Salazar et al v. Avis Budget Group, Inc. et al
Filing
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ORDER Granting 7 Plaintiffs' Motion to Remand to State Court. Plaintiffs' Motion for Remand is Granted, and the case is Remanded to the San Diego Superior Court. Signed by Judge Gonzalo P. Curiel on 4/22/2013. (srm)(Certified Copy of Order sent to San Diego Superior Court)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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GELASIO SALAZAR and SAAD
SHAMMAS, individually and on
12 behalf of all other similarly situated
current and former employees of
13 Defendants in the State of California,
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v.
Plaintiffs,
AVIS BUDGET GROUP, INC., a
Delaware Corporation; AVIS
BUDGET CAR RENTAL, LLC, a
Delaware Limited Liability Company
(formerly known as CENDANT
RENTAL SERVICES, INC.);
BUDGET RENT A CAR SYSTEM,
INC., a Delaware Corporation; and
AVIS RENT A CAR SYSTEM, LLC,
a Delaware Limited Liability
Company,
Defendants.
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Case No. 12-CV-01628-GPC-WVG
ORDER GRANTING
PLAINTIFFS’ MOTION TO
REMAND
(ECF NO. 7)
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INTRODUCTION
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Presently before the Court is Plaintiffs’ Motion to Remand, which has been fully
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briefed, (ECF Nos. 7, 11, 12), and which the Court finds suitable for disposition
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without oral argument, see CivLR 7.1.d.1. After a careful review of the parties’
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submissions and the record in this matter, and for the reasons that follow, the Court
3:12-CV-01628-GPC-WVG
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GRANTS Plaintiffs’ Motion to Remand.
BACKGROUND
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On November 27, 2006, Plaintiffs filed a putative wage-and-hour class action
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complaint in the Superior Court of California, San Diego County. (ECF No. 7-4.) On
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January 10, 2007, Defendants removed the case to federal court pursuant to the Class
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Action Fairness Act (“CAFA”), and the case was assigned to Judge Gonzalez.1 On
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May 14, 2008, Plaintiffs filed their currently operative First Amended Complaint
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(“FAC”), in which Plaintiffs allege Defendants failed to comply with various California
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wage-and-hour laws. (ECF No. 7-5.) That same month, Plaintiffs also filed a motion
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for class certification of Plaintiffs’ meal period claims only, which Judge Gonzalez
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denied, and which the Ninth Circuit declined to review on an interlocutory basis. (ECF
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Nos. 7-6, 7-7.) Thereafter, on November 20, 2008, Judge Gonzalez remanded the case
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to the San Diego Superior Court. (ECF No. 7-8.) After remand, the state court stayed
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the action because the California Supreme Court was set to review Brinker v. Superior
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Court, 53 Cal. 4th 1004 (2012), a case addressing whether meal period violations are
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amenable to class treatment.
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On April 12, 2012, the California Supreme Court published its opinion in
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Brinker, and, two weeks later, the state court lifted the stay on Plaintiffs’ action. On
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June 4, 2012, Plaintiffs informed Defendants they intended to seek leave to amend their
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FAC in conjunction with filing a renewed class certification motion. Because
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Defendants refused to stipulate to the filing of a second amended complaint (“SAC”),
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Plaintiffs filed a motion for leave to amend their complaint, including a proposed SAC,
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on June 13, 2012.
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The proposed SAC indicated Plaintiffs would: (1) pursue class-wide claims for
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meal periods only (and not business reimbursement claims), (2) forego their punitive
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damages claim, and (3) forego claims for attorneys’ fees pursuant to the California
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Labor Code section 218.5. Indeed, Plaintiffs assert the proposed SAC significantly
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The prior District Court case number is 3:07-cv-0064-IEG-WMC.
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reduces the potential damages, penalties, interest, and related costs and attorneys’ fees
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to less than $5 million.
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On June 15, 2012, Plaintiffs filed a renewed motion for class certification
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(“Renewed Motion”) in light of Brinker, asserting class treatment is appropriate in this
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case. On June 29, 2012, Defendants used the Renewed Motion as a basis to again
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remove the case to federal court pursuant to CAFA. On July 20, 2012, Plaintiffs filed
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the instant Motion to Remand.
