Farley et al v. Dolgen California LLC

Filing 21

ORDER signed by District Judge Kimberly J. Mueller on 8/8/2017 GRANTING 10 Motion to Remand; REMANDING this matter to Superior Court of California, County of San Joaquin; DENYING 6 Motion to Compel Arbitration as moot. CASE CLOSED. (Michel, G.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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ERIC FARLEY and DAVE RINALDI,
individually and on behalf of other
members of the general public similarly
situated,

ORDER
Plaintiffs,

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v.

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No. 2:16-cv-02501-KJM-EFB

DOLGEN CALIFORNIA LLC, and DOES
l through 50, inclusive,

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Defendants.

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This putative class action attacks a retail corporation’s policy and practice of

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preventing “key carrier” employees from taking true rest and meal breaks because they are

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constantly on call. Plaintiffs Eric Farley and Dave Rinaldi originally sued defendant Dolgen

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California, LLC (Dolgen) in state court for labor and employment law violations before Dolgen

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removed the case to this court. Not. Removal ¶ 1, ECF No. 1. Plaintiffs now move to remand to

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San Joaquin County Superior Court. Mot., ECF No. 10. Defendant opposes the motion, and

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plaintiffs have replied. Opp’n, ECF No. 13; Reply, ECF No. 15. The court submitted the matter

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without a hearing on December 12, 2016. ECF No. 16. As explained below, the court GRANTS

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plaintiffs’ motion to remand.

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I.

BACKGROUND

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The putative class includes defendant’s current or former “non-exempt” retail

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employees who were unable to take proper rest or meal breaks because they were the only

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employees on duty with “key carrier” responsibility. First Am. Compl. ¶ 16, Ex. B, ECF No. 1 at

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37 (FAC). Plaintiffs filed this class action in San Joaquin County Superior Court on July 8, 2016.

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Compl., Ex. A, ECF No. 1 at 19. They filed the operative first amended complaint on September

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15, 2016, alleging: (1) Meal period and rest break violations; (2) waiting time penalties under

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Labor Code § 203; (3) wage statement penalties under Labor Code § 226; (4) unfair business

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practices under California Business and Professions Code § 17200; and (5) violations of the

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Private Attorneys General Act of 2004, Labor Code § 2699 (PAGA). FAC ¶¶ 32–65. On

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October 19, 2016, defendant removed the case to federal court, asserting jurisdiction under the

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Class Action Fairness Act (CAFA), 12 U.S.C. § 1453. Not. Removal. Plaintiffs now move to

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remand, challenging defendant’s ability to meet CAFA’s amount-in-controversy requirement.

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Mot. at 11.

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II.

LEGAL STANDARD: CAFA JURISDICTION

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A defendant may remove to a federal district court “any civil action brought in a

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state court of which the district courts of the United States have original jurisdiction.” 28 U.S.C.

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§ 1441(a). CAFA gives federal courts original jurisdiction over certain class actions only if

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(1) the class has more than 100 members, (2) any member of the class is diverse from the

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defendant, and (3) the amount in controversy exceeds $5 million, exclusive of interest and costs.

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See 28 U.S.C. § 1332(d)(2), (d)(5)(B).

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A.

CAFA Generally

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Congress enacted CAFA “specifically to permit a defendant to remove certain

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class or mass actions into federal court” and wanted courts to interpret CAFA “expansively.”

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Ibarra v. Manheim Inv., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citation omitted). Although

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courts generally “strictly construe the removal statute against removal jurisdiction” and apply a

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“strong presumption against removal,” Gaus v. Miles, Inc., 980 F.3d 564, 566 (9th Cir. 1992), “no

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antiremoval presumption attends cases invoking CAFA.” Dart Cherokee Basin Operating Co. v.
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Owens, 135 S. Ct. 547, 554 (2014) (citing S. Rep. No. 109–14, p. 43 (2005) “[CAFA’s]

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provisions should be read broadly with a strong preference that interstate class actions should be

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heard in a federal court if properly removed by any defendant.”). Nonetheless, “[i]f at any time

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before final judgment it appears that the district court lacks subject matter jurisdiction, the case

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

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B.

