Young v. Novartis Pharmaceuticals Corporation
Filing
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ORDER by Judge Edward M. Chen Granting 18 Plaintiff's Motion to Remand. (emcsec, COURT STAFF) (Filed on 10/16/2017)
< x 30 (days) x 84 (number of employees who left between
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June 23, 2014 and July 3, 2017) = $595,929.60 (amount in controversy).
Wage Statement Penalties: [$50 x 59 (number of class members since June 23, 2016)] +
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[(1,481 (aggregate pay periods since June 23, 2016) - 59 (number of class members since June 23,
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2016)) x $100] = $145,150.00 (amount in controversy).
Attorneys’ Fees: 0.25 x $6,446,368.48 (sum of amounts in controversy) = $1,611,592.12.
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This math is wrong. The correct number should be $744,156.90.
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Based on these calculations, NPC estimates the total amount in controversy is
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$8,057,960.60. See Docket No. 1 ¶ 35.
II.
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A.
DISCUSSION
Legal Standard
putative class members; (2) at least one class member is a citizen of a state different from any
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defendant; and (3) the aggregated amount in controversy exceeds $5 million (exclusive of interest
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and costs). 28 U.S.C. § 1332(d)(2), (5), and (6); see also Serrano v. 180 Connect, Inc., 478 F.3d
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1018, 1020-21 (9th Cir. 2007). Generally, removal jurisdiction is statutory and strictly construed.
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Gould v. Mutual Life Ins. Co. of N.Y., 790 F.2d 769, 773 (9th Cir. 1986); see also Gaus v. Miles,
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Inc., 980 F.2d 564, 566 (9th Cir. 1992). However, there is no anti-removal presumption in cases
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For the Northern District of California
A district court has jurisdiction over a class action if: (1) the case involves at least 100
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United States District Court
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involving CAFA and thus the CAFA jurisdictional statute is not to be strictly construed. Dart
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Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014); see also Ibarra v.
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Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (holding that it is congressional intent to
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interpret CAFA jurisdiction expansively).
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B.
Size of Class
NPC presented uncontested evidence that the class consists of more than 100 individuals.
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Hughes Decl. ¶ 8. Thus, this jurisdictional requirement is met.
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C.
Minimal Diversity
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NPC is incorporated in Delaware and maintains its U.S. headquarters in New Jersey.
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Docket No. 1 ¶ 10; Hughes Decl. ¶¶ 4-5. Plaintiff is a citizen of California. Comp. ¶ 5. Thus, the
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minimal diversity requirement is met.
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D.
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Amount in Controversy
The removing defendant of establishing bears the burden to establish jurisdiction under
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CAFA. Gaus, 980 F.2d at 566. Thus, the defendant bears the burden of showing that the amount
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in controversy exceeds $5 million and of persuading the court that the estimate is a reasonable
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one. Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). The defendant may
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establish the amount in controversy by an unchallenged, plausible assertion of the amount in
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controversy in its notice of removal. Dart, 135 S. Ct. at 553. However, if the plaintiff contests
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defendant‟s estimate, then “both sides submit proof and the court decides, by a preponderance of
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evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at 554. Parties
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may submit evidence outside the complaint, including affidavits or declarations, or any kind of
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“summary-judgment-type evidence.” Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377
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(9th Cir. 1997). In considering the evidence, the court does not draw inferences in favor of any
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party. Dart, 135 S. Ct. at 554. The Court has given both parties ample opportunities to submit
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evidence including and after the hearing on the motion. The Court, in considering the evidence,
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must determine whether the $5 million jurisdictional threshold has been established by a
preponderance of the evidence. NPC has failed to meet its burden of proving the requisite amount
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in controversy for the following reasons.
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For the Northern District of California
United States District Court
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Even assuming that all the assumptions made for unpaid overtime wages, waiting time
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penalties, and wage statement penalties are reasonable, the amount in controversy for these three
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counts is only $1,485,322.48. Therefore, the key issue is the amount of controversy attributed to
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the meal and rest break premiums, which makes up almost $5 million.
