCx)

Date

Title

May 21, 2015

Jorge Alberto Mejia v. DHL Express (USA), Inc.

the Ninth Circuit in Garibay . . . . Faced with this potential conflict, this Court accepts the Ninth
Circuit’s published opinion as the superior authority.”).
Plaintiff’s FAC does not contain any allegations that suggest a 100% violation rate is an
impermissible assumption. Unlike in Ibarra, Plaintiff does not allege that there was a “pattern and
practice” or that the lead plaintiff experienced violations only on “multiple” occasions. Instead, Plaintiff
alleges that Defendant “adopted and maintained uniform policies, practices and procedures” that caused
the purported violations of California’s rest period law. (FAC at ¶ 11.) It is not unreasonable to assume
that when a company has unlawful policies and they are uniformly “adopted and maintained,” then the
company may potentially violate the law in each and every situation where those policies are applied.
Thus, this case is more like Lewis than Ibarra and a 100% violation rate is not an unreasonable
assumption to use in estimating the amount in controversy in light of the allegations in the FAC. Since
Defendant has submitted evidence to show that the class members worked 314,013 days in the class
period and that the average penalty would be $21.40 per violation, the amount in controversy for the rest
period claim can be roughly estimated at $6,719,878.20.3
B.

Wage Statement Violations

California Labor Code section 226(a) provides that employers shall, “semimonthly or at the time
of each payment of wages,” furnish each employee with “an accurate itemized statement in writing
showing” all of the items of information required by Labor Code section 226(a)(1)-(9). The penalty for
a violation is “the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a
violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay
period, not to exceed an aggregate penalty of four thousand dollars ($4,000).” Cal. Lab. Code § 226.
The statute of limitations is one year. See Cal. Code Civ. Proc. § 340.
For this claim, Defendant submits that there are 599 putative class members. (Lloyd Decl. at ¶ 3;
Devaux Decl. at ¶ 8.) Multiplying the number of class members by the number of pay periods worked
by these employees during the relevant period—while accounting for the different penalties under the
statute for an initial violation and a repeat violation—Defendant estimates the amount in controversy for
this claim to be $1,643,300. (Suppl. Devaux Decl. at ¶ 6.)
Plaintiff contends that this calculation is also flawed because it too assumes a 100% violation
rate—i.e., that every single wage statement was unlawful. But, as with the rest period claim, that
3

Defendant’s calculation possibly could have been more precise. It is unclear from the
declarations submitted whether Defendant took into account the fact that employees who worked less
than three-and-half hours in a day would not be entitled to a rest period break. See IWC, Wage Order
No. 5, subd. 12 (“[A] rest period need not be authorized for employees whose total daily work time is
less than three and one-half (3 ½) hours.”). But unless a very significant number of the 314,013 work
days were that short, the amount in controversy in this case would still exceed the jurisdictional
threshold when one takes into account the amount in controversy from the two other claims for which
Defendant has submitted evidence.
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E-FILED
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-890-GHK (JCx)

Date

Title

May 21, 2015

Jorge Alberto Mejia v. DHL Express (USA), Inc.