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Burdens of Proof; CAFA Amount-in-Controversy Disputes
A defendant’s burden of proof as to the amount in controversy for removal

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purposes is lenient. “[A] defendant seeking to remove a case to a federal court must file in the

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federal forum a notice of removal ‘containing a short and plain statement of the grounds for

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removal.” 28 U.S.C. § 1446(a). But the notice of removal “need not contain evidentiary

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submissions”: A defendant’s “plausible allegation that the amount in controversy exceeds the

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jurisdictional threshold” suffices. Dart Cherokee, 135 S. Ct. at 551, 554.

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In contrast, when “a defendant’s assertion of the amount in controversy is

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challenged . . . both sides submit proof and the court decides, by a preponderance of the evidence,

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whether the amount in controversy requirement has been satisfied.” Id. at 554. The parties may

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submit evidence outside the complaint including affidavits or declarations or other “summary-

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judgment-type evidence relevant to the amount in controversy at the time of removal.” Singer v.

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State Farm Mut. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997) (citation omitted). When the

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defendant relies on a chain of reasoning that includes assumptions to satisfy its burden of proof,

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the chain of reasoning and its underlying assumptions must be reasonable, and not constitute mere

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speculation and conjecture. Ibarra, 775 F.3d at 1197, 1199. “CAFA’s requirements are to be

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tested by consideration of real evidence and the reality of what is at stake in the litigation, using

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reasonable assumptions underlying the defendant’s theory of damages exposure.” Id. at 1198.

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Then “the district court must make findings of jurisdictional fact to which the preponderance

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standard applies.” Dart Cherokee, 135 S. Ct. at 554 (internal citation and quotation marks

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omitted). If “the evidence submitted by both sides is balanced, in equipoise, the scales tip against

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federal-court jurisdiction.” Ibarra, 775 F.3d at 1199.

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III.

DISCUSSION

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Plaintiff moves to remand based exclusively on the amount in controversy under

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CAFA. To determine if the amount in controversy exceeds $5 million, courts first look to the

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complaint. Ibarra, 775 F.3d at 1197. Generally, “the sum claimed by the plaintiff controls if the

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claim is apparently made in good faith.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S.

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283, 288 (1938) (internal footnote omitted). Here, plaintiffs brought an “unlimited civil case,”

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and asserted “the claims of individual class members, including each plaintiff, are under the

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$75,000.00 jurisdictional threshold for federal court.” FAC at 1. Relying on the complaint and

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the declarations of Kellie Collier and Leslie Cheesman,1 defendant’s notice of removal evaluated

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the alleged meal and rest break violations, wage statement penalties, waiting-time penalties, and

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potential attorneys’ fees to make its showing that the aggregated amount in controversy exceeds

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$5 million. Not. Removal. Specifically, defendant estimated an amount in controversy of

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$6,726,231.00, discussed further below. Id. at 14.

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In their remand motion, plaintiffs do not provide rebuttal evidence. Rather, they

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challenge defendant’s calculations and argue defendant did not meet its burden because it relied

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on “unsupported assumptions.” See Mot. at 3–9. Defendant contends plaintiffs’ motion to

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remand must fail because plaintiffs did not submit required evidence or offer an alternative basis

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for calculating the amount in controversy. Because plaintiffs challenge defendant’s estimate,

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defendant bears the burden to establish jurisdiction by a preponderance of the evidence. Dart

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Cherokee, 135 S. Ct. at 553–54; see also Ibarra, 775 F.3d at 1197 (emphasizing “the defendant

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seeking removal bears the burden to show by a preponderance of the evidence that the amount in

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controversy exceeds $5 million”) (citation omitted). Accordingly, defendant must provide more

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than a plausible statement to show it satisfies the jurisdictional prerequisite, and the absence of

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plaintiffs’ rebuttal evidence does not change that requirement.

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Leslie Cheesman works for Dollar General Corporation as a Workforce Reporting
Analyst. Cheesman Decl. ¶ 1, ECF No. 1-4. Kellie Collier also works for Dollar General
Corporation, as Senior Director of Business Law. Collier Decl. ¶ 1, ECF No. 1-3.
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Defendant does not submit new evidence or new calculations in its opposition

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brief, but instead rehashes the assumptions, evidence and reasoning it relied on for removal. The

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question thus is whether defendant’s initial calculations show, by a preponderance of the

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evidence, an amount in controversy of $5 million or more.

