Contreras v. J.R. Simplot Company

Filing 23

ORDER signed by District Judge Kimberly J. Mueller on 10/5/2017 GRANTING 10 Motion to Remand. Case REMANDED to Sacramento County Superior Court. Copy of remand order sent to other court. CASE CLOSED. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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JUAN CONTRERAS, individually, and on
behalf of other members of the general
public similarly situated,

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Plaintiffs,

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No. 2:17-cv-00585-KJM-EFB

ORDER

v.
J.R. SIMPLOT COMPANY, an unknown
business entity; and DOES 1 through 100,
inclusive,

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Defendants.

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Juan Contreras brings this putative class action against an agricultural company for

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several labor code violations. Defendant J.R. Simplot Company (“Simplot”) removed the case to

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this court. Notice of Removal ¶ 1, ECF No. 1. Plaintiff now moves to remand to Sacramento

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County Superior Court. Mot., ECF No. 10. Defendant opposes the motion, and plaintiff has

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replied. Opp’n, ECF No. 11; Reply, ECF No. 15. As explained below, the court GRANTS

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plaintiff’s motion to remand.

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I.

BACKGROUND

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Plaintiff filed this putative class action in Sacramento County Superior Court on

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January 3, 2017, alleging: (1) failure to pay overtime wages, California Labor Code §§ 510 and

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1198; (2) meal period violations, id.§§ 226.7 and 512(a); (3) rest break violations, id.§ 226.7;

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(4) failure to pay minimum wages, id.§§ 1194, 1197 and 1197.1; (5) failure to pay wages due at

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termination, id.§§ 201 and 202; (6) failure to timely pay wages during employment, id.§ 204;

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(7) wage statement penalties, id.§ 226(a); (8) failure to keep payroll records, id.§ 1174(d); (9)

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failure to reimburse business expenses, id.§§ 2800 and 2802; and (10) unfair business practices,

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Cal. Bus. & Prof. Code § 17200. Compl. ¶¶ 17–48.

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Defendant removed the case to federal court, asserting jurisdiction under the Class

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Action Fairness Act, 12 U.S.C. § 1453 (“CAFA”). Notice of Removal. To support its contention

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that the amount in controversy exceeds the requisite $5 million, defendant submitted the

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declaration of Simplot’s Human Resources Manager, Melanie A. Angiolini (“Angiolini”). Decl.,

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ECF No. 4. In her declaration, Angiolini states “936 individuals worked as non-exempt

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employees for Simplot in California (‘the putative class members’),” “the putative class members

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worked approximately 15,435 pay periods,” and “[t]he Company’s records reflect that the

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average pay rate for all putative class members is $18.52 per hour.” Id. at 2–3. Defendant used

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these numbers to calculate a total amount in controversy of $13,773,163.28, which exceeds the

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requisite $5 million for CAFA-based jurisdiction.

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Plaintiff now moves to remand, challenging defendant’s calculation. Mot. 4.
II.

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LEGAL STANDARD: CAFA JURISDICTION
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 interests and costs.

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See 28 U.S.C. § 1332(d)(2), (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). Although courts “strictly

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construe the removal statute against removal jurisdiction” and apply a “strong presumption

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

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presumption attends cases invoking CAFA,” Dart Cherokee Basin Operating Co. v. Owens,

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135 S. Ct. 547, 554 (2014) (citing S. Rep. No. 109-14, p. 43 (2005) (“[CAFA’s] provisions

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

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

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

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

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B.

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 from state to federal court must file in

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

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removal.’” Dart Cherokee, 135 S. Ct. at 549 (quoting 28 U.S.C. § 1446(a)). But the notice of

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removal “need not contain evidentiary submissions”: A defendant’s “plausible allegation that the

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amount in controversy exceeds the jurisdictional threshold” suffices. Id. 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 (citation omitted). If “the evidence

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submitted by both sides is balanced, in equipoise, the scales tip against federal-court jurisdiction.”

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Ibarra, 775 F.3d at 1199.

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III.