DISCUSSION
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I.
Legal Standard
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Only state court actions that could originally have been filed in federal court can
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be removed to federal court. 28 U.S.C. § 1441(a); Caterpillar, Inc. v. Williams, 482
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U.S. 386, 392 (1987). Removal is governed by 28 U.S.C. § 1441 et seq. The removal
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statutes are to be “strictly construe[d] . . . against removal jurisdiction,” and the
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removing party “always has the burden of establishing that removal was proper.” Gaus
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v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Federal jurisdiction must be rejected
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if there is any doubt as to the right of removal in the first instance.” Id.
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CAFA vests district courts with original subject-matter jurisdiction over class
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actions when: (1) the matter in controversy exceeds the sum or value of $5,000,000,
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exclusive of interests and costs; (2) there is a putative class with more than 100
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members; and (3) there exists minimal diversity, i.e., any member of a putative class
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is a citizen of a state different from any defendant. 28 U.S.C. § 1332(d)(2).
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II.
Analysis
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Plaintiffs do not dispute that the putative class is comprised of more than 100
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members or that minimal diversity exists. The parties do dispute whether the action
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was timely removed in light of Plaintiffs’ Renewed Motion. The Court need not
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resolve this dispute, however, because the Court concludes Defendants have not
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satisfied their burden of proving the amount in controversy exceeds $5 million.
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The removing party bears the burden of demonstrating the amount in controversy
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exceeds $5,000,000. Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 685 (9th Cir.
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2006) (“[U]nder CAFA the burden of establishing removal jurisdiction remains, as
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before, on the proponent of federal jurisdiction”). This burden is not met by mere
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conclusory allegations; the defendant must prove existence of the jurisdictional
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amount. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). In
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this regard, the defendant must set forth, in the removal petition itself, the underlying
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facts supporting its assertion that the amount in controversy exceeds $5,000,000.2
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Abrego Abrego, 443 F.3d at 689.
A.
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Applicable Standard of Proof
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Plaintiffs argue that because their proposed SAC asserts that damages do not
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exceed $5,000,000, Defendants must prove to a “legal certainty” that the amount-in-
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controversy requirement has been met. (ECF No. 7-1 at 11.) Plaintiffs argue
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Defendants cannot claim the Renewed Motion notified them of the case’s
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“removability” but then use the FAC, as opposed to the Plaintiffs’ proposed SAC, to
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determine the amount in controversy. (Id. at 8.)
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Defendants counter, arguing that because Plaintiffs’ Renewed Motion is
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ambiguous as to the actual amount in controversy, and because the operative FAC is
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silent on the issue, a preponderance of the evidence standard applies. (ECF No. 11 at
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13.)
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Defendants failed to consider the inherent limits of Plaintiffs’ proposed SAC.3 (Id. at
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18-19.)
Furthermore, Defendants contend Plaintiffs have mistakenly asserted that
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Plaintiffs argue that a case removed from state court under CAFA must be remanded unless
the defendant shows there is at least one plaintiff whose claim or claims exceed $75,000. (ECF No.
7-1 at 14.) The Court, however, rejects this argument, as it is mass actions – not class actions – that
limit federal jurisdiction to those plaintiffs whose individual claim or claims exceed $75,000. See 28
U.S.C. § 1332(d)(11)(B)(i).
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Defendants maintain that the FAC is controlling but state that, “assuming arguendo that
Plaintiffs’ proposed [SAC] allegations are controlling . . . Defendants’ calculations for the amount in
controversy include only the claims that are at issue in Plaintiffs’ proposed [SAC].” (ECF No. 11 at
14.)
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In Sanchez v. Monumental Life Ins. Co., the Ninth Circuit identified three
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burdens applicable to the amount in controversy that a Defendant must bear depending
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on the allegations in the operative complaint. 102 F. 3d 398, 403-04 (9th Cir. 1996).