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A. Meal and Rest Break Violations (Claim 1)

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Plaintiffs allege defendant violated the California Labor Code’s meal and rest

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period standards. Defendant calculated a total amount in controversy for this claim to be

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$1,838,845.80. Not. Removal at 10. To reach that number, defendant fashioned an equation

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from the complaint and certain statements from Cheesman’s declaration, attached to the removal

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notice. See id. (citing Cheesman Decl. ¶ 2, ECF No. 1-4, and FAC ¶ 16). Defendant multiplied

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1,683 (half of the members in the putative class) by 45 (total work weeks within the period at

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issue) by 2 (assumption that each member suffered one meal violation and one rest period

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violation per week) by $12.14 (average hourly rate).2 Id.

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This calculation, paired with the accompanying explanation and declarations,

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sufficed under the low burden of proof at the time of removal. See Dart Cherokee, 135 S. Ct. at

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551, 554 (defendant’s “plausible allegation that the amount in controversy exceeds the

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jurisdictional threshold” is enough; notice of removal “need not contain evidentiary

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submissions.”). For removal purposes, defendant needed to provide only a “short and plain”

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statement, and it did that. Id. at 553 (“By design, § 1446(a) tracks the general pleading

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requirement stated in Rule 8(a) of the Federal Rules of Civil Procedure.”) (internal citations

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omitted).

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Once plaintiffs challenged this calculation in their remand motion, however;

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defendant needed to do more, given the nature of its initial showing. Defendant’s calculation

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assumed an average hourly rate of $12.14, yet it is unclear how defendant arrived at that average.

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Although Cheesman’s declaration avers this is the average salary of the 3,366 retail employees in

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California that fit the First Amended Complaint’s non-exempt “key carriers” definition, she does

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1,683 x 45 x 2 x $12.14 = $1,838,845.80.
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not provide the individual salaries that inform this average. Cheesman Decl. ¶ 4. The calculation

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also assumes, in the face of the complaint’s silence, that half of the class incurred at least two

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violations per week. Defendant claims this violation rate is reasonable in light of plaintiffs’

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allegation of a “uniform[] corporate policy, practice and/or custom” that “routinely” interrupted

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meal and rest periods because class members were, as a matter of policy and practice, the sole key

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carrier on duty and thus prevented from taking compliant meal and rest periods. Opp’n (quoting

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FAC, ¶¶ 19 20, 30, 37). Defendant has neither fully supported its estimate nor sufficiently

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explained its reasonableness.

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Without corroborating documents, Cheesman’s declaration, on which defendant

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heavily relies, is speculative and self-serving. See Carag v. Barnes & Noble, Inc., No. 2:15-cv-

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00115, 2015 WL 3706497, at *2, 5 (E.D. Cal. June 11, 2015); Carag v. Barnes & Noble, Inc.,

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No. 2:14-cv-00481, 2014 WL 2446366, at *3 (E.D. Cal. May 30, 2014). Defendant has not met

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its burden. The court therefore does not consider the $1,838,845.80 estimate in assessing the

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amount in controversy.

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B. Waiting Time Penalties (Claim 2)

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Plaintiffs also allege waiting time penalties under Labor Code § 203. At the time

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of removal, defendant calculated the total amount in controversy for these violations to be

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$1,956,564.00. To get there, defendant again relied on the First Amended Complaint to create the

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following equation: 1,042.5 (half of the number of terminated employees) x 8 (hours in a work

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day) x 20 (assumed number of days violations occurred) x $11.73 (average hourly rate) for a total

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of $ 1,956,564.00.3 Not. Removal at 11.

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This estimate sufficed for removal. See Dart Cherokee, 135 S. Ct. at 551.

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However, defendant has not met its heightened burden to rebut plaintiffs’ challenge to this

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calculation. Defendant again provides no meaningful insight into how Cheesman extrapolated

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average wage rates. Defendant also makes unsupported assumptions based on plaintiffs’

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complaint. Defendant contends the complaint’s unlimited language “entitled [defendant] to

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1,042.5 x 8 x 20 x 11.73 = $ 1,956,564.00.

