Giannini v. Northwestern Mutual Life Insurance Company et al

Filing 33

ORDER by Judge Claudia Wilken DENYING PLAINTIFFS 16 MOTION TO REMAND. (ndr, COURT STAFF) (Filed on 4/30/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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DAVID GIANNINI, individually and
on behalf of all others similarly
situated and in the interest of
the general public of the State
of California,

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ORDER DENYING
PLAINTIFF’S MOTION
TO REMAND
(Docket No. 16)

Plaintiff,
v.

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NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, a Wisconsin
company; NORTHWESTERN MUTUAL SAN FRANCISCO BAY AREA GROUP,
INC., a California corporation;
and JOHN GOODENOUGH, an
individual,

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Defendants.

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United States District Court
For the Northern District of California

No. C 12-77 CW

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________________________________/
Plaintiff David Giannini moves to remand this putative class

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action to state court.

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Insurance Company, SFBAG Insurance Services, Inc., sued as

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Northwestern Mutual – San Francisco Bay Area Group, Inc., and John

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Goodenough oppose the motion.

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under submission on the papers.

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the Court DENIES Plaintiff’s motion.

Defendant Northwestern Mutual Life

The Court took Plaintiff’s motion
For the reasons set forth below,

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BACKGROUND

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On December 5, 2011, Plaintiff filed the instant lawsuit

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against Defendants in the Superior Court in the County of San

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Francisco.

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complaint as “all current and former [sales and financial

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representatives] who work or worked at any office within Defendant

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San Francisco Bay Area Group’s direction within four years prior

Plaintiff seeks to represent a class defined in his

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to the date of filing of this Complaint.”

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alleges that Defendants misclassified Plaintiff and the putative

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class members as independent contractors instead of as employees

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and, among other things, failed to pay them overtime, did not

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provide them with meal and rest periods and failed to pay waiting

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time penalties to former employees.

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Compl. ¶ 27.

Plaintiff

On January 5, 2011, Northwestern Mutual removed this action

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to federal court, alleging federal jurisdiction under the Class

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Action Fairness Act of 2005 (CAFA).

On that date, the San

United States District Court
For the Northern District of California

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Francisco Bay Area Group and Goodenough consented to the removal

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and adopted Northwestern’s removal notice as their own.

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LEGAL STANDARD
A defendant may remove a civil action filed in state court to

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federal district court so long as the district court could have

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exercised original jurisdiction over the matter.

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§ 1441(a).

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time before judgment, it appears that the district court lacks

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subject matter jurisdiction over a case previously removed from

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state court, the case must be remanded.

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the scope of the removal statute must be strictly construed.

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v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

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presumption’ against removal jurisdiction means that the defendant

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always has the burden of establishing that removal is proper.”

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Id.; see also Wash. State v. Chimei Innolux Corp., 659 F.3d 842,

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847 (9th Cir. 2011) (“The burden of establishing removal

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jurisdiction, even in CAFA cases, lies with the defendant seeking

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removal.”)).

28 U.S.C.

Title 28 U.S.C. § 1447(c) provides that if, at any

On a motion to remand,
Gaus

“The ‘strong

Courts should resolve doubts as to removability in

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favor of remanding the case to state court.

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566.

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Gaus, 980 F.2d at

DISCUSSION

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Plaintiff argues that Defendants have not satisfied CAFA’s

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five million dollar amount-in-controversy requirement and that,

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even if they did, the local controversy exception to CAFA applies.

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I.

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Amount-in-controversy requirement
When assessing whether a defendant has met the amount in

controversy requirement, “‘[t]he ultimate inquiry is what amount

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United States District Court
For the Northern District of California

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is put ‘in controversy’ by the plaintiff’s complaint, not what a

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defendant will actually owe.’”

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2012 U.S. Dist. LEXIS 27215, at *6 (N.D. Cal.) (quoting Korn v.

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Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal.

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2008)).1

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amount of damages, the defendant seeking removal ‘must prove by a

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preponderance of the evidence that the amount in controversy

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requirement has been met.’”

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Nat’l Assoc., 479 F.3d 994, 998 (9th Cir. 2007) (quoting Abrego

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Abrego v. The Dow Chemical Co., 443 F.3d 676, 683 (9th Cir.

