Nico Cruz v. Mohawk Industries, Inc. et al

Filing 18

ORDER DENYING 7 Motion to Remand, signed by District Judge Jennifer L. Thurston on 01/09/2022. (Maldonado, C)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11
12

NICO CRUZ, individually and on behalf of
other members of the general public
similarly situated,
Plaintiff,

13
14
15
16

Case No. 1:20-cv-01510-JLT-EPG
ORDER DENYING MOTION TO REMAND
(Doc. 7)

v.
MOHAWK INDUSTRIES, INC., et al.,
Defendants.

17
18

Nico Cruz filed a putative class-action complaint in the California Superior Court, Fresno

19

County against Defendants Mohawk Industries, Inc., Daltile Services, Inc., Dal-Tile Services,

20

Inc., and Dal-Tile Corporation on September 14, 2020. (Doc. 1-2.) Defendants removed the

21

action to this court on October 23, 2020, invoking federal jurisdiction under the Class Action

22

Fairness Act of 2005 (“CAFA”). (Doc. 1.)

23
24

BACKGROUND
Plaintiff’s complaint asserts nine causes of action for violations of various provisions of

25

the California Labor Code and one violation of the California Business and Professions Code.

26

(Doc. 1-2 (“Compl.”).) Plaintiff alleges that defendants “engaged in a pattern and practice of

27

wage abuse against their hourly-paid or non-exempt employees within the State of California,”

28

including “failing to pay them for all regular and/or overtime wages earned and for missed meal
1

1

periods and rest breaks in violation of California law.” (Id. ¶ 28.)
Plaintiff seeks to represent a class of “All current and former hourly-paid or non-exempt

2
3

employees who worked for any of the Defendants within the State of California at any time

4

during the period from four years preceding the filing of this Complaint to final judgment and

5

who reside in California.” (Id.¶ 16.) Plaintiff alleges that “[t]he amount in controversy for the

6

named Plaintiff . . . is less than seventy-five thousand dollars ($75,000).” (Id. ¶ 1.)

7

Defendants removed this action to this court on October 23, 2020, based upon CAFA

8

jurisdiction. (Doc. 1.) Defendants rely upon a declaration of Robin Krueger, the director of

9

human resources for Defendant Daltile Services, Inc., who declared that the defendants were

10

incorporated in or have principal places of businesses in a mixture of Delaware, Georgia,

11

Pennsylvania, and Texas. (Doc. 1-6 ¶¶ 3–6.) Krueger further declared that there were 4201

12

individuals falling within Plaintiff’s definition of the proposed class, and the amount in

13

controversy exceeded $5 million. (Id. ¶¶ 7–8.)
Plaintiff’s sole argument in the motion to remand the matter is that CAFA removal is

14
15

improper because Defendants failed to prove by a preponderance of the evidence that the amount

16

in controversy exceeds $5 million. (See Doc. 7.)

17

In their opposition to the motion, Defendants filed additional declarations by Krueger,

18

concerning the size of the proposed class and Defendants’ citizenship; Sean Chasworth, a third-

19

party data analyst, concerning the amounts in controversy based on assumptions from the

20

complaint; and Ian Wright, Defendants’ counsel concerning attorneys’ fees that Plaintiff’s

21

counsel had requested in previous cases. (Docs. 10-1, 10-2, 10-3.)

22

Earlier, the Court noted that it was likely to grant the motion to remand. (Doc. 12.) The

23

Court indicated that Defendants had improperly assumed a 100% violation rate for several of the

24

causes of action they had briefed, and such an assumption is improper. (Id. (citing Ibarra v.

25

Manheim Inv. Inc., 775 F.2d 1193, 1198–99 (9th Cir. 2015).) Because Defendants requested

26

leave to make arguments concerning Plaintiff’s sixth, eighth and tenth causes of action if the

27
1

28

In a subsequent declaration, Krueger revised this number to 490, stating that she had since
reviewed records from a discontinued computer system. (Doc. 10-2 ¶ 4.)
2

1

Court intended to grant the motion to remand, (Doc. 10 at 19), the Court granted leave to do so

2

(Doc. 12 at 3). Defendants supplemental briefing (Docs. 14 & 15), is now before the court.2

3

LEGAL STANDARD

4

A suit brought in state court may be removed to federal court if the federal court would

5

have had original jurisdiction over the suit. 28 U.S.C. § 1441(a); see also Libhart v. Santa

6

Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979) (“The removal jurisdiction of the federal

7

courts is derived entirely from the statutory authorization of Congress.”). Under CAFA, federal

8

courts have original jurisdiction “over certain class actions, defined in [28 U.S.C.] § 1332(d)(1), if

9

the class has more than 100 members, the parties are minimally diverse, and the amount in

10

controversy exceeds $5 million.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S.

11

81, 84–85 (2014) (citing Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592 (2013)).