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assume that plaintiffs intended to include all putative members in the putative class, and that

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plaintiffs would seek to recover all of the waiting time penalties for each . . . class member.”

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Opp’n at 17 (citing Not. Removal at 11). The complaint itself states “Defendants willfully failed

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to pay [p]laintiffs and other members of the Class who are no longer employed by Defendants for

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their missed, untimely and/or on-duty or interrupted meal periods . . . upon termination or

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separation from employment with Defendants as required by California Labor Code §§ 201 and

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202.” FAC ¶ 41. Defendant’s calculation assumes half of the terminated employees will seek

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two-thirds of the available recovery. Defendant has not supported this calculation by a

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preponderance of the evidence. Accordingly, the court will not consider defendant’s

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$1,956,564.00 estimate as part of the amount in controversy.

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C. Inaccurate Wage Statements (Claim 3) and Attorneys’ Fees

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Plaintiffs also attack defendant’s estimated amount in controversy for inaccurate

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wage statements and attorneys’ fees. For the allegedly inaccurate wage statements in violation of

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Labor Code § 226, defendant estimated $1,585,575.00 in controversy at the time of removal.

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Not. Removal at 12. To get there, defendant estimated half of the putative class received

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inaccurate wage statements. Id. Defendant also referenced the $50 statutory fee for an initial

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wage time penalty and $100 fee for all subsequent violations. Id. Defendant multiplied 1,093.5

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(half of putative class) by 50 (initial penalty), and then added that number to a separate

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calculation of 1,093.5 (half of putative class) by $100 (subsequent penalty) by 14 (pay periods

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after initial violation), for a total of $1,585,575.00.4 Id. at 13. Defendant then combined the three

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award estimates for meal and rest time violations, overtime violations and inaccurate wage

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statements, to form the baseline for its attorneys’ fees calculation. Id. at 13–14. Applying the

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Ninth Circuit’s twenty-five percent benchmark recovery rate to that baseline, defendant estimated

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$1,345,246.20 in attorneys’ fees.5

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(1,093.5 x 50) + (1,093.5 x 100 x 14) = $1,585,575.00.

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(1,838,845.80 + 1,956,564 + 1,585,575) x 25% = $1,345,246.20.
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The wage statement violation calculation sufficed for removal for the same reasons

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as did defendant’s calculations for overtime wages and meal and rest violations. See Dart

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Cherokee, 135 S. Ct. at 551 (“short and plain” statement). The attorneys’ fees estimate also

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sufficed because when an underlying statute authorizes attorneys’ fees, those “fees may be

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included in the amount in controversy.” Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th

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Cir. 1998). PAGA authorizes attorneys’ fees,6 and plaintiffs assert a PAGA claim.

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The court need not, however, inquire into how these two calculations fare in

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opposition to plaintiff’s remand motion. The court has rejected defendant’s meal and rest

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violation and overtime violation calculations as unsupported, and defendant’s attorneys’ fees

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estimate derives from that unsupported foundation. The court will not consider defendant’s

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$1,345,246.20 attorneys’ fees estimate in assessing amount in controversy.

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Without defendant’s three estimates—meal and rest break calculation of

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$1,838,845.80, overtime calculation of $ 1,956,564.00, and attorneys’ fee calculation of

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$1,345,246.20—the total amount in controversy does not exceed $5 million.

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IV.

CONCLUSION

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Although defendant’s notice of removal adequately stated an amount in

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controversy beyond $5 million, when plaintiffs challenged that calculation, defendant faced a

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heightened burden to support its calculation by a preponderance of evidence. Defendant has not

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met that burden. The court GRANTS plaintiffs’ motion to remand to San Joaquin County

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Superior Court.

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This order resolves ECF No. 3. The court denies defendant’s pending motion to
compel arbitration as moot. ECF No. 6. CASE CLOSED.
IT IS SO ORDERED.
DATED: August 8, 2017.

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UNITED STATES DISTRICT JUDGE

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“Any employee who prevails in any action shall be entitled to an award of reasonable
attorney’s fees and costs.” Cal. Lab. Code § 2699(g).
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