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2006)).

Jasso v. Money Mart Express, Inc.,

Where, as here, “the plaintiff fails to plead a specific

Lowdermilk v. United States Bank

“‘Under this burden, the defendant must provide evidence

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Thus, Plaintiff’s argument that Defendants should later be
estopped from contending that damages are less than five million
dollars is unavailing. That this amount is at issue in this case
does not mean that Plaintiff ultimately will be able to prove that
the class is entitled to it. See, e.g., Rippee v. Boston Mkt.
Corp., 408 F. Supp. 2d 982, 986 (S.D. Cal. 2005) (citing Scherer
v. Equitable Life Assurance Soc’y of the United States, 347 F.3d
394, 397-99 (2nd Cir. 2003)) (“the ultimate or provable amount of
damages is not what is considered when determining the amount in
controversy; rather, it is the amount put in controversy by the
plaintiff’s complaint”).
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that it is “more likely than not” that the amount in controversy’

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satisfies the federal diversity jurisdictional amount

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requirement.”

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

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When it is not “‘facially apparent’ from the complaint that the

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jurisdictional amount is in controversy,” a “court may consider

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facts in the removal petition, and may require parties to submit

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summary-judgment-type evidence relevant to the amount in

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controversy at the time of removal.”

Abrego Abrego, 443 F.3d at 683 (quoting Sanchez v.

Singer v. State Farm Mut.

United States District Court
For the Northern District of California

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Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997) (internal

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quotations omitted).

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research, state, and prove the plaintiff’s claims for damages,

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. . . a court cannot base a finding of jurisdiction on a

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defendant’s speculation and conjecture.”

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799 F. Supp. 2d 1107, 1117-1118 (C.D. Cal. 2010) (internal

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quotations and formatting omitted).

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While Defendants “are not required to

Roth v. Comerica Bank,

Defendants contend that the requisite amount is put into

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controversy by just four of Plaintiff’s nine asserted claims and

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his request for attorneys’ fees.

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A. Claim for unpaid overtime

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The Court agrees.

Defendants calculate that Plaintiff placed at least

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$2,516,400 at issue through this claim.

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applicable minimum wage under California law, eight dollars per

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hour, to calculate an overtime pay rate of one and a half times

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that hourly rate, or twelve dollars per hour.

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multiply that figure by the number of weeks that class members

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worked during the class period, 27,960 weeks.

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Defendants use the

Defendants then

Finally, Defendants

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multiply the result by five days per work week and by ninety

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minutes of overtime per day.2

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Defendants have proffered adequate evidence to support each

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step of this calculation.

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hundred class members worked at least 27,960 work weeks during the

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class period, based on his review of Northwestern Mutual’s

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business records.

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excluded from their calculations the hours worked by employees who

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in fact made more than twelve dollars per hour or who were

Mr. Paschall attests that the four

Plaintiff argues that Defendants should have

United States District Court
For the Northern District of California

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“treated as true independent contractors,” because they cannot

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state a claim for unpaid overtime.

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class to include “all current and former” sales and financial

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representatives who worked for Defendants during the relevant time

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period, with no such exclusions, and makes allegations that class

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members were “uniformly” treated, including that Defendants

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misclassified class members as independent contractors and “that

However, Plaintiff defines his

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Plaintiff objects to the admissibility of several
declarations offered by Defendants in support of their
calculations. The Court OVERRULES his objections.
Defendants have laid an adequate foundation for the
admissibility of the declarations of Jason L. Paschall and Kathryn
Raphael pursuant to the business records exceptions to the hearsay
rule. Further, to the extent that Plaintiff contends that
Defendants should have offered the records themselves, courts
frequently accept declarations summarizing business records when
analyzing a motion to remand under the preponderance standard.
See, e.g., Jasso, 2012 U.S. Dist. LEXIS 27215, at *11-12
(overruling best evidence objection to declaration summarizing
business records); Wilson v. Best Buy Co., 2011 U.S. Dist. LEXIS
14400, at *4-5 (E.D. Cal.) (same).
Defendants have also laid an adequate foundation for the
declarations of Andrew Miner and Rachel Mangas Moniz, who provide
evidence of their personal knowledge of the facts to which they
attest. Accordingly, Plaintiff’s challenges to the Miner and
Moniz declarations more properly go to their weight, not their
admissibility.
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they were not compensated for overtime at any time by Defendants.”

