Raul Villarreal v. Central Freight Lines, Inc., et al

Filing 18

ORDER GRANTING MOTION TO REMAND 11 by Judge Otis D. Wright, II: Case Remanded to Los Angeles Superior Court, Long Beach, NS032922. The Clerk of Court shall close the case. MD JS-6. Case Terminated. (lc)

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United States District Court
Central District of California

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Plaintiff,

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Case № 2:16-cv-08747-ODW (AGR)

RAUL VILLARREAL,
v.

ORDER GRANTING MOTION TO

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CENTRAL FREIGHT LINES, INC.; and

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DOES I–V,

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REMAND [11]

Defendants.

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I.

INTRODUCTION

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This Labor Commissioner appeal was removed from California Superior Court.

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(ECF No. 1.) Before the Court is Raul Villarreal’s motion to remand. (ECF No. 11.)

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Finding that Central Freight Lines Inc. has not met its burden to show that the amount

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in controversy exceeds the $75,000 threshold for diversity jurisdiction, the Court

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GRANTS Villarreal’s motion to remand.

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II.

FACTUAL BACKGROUND

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Villarreal worked as a truck driver for Central Freight from August 8, 2014, to

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April 30, 2015. (Not. of Claims ¶ 10, ECF No. 12-1.) During that time, he was

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classified as an independent contractor. (Id. ¶ 20.) On July 8, 2015, Villarreal filed a

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complaint with the Labor Commissioner alleging (1) that Central Freight violated

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California Labor Code section 221 by making unlawful deductions from his wages

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and (2) that he is entitled to waiting time penalties under California Labor Code

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section 203. (Labor Comm’r Compl. 1, ECF No. 12-1.)1

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On October 12, 2016, the Labor Commissioner found that Villarreal should

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have been classified as an employee and awarded him $54,058.99 in improperly

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deducted wages, $12,119.40 in waiting time penalties, and $7,864.48 in accrued

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interest for a total of $74,042.87. (Order, Decision or Award of the Labor Comm’r

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11, 14.) Central Freight filed a notice of appeal on October 27, 2016, in the California

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Superior Court, County of Los Angeles.

(Not. of Appeal, ECF No. 1-4.)

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November 18, 2016, Villarreal filed a notice of claims, adding four additional causes

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of action to those previously alleged before the Labor Commissioner: (1) failure to

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provide a legally complaint paycheck stub under California Labor Code section 226;

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(2) failure to pay rest period premiums under California Labor Code section 227; (3)

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failure to pay rest periods under California Labor Code section 226.2; and (4) failure

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to pay minimum wages under California Labor Code section 1194. (Not. of Claims ¶¶

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22–62.)

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On November 23, 2016, Central Freight removed this case to federal court.

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(ECF No. 1.) On December 28, 2016, Villarreal filed the pending motion to remand.

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(ECF No. 11.) The motion is now fully briefed and ready for decision. (ECF Nos.

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12–13.)2

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III.

LEGAL STANDARD

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Federal courts have subject matter jurisdiction only as authorized by the

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Constitution and by Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v.

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Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

Federal courts have

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Villarreal also asked for liquidated damages in his administrative complaint but withdrew that
claim before the Labor Commissioner heard his case. (Labor Comm’r Compl. 1; Order, Decision or
Award of the Labor Comm’r 2, ECF No. 12-1.)
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After carefully considering the papers filed in support of this motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.

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jurisdiction where an action arises under federal law, or where each plaintiff’s

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citizenship is diverse from each defendant’s citizenship and the amount in controversy

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exceeds $75,000. 28 U.S.C. §§ 1331, 1332(a).

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In evaluating a motion to remand, courts “strictly construe the removal statute

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against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

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In other words, there is a “strong presumption against removal” and “[f]ederal

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jurisdiction must be rejected if there is any doubt as to the right of removal in the first

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instance.” Id.

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The defendant has the burden of establishing that removal is proper, including

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that the amount in controversy requirement is met. See id.; see also Piazza v. EMPI,

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Inc., No. 1:07-CV-00954-OWWGSA, 2008 WL 590494, at *14 (E.D. Cal. Feb. 29,

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2008); Moye v. Wal-Mart Stores, Inc., No. 215CV00161RFBVCF, 2016 WL

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1298715, at *4 (D. Nev. Mar. 31, 2016). The defendant’s burden of proof as to the

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amount in controversy is generally satisfied “if the plaintiff claims a sum greater than

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the jurisdictional requirement” in the complaint. Gaus, 980 F.2d at 566. However, if

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it is unclear on the face of the complaint whether the amount in controversy

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requirement is met, then “the defendant bears the burden of actually proving the facts

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to support jurisdiction” “by a preponderance of evidence.” Id. at 566–567 (citing

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Garza v. Bettcher Indus., Inc., 752 F. Supp. 753, 763 (E.D. Mich. 1990)); Guglielmino

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v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007).

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IV.