12

“Congress enacted CAFA to ‘curb perceived abuses of the class action device which, in the view

13

of CAFA’s proponents, had often been used to litigate multi-state or even national class actions in

14

state courts.’” Singh v. Am. Honda Fin. Corp., 925 F.3d 1053, 1067 (9th Cir. 2019) (quoting

15

United Steel v. Shell Oil Co., 602 F.3d 1087, 1090 (9th Cir. 2010)). The Supreme Court has held

16

that there is “no presumption against removal jurisdiction [under CAFA] and that CAFA should

17

be read ‘with a strong preference that interstate class actions should be heard in a federal court if

18

properly removed by any defendant.’” Allen v. Boeing Co., 784 F.3d 625, 633 (9th Cir. 2015)

19

(alteration in original) (quoting Dart Cherokee, 574 U.S. at 89).
“The burden of establishing removal jurisdiction, even in CAFA cases, lies with the

20
21

defendant seeking removal.” Washington v. Chimei Innolux Corp., 659 F.3d 842, 847 (9th Cir.

22

2011) (citation omitted); see also Guglielmino v. McKee Foods Corp., 506 F.3d 696, 700 (9th

23

Cir. 2007) (“[T]he plaintiff is ‘master of her complaint’ and can plead to avoid federal

24

jurisdiction.”). “A defendant seeking removal must file in the district court a notice of removal

25

‘containing a short and plain statement of the grounds for removal . . .’” Ibarra v. Manheim

26

Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (quoting 28 U.S.C. § 1446(a)). “‘[W]hen

27

a defendant seeks federal-court adjudication, the defendant’s amount-in-controversy allegation

28

2

Plaintiff has not filed a reply, and the deadline to do so has expired.
3

1

should be accepted when not contested by the plaintiff or questioned by the court.’ ‘[A]

2

defendant’s notice of removal need include only a plausible allegation that the amount in

3

controversy exceeds the jurisdictional threshold,’” and “need not contain evidentiary

4

submissions.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 922, 927 (9th Cir. 2019)

5

(emphasis added) (quoting Dart Cherokee, 574 U.S. at 87–89; Ibarra, 775 F. 3d at 1197); see

6

also 28 U.S.C.A. § 1446(c)(2) (With certain exceptions, “the sum demanded in good faith in the

7

initial pleading shall be deemed to be the amount in controversy”). “Where a removing defendant

8

has shown potential recovery could exceed $5 million and the plaintiff has neither acknowledged

9

nor sought to establish that the class recovery is potentially any less, the defendant has borne its

10

burden to show the amount in controversy exceeds $5 million.” Arias, 936 F.3d at 927 (internal

11

quotation marks and citation omitted).

12

“Evidence establishing the amount is required by § 1446(c)(2)(B) only when the plaintiff

13

contests, or the court questions, the defendant’s allegation.” Dart Cherokee, 574 U.S. at 89. If

14

evidence is required, “[b]oth parties may submit evidence supporting the amount in controversy

15

before the district court rules.” Harris v. KM Indus., Inc., 980 F.3d 694, 699 (9th Cir. 2020).

16

Nonetheless, the defendant seeking removal bears the ultimate burden of showing “by a

17

preponderance of the evidence that the aggregate amount in controversy exceeds $5 million when

18

federal jurisdiction is challenged.” Ibarra, 775 F. 3d at 1197; see also Sanchez v. Monumental

19

Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996) (observing that a preponderance of the evidence

20

means “it is ‘more likely than not’ that the amount in controversy exceeds” the jurisdictional

21

threshold.). This burden may be satisfied by submitting “affidavits or declarations, or other

22

‘summary-judgment-type evidence relevant to the amount in controversy at the time of

23

removal,’” Ibarra, 775 F. 3d at 1197, or by relying on a chain of reasoning that includes

24

reasonable assumptions, LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1202 (9th Cir. 2015); see

25

also Arias, 936 F.3d at 925 (holding that “[a]n assumption may be reasonable if it is founded on

26

the allegations of the complaint.”). Removal is proper “if the district court finds, by a

27

preponderance of the evidence, that the amount in controversy exceeds” the jurisdictional

28

threshold. Dart Cherokee, 574 U.S. at 88 (citations omitted).
4

1

The amount in controversy is not the amount of damages that Plaintiff will likely recover,

2

see Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 417 (9th Cir. 2018), nor is it “a prospective

3

assessment of defendant’s liability,” Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 401 (9th

4

Cir. 2010). Rather, it “is simply an estimate of the total amount in dispute.” Id. Thus, the

5

amount in controversy merely “reflects the maximum recovery the plaintiff could reasonably

6

recover.” Arias, 936 F.3d at 927 (emphasis added).

7
8

ANALYSIS
A.