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

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CAFA. This court recently decided a similar case, Farley v. Dolgen Cal. LLC, No. 2:16-cv-

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02501, 2017 WL 3406096 (E.D. Cal. Aug. 8, 2017), which is instructive here. In Farley, the

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court determined the defendant did not meet its burden of proof to show that the amount in

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controversy exceeded $5 million. See id. at *5. The only proof the defendant provided was a

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declaration from a Workforce Reporting Analyst showing the average salary for the workers

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covered by the complaint. See id. For similar reasons, the court finds defendant here has not met

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its burden in establishing federal jurisdiction under CAFA. To determine if the amount in

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controversy exceeds $5 million, courts first look to the complaint. Ibarra, 775 F.3d at 1197.

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Generally, “the sum claimed by the plaintiff controls if the claim is apparently made in good

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faith.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938) (footnote

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omitted). Here, plaintiff brought a class action and alleged that his amount in controversy is less

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than $75,000.00. Compl. ¶ 1. In its notice of removal, defendant relies on the complaint and the

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averments of Human Resources Manager Angiolini, described above, to argue that the aggregated

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amount in controversy is an estimated $13,773,163.28, discussed further below. Notice of

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Removal 3, 6–14.

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In his remand motion, plaintiff does not provide rebuttal evidence. Instead, he

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challenges defendant’s calculations and argues defendant has not met its burden because it makes

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assumptions unsupported by evidence. Mot. 4–16. Defendant contends plaintiff’s motion to

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remand must fail because plaintiff did not submit “any evidence contrary to that offered by

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[defendant].” Opp’n 2:13–14. Because plaintiff challenges defendant’s estimate, defendant bears
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the burden to establish jurisdiction by a preponderance of the evidence. Dart Cherokee, 135 S.

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

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bears the burden to show by a preponderance of the evidence that the aggregate 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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A.

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Overtime Violations
With respect to plaintiff’s overtime claim, defendant relies on Angiolini’s

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declaration, stating that the “putative class members worked approximately 61,941 weeks during

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the applicable period” and noting the average hourly rate as $18.52 per hour. Notice of Removal

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6. Defendant then uses a rate of “1 hour of overtime per employee, per week” to determine the

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amount in controversy for the overtime violations to be $1,720,720.98.1 This calculation was

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enough to support removal, but defendant has not met its heightened burden to rebut plaintiff’s

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challenge to the calculation. A defendant’s amount in controversy calculation is unjustified

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where the only evidence the defendant provides is “a declaration by [its] supervisor of payroll,

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which sets forth only the number of employees during the relevant period, the number of pay

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periods, and general information about hourly employee wages.” Garibay v. Archstone

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Communities LLC, 539 F. App’x 763, 764 (9th Cir. 2013); see also Farley, 2017 WL 3406096, at

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*3 (finding defendant failed to meet its burden under CAFA by relying on a Workforce Reporting

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Analyst’s declaration regarding the average salary without providing any other corroborating

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evidence). As such, defendant has provided insufficient evidence to meet its heightened burden

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for the overtime claim damages.

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B.

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Meal and Rest Break Violations
Plaintiff alleges defendant violated the California Labor Code’s meal and rest

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period standards. Defendant calculated an amount in controversy for each type of violation to be

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$1,147,147.32. Notice of Removal 8–9. To reach this number, defendant uses a similar

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$27.78 (1.5 X $18.52) X 1 X 61,941 = $1,720,720.98
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calculation as that for the overtime violations. Id. at 7–8. For each claim, defendant multiplies

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$18.52 (the average hourly rate for putative class members) by 1 (missed meal/rest period per

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workweek) by 61,941 (number of weeks worked by putative class during the period at issue).2

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Thus, for meal and rest period violations combined, defendant calculates a total

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amount in controversy for these two claims to be $2,294,294.64.3

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Again, this calculation, paired with the accompanying explanation and

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declarations, sufficed under the low burden of proof at the time of removal. See Dart Cherokee,

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135 S. Ct. at 551, 554 (holding defendant’s “plausible allegation that the amount in controversy

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exceeds the jurisdictional threshold” was sufficient and notice of removal “need not contain

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

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plain” 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.”).

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Similar to the overtime calculation, however, without corroborating documents

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Angiolini’s declaration is “speculative and self-serving.” Garibay, 539 F. App’x at 764; see also

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Farley, 2017 WL 3406096 at *3 (finding similar declarations to be “speculative and self-

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serving”); Carag v. Barnes & Noble, Inc., No. 2:15-cv-00115, 2015 WL 3706497, at *2, 5 (E.D.