DISCUSSION

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Villarreal argues that Central Freight has failed to prove an amount in

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controversy exceeding the $75,000 threshold for diversity jurisdiction. (Mot. 2, ECF

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No. 11.) The parties agree that Villarreal’s first two claims are worth $66,178.39

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($54,058.99 in unlawful deductions plus $12,119.40 in waiting time penalties). (See

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generally Opp’n 3–4, ECF No. 12; Reply 5–7, ECF No. 13.) However, the parties

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disagree whether Villarreal’s remaining claims and attorneys’ fees total $8,821.62, the

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amount necessary to exceed the $75,000 jurisdictional threshold.

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Opp’n 3–4; Reply 5–7.)

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A. The Value of Villarreal’s Remaining Claims

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(See generally

1. Paystub Claim

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Central Freight calculates the value of Villarreal’s paystub claim at $3,050.

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(Opp’n 3.) Central Freight arrived at this figure by multiplying the number of weekly

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settlements Villarreal lists in the notice of claims (thirty-one settlements) with the

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statutory penalties accorded to each violation ($50 for the first violation plus $100 for

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subsequent violations). (Id.; Not. of Claims ¶ 31.)

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Villarreal argues that this calculation is incorrect because it is unknown how

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often Central Freight pays its employees or whether Central Freight’s settlement

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sheets are the legal equivalent of paystubs. (Reply 7.) The Court agrees with Central

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Freight’s calculation. Apparently, Villarreal has forgotten that the notice of claims

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indicates he was paid on a weekly basis while working for Central Freight. (Not. of

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Claims ¶ 29.) Therefore, it makes sense that the weekly settlement sheets either

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served as, or at least corresponded in numerosity with, the number of paystubs

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Villarreal received during the course of his employment. Accordingly, the Court finds

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an additional $3,050 creditable towards the amount in controversy.

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2. Failure to Pay Rest Period Premiums Claim
Central Freight next calculates the value of Villarreal’s “rest period premium

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claim” at $5,452.52.

(Opp’n 3–4.)

Central Freight arrived at this figure by

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multiplying the number of alleged rest periods Villarreal missed (108)3 with $50.48,

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which it argues is Villarreal’s hourly wage.4 (Id.; Notice of Claims ¶ 51.)

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While the Court does not take issue with the propriety of Central Freight’s

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proposed equation, it does take issue with Central Freight’s calculation of Villarreal’s

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California Labor Code section 226.7(c) provides that for every missed rest break, the employer
shall pay the employee for one hour of work at the employee’s “regular rate of compensation.”
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Central Freight’s proposed $50.48 hourly wage would equate to $105,351.76 over a typical 2087hour work year.

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hourly wage. Central Freight reached its hourly wage figure by taking the daily wage

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figure included in Villarreal’s notice of claims ($403.89) and dividing it by eight.

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Central Freight divides by eight because it “assum[es] an eight hour [work] day.”

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(Opp’n 3–4.)

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The $403.89 figure originates from the second paragraph of the Labor

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Commissioner’s findings of fact, which is attached to Villarreal’s notice of claims and

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expressly incorporated into that document by reference. (Not. of Claims ¶¶ 1, 2, 21;

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Order, Decision or Award of the Labor Comm’r 2.) In the paragraph immediately

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preceding the paragraph where the $403.89 figure appears, the Labor Commissioner

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notes that Villarreal worked “14 hours a day.” (Order, Decision or Award of the

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Labor Comm’r 2.) Therefore, it is unclear on what basis it would be reasonable for

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Central Freight to assume that Villarreal, a trucker, works “an eight hour day.”

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(Opp’n 4.)

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Further, it is entirely unclear why Central Freight needs to rely on an

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assumption about the number of hours Villarreal worked each day. Central Freight

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was Villarreal’s employer as recently as April 30, 2015. (Not. of Claims ¶ 10.) Thus,

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it had knowledge of Villarreal’s schedule and likely possesses detailed records that

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would allow for the calculation of this figure. Yet despite its position as Villarreal’s

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employer, Central Freight has not put forth any evidence regarding the average

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number of hours Villarreal worked each day.

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Faced with the unpleasant choice of accepting Central Freight’s completely

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unsubstantiated assumption that Villarreal worked only eight hours a day, or using the

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fourteen-hour figure from the findings of fact attached to the notice of claims, the

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Court reluctantly adopts the fourteen-hour figure. Substituting fourteen for eight in

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Central Freight’s equation, Villarreal’s hourly wage is $28.85. By multiplying the

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number of missed rest periods Villarreal alleges (108) with his hourly wage ($28.85),

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the Court finds an additional $3,115.80 creditable towards the amount in controversy.

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3. Failure to Pay Rest Periods Claim

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The last calculation Central Freight attempts is for Villarreal’s “failure to pay

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rest periods” claim. Using the same logic and methodology it applied in the rest

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period premiums claim above, Central Freight effectively multiplies the number of

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missed rest periods Villarreal alleges (108) with its hourly rate ($50.48) and then

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divides that figure by six, given that each rest break is ten minutes long, for a total of

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$907.20. (Opp’n 4.) Inserting the more appropriate $28.85 hourly wage into this

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equation, the Court finds that Central Freight may credit an additional $519.30

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towards the amount in controversy.