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1.
Meal and Rest Break Premiums
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In calculating the meal and rest break premiums, NPC assumes a 100% violation rate.
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Docket No. 1 ¶ 25. NPC argues that this assumption is reasonable because the allegations in the
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Complaint states that class members were denied meal and rest breaks “at all material times,” see
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Comp. ¶ 25, based on a “uniform policy/practice of wage abuse . . . [that] involved failing to pay
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them for . . . missed meal periods and rest breaks,” see Comp. ¶ 40, and policies and practices
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“requiring employees . . . to work through their meal and rest periods without paying them proper
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compensation.” Comp. ¶¶ 69, 78, 120.
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The allegations in the Complaint do not support a 100% violation rate assumption. The
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Ninth Circuit made clear in Ibarra that “„a pattern and practice‟ of doing something does not
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necessarily mean always doing something” and that even “an institutionalized unwritten policy
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that mandates the employment violations . . . including the denial of meal and rest periods, does
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not mean that such violations occurred in each and every shift.” Ibarra, 775 F.3d at 1198-99.
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Therefore, Plaintiff‟s allegations that NPC engaged in a uniform policy and practice of meal/rest
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break violations cannot support the assumption that the violations happened 100% of the time.
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Moreover, Plaintiff claims a uniform policy of “failing to pay them for all . . . missed meal periods
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and rest breaks” and “policies and practices of requiring employees . . . to work through their meal
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and rest periods without paying them proper compensation.” Comp. ¶¶ 25, 120. Even if one
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could infer from such allegations that each time a meal break or rest break is missed, NPC fails to
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pay for the meal/rest break premium, the allegations do not tell us how often an employee misses a
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meal break or rest break. Thus, the allegations do not support the assumption that each employee
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misses one meal break and one rest break per day. It only implies that when such breaks are
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missed, employees are not paid the premium.
NPC attempts to distinguish Ibarra by arguing that plaintiff in Ibarra alleged that the
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For the Northern District of California
United States District Court
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violations occurred “on multiple occasions,” whereas this kind of limiting language does not
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appear in Plaintiff‟s Complaint. Docket No. 28 at 9. This argument is without merit. In Ibarra,
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the phrase “on multiple occasions” only appeared in the context of unpaid overtime. While the
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Ninth Circuit denied the 100% violation rate assumption in calculating unpaid overtime
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compensation, Ibarra, 775 F.3d at 1199, it also refused to find a 100% violation rate for unused
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breaks even though the “on multiple occasions” phrase did not appear in the discussion of missed
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meal and rest breaks. Id.
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NPC relies on Plaintiff‟s allegation that the violations occurred “at all material times,”
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Comp. ¶ 40, to support the assumption of a 100% violation rate. See Docket No. 1 ¶ 24. But “at
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all material times” provides a time period within which violations occurred; it does not say how
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after within that time period violations occur. The Ninth Circuit, albeit in an unpublished
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decision, specifically noted that the phrase “at all relevant times” in the complaint does not permit
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a removing defendant to assume a 100% violation rate because the phrase does not refer to a
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violation rate. See Branch v. PM Realty Group, 647 Fed. Appx. 743, 746 n.7 (9th Cir. 2016).
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NPC also relies on Altamirano in which this Court previously allowed a 100% violation
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rate assumption in calculating the amount in controversy for missed meal breaks. See Altamirano
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v. Shaw Indus., Inc., No. C-13-0939 EMC, 2013 WL 2950600, at *11 (N.D. Cal. June 14, 2013).
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However, Altamirano was decided before Dart and Ibarra. In light of Dart and Ibarra, the Court
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finds there is no sufficient basis to assume a 100% violation rate in this case.
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NPC would have submitted evidence to support the 100% assumption. Although it
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submitted Lucy Hughes‟ declarations, the declarations only state the numbers of employees, total
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workweeks, average hourly rates and their full-time employment status. See Docket No. 1-1
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(Hughes Decl.); see also Docket No. 28-8 (Hughes Supp. Decl.); see also Docket No. 36 (Hughes
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Second Supp. Decl.). The declarations say nothing about the frequency of missed meal and rest
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breaks either. Id.
