Jose Chan v. C&S Wholesale Grocers Inc et al

Filing 42

ORDER signed by Chief Judge Morrison C. England, Jr. on 3/11/2014 ORDERING 16 Plaintiff's Motion to Remend is DENIED. (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JOSE CHAN,

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Plaintiff,

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No. 2:13-cv-02140-MCE-KJN

v.

MEMORANDUM AND ORDER

C&S WHOLESALE GROCERS, INC. a
Vermont Corporation; TRACY
LOGISTICS, LLC, an unknown
business entity; and DOES 1 through
100, inclusive,

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Defendants.

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Through this action, Plaintiff Jose Chan (“Plaintiff”) seeks relief from Defendants

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C&S Wholesale Grocers, Inc. (“C&S”) and Tracy Logistics, LLC (“Tracy Logistics”)

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(collectively “Defendants”) for violations of the California Labor Code and California’s

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Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. Plaintiff originally filed

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his Complaint in the Superior Court of California, County of Los Angeles. On August 29,

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2013, Defendants removed Plaintiff’s case to the United States District Court for the

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Central District of California pursuant to the Court’s diversity jurisdiction. On October 16,

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2013, the case was transferred from the Central District of California to the Eastern

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District of California. ECF No. 20. Presently before the Court is Plaintiff’s Motion to

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Remand (“Motion”). Mot., Oct. 1, 2013, ECF No. 16. For the reasons set forth below,

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Plaintiff’s Motion is DENIED.1

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BACKGROUND

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Defendant Tracy Logistics has employed Plaintiff as a Warehouse Supervisor at

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its Stockton Facility since the end of 2003 or the beginning of 2004. Generally speaking,

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Plaintiff alleges that he was hired by Defendants, misclassified as an “exempt”

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employee, and paid on a salary basis without any compensation for overtime hours

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worked, missed meal periods, or rest breaks.

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Plaintiff further claims that he worked over eight hours per day, and/or more than

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forty hours per week, during the course of his employment with Defendants. According

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to Plaintiff, although Defendants knew or should have known that he was entitled to

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receive certain wages as overtime compensation, he did not receive such wages.

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Plaintiff also asserts he did not receive all his rest and meal breaks; nor did he receive

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one additional hour of pay when he missed a meal period. Additionally, while

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Defendants knew or should have known that Plaintiff was entitled to receive at least

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minimum wages as compensation, he did not receive that wage for all hours worked.

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Plaintiff goes on to allege that he was entitled to timely payment of all wages

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during his employment and to timely payment of wages earned upon termination of his

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employment, neither of which he received. Likewise, Defendants did not provide Plaintiff

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with complete and accurate wage statements, although Defendants knew or should have

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known that Plaintiff was entitled to that reporting.

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Plaintiff also asserts that Defendants failed to keep complete and accurate payroll

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records. Finally, Defendants purportedly falsely represented to Plaintiff that the wage

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Because oral argument would not be of material assistance, the Court ordered this matter
submitted on the briefs pursuant to E.D. Cal. Local Rule 230(g).

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denials were proper. Instead, according to Plaintiff, these wage denials were improper

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and served the purpose of increasing Defendants’ profits.

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These claims were brought by a different plaintiff in a class action in state court,

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Tompkins v. C&S Wholesale Grocers, Inc., on February 3, 2011.2 On March 14, 2011,

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the defendants in the Tompkins action removed the case to federal court, asserting

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diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). The Tompkins plaintiff then moved

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to remand the case, on the grounds that the operative complaint alleged an amount in

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controversy below the $75,000 threshold. The Court granted the plaintiff’s motion to

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remand, finding that there was insufficient evidence to show that the amount in

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controversy for the plaintiff’s individual claims exceeded $75,000. The defendants again

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removed the case to federal court on October 26, 2011, based on discovery conducted

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prior to that date. The Tompkins plaintiff again moved to remand, and the Court again

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granted the plaintiff’s motion on the grounds that the defendants had not met their

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burden of proving that the amount in controversy on the plaintiff’s individual claims

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exceeded the jurisdictional threshold.

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On June 15, 2012, after the Court remanded the case a second time, the

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Tompkins defendants deposed the named plaintiff in that case, David Tompkins. On

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September 21, 2012, the defendants offered Mr. Tompkins a Joint Offer to Compromise

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under California Civil Procedure Code § 998(b)(2), in the amount of $75,001.00.

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Mr. Tompkins accepted the Joint Offer on October 3, 2012.

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The subject wage and hour claims were subsequently brought in a new class

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action, Bicek v. C&S Wholesale Grocers, Inc., No. 13-cv-00411, on behalf of the same

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putative class. Bicek, which is also before this Court, is a class action which this Court

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has jurisdiction over pursuant to the Class Action Fairness Act

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All facts relating to the Tompkins action are taken from Defendants’ Opposition to Plaintiff’s
Motion to Remand. ECF No. 14.