9

Minimal Diversity
Krueger has averred that Defendants are corporations with states of incorporation or

10

principal places of business in Delaware, Georgia, Pennsylvania and Texas. (Doc. 1-6 ¶¶ 3–6.)

11

Defendants allege that Plaintiff is a citizen of California. (Doc. 1 ¶ 18.) Thus, they have alleged

12

minimal diversity as required for jurisdiction under CAFA. Ehrman v. Cox Commc’ns, Inc., 932

13

F.3d 1223, 1226–27 (9th Cir. 2019) (discussing diversity requirements of CAFA). Because

14

“[D]efendant[s’] allegations of citizenship are unchallenged, nothing more is required” to

15

establish CAFA’s diversity requirement. Id. at 1228.

16

B.

Size of Class
In Krueger’s supplemental declaration, Kreuger declared that she is the custodian of

17
18

employee records and that she has reviewed their records to determine 490 employees fit the

19

definition of plaintiff’s proposed class. (Doc. 10-2 ¶¶ 3–4.) Though Plaintiff argues that

20

Krueger’s initial declaration failed to provide sufficient detail, (Doc. 7 at 10), certainly by this

21

point, Defendants have adequately established that there are more than 100 members in the

22

proposed class.

23

C.

24

Amount in Controversy
The crux of this dispute is whether at least $5 million is in controversy in this action. The

25

Court finds that Defendants have met their burden based on Plaintiff’s second, third, fourth and

26

sixth claims.

27

As often happens in CAFA removal cases concerning alleged violations of California

28

labor laws, Plaintiff alleges that defendants had a “pattern and practice” of violating specified
5

1

California labor laws but do not allege any specific rate of violations. (Compl. ¶ 28.) When

2

encountering such allegations, a defendant asserting CAFA jurisdiction cannot assume a 100%

3

violation rate:
We agree with the district court that a “pattern and practice” of doing
something does not necessarily mean always doing something. The
complaint alleges a “pattern and practice” of labor law violations but
does not allege that this “pattern and practice” is universally followed
every time the wage and hour violation could arise. . . . Because the
complaint does not allege that Manheim universally, on each and
every shift, violates labor laws by not giving rest and meal breaks,
Manheim bears the burden to show that its estimated amount in
controversy relied on reasonable assumptions.

4
5
6
7
8
9

Ibarra, 775 F.3d at 1198–99. Following Ibarra, “[d]istrict courts have found, however, that

10

violation rates of 25% to 60% can be reasonably assumed as a matter of law based on ‘pattern and

11

practice’ or ‘policy and practice’ allegation.” Avila v. Rue21, Inc., 432 F. Supp. 3d 1175, 1189

12

(E.D. Cal. 2020) (citing cases).

13

1.

Claim 2: Meal Breaks

Plaintiff’s second cause of action alleges that Defendants failed to comply with California

14
15

Labor Code §§ 226.7 and 512(a) and an applicable Industrial Welfare Commission Wage Order

16

requiring paid meal and rest breaks.
Defendants’ argument in its first round of briefing rests mostly on Chasworth’s

17
18

declaration. (See Doc. No. 10.) Chasworth reviewed defendants’ California employment records,

19

including the periods of September 14, 2016 through November 30, 2016 (“Four-Year Period”)

20

and September 14, 2019 through November 30, 2020 (“One-Year Period”). (Doc. 10-3 ¶¶ 7, 10.)

21

Each week (a “workweek”), the typical employee worked 40 hours over five days. (Id. ¶ 6.b.)

22

During the Four-Year Period, there were 490 non-exempt California employees who worked a

23

total of 65,120 workweeks and were paid an average of $21.38 per hour. (Id. ¶ 8.)3 During the

24

One-Year Period, there were 337 such employees who worked 19,154 workweeks at an average

25

hourly rate of $22.21. (Id. ¶ 10.)

26

For meal breaks, Chasworth took the 65,120 workweeks in the Four-Year Period with a

27

$21.38 average wage and assumed that 20% of days had a meal break violation—or an average of

28

3

For ease of reading, this order uses a rounded $21.38 wage instead of $21.3832213739509.
6

1

one hour per workweek. (Doc. 10-3 at 7–8.) This amount comes to 65,120 workweeks × 1 hour

2

per workweek × $21.38 / hour = $1,392,475. Where, as here, Plaintiffs do not contest these

3

assumptions with alternate evidence, courts find allegations such as these reasonable. See Avila,

4

432 F. Supp. 3d at 1189 (collecting cases). Thus, the Court finds that these assumptions are

5

reasonable, and that Defendants have established this is the amount in controversy by a

6

preponderance of the evidence. See also Arias, 936 F.3d at 927 (when defendant puts forth

7

evidence “and the plaintiff has neither acknowledged nor sought to establish that the class

8

recovery is potentially any less, the defendant has borne its burden to show the amount in

9

controversy exceeds $5 million” (citation omitted)).

