Garnett v. ADT LLC

Filing 13

ORDER signed by Senior Judge William B. Shubb on 2/10/2015 DENYING 8 Plaintiff's Motion to Remand. (Kirksey Smith, K)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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SHIRLEY GARNETT, on behalf of
herself and all others
similarly situated,
Plaintiff,

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ADT LLC, and Does 1 through
50, inclusive,
Defendants.

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----oo0oo----

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MEMORANDUM AND ORDER RE: MOTION
TO REMAND

v.

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CIV. NO. 2:14-2851 WBS DAD

Plaintiff Shirley Garnett brought this putative class
action against defendant ADT LLC, asserting claims arising out of
the alleged failure to reimburse her and others for work-related
expenses and failure to provide wage statements required by
California law.

Defendant removed the action from San Joaquin

County Superior Court under the Class Action Fairness Act of
2005.

28 U.S.C. §§ 1332(d), 1446.

pursuant to 28 U.S.C. § 1447(c).

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Plaintiff now moves to remand

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I.

Factual and Procedural History

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Plaintiff worked for defendant during the four years

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preceding this lawsuit.

(FAC ¶ 10 (Docket No. 1).)

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time, plaintiff alleges that defendant required her and other

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employees to use their personal vehicles in the course of

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performing their jobs without reimbursing them for the expenses

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they incurred.

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defendant failed to provide her and other employees with hard

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copies of their wage statements, as required by California law.

(Id. ¶¶ 19, 28.)

During that

Plaintiff also alleges that

Her First Amendment Complaint1 (“FAC”)

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(Id. ¶¶ 15, 23, 28.)

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asserts claims under California Labor Code section 2802,

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California Business & Professions Code sections 17200 et seq.,

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and California’s Private Attorneys General Act of 2004, Cal. Lab.

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Code §§ 2698, et seq.

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third claim, she seeks statutory damages under California Labor

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Code section 226, which governs the furnishing of wage statements

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to employees.

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(Id. ¶¶ 18-29.)

As part of plaintiff’s

(See id. ¶ 28 (citing Cal. Lab. Code § 226).)

Defendant removed the action to federal court on

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December 5, 2014, asserting that, based solely on the statutory

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penalties available under California Labor Code section 226(e),

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the amount in controversy is approximately $6,794,550.

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Notice of Removal ¶¶ 15-16 (Docket No. 1).)

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supported this number with the declaration of Doug Cuellar, a

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manager employed by defendant to maintain and review human

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resources data.

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Defendant originally

(See Cuellar Decl. (Docket No. 3).)

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(Def.’s

Defendant

Plaintiff reportedly amended her Complaint before
serving the original Complaint on defendant. (See Def.’s Notice
of Removal at 2-3.)
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has since acknowledged a typographical error in Cuellar’s

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declaration misstating the time period that Cuellar used to

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calculate the number of wage statements issued by defendant.

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(See Def.’s Opp’n at 8-9 (Docket No. 10).)

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error by submitting a new declaration listing the correct dates,

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this time by HR Workforce Analyst Lori Pencis.

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(Docket No. 10-1).)

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number.

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maintains that the amount in controversy fails to reach the

It corrected this

(See Pencis Decl.

Both declarations arrived at the same

Plaintiff disputes defendant’s calculations and

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required $5 million minimum.

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8).)

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II.

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(Pl.’s Mot. to Remand (Docket No.

Discussion
“[A]ny civil action brought in a State court of which

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the district courts of the United States have original

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jurisdiction, may be removed by the defendant or the defendants,

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to the district court of the United States for the district . . .

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where such action is pending.”

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appears that the district court lacks subject matter

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jurisdiction, the case shall be remanded.”

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28 U.S.C. § 1441(a).

If “it

28 U.S.C. § 1447(c).

The Class Action Fairness Act of 2005 (“CAFA”) grants

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district courts original jurisdiction over civil class action

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lawsuits if the parties are minimally diverse and the amount in

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controversy exceeds $5 million.

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28 U.S.C. § 1332(d)(2).

Plaintiff’s FAC does not specify a particular amount of

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alleged damages.

In such cases, “the removing defendant bears

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the burden of establishing, by a preponderance of the evidence,

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that the amount in controversy exceeds [$5 million].”

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Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996).
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Sanchez v.
The

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Supreme Court recently clarified this burden by explaining that

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“the defendant’s amount-in-controversy allegations should be

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accepted when not contested by the plaintiff or questioned by the

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court.”