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When a complaint alleges an amount in controversy sufficient to meet the federal
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jurisdiction threshold, it is presumptively valid unless it appears to a “legal certainty”
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that the plaintiff cannot recover that amount. Sanchez, 102 F.3d at 402; see also
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Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). When a
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complaint affirmatively alleges the amount in controversy is less than the jurisdictional
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requirement, the “party seeking removal must prove with legal certainty that CAFA’s
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jurisdictional amount is met.” Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994,
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1000 (9th Cir. 2007); see also Castillo v. Apple Core Enterprises, Inc., 2009 WL
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2849124, at *1-2 (S.D. Cal. Sept. 1, 2009) (applying the legal certainty standard where
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complaint alleged “the amount in controversy does not reach or exceed five million
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dollars”). If the amount in controversy is unclear or ambiguous on the face of the
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complaint, “the removing defendant bears the burden of establishing, by a
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preponderance of the evidence, that the amount in controversy exceeds [the
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jurisdictional amount].” Sanchez, 102 F.3d at 404; see also Abrego Abrego, 443 F.3d
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at 683 (applying the preponderance of the evidence standard to complaint removed
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under CAFA which did not specify an amount-in-controversy).
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Here, the operative state-court complaint is the FAC because Plaintiffs’ motion
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for leave to file their proposed SAC was not decided by the state court. Plaintiffs’
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argument that Defendants should not be allowed to remove the action based on the
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Renewed Motion while ignoring the proposed SAC is unpersuasive. As stated in
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Plaintiff’s Renewed Motion: “For purposes of this class certification motion, the meal
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period class allegations asserted in Plaintiff’s Second, Third, and Fourth Causes of
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Action in Plaintiffs’ FAC are the same as their counter-parts in the proposed SAC.”
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(ECF No. 1-72 at 16 n.7.) Thus, Plaintiffs could have filed their Renewed Motion even
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if they did not also seek leave to file a SAC. That is, the Renewed Motion and the
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proposed SAC are not inextricably linked.
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In any event, both the Renewed Motion and the FAC are “unclear or ambiguous”
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as to the amount in controversy. Defendants therefore bear the burden of showing, by
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a preponderance of the evidence, that the amount in controversy exceeds the statutory
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amount. See Sanchez, 102 F.3d at 404. That is, Defendants must demonstrate it is
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“more likely than not” that the amount in controversy exceeds $5 million. See id.
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B.
Evidence
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If the amount in controversy is not facially apparent from the complaint, “the
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court can consider facts in the removal petition, and may require parties to submit
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summary-judgment type evidence relevant to the amount in controversy at the time of
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removal.” Singer v. State Farm Mutual Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.
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1997) (internal quotation marks omitted). “A Court may also consider supplemental
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evidence later proffered by the removing defendant, which was not originally included
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in the removal notice.” Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205
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(E.D. Cal. 2008) (citing Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002)).
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While the FAC is ambiguous as to the amount in controversy, the Court
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nonetheless begins its analysis with the FAC, as the parties dispute whether Plaintiff
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has alleged a 100% violation rate as to Plaintiffs’ meal period claims. In their FAC,
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Plaintiffs allege that, “[w]ithin the four (4) years before the filing of this Complaint, in
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the course and scope of their employment as Mechanics, Plaintiffs have worked more
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than five (5) hours per day, but have not been provided full thirty (30) minute meal
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periods during each and every such work day.” (ECF No. 7-5 at ¶ 35 (emphasis
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added).) In calculating the amount in controversy, the parties disagree on the
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interpretation of the phrase, “during each and every such work day.”
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The Court finds the phrase can be interpreted in at least two ways. As Plaintiffs
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advance, the phrase may be interpreted to mean that auto mechanics were not always
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provided with meal periods on the days they worked. And according to Defendants,
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the phrase could be interpreted to mean that auto mechanics were not provided with
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meal periods on any of the days they worked. With the rule in mind that “federal
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jurisdiction must be rejected if there is any doubt as to the right of removal,” the Court
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construes this ambiguity in favor of Plaintiffs. That is, the Court interprets the phrase
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“during each and every such work day” to mean that auto mechanics were not always
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provided with meal periods on the days they worked. Thus, the Court will not assume
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a 100% violation rate in determining whether Defendants have satisfied the amount-in-
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controversy requirement.
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Defendants submit a declaration by a Senior Human Resources Management
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System (“HRMS”) Analyst regarding the electronic database that tracks Defendants’
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personnel information, including dates of hire, termination, and pay rates. (ECF No.