10
11

2.

Claim 3: Rest Breaks

The same calculations apply as for the meal-breaks claim. Thus, for the same reasons as

12

above, the court finds that Defendants have established that $1,392,475 is the amount in

13

controversy for this claim by a preponderance of the evidence.

14
15

3.

Claim 4: Unpaid Minimum Wage (Non-Penalties)

If an employer fails to pay its employees the minimum wage, California Labor Code

16

§ 1194 provides that “[n]otwithstanding any agreement to work for a lesser wage, any employee

17

receiving less than the legal minimum wage . . . is entitled to recover in a civil action the unpaid

18

balance of the full amount of this minimum wage[,] . . . including interest thereon, reasonable

19

attorney’s fees, and costs of suit.” In addition, the employee is “entitled to recover liquidated

20

damages in an amount equal to the wages unlawfully unpaid and interest thereon.” Id. § 1194.2.

21

Plaintiff alleges that he and other class members were “hourly-paid or non-exempt

22

employees” and that Defendants “failed to compensate them for all hours worked and missed

23

meal periods and/or rest breaks.” (Compl. ¶ 22.) Additionally, Plaintiff alleges that he and the

24

other class members “were not receiving at least minimum wages for all hours worked,” (id.

25

¶ 33), and that their wage statements “fail[ed] to include the total number of hours worked by

26

Plaintiff and the other class members,” (id. ¶ 36).

27
28

As to the unpaid wages and liquidated damages, Chasworth assumed that a $10 minimum
wage applied because since January 1, 2016, the California minimum wage applicable to
7

1

defendants has been at least $10. (Doc. No. 10-2 ¶ 19.) Chasworth assumed an average of 0.5

2

unpaid hours per workweek. At a minimum wage of $10, that equals $10 per hour × 0.5 hours

3

per workweek × 65,120 workweeks in the Four-Year Period = $325,600. Chasworth then

4

doubles that amount to account for liquidated damages, to reach $651,200. Defendants have

5

established this amount by a preponderance of the evidence.

6

4.

Claim 6: Timely Payment of Wages

Plaintiff’s sixth claim is for failing to pay timely wages under California Labor Code

7
8

§ 204. California Labor Code § 204 sets forth the schedule by which California employees must

9

be paid. Civil actions brought for violations of § 204 may recover $100 for an initial violation for

10

each employee and $250 for all subsequent violations for each employee, plus 25% of all

11

amounts unlawfully withheld. Cal. Labor Code § 210(a).4 Plaintiff alleges that “Plaintiff and the

12

other class members did not receive payment of all wages, including overtime and minimum

13

wages and meal and rest period premiums, within any time permissible under California Labor

14

Code section 204.” (Compl. ¶ 35.)

15

Chasworth makes assumptions that reduce the violations to every other week instead of

16

every week. (Doc. 14 ¶¶ 17–21.) Although “pattern or practice” allegations standing alone

17

cannot support a 100% violation rate, Ibarra, 775 F.3d at 1198–99, this 50% violation rate falls

18

within the “25% to 60% [rates that] can be reasonably assumed as a matter of law based on

19

‘pattern and practice’ or ‘policy and practice’ allegation,” particularly because Plaintiff provided

20

no contrary figures. Avila, 432 F. Supp. 3d at 1189. Thus, the Court finds these figures are

21

reasonable. Chasworth counts 337 initial pay periods and 8,726 subsequent periods. (Id.)

22

Chasworth further assumes for the 25% penalty that all employees were paid the minimum wage

23

of $10 per hour and that on average, they were not compensated the minimum wage for 30

24

minutes per workweek (i.e., 30 minutes for every 40 hours went uncompensated). Given the

25

19,154 relevant workweeks, Chaworth reaches a figure of $1,790,229.5

26
4

27
28

Section 204b, which concerns employees paid weekly, has the same penalty structure. Id.
§ 210(a).
5
337 initial workweeks × $100 per initial workweek + 8,726 subsequent workweeks × 200 per
subsequent workweek + $10 per hour × 0.5 hours per workweek × 19,154 workweeks × 25%
8

1
2
3

CONCLUSION AND ORDER
Defendants have established the following amounts are in controversy by a preponderance
of the evidence:

4

Type of Claim
Claim 2: Meal Breaks
Claim 3: Rest Breaks
Claim 4: Unpaid Minimum
Wage (Non-Penalties)
Claim 6: Payroll Records
Total:

5
6
7
8
9
10

Value
$1,392,475
$1,392,475
$651,200
$1,790,229
$5,226,379

Because this amount exceeds $5 million, Plaintiff’s motion to remand (Doc. 7) is
DENIED.

11
12
13

IT IS SO ORDERED.
Dated:

January 9, 2022

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

statutory penalty = $1,790,229.
9