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Cal. June 11, 2015) (same). Therefore, this court does not consider defendant’s calculation, which

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relies solely on Angiolini’s declaration, as part of the amount in controversy.

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C.

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Waiting Time Penalties
In its calculation for waiting time penalties, defendant assumes each employee

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would be entitled to the maximum statutory penalty. Notice of Removal 10. However, because

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defendant has not supported this calculation by a preponderance of the evidence, the court rejects

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defendant’s assumption. See Garibay, 539 F. App’x at 764 (rejecting defendants’ assumption

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that each employee was entitled to maximum statutory penalty because the assumption was not

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supported by any evidence); see also Weston v. Helmerich & Payne Inter. Drilling Co., 2013 WL

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$18.52 X 61,941 X 1 = $1,147,147.32

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$1,147,147.32 X 2 = $2,294,294.64

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5274283, at *3–6 (E.D. Cal. 2013) (noting that “the Ninth Circuit appears to have disavowed the

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use of a 100% violation rate”). The court does not consider defendant’s estimate of waiting time

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penalties as part of the amount in controversy.

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D.

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Itemized Wage Statement Penalties
To calculate the penalties for non-compliant wage statements, defendant again

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assumes a 100 percent violation rate. Notice of Removal 12. Defendant represents it “issued at

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least 15,435 wage statements to 669 putative class members during the applicable statute of

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limitations period.” Id. It then multiplies 669 by $50, which is the penalty for violations within

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the initial pay period, and adds that sum to 14,766 multiplied by $100, which is the penalty for

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subsequent wage statement violations. Id. Thus, defendant calculates a total amount in

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controversy for this claim to be $1,510,050.00.4

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Similar to the calculation for wait time penalties, however, this calculation is based

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on an assumption that each class member will recover the maximum penalty for each pay period,

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which is not supported by evidence. See Garibay, 539 F. App’x at 764 (finding similar

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calculation assumed “every single member of the class would be entitled to recover penalties for

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every single pay period” was not supported by evidence and could not be used to calculate

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amount in controversy). As such, defendant has provided insufficient evidence to meet its

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heightened burden for the itemized wage statement penalties.

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E.

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Attorney’s Fees
Defendant combines its award estimates to form the baseline for its attorney’s fees

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calculation. Applying the Ninth Circuit’s twenty-five percent benchmark level for reasonable

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attorney’s fees in class action cases, defendant estimates $2,754,632.66 in attorney’s fees.5 See

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Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998). Defendant contends the court

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should consider these likely attorney’s fees in determining the amount in controversy. But

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because there is insufficient evidence to establish the award estimates upon which attorney’s fees

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(669 X $50) + (14,766 X $100) = $1,510,050.00

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$11,018,530.62 X .25 = $2,754,632.66

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would be based, there is also insufficient evidence to establish defendant’s $2,754,632.66

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attorneys’ fees estimate in assessing the amount in controversy.

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Without these amounts—$1,720,720.98 for overtime violations, $2,294,294.64 for

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meal and rest break violations, $744,504.00 for waiting time penalties, $1,510,050.00 for

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itemized wage statement penalties, and $2,754,632.66 for attorney’s fees—the defendant’s

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estimate of the total amount sought by the remaining claims, $4,748,961.00, does not exceed $5

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million as required by CAFA, so the court need not address them individually. Abrego Abrego v.

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The Dow Chem. Co., 443 F.3d 676, 678 (9th Cir. 2006) (“Prominent among the requirements in

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these specified [CAFA] paragraphs [is] that the aggregate amount in controversy must exceed

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$5,000,000.”) (emphasis added).

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IV.

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

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controversy beyond $5 million, plaintiff has challenged the calculation, and defendant has failed

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to meet its heightened burden to support its calculation by a preponderance of the evidence. The

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court therefore GRANTS plaintiff’s motion to remand to Sacramento County Superior Court.

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IT IS SO ORDERED.

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This order resolves ECF No. 10.

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DATED: October 5, 2017.

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UNITED STATES DISTRICT JUDGE

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