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See, e.g., Compl. ¶¶ 27, 30(a), 36, 40.

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this Court’s jurisdiction by disregarding the allegations in his

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complaint.

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Plaintiff may not defeat

Defendants have also offered sufficient evidence to support

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their assumption that the average week worked by class members

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consisted of at least five work days.

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Mr. Miner attest that, based on their observations, class members

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in the San Francisco Bay Area Group offices regularly work at

Specifically, Ms. Moniz and

United States District Court
For the Northern District of California

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least five days per week.

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could have produced better evidence of this fact from their

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business records, Plaintiff offers no evidence to contradict the

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first-hand observations of Ms. Moniz and Mr. Miner.

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While Plaintiff argues that Defendants

Further, Defendants reasonably assume that class members

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worked at least one and a half hours of overtime each work day,

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based on the contentions in Plaintiff’s complaint.

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alleges that “Reps, including Mr. Giannini, were required to

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appear and work at Defendants’ offices every work day from

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7:30a.m. to at least 5:00 p.m.,” or nine and a half hours per work

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day, Compl. ¶ 17, in excess of eight hours per day or forty hours

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per week, id. at ¶ 38, and were routinely denied meal and rest

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breaks, id. at ¶ 45.

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support Defendants’ use of a one hundred percent violation rate

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for each work day, as well as their estimate of one and a half

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hours of overtime on each of these days.

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Plaintiff

The allegations in Plaintiff’s complaint

Accordingly, the Court finds that Defendants have established

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by a preponderance of the evidence that at least $2,516,400 is in

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controversy through this claim.
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In the alternative, Defendants offer evidence that class

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members were paid an hourly wage of substantially more than eight

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dollars per hour.

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for sales and financial representatives in the five offices

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comprising the San Francisco Bay Area Group for 2009 as $38.14 and

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for 2010 as $43.20.

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that class members were compensated for a forty-hour work week,

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which is reasonable based on the allegations in Plaintiff’s

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complaint.

Defendants calculated the average hourly wage

To make this calculation, Defendants assumed

See, e.g., Compl. ¶¶ 37-40 (class members routinely

United States District Court
For the Northern District of California

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worked in excess of forty hours in any one work week and were not

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compensated for hours in excess of forty).

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not provided an average hourly rate for the entire class period,

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there is no reason to believe that this rate decreased

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substantially in 2011.

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for the class period were nineteen dollars per hour--less than

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half the average wage for 2009, which was less than 2010--this

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claim alone would place more than five million dollars at issue.

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While Defendants have

Further, even if the average hourly wage

B. Claim for failure to prove meal and rest breaks

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Defendants calculate that Plaintiff’s claims for overtime

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meal and rest break violations place into controversy at least

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$2,236,800, based on the minimum wage.

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amount in controversy for meal break violations by taking the

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product of 27,960 work weeks, five days per work week, one missed

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meal period per day--which is compensated at a rate of one hour of

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pay per missed meal--and eight dollars per hour.

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Defendants use the same formula to calculate the amount put in

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controversy for the claim based on rest break violations.

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Defendants calculate the

Opp. at 15.

Id.

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For the reasons previously stated, the Court finds that this

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calculation is not arbitrary or conjectural.

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assumption of a one-hundred-percent violation rate on days worked

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by class members for these claims is supported by the allegations

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in the complaint.

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“Plaintiff Giannini and the Class routinely were or are forced by

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Defendants to work in excess of five (5) or ten (10) hours without

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a mandatory meal or rest break of any kind,” “Defendants

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systematically failed to inform or refused to inform Plaintiff

Further, Defendants’

See, e.g., Compl. ¶¶ 45, 47 (stating that

United States District Court
For the Northern District of California

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Giannini and the Class of their right to take meal and rest

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breaks,” and “Defendants actively discouraged [class members] from

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taking any breaks whatsoever during the work day”).