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U.S. ____, 135 S. Ct. 547, 553 (2014).

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contests the defendant’s allegations . . . both sides submit

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proof and the court decides, by a preponderance of the evidence,

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whether the amount in controversy requirement has been

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satisfied.”

Dart Cherokee Basin Operating Co., LLC v. Owens, ____

Id. at 553-54.

“If the plaintiff

“[N]o antiremoval presumption

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attends cases invoking CAFA, which Congress enacted to facilitate

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adjudication of certain class actions in federal courts.”

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554.

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Id. at

A. Statutory Damages
The parties’ disagreement over the amount in

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controversy stems from their different interpretations of

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California Labor Code section 226(e), which provides:

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An employee suffering injury as a result of a knowing
and intentional failure by an employer to comply with
subdivision (a) is entitled to recover the greater of
all actual damages or fifty dollars ($50) for the
initial pay period in which a violation occurs and one
hundred dollars ($100) per employee for each violation
in a subsequent pay period, not to exceed an aggregate
penalty of four thousand dollars ($4,000), and is
entitled
to
an
award
of
costs
and
reasonable
attorney’s fees.
Cal. Lab. Code § 226(e).
Defendant interprets “subsequent” to mean a pay period

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that occurs chronologically after the first pay period in which

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an employer fails to comply with section 226(a).

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at 10-11.)

(Def.’s Opp’n

After noting that a one-year statute of limitations

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applies to plaintiff’s wage-statement claim, defendant calculated

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the amount in controversy using three different penalty rates:

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(1) a set of 1,040 employee wage statements where the
number of wage statements for each employee in the
relevant period was such (at least 41) that the $4,000
maximum penalty is reached with regard to them; (2)
additional “initial” wage statements (total of 1,751)
for employees who are not included in the 1,040
putative class members . . . because they did not have
a sufficient number of wage statements to reach the
maximum;
and
(3)
additional
“subsequent”
wage
statements (a total of 25,465) for the individuals
included in category (2).
(Id. at 9-10.)
Plaintiff argues that this computation overestimates
the amount in controversy because “subsequent” has a special
meaning within the California Labor Code that triggers heightened
statutory penalties only after an employer has learned that its
conduct violates the Labor Code.

(Pl.’s Mem. at 7-10.)

Plaintiff asserts that, if defendant correctly states the number
of wage statements issued within the one-year limitation period,
the correct amount in controversy is $4,064,800.

(Id. at 9-10.)

Plaintiff relies principally on Amaral v. Cintas Corp.,
a California Court of Appeal case that rejected a purely temporal
understanding of the term “subsequent” and interpreted its use in
California Labor Code sections 210 and 225.5 to require that “the
employer has been notified that it is violated a Labor Code
provision” before higher penalties are triggered.
4th 1157, 1207-09 (1st Dist. 2008).
section 226(e).

163 Cal. App.

Amaral did not examine

However, plaintiff argues that its

interpretation applies to the Labor Code generally by pointing to
a federal court’s application of Amaral to California Labor Code
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section 2699(f)(2), see Chen v. Morgan Stanley Smith Barney, LLC,

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Civ. No. 8:14-01077 ODW, 2014 WL 4961182, at *2 (C.D. Cal. Oct.

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2, 2014), and, in this district, Magistrate Judge Thurston’s

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application of Amaral to section 226(e).

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WinnCompanies, Inc., Civ. No. 1:14-01497 LJO, 2014 WL 5823064, at

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*7 (E.D. Cal. Nov. 10, 2014) (finding that a defendant faced only

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$50 penalties for each failure to provide an accurate wage

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statement under section 226(e)).

See Perez v.

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It is a “well-established canon of statutory

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interpretation” that the use of different words or terms within a

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statute demonstrates an intent to convey a different meaning for

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those words.

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F.3d 683, 689 (9th Cir. 2003) (citing SEC v. McCarthy, 322 F.3d

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650, 656 (9th Cir. 2003)).

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sections 210, 225.5, and 2699 use the term “subsequent” in a

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different way than section 226(e).

