Danny Payne v. C&S Wholesale Grocers Inc et al

Filing 33

MEMORANDUM and ORDER signed by Chief Judge Morrison C. England, Jr. on 3/12/2014. Plaintiff's 16 Motion for Remand to Los Angeles Superior Court is DENIED. (Marciel, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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DANNY PAYNE,

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Plaintiff,

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No. 2:13-cv-02153-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
11, inclusive,

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Defendants.

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Through this action, Plaintiff Danny Payne (“Plaintiff”) seeks relief from

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

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

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California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. Plaintiff

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originally filed his Complaint in the Superior Court of California, County of Los Angeles.

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On August 29, 2013, Defendants removed Plaintiff’s case to the United States District

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Court for the Central District of California pursuant to the Court’s diversity jurisdiction.

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On October 17, 2013, the case was transferred from the Central District of California to

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the Eastern District of California.

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Presently before the Court is Plaintiff’s Motion to Remand (“Motion”). Mot., Oct. 1, 2013,

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ECF No. 16. For the reasons set forth below, Plaintiff’s Motion is DENIED.1

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BACKGROUND2

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Defendant Tracy Logistics has employed Plaintiff as a Warehouse Supervisor at

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its Stockton Facility since August 2011. Generally speaking, Plaintiff alleges that he was

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hired by Defendants, misclassified as an “exempt” employee, and paid on a salary basis

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without any compensation for overtime hours worked, missed meal periods, or rest

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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 to

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

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

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asserts he did not receive all his rest and meal periods; nor did he receive one additional

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hour of pay when he missed a meal period. Additionally, while Defendants knew or

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should have known that Plaintiff was entitled to receive at least minimum wages as

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compensation, he did not receive at least minimum wages 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, but he did not receive timely payment of these wages either during his

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employment or upon termination. Likewise, Defendants did not provide Plaintiff with

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

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known that Plaintiff was entitled to these statements.

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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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The following recitation of facts is taken, at times verbatim, from Plaintiff’s Complaint.

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

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

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

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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, 2011.3 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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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).

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Here, it is clear that Plaintiff is a citizen of California. The complaint alleges that

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“Plaintiff Danny Payne is an individual residing in the State of California.” ECF No. 2-1 at

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3. The Notice of Removal also states that “Plaintiff alleges that he ‘is an individual

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residing in the State of California’ . . . . Therefore, Plaintiff was domiciled in the State

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of California at the time he filed this action and is a citizen of California for the purposes

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of diversity jurisdiction in this matter.’” ECF No. 1 at 6-7.

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

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28 U.S.C. § 1332(c). A corporation is a citizen both of the state where it was

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incorporated and the state where it has its primary place of business. Id. Because C&S

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

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citizen of Vermont 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). Defendants’ removal papers make clear that Tracy Logistics is diverse from
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Plaintiff. ECF No. 1 at 7-8. Tracy Logistics is owned by its sole member, C&S Logistics

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of Sacramento/Tracy LLC, which in turn is wholly owned by its sole member, C&S

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

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Wholesale Grocers, Inc., which is a citizen of both Vermont and New Hampshire. Tracy

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Logistics, like C&S Wholesale Grocers, Inc., is therefore a citizen of Vermont and New

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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 his

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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 19-23. 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 WL

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

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b.

Amount in Controversy Calculations

Plaintiff takes issue with Defendants’ calculation of the amount in controversy for

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Plaintiff’s overtime claim, asserting that “each figure required to calculate overtime

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damages (hours worked, workweeks, and salary) is offered by Defendants without any

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competent evidence.” ECF No. 16 at 9.

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However, in support of Defendants’ Opposition to the Motion, Defendants offer

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Plaintiff’s deposition testimony, as well as the declarations of certain C&S employees.

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First, Christopher Clark, the Regional Director of Field Human Resources for C&S,

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testified that Plaintiff was employed at the Stockton facility for approximately 104

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workweeks, from August 29, 2011, through the date of Clark’s declaration, October 10,

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2013. Clark Decl. at 2-3. From August 29, 2011, to August 29, 2013, Plaintiff earned an

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average salary of $28.16. Clark Decl. at 2. The Court accepts this, for purposes of

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calculating the amount in controversy, as sufficient evidence of Plaintiff’s salary and

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number of weeks worked.

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Plaintiff testified that during his first year at the Stockton facility, he generally

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worked five days per week, from approximately 2:00 PM to 7:00 AM, or 17 hours per

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day. Payne Dep. at 38-39. He stated that he typically worked “15-, 16-hour days,

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sometimes longer.” Payne Dep. at 39. Thus, for 52 weeks, beginning on August 29,

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2011, the Court estimates that, at a minimum Plaintiff worked 15 hours per day, which
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amounts to 20 hours overtime per week and 15 hours double time per week: (52 x

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$28.16 per hour x 20 hours OT x 1.5 = $43,929.60) + (52 x $28.16 per hour x 15 hours

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DR x 2 = $43,929.60). Accordingly, for the first year of Plaintiff’s employment alone,

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there is $87,859.20 in controversy. Plaintiff also testified that in the time that he in the

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transportation office, for between six and eight months, he worked fourteen to fifteen

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hours per day. Payne Dep. at 205-07. This additional time adds at least $29,286.40 to

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the amount in controversy, calculated as follows: (26 weeks x 16 hours OT per week x

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$28.16 x 1.5 = $17,571.84) + (26 weeks x 8 hours DT per week x $28.16 x 2 =

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$11,714.56).

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Plaintiff’s primary Operations Manager, Norberto Caballery, testified that

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“Mr. Payne typically worked and works, on average, 12 hours per day on each shift and

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sometimes more.” Caballery Decl. at 3. When Plaintiff switched to the day shift, he “got

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an extra day,” so he worked four days instead of five days per week. Payne Dep. at

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196. However, the Court finds that there is inadequate evidence as to the number of

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weeks that Plaintiff worked the day shift, and thus does not include this number in

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calculating the amount in controversy.

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Additionally, the Court accepts $4,000 as the amount in controversy for Plaintiff’s

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Non-Compliant Wage Statement claim and $500 as the amount in controversy for

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Plaintiff’s Failure to Keep Requisite Payroll Records claim, as Plaintiff does not dispute

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these amounts. See Mot. at 8-9. The Court therefore finds that, at a minimum, the

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amount in controversy is $121,645.60. Defendants have therefore shown, by a

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preponderance of the evidence, that the amount in controversy is over the jurisdictional

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threshold of $75,000. As such, Plaintiff’s Motion 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 12, 2014

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