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1-7 at ¶ 1.) The HRMS Analyst generated a report containing information about
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Defendants’ California employees who were employed from November 27, 2002,
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through June 15, 2012, as an “Auto Mechanic.” (Id. at ¶ 3.) This initial report
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supplied the most recent hire date, termination date, rehire date, and lowest and most
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recent hourly pay. (Id.) The HRMS Analyst submitted the initial report to the HRMS
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Manager who used this report to determine the number of days that each employee
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listed on the initial report worked more than six hours. (ECF No. 1-8 at ¶ 3.) The
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HRMS Manager only calculated dates from January 15, 2005, onward due to difficulty
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with the format of older data. (Id. at ¶ 3, Ex. A.) Defendants then multiplied the
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number of days between January 15, 2005, and June 15, 2012, that each employee
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worked six or more hours, by the employee’s lowest hourly wage while employed
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during that period. Finally, Defendants aggregated the amounts calculated for each
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employee to arrive at the amount of $5,711,140.91. (ECF No. 1 at ¶ 64(c)(i).)
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Defendants calculated Plaintiffs’ claims for waiting time and wage statement
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penalties using similar methods. (Id. at ¶ 64(c)(i)-(ii).) Defendants first determined the
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number of employees whose penalty claims would not be barred by the statute of
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limitations. Defendants then multiplied the greatest number of penalty days or pay
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periods permitted for each employee by the appropriate penalty – a day’s wages (up to
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30 days) for waiting time penalties and $50 or $100 for wage statement penalties.
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Defendants arrived at the additional amount of $2,105,434.48, for a total amount in
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controversy of $7,816,575.39.
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Defendants also assert that, based on similar cases, the Court should value
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Plaintiffs’ remaining claims for attorney fees at $500,000. Defendants further assert
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that Plaintiffs’ individual business expense reimbursement claims serve to bolster the
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amount in controversy.
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Defendants claim the actual amount in controversy is much higher because their
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calculation (1) does not include any days employees worked 6 or more hours from the
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beginning of the putative class period; (2) does not include employees who worked
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more than five but less than six hours, warranting additional pay; and (3) only uses the
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employee’s lowest hourly rate without addressing increases over time. (Id.)
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Plaintiffs offer evidence of their own. Plaintiffs provide their own “Time
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Details,” which show meal periods were sometimes provided, indicating something less
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than a 100% violation rate. Indeed, it appears from Plaintiffs’ “Time Details,” that
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Plaintiffs did themselves take several meal periods. How many, however, is unclear.
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Weighing all the evidence together, the Court concludes Defendants have not
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met their burden of proving that it is more likely than not that the amount in
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controversy exceeds $5 million. Considering that Plaintiffs’ “Time Details” indicate
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when meal periods were taken, the Court finds Defendants had the ability to
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approximate the actual number of missed meal periods to arrive at a more accurate
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violation rate. Instead, Defendants took the chance of relying on their interpretation
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of Plaintiff’s FAC to calculate the amount in controversy using a 100% violation rate.
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Thus, the Court is left without sufficient evidence to determine the amount actually put
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into controversy by Plaintiffs’ meal period claims. Without the ability to estimate the
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value of Plaintiffs’ meal period claims, Defendants’ penalty and attorney fees
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calculations (totaling approximately $2.6 million) are insufficient. And Defendants do
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not attempt to value Plaintiffs’ individual business expenses reimbursement claims.
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In sum, the Court finds Defendant’s have failed to meet their burden of proving the
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amount in controversy exceeds the jurisdictional threshold. Accordingly, the Court
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concludes it lacks jurisdiction over Plaintiffs’ claims and must therefore grant
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Plaintiffs’ Motion to Remand.
CONCLUSION
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After a careful review of the parties’ submissions and the record in this matter,
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and for the foregoing reasons, IT IS HEREBY ORDERED that Plaintiffs’ Motion for
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Remand is GRANTED, and the case is REMANDED to the San Diego Superior
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Court.4
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DATED: April 22, 2013
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HON. GONZALO P. CURIEL
United States District Judge
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San Diego Superior Court case number GIC 876049.
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