assumption is not inconsistent with anything in the FAC. The FAC alleges a laundry list of potential
deficiencies in the wage statements:
In particular and without limitation, Defendants [sic] furnished wage statements to
Plaintiff and other Class members which showed the amount of shift differential
compensation but failed to show the amount of hours or applicable rate of compensation
for those hours subject to a shift differential. In addition, the wage statements furnished
to Plaintiff and the rest of the Class were rendered inaccurate and incomplete by
Defendant’s failure to pay one hour of wages to Plaintiff and other Class members when
they failed to legally-compliant [sic] meal and rest periods. Moreover, the wage
statements furnished to Plaintiff and the other Class members were inaccurate, for among
others reasons [sic], because (i) Defendants [sic] improperly “rounded,” adjusted or
edited the time recorded by or for Plaintiff and other Class members and (ii) Defendants
[sic] deducted time from the wages of Plaintiff and the rest of the Class regardless of
whether they actually received legally-compliant meal period [sic]. By failing to pay for
all hours worked by Plaintiff and other Class members, Defendant underpaid the actual
amount of regular hours worked by Plaintiff and the rest of the Class. Plaintiff and the
rest of the Class members suffered injury as a result of Defendants’ [sic] failure to
comply with Labor Code Section 226(a).
(FAC at ¶ 33.) It is not unreasonable to assume that, with this many violations alleged, every one of the
wage statements issued during the class period could potentially have been noncompliant. In addition,
and aside from the various allegations, if Defendant had a uniform policy of failing to provide rest
periods, as discussed above, the wage statements that Defendant provided would necessarily have been
inaccurate 100% of the time because each wage statement would have failed to include compensation
for the missed rest break. Accordingly, $1,643,300 is not an unreasonable or speculative estimate of the
amount in controversy for this claim.
C. Waiting Time Violations
California Labor Code section 203(a) provides that, “if an employer willfully fails to pay . . . any
wages of an employee who is discharged or who quits, the wages of the employee shall continue as a
penalty” from the date such wages were due until the date paid. But such wages “shall not continue for
more than 30 days.” Cal. Lab. Code § 203(a). The statute of limitations is three years. See Cal. Code
Civ. Proc. § 338(a).
Defendant found that there were 220 potential class members whose employment ended during
limitations period and their hourly rate was an average of $20.12 per hour. (Lloyd Decl. at ¶ 3; Devaux
Decl. at ¶ 7.) Defendant then assumed they were owed the maximum penalty of 30 days wages at 8
hours of pay per day, which works out to $1,062,336. (NOR at ¶ 37.)
Plaintiff objects again to assuming a 100% violation rate, not only in assuming that every class
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E-FILED
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-890-GHK (JCx)

Date

Title

May 21, 2015

Jorge Alberto Mejia v. DHL Express (USA), Inc.

members’ wages were withheld, but that every one of them was withheld for 30 days. But these
assumptions are also not inconsistent with Plaintiff’s allegations. Plaintiff does not allege that
Defendant simply forgot to give these employees their wages when they quit. Rather he alleges that by
failing to pay for meal breaks and rest breaks and other hours worked, Defendant “withheld” those
amounts unlawfully:
[B]y failing to pay for all hours worked by Plaintiff and other Class members, Defendant
underpaid the actual amount of regular hours worked by Plaintiff and the rest of the
Class. In addition, as alleged above, Defendants [sic] failed to pay one hour of wages to
Plaintiff and other Class members when Defendants [sic] failed to provide legally
compliant meal and rest breaks. These unpaid amounts were still owing to former
employees in the Class when they ended their employment with Defendants [sic].
Consequently, Defendants [sic] failed to timely pay all wages due former employees in
the Class at the time that their employment ended.
(FAC at ¶ 39.) Since it is reasonable to assume a 100% violation rate for the rest break claim, then it is
reasonable to further assume that 100% of the former employees would have had those unpaid rest break
wages unlawfully withheld after their employment ended and still not paid up to the maximum 30-day
period under the statute. Accordingly, $1,062,336 is a reasonable estimate of the amount in
controversy.4
IV.

Conclusion

The estimated sum of these three claims is $9,425,514, far more than the $5,000,000 required for
CAFA jurisdiction. Accordingly, we have subject matter jurisdiction, and Plaintiff’s Motion is
DENIED.
IT IS SO ORDERED.
-Initials of Deputy Clerk

:

--

Bea

4

Here, too, Defendant’s calculation could have been more precise. Damages for violations of
section 203(a) are calculated by determining the plaintiff’s “daily” wages and multiplying by 30. See
Mamika v. Barca, 68 Cal. App. 4th 487, 493 (1998). Thus, a more accurate estimate of the amount in
controversy would require determining how many hours the class members worked on average per day,
rather than simply assuming a full-time, eight-hour workday for all. Given the value of the other claims
alleged, it is unlikely that a more precise calculation would lower the amount in controversy to below
the jurisdictional threshold.
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