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C. Claim for waiting time penalties

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In their notice of removal, Defendants calculate that

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Plaintiff’s waiting time penalty claim under California Labor Code

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section 203 places into controversy $370,560, utilizing the

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minimum wage.

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the time of termination, the wages of an employee who is

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discharged or quits, the employer may be required to pay his or

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her daily wages at his or her regular pay rate for up to thirty

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days.

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claim by multiplying the number of class members who left their

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employment during the class period by their daily work rate, or

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eight hours at eight dollars per hour, and then by thirty days.

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Opp. at 16.

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Under section 203, if an employer fails to pay, at

Thus, Defendants calculate the amount put in issue by this

In their calculations, Defendants assume that none of the

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class members who left their employment during the class period,

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193 individuals, were given their unpaid wages and overtime pay at
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time of termination.

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assume that all class members were owed something at the end of

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their employment.

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the allegations in Plaintiff’s complaint, which suggest that all

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class members were denied at least some form of compensation

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during the course of their employment and that the underpayment

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was not corrected at any point.

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alleges that class members routinely had to work nine and a half

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hours on each work day, that they were never compensated for that

Plaintiff argues that Defendants improperly

However, this assumption is properly based on

Among other things, Plaintiff

United States District Court
For the Northern District of California

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overtime that they were routinely deprived of meal and rest

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breaks, and that they were not paid additional wages for the meal

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and rest periods missed.

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that all members of the former employee subclass were entitled to

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maximum waiting time penalties under Labor Code section 203.

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Thus, Defendants can properly assume

D. Demand for attorneys’ fees

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Attorneys’ fees are properly included in the amount in

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controversy for purposes of evaluating jurisdiction under CAFA.

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Guglielmino v. McKee Foods Corp., 506 F.3d 696, 700 (9th Cir.

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2007).

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the prevailing plaintiff to recover reasonable attorney fees, a

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reasonable estimate of fees likely to be incurred to resolution is

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part of the benefit permissibly sought by the plaintiff and thus

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contributes to the amount in controversy.”

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USA, Inc., 243 F. Supp. 2d 1004, 1011 (N.D. Cal. 2002).

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Further, the Court agrees that, “[w]here the law entitles

Brady v. Mercedes-Benz

Defendants calculate that Plaintiff has placed $1,280,940 in

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controversy through his demand for attorneys’ fees.

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base this amount by multiplying by twenty-five percent the sum of

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the amounts placed in controversy by the four claims discussed
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Defendants

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previously.

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common fund as a benchmark award for attorney fees.’”

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U.S. Dist. LEXIS 27215, at *20-21 (quoting Hanlon v. Chrysler

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Corp., 150 F.3d 1011, 1029 (9th Cir. 1998).

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not unreasonable for [Defendants] to rely on this estimate using

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the common fund method under the circumstances here.”

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“[T]he Ninth Circuit ‘has established 25% of the
Jasso, 2012

Accordingly, “it is

Id. at *21.

Further, the Court notes that Defendants have sufficiently

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demonstrated that the jurisdictional amount is in controversy

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without considering attorneys’ fees, by their calculations based

United States District Court
For the Northern District of California

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both on the minimum wage and on the actual average wages earned by

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class members in 2009 and 2010.

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II.

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Local Controversy Exception
Plaintiff argues that, even if the amount in controversy

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requirement is met, the local controversy exception to CAFA

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jurisdiction precludes this Court from exercising jurisdiction

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over this case.

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federal district court to decline to exercise jurisdiction over

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cases in which certain requirements are met, including that

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“during the 3-year period preceding the filing of that class

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action, no other class action has been filed asserting the same or

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similar factual allegations against any of the defendants on

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behalf of the same or other persons.”

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§ 1332(d)(4)(A)(ii).

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showing that the local controversy exception applies.

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180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).

The local controversy exception requires a

28 U.S.C.

A plaintiff seeking remand has the burden of

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Serrano v.

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Defendants have identified two previously filed class

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actions, each of which fulfills the criteria of 28 U.S.C.

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§ 1332(d)(4)(A)(ii).3

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The first, Lint v. Northwestern Mutual Life Insurance Co.,

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Case No. 09-1373 (S.D. Cal.), was a class action, initiated on

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June 25, 2009, on behalf of national and California classes of

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sales and financial representatives of Northwestern Mutual Life.