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those sections modifies the word “violation,” so that a defendant

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faces enhanced penalties “for each subsequent violation.”2

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Spencer Enterprises, Inc. v. United States, 345

It is therefore significant that

The term “subsequent” in

The

California Labor Code section 210 states:

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(1) For any initial violation, one hundred dollars
($100) for each failure to pay each employee. (2) For
each
subsequent
violation,
or
any
willful
or
intentional violation, two hundred dollars ($200) for
each failure to pay each employee, plus 25 percent of
the amount unlawfully withheld.

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Cal. Lab. Code § 210(a) (emphasis added).

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California Labor Code section 225.5 provides:
(a) For any initial violation, one hundred dollars
($100) for each failure to pay each employee. (b) For
each
subsequent
violation,
or
any
willful
or
intentional violation, two hundred dollars ($200) for
each failure to pay each employee, plus 25 percent of
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Amaral court thus reasoned that an initial “violation” could

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encompass multiple failures to pay an employee under sections 210

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and 225.5.

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“each failure to pay each employee” may have “occurred in an

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initial violation”).

See Amaral, 163 Cal. App. 4th at 1209 (noting that

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This contrasts with section 226(e)’s use of the term

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“subsequent” to modify the noun “pay period,” so that enhanced

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penalties apply “per employee for each violation in a subsequent

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pay period.”

Cal. Lab. Code § 226(e) (emphasis added).

It is

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not at all clear that the Amaral court would have interpreted

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this language the same way it interpreted the language of

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sections 210 and 225.5.

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argued that sections 210 and 225.5 should be distinguished from

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“examples of other statutes that expressly impose penalties ‘per

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pay period,’” see Amaral, 163 Cal. App. 4th at 1208 (citing Cal.

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Lab. Code § 2699(f)(2)), but the court’s opinion leaves ambiguous

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whether the court agreed with that understanding.

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Thurston applied Amaral’s approach to section 226(e) in Perez,

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she did so without analyzing the difference in language between

In fact, one of the parties in Amaral

Although Judge

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the amount unlawfully withheld.

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Cal. Lab. Code § 225.5 (emphasis added).

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California Labor Code section 2699 provides:

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If, at the time of the alleged violation, the person
employs one or more employees, the civil penalty is
one hundred dollars ($100) for each aggrieved employee
per pay period for the initial violation and two
hundred dollars ($200) for each aggrieved employee per
pay period for each subsequent violation.
Cal. Lab. Code § 2699(f)(2) (emphasis added).
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the two statutes or discussing the intent behind section 226’s

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penalties.

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2014).

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value here.

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See Perez, 2014 WL 5823064, at *7 (E.D. Cal. Nov. 10,

The court thus finds that opinion of limited persuasive

The Amaral court may also have found significant the

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use of the phrase “[f]or each subsequent violation, or any

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willful or intentional violation, . . .”

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§ 210(a); Cal. Lab. Code § 225.5.

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reinforces Amaral’s conclusion that a subsequent violation occurs

See Cal. Lab. Code

This statutory language

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only after an employer gains notice of the Labor Code’s

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requirements, making any post-notice violation a “willful or

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intentional” one.

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phrase “willful or intentional violation.”

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predicates all liability upon a “knowing and intentional failure

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by an employer to comply with subdivision (a).”

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226(e).

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Amaral here.

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Notably, section 226(e) does not contain the
Instead, the statute

Cal. Lab. Code §

This difference casts more doubt on the application of

Having distinguished Amaral, and in the absence of

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controlling authority, the court will interpret the language of

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section 226(e) according to its plain meaning.

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$50 penalty for each violation in an initial pay period, and a

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$100 penalty per employee for each violation that occurs in a pay

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period after the initial pay period.

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accept defendant’s estimate of the amount in controversy as

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approximately $6,794,550,3 and finds more likely than not that

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Defendant faces a

Accordingly, the court will

Notably, defendant urges the court to reject Amaral for
purposes of calculating the amount in controversy, but it
“reserves the right” to argue that Amaral applies on the merits.
(Def.’s Opp’n at 10.)
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this case exceeds the $5 million minimum required by CAFA.4
B. Attorneys’ Fees

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Even if the court were to apply the Amaral approach and

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adopt plaintiff’s lower estimate of statutory damages under

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section 226(e), the court must also consider attorneys’ fees.

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“[W]here an underlying statute authorizes an award of attorneys’

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fees, either with mandatory or discretionary language, such fees

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may be included in the amount in controversy.”

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McKee Foods Corp., 506 F.3d 696, 700 (9th Cir. 2007) (considering

Guglielmino v.