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NPC has not met its burden to prove that the 100% violation rate assumption is reasonable
violation rate, e.g., of two days a week (cf. Branch, 647 Fed. Appx. at 746), the damages for
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For the Northern District of California
and that the amount in controversy exceeds $5 million. Even if the Court were to assume a
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United States District Court
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missed meal and rest breaks would amount to $1,984,418.40. Adding the claims for unpaid
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overtime wages ($744,242.88), waiting time penalties ($595,929.60), wage statement penalties
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($145,150.00), total damages equals $3,469,740.88. Even if a 25% fee award is added, the total
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amount in controversy would still be only $4,337,176.10. However, as noted below, even a 25%
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fee award cannot be counted.
Attorneys‟ Fees
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2.
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NPC seeks to include attorneys‟ fees in the amount in controversy and calculates the
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attorneys‟ fees to be 25% of recovery for unpaid overtime, meal and rest break premium, waiting
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time penalties, and wage statement penalties. Docket No. 1 ¶ 35. Although the Ninth Circuit has
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established 25% of the common fund as a benchmark award for attorneys‟ fees, see Staton v.
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Boeing Co., 327 F.3d 938, 968 (9th Cir. 2003), that figure is only used to determine
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reasonableness of a fee awarded under a common fund analysis. In the common fund content,
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such fees do not add to a defendant‟s potential liability and are not to be counted toward the
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amount in controversy. See Scott v. Credico (USA) LLC, No. 17-cv-02846-EMC2017 WL
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4210994, at *3 (N.D. Cal. Sep. 22, 2017); see also Fed. Prac. & Proc. § 3704.2 (discussing “cases
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concluding that attorneys' fees paid from a common fund recovery cannot be considered for
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amount in controversy purposes because they are not damage elements, do not enhance any
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plaintiff's claim against any defendant, and actually are deducted from the common fund.”).
statute authorizes an award of attorneys‟ fees, either with mandatory or discretionary language.”
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Galt G/S v. JSS Scandinavia, 142 F.3d. 1150, 1155-56 (9th Cir. 1998). In this case, the only fee-
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shifting statute is for the wage-statement-penalty claim.2 See Cal. Labor Code § 226. Attorneys‟
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fees for the wage-statement-penalty claim must be calculated based on the number of hours
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worked at a reasonable hourly rate – the lodestar method. See Winterrowed v. Am. Gen. Annuity,
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Ins. Co., 556 F.3d 815, 826-27 (9th Cir. 2009). NPC has failed to present any evidence to support
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an estimate of attorneys‟ fees that Plaintiff might recover based on a projected lodestar. Nor has
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NPC provided any basis for the Court to conclude that a 25% benchmark provides a reasonable
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proxy for the lodestar estimate. Therefore, NPC has not proven by a preponderance of evidence
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For the Northern District of California
Attorneys‟ fees may be counted toward the amount in controversy only if “an underlying
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United States District Court
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attorneys‟ fees that should be included in the amount in controversy. In any event, even if a 25%
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award were included, the total amount of controversy would not read $5 million.
III.
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CONCLUSION
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Because the preponderance of the evidence does not establish the amount in controversy
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exceeds $5 million, the Court lacks jurisdiction under CAFA. The Court therefore REMANDS
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the matter to the San Mateo County Superior Court.
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This order disposes of Docket No. 18.
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IT IS SO ORDERED.
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Dated: October 16, 2017
______________________________________
EDWARD M. CHEN
United States District Judge
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Plaintiff alleges Cal. Labor Code §§ 1194 and 2802 violations in the Complaint and these
sections also authorize an award of attorneys‟ fees. See Comp ¶¶ 82-87, 112-116. However, NPC
does not include them in the amount-in-controversy calculation, and also does not include them in
the common fund for attorneys‟ fees. See Docket No. 1. Thus, the Court does not address them.
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