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STANDARD

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There are two bases for federal subject matter jurisdiction: (1) federal question

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jurisdiction under 28 U.S.C. § 1331 and (2) diversity jurisdiction under 28 U.S.C. § 1332.

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A district court has federal question jurisdiction in “all civil actions arising under the

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Constitution, laws, or treaties of the United States.” Id. § 1331. A district court has

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diversity jurisdiction “where the matter in controversy exceeds the sum or value of

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$75,000, . . . and is between citizens of different states, or citizens of a State and citizens

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or subjects of a foreign state . . . .” Id. § 1332(a)(1)-(2). Diversity jurisdiction requires

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complete diversity of citizenship, with each plaintiff being a citizen of a different state

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from each defendant. 28 U.S.C. § 1332(a)(1); Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68

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(1996) (stating that complete diversity of citizenship is required).
When a party brings a case in state court in “which the district courts of the United

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States have original jurisdiction,” the defendant may remove it to the federal court

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“embracing the place where such action is pending.” 28 U.S.C. § 1441(a). “The party

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invoking the removal statute bears the burden of establishing federal jurisdiction.”

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Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citing Williams v.

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Caterpillar Tractor Co., 786 F.2d 928, 940 (9th Cir. 1986)). A motion to remand is the

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proper procedure for challenging removal. “The party invoking the removal statute bears

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the burden of establishing federal jurisdiction.” Ethridge, 861 F.2d at 1393 (internal

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citations omitted). Courts “strictly construe the removal statute against removal

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

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omitted). “[I]f there is any doubt as to the right of removal in the first instance,” the court

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must grant the motion for remand. Id. Additionally, “[i]f at any time before final judgment

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it appears that the district court lacks subject matter jurisdiction, the case shall be

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remanded” to state court. 28 U.S.C. § 1447(c).

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ANALYSIS

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Defendants removed the instant case pursuant to the Court’s diversity jurisdiction.

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As set forth above, a district court has diversity jurisdiction “where the matter in

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controversy exceeds the sum or value of $75,000, . . . and is between citizens of

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different states, or citizens of a State and citizens or subjects of a foreign state . . . .” Id.

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§ 1332(a)(1)-(2).

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1.

Citizenship

Diversity jurisdiction requires complete diversity of citizenship, with each plaintiff

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being a citizen of a different state from each defendant. 28 U.S.C. § 1332(a)(1);

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Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996) (stating that complete diversity of

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citizenship is required). Here, it is clear that Plaintiff is a citizen of California. The

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complaint alleges that “Plaintiff Jesus Alvarez is an individual residing in the State of

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California.” ECF No. 2-1 at 3. The Notice of Removal also states that “Plaintiff alleges

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that he ‘is an individual residing in the State of California’ . . . . Therefore, Plaintiff was

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domiciled in the State of California at the time he filed this action and is a citizen of

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California for the purposes of diversity jurisdiction in this matter.’” ECF No. 1 at 7.

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C&S is a corporation, and thus has dual citizenship for diversity purposes,

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meaning it is a citizen both of the state where it was incorporated and the state where it

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has its primary place of business. See 28 USC 1332(c). Because C&S is incorporated in

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Vermont with its principal place of business in New Hampshire, it is a citizen of Vermont

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and New Hampshire for purposes of diversity jurisdiction.

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Next is the issue of Tracy Logistics’ citizenship. For purposes of diversity

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jurisdiction in a case removed pursuant to 28 U.S.C. § 1441, “like a partnership, an LLC

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is a citizen of every state of which its owners/members are citizens.” Johnson v.

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Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (citations

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omitted). Although unclear from Defendants’ Opposition, Defendants’ removal papers

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make clear that Tracy Logistics is diverse from Plaintiff. ECF No. 1 at 7. Tracy Logistics
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is owned by its sole member, C&S Logistics of Sacramento/Tracy LLC, which in turn is

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wholly owned by its sole member, C&S Acquisitions LLC. C&S Acquisitions LLC is

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wholly owned by its sole member, C&S Wholesale Grocers, Inc., which is a citizen of

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both Vermont and New Hampshire. Tracy Logistics, like C&S Wholesale Grocers, Inc.,

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is therefore also a citizen of Vermont and New Hampshire.

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Thus, because Plaintiff is a citizen of California, while Defendants are citizens of

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Vermont and New Hampshire, there is complete diversity between Plaintiff and

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Defendants.

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2.

Amount in Controversy
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Defendants’ Burden

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Defendants contend that the standard for establishing the amount in controversy

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is a preponderance of the evidence. Plaintiff, on the other hand, takes the position that

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the Court lacks jurisdiction because he alleges that the amount in controversy for their

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individual claims is less than $75,000, and Defendants have failed to prove with legal

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certainty that the jurisdictional amount is met. Specifically, the Complaint states in the

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Jurisdiction and Venue allegations that “the ‘amount in controversy’ for the named

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Plaintiff, including claims for compensatory damages, restitution, penalties, and pro rata

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share of attorneys’ fees is less than [$75,000].” Compl. at 2. No specific amount is

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stated in Plaintiff’s prayer for relief. See Compl. at 18-22. The prayer for relief lists civil

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and statutory penalties; reasonable attorneys’ fees and costs of the suit; actual,

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consequential, and incidental losses and damages; and other and further relief as the

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Court deems just and proper.