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In the suit, the plaintiffs alleged that the company had

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improperly labeled class members as independent contractors

United States District Court
For the Northern District of California

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instead of employees and had, among other things, deprived them of

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overtime wages for their work beyond forty hours per week.

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plaintiffs asserted claims based on various California statutes

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and the Federal Fair Labor Standards Act.

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no class was certified in Lint, and the case was terminated

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following an unopposed motion to dismiss.

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The

According to Plaintiff,

Bradshaw Decl. ¶ 4.

The second, Fossum v. Northwestern Mutual Life Insurance Co.,

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Case No. 10-2657 (N.D. Cal.), was filed in this district on June

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17, 2010 on behalf of persons employed by Northwestern Mutual as

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financial representatives or other similarly situated employees in

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the state of California.

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that Northwestern Mutual improperly categorized the putative class

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members as independent contractors instead of employees and

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asserted various claims arising under California state law,

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including for waiting time penalties and unfair competition.

The plaintiff in Fossum also alleged

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Defendants request that the Court take judicial notice of
the complaints filed in both actions. Plaintiff does not oppose
the request. Because the accuracy of these documents can be
ascertained by reference to a source that cannot be readily
questioned, the Court grants Defendants’ request and takes
judicial notice of these filings.
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According to Plaintiff, no class was certified in Fossum, which

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was transferred to the Southern District of California and

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consolidated with Lint prior to the dismissal of that action.

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Bradshaw Decl. ¶ 3.

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The factual allegations in the Fossum and Lint actions are

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similar to those in Plaintiff’s complaint in this case.

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the Court is not persuaded by Plaintiff’s contention that the

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Fossum and Lint actions do not fulfill the requirements of

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subsection (d)(4)(A)(ii) because a class was not certified in

Further,

United States District Court
For the Northern District of California

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either case and neither case survives today.

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cases in support of his argument.

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subsection (d)(4)(A)(ii) demonstrates that it is concerned with

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whether the earlier filed cases contained “the same or similar

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factual allegations,” not what procedural stage the earlier cases

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reached.

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Plaintiff cites no

The plain language of

Plaintiff also asserts that the earlier cases were concerned

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with claims brought on behalf of national classes, unlike this

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case, which alleges violations of California laws, making it a

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more local dispute.

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First, it is inaccurate; both earlier actions were brought on

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behalf of California classes, at least in part, and both alleged

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violations of California law.

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statute establishes that the requirement is concerned with whether

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the complaints had the same or similar factual allegations, not

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whether they had the same or similar causes of action or legal

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theories.

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Dist. LEXIS 130248, at *6-7 (N.D. Cal.) (Alsup, J.) (rejecting the

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plaintiff’s attempt to “focus on legal theories rather than the

This argument fails for several reasons.

Further, the plain text of the

See also Jadeja v. Redflex Traffic Sys., 2010 U.S.

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factual allegations in play” as clearly contrary to the plain

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language of the statute and noting that the Senate Judiciary

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Committee had specifically stated that “‘the inquiry under this

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criterion should not be whether identical (or nearly identical)

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class actions have been filed’” but is instead “‘whether similar

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factual allegations have been made against the defendant in

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multiple class actions, regardless of whether the same causes of

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action were asserted or whether the purported plaintiff classes

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were the same (or even overlapped in significant respects).’”)

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United States District Court
For the Northern District of California

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(quoting S. Rep. No. 109-14, at 41 (2005), as reprinted in 2005

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U.S.C.C.A.N. 3, 39) (emphasis in original).

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Because Plaintiff has not met his burden of demonstrating

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that “no other class action has been filed asserting the same or

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similar factual allegations against any of the defendants on

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behalf of the same or other persons” during the three years before

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this case was filed, the Court finds that the local controversy

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exception to its jurisdiction under CAFA does not apply.

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CONCLUSION
For the reasons set forth above, the Court DENIES Plaintiff’s
motion to remand (Docket No. 16).
IT IS SO ORDERED.

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Dated: 4/30/2012

CLAUDIA WILKEN
United States District Judge

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