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attorneys’ fees for purposes of calculating the amount in

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controversy for a case asserting violations of California’s Labor

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Code).

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reasonable attorney’s fees.”

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reasonableness of attorney’s fees, when such fees are

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unascertainable on the face of the complaint, can be calculated

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by looking to other attorney’s fees awards in similar cases.”

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Garcia v. ACE Cash Express, Inc., Civ. No. 14-0285 DOC, 2014 WL

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2468344, at *5 (C.D. Cal. May 30, 2014) (citing Kroske v. U.S.

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Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005)).

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Section 226(e) provides for “an award of costs and
Cal. Lab. Code § 226(e).

“The

Assuming that plaintiff correctly estimates the

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statutory damages available under section 226(e) as $4,064,800,

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an attorney award of $935,200--or approximately 23 percent of

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estimated recovery--would suffice to push this case over CAFA’s

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It is also worth noting that none of these calculations
take into account plaintiff’s other causes of action. Neither
party has addressed potential recovery under plaintiff’s other
claims, including her claim for failure to reimburse work-related
expenses pursuant to California Labor Code section 2802 (FAC ¶¶
18-20). Presumably, this claim could further increase the amount
in controversy.
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$5 million requirement.

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attorneys’ fee in this case is 25 percent of total recovery.5

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(Def.’s Opp’n at 13.)

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that included, among other claims, a claim similar to the instant

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one for failure to provide accurate wage statements.

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v. Oakland Port Servs. Corp., 230 Cal. App. 4th 1267, 1271 (1st

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Dist. 2014); Pellegrino v. Robert Half Int’l, Inc., 182 Cal. App.

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4th 278, 283 (4th Dist. 2010).

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Defendant argues that a reasonable

In support, it offers two California cases

See Godfrey

In Godfrey, a California Court of Appeal upheld a

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$487,810.50 award of attorneys’ fees in a case where the

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plaintiff’s class was awarded $964,557.80--a fee award of more

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than 50 percent of total recovery.

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4th at 1270, 1272, 1288.

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“lodestar” method for calculating attorneys’ fees from a common

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fund.6

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upheld the use of a 1.75 multiplier, ultimately awarding

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$978,121.98 in attorneys’ fees.

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See Godfrey, 230 Cal. App.

The court in Pellegrino employed the

See Pellegrino, 182 Cal. App. 4th at 285-87.

The court

In common fund cases, the Ninth

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Defendant has not provided the court with information
on plaintiff’s counsel’s hourly billing rate or estimated the
amount of time the case will require. Defendant only offers a
percentage estimate based on the total recovery.
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Common fund cases are distinct from other cases
involving an award of attorneys’ fees. Ordinarily, the amount of
attorneys’ fees awarded does not impact the amount of recovery.
However, “[u]nder regular common fund procedure, the parties
settle for the total amount of the common fund and shift the fund
to the court’s supervision. The plaintiffs’ lawyers then apply
to the court for a fee award from the fund.” Staton v. Boeing
Co., 327 F.3d 938, 969 (9th Cir. 2003) “The court then
determines the amount of attorney’s fees that plaintiffs’ counsel
may recover from this fund, thereby diminishing the amount of
money that ultimately will be distributed to the plaintiff
class.” Id. (quoting Florin v. Nationsbank of Georgia, N.A., 34
F.3d 560, 563 (7th Cir. 1994)).
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Circuit as also approved a “benchmark” percentage of 25 percent

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when considering what percentage of a fund to award in reasonable

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attorneys’ fees.

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Litig., 654 F.3d 935, 942 (9th Cir. 2011).

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See In re Bluetooth Headset Products Liab.

The cases provided by defendant do not align perfectly

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with the present action, and therefore, they cannot provide a

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faultless basis on which to estimate attorneys’ fees.

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cases are ever perfectly alike.

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its best to estimate attorneys’ fees, and in light of these

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cases, the court finds that defendant’s fee estimation of 25

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percent of recovery is a reasonable one.

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lower calculation of statutory damages ($4,064,800), this equates

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to a fee of approximately $1,016,200.

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controversy thus exceeds $5 million.

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No two

The court must nonetheless do

Even from plaintiff’s

The total amount in

IT IS THEREFORE ORDERED that plaintiff’s motion to

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remand be, and the same hereby is, DENIED.

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Dated:

February 10, 2015

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