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4. Failure to Pay Minimum Wages Claim
Central Freight does not calculate the value of this claim.

(Opp’n 3–4.)

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Therefore, the Court will not credit any additional monies from this claim towards the

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amount in controversy.

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In sum, Central Freight can credit an additional $6,685.10 ($3,050 + $3,115.80

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+ $519.30) towards the amount in controversy beyond the $66,178.39, which the

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parties agree is creditable. Therefore, Central Freight has, to this point, proved an

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amount in controversy of $72,863.49.

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B. Attorneys’ Fees

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Central Freight also argues that Villarreal’s attorney fees’ are creditable

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towards the amount in controversy. (Opp’n 4–6.) In the Ninth Circuit, statutorily

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authorized attorneys’ fees are creditable towards the amount in controversy.

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Camarreri v. Phillips 66 Co., No. CV 17-0202 FMO (JCX), 2017 WL 436386, at *3

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(C.D. Cal. Jan. 31, 2017) (citing Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994,

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1000 (9th Cir. 2007), overruled on other grounds as recognized by Rodriguez v. AT &

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T Mobility Servs. LLC, 728 F.3d 975, 976–77 (9th Cir. 2013)). Here, all of the

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attorneys’ fees sought are statutorily authorized, and as a result, are creditable towards

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the amount in controversy.

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1194(a).

See Cal. Lab. Code §§ 98.2(c), 218.5(a), 226(e)(1),

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With this in mind, the Court must determine the amount of attorneys’ fees

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creditable toward the amount in controversy.

As one district court correctly

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annunciated, “[t]he Ninth Circuit has not yet expressed any opinion as to whether

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expected or projected future attorney fees may properly be considered ‘in controversy’

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at the time of removal for purposes of the diversity-jurisdiction statute.” Reames v.

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AB Car Rental Servs., Inc., 899 F. Supp. 2d 1012, 1018 (D. Or. 2012). However, a

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review of recent Central District of California decisions reveals a decided trend in

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favor of crediting only those attorneys’ fees incurred before the filing of a notice of

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removal. See, e.g., Camarreri, 2017 WL 436386, at *3; Morin v. Am. Expediting Co.,

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No. CV168552FMOAGRX, 2016 WL 7176568, at *3 (C.D. Cal. Dec. 9, 2016);

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Bloomer v. Serco Mgmt. Servs., Inc., No. EDCV161655JGBRAOX, 2016 WL

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4926409, at *2 (C.D. Cal. Sept. 15, 2016). The Court agrees that only attorneys’ fees

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incurred before the filing of a notice of removal should be creditable towards the

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amount in controversy; future attorneys’ fees are “entirely speculative” and are not in

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controversy at the time of removal. Camarreri, 2017 WL 436386 , at *3; Abrego

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Abrego v. The Dow Chem. Co., 443 F.3d 676, 690 (9th Cir. 2006) (indicating that

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courts are to examine the amount in controversy “at the time of removal” (quoting

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Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997))).

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In this case, both sides seem to agree that Villarreal incurred $1,700 in

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attorneys’ fees before the notice of removal was filed. (Opp’n 6; Reply 8.) Thus, the

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Court will credit $1,700 towards the amount in controversy. Adding $1,700 to the

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$72,863.40 figure from the previous subsection, Central Freight has proven an amount

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in controversy of $74,563.49.

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C. Central Freight Has Not Met Its Burden

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This is undoubtedly a close case. In such instances, it is critically important to

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consider the policies underlying removal. To this point, the Court recognizes that

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where there is “any doubt” whether “removal was proper in the first instance,” that

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doubt should be resolved “against finding subject matter jurisdiction” and in favor of

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remanding the case. See Moye, 2016 WL 1298715, at *4 (citing Gaus, 980 F.2d at

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566). There is doubt in this case and thus, it must be remanded.

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The burden is squarely on Central Freight to establish an amount in controversy

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exceeding $75,000 “by a preponderance” of the evidence, and it has not carried that

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burden. Guglielmino, 506 F.3d at 701. Despite clear guiding authority that it had the

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burden of “actually proving the facts” necessary “to support jurisdiction,” Central

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Freight did not produce one shred of independent evidence in opposition to this

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motion and did not even attempt to assign a value to Villarreal’s “minimum wages”

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claim. (See Opp’n 3–4.); see also Gaus, 980 F.2d at 566–567. In light of the

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calculations outlined in the previous subsections and considering that the removal

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statute is to be strictly construed against removal, the Court GRANTS Villarreal’s

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motion to remand based on Central Freight’s failure to prove an amount in

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controversy exceeding $75,000.

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V.

CONCLUSION

For the reasons discussed above, the Court GRANTS Villarreal’s motion to
remand. (ECF No. 11.) The Clerk of Court shall close the case.

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IT IS SO ORDERED.
February 13, 2017
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OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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