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For the reasons set forth in the related case Cagle v. C&S Wholesale Grocers,

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Inc., No. 2:13-cv-02134, in the Court’s Order issued February 19, 2014, ECF No. 24, the

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Court finds that the standard for determining whether Defendants meet their burden of

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establishing the amount in controversy is the preponderance of the evidence. Under this

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standard, “the removing party’s burden is ‘not daunting,’ and defendants are not

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obligated to ‘research, state, and prove the plaintiff’s claims for damages.’” Behrazfar v.
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Unisys Corp., 687 F. Supp. 2d 999, 1004 (C.D. Cal. 2009) (quoting Korn v. Polo Ralph

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Lauren Corp., 536 F. Supp. 2d 1199, 1204-05 (E.D. Cal. 2008)). When a “[d]efendant’s

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calculations [are] relatively conservative, made in good faith, and based on evidence

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wherever possible,” the court may find that the “[d]efendant has established by a

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preponderance of the evidence that the amount in controversy” is met. Id. (citing

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Neville v. Value City Dep’t Stores, LLC., No. 07-cv-53-DRH, 2008 WL 2796661, *5-6

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(S.D. Ill. July 18, 2008); Eisler v. Med. Shoppe Int’l, Inc., NO. 4:05CV2272 JCH, 2006

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WL 415953, *2 (E.D. Mo. 2006)).

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b.

Amount in Controversy Calculations

Plaintiff takes issue with Defendants’ calculations of Plaintiff’s overtime claim.

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Mot. at 5. Specifically, Plaintiff contends that Defendants may not rely on a declaration

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made by Plaintiff in April 2011 as evidence of Plaintiff’s hours worked through August

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2013. Plaintiff also takes issue with Defendants’ proposition that Plaintiff’s salary was

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$28.13 per hour. Plaintiff also argues that Defendants’ reliance on the settlement in

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Tompkins is impermissible.

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As a preliminary matter, the Court finds that under the preponderance of the

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evidence standard, it may accept $28.13 as Plaintiff’s hourly wage. This assertion,

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contained in the Notice of Removal, is a weighted average which takes into

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consideration the amount of weeks worked at each hourly rate during the relevant class

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period. Notice of Removal at 10. Thus, this amount appears to be “relatively

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conservative, made in good faith, and based on evidence.” Behrazfar, 687 F. Supp. 2d

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at 1004.

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The time period at issue begins July 18, 2009. From July 18, 2009, to March 31,

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2011, Plaintiff worked 88 workweeks. Plaintiff’s Declaration states that during that time

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period, he worked Sunday through Thursday. Chan Decl. at 1. On days other than

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Thursday, Plaintiff worked from approximately 4:00 PM to 4:00 AM, or 12 hours per day.

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Id. On Thursdays, Plaintiff worked from approximately 2:30 PM to 1:00 AM, or 10.5

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hours per day. Id. Accordingly, during this time period, Plaintiff worked approximately
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18.5 hours of overtime per week. From April 1, 2011, to April 20, 2011, Plaintiff’s

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schedule was Monday through Friday from approximately 2:00 PM to 2:00 AM. Id.

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Thus, from April 1, 2011, to April 20, 2011, Plaintiff worked 14 12-hour days. The Court

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therefore calculates Plaintiff’s overtime claim from July 18, 2009, to March 31, 2011, as

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follows: (88 weeks x 18.5 hours OT per week x $28.13 per hour x 1.5 = $68,693.46).

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The amount in controversy for this claim from April 1, 2011, to April 20, 2011, is

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calculated as follows: (14 days x 4 hours OT per day x $28.13 per hour x 1.5 =

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$2,362.92). Thus, the total amount in controversy for this period is $71,056.38.

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Given that Plaintiff does not contest Defendants’ assertion that the amount in

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controversy for Plaintiff’s wage statement claim is $4,000, and that the amount in

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controversy for Plaintiff’s claim for failure to keep requisite payroll records is $500, the

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amount in controversy—without calculating attorneys’ fees or the amount in controversy

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for the overtime claim past the date of April 20, 2011—is $75,556.38.

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Accordingly, the Court finds that the requisite amount in controversy is met by a
preponderance of the evidence. Plaintiff’s Motion to Remand is DENIED.

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CONCLUSION

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For the reasons just stated, Plaintiff’s Motion to Remand, ECF No. 16, is DENIED.

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IT IS SO ORDERED.

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Dated: March 11, 2014

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