Peck v. First Student, Inc. et al

Filing 13

Opinion and Order - Plaintiff's Motion to Remand (ECF 8 ) is GRANTED. This case is REMANDED to the Circuit Court of the State of Oregon for the County of Multnomah. The Clerk of the Court is directed to send the files in this case to the Clerk of the Multnomah County Circuit Court. Signed on 8/2/2017 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

CHELSEA PECK, individually and on behalf
of all similarly situated,

Case No. 3:17-cv-0863-SI
OPINION AND ORDER

Plaintiff,
v.
FIRST STUDENT, INC., a foreign
corporation, and FIRST STUDENT
MANAGEMENT, LLC, a foreign limited
liability company,
Defendants.

David A. Schuck, Stephanie J. Brown, and Karen A. Moore, SCHUCK LAW, LLC, 9208 NE
Highway 99, Number 107-84, Vancouver, WA 98665. Of Attorneys for Plaintiff.
Adam E. Brauner and Jennifer Warberg, LITTLER MENDELSON, P.C., 121 SW Morrison, Suite
900, Portland, OR 97204. Of Attorneys for Defendants.
Michael H. Simon, District Judge.
Plaintiff Chelsea Peck filed a putative class action complaint in the Circuit Court of the
State of Oregon for the County of Multnomah. Plaintiff asserts one claim for relief against
Defendants First Student, Inc. and First Student Management, LLC, for unpaid wages under
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Oregon Revised Statutes § 652.150, and attorney’s fees under Oregon Revised Statutes
§ 652.200. Defendants removed the case to this Court, asserting both federal question and
diversity jurisdiction. Defendants assert federal question jurisdiction based on Plaintiff’s
allegation in her Complaint that Defendants are subject to the Americans with Disabilities Act
(“ADA”). Defendants assert diversity jurisdiction based on Plaintiff’s allegation of $3,900 in
damages and Defendants’ statement that the jurisdictional threshold will be met with future
attorney’s fees incurred in this action.
Before the Court is Plaintiff’s motion to remand. Plaintiff argues that the Court does not
have federal question jurisdiction because her claim arises solely under state law and does not
depend on the resolution of any issue of federal law. Plaintiff further argues that the Court does
not have diversity jurisdiction because Defendants fail to prove by a preponderance of the
evidence that the amount in controversy exceeds $75,000. For the reasons discussed below,
Plaintiff’s motion to remand is granted.
DISCUSSION
A. Legal Standard
A civil action generally may be removed from state court to federal court if the federal
district court would have had original, subject matter jurisdiction over the case. 28 U.S.C.
§ 1441(a). Subject matter jurisdiction may be based on either diversity jurisdiction or federal
question jurisdiction. 28 U.S.C. §§ 1331, 1332.
Diversity jurisdiction exists over all civil actions when the amount in controversy exceeds
$75,000 and there is complete diversity among all plaintiffs and defendants. 28 U.S.C.
§ 1332(a)(1). “[D]iversity jurisdiction does not exist unless each defendant is a citizen of a
different State from each plaintiff.” Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373
(1978) (emphasis in original).
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The presence or absence of federal question jurisdiction “is governed by the ‘wellpleaded complaint rule,’ which provides that federal jurisdiction exists only when a federal
question is presented on the face of plaintiff’s properly pleaded complaint.” Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987). For an action to be removed on the basis of federal question
jurisdiction, the complaint must establish either that federal law creates the cause of action or
that the plaintiff’s right to relief necessarily depends on the resolution of substantial questions of
federal law. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463
U.S. 1, 10-11 (1983).
A motion to remand is the proper procedure for a plaintiff to use when challenging
removal. 28 U.S.C. § 1447; see also Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1244
(9th Cir. 2009). The party seeking removal bears the burden of establishing by a preponderance
of the evidence that removal is proper. Moore-Thomas, 553 F.3d at 1244.
B. Federal Question Jurisdiction
Plaintiff alleges only one cause of action, and it is based solely on state law. Thus, federal
law does not create the cause of action brought by Plaintiff. Defendants argue, however, that
Plaintiff’s state law cause of action necessarily requires the interpretation and application of the
ADA, a federal statute.
In her Complaint, Plaintiff states two allegations relating to the ADA. The first is in
paragraph 12, which states: “Defendants are subject to the requirements of the Americans with
Disabilities Act, and amendments thereto.” ECF 1-1 at 4. The second is in paragraph 38(c),
which alleges that questions common to the putative class include: “Whether Defendants are
required to comply with the Americans with Disabilities Act regarding pre-employment
requirements for medical examinations.” Id. at 9.

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Plaintiff argues that there is no dispute that Defendants are subject to the ADA, and that
even if Defendants were not subject to the ADA, Plaintiff can still prevail on her unpaid wage
claim under state law. Plaintiff further argues that her claim does not “arise under” the ADA
because her claim asks only whether she performed work for which she was not compensated
under Oregon law and whether wages for that work were paid timely at the time of her
termination. Plaintiff contends that none of the essential elements of her state law claim depend
on the ADA. Defendants respond that the only way for Plaintiff to prove that she was
“employed” at the time of her training, the time for which she alleges she was working but not
paid, is by relying on the ADA and making an argument that under the ADA, after Plaintiff had
her preemployment medical examination she was “automatically” an employee.
The Court may look only within the four corners of the Complaint when evaluating
removability. See Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005) (noting
that “removability under § 1446(b) is determined through examination of the four corners of the
applicable pleadings” and that “[i]f no ground for removal is evident in that pleading, the case is
‘not removable’ at that stage”). Further, “[u]nder the well-pleaded complaint rule, [courts] must
determine whether ‘a right or immunity created by the Constitution or laws of the United States
must be an element, and an essential one, of the plaintiff’s cause of action.’” California Shock
Trauma Air Rescue v. State Comp. Ins. Fund, 636 F.3d 538, 541 (9th Cir. 2011) (quoting Gully
v. First Nat’l Bank, 299 U.S. 109, 112 (1936)).
Based on the allegations in Plaintiff’s Complaint, it does not appear that the ADA is an
essential element of her state law cause of action. The theory that Defendant’s argue, that the
only way that Plaintiff can prove she was an employee of Defendants is by arguing that under the
ADA she was employed the moment she completed her medical examination, is not a theory

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alleged in Plaintiff’s Complaint. Accordingly, Defendants fail to show that Plaintiff’s state law
claim depends on the interpretation and application of a federal law. Thus, Defendants fail to
show by a preponderance of the evidence that federal question jurisdiction exists in this case.
C. Diversity Jurisdiction—Amount in Controversy
Plaintiff alleges that she is owed not less than $3,900 in statutory penalty wages. In order
for diversity jurisdiction to apply, damages must exceed $75,000. Defendants argue that the
remaining “damages” include future attorney’s fees and that a reasonable estimate of those fees
more than exceeds $71,101, the amount required for Plaintiff’s total damages to exceed $75,000.
Defendants add that although Plaintiff’s Complaint only alleges a cause of action under
Oregon Revised Statutes § 652.150 and a claim for attorney’s fees under § 652.200, Plaintiff
mentioned additional claims in her counsel’s pre-litigation demand letters. Thus, argue
Defendants, Plaintiff must also intend to assert claims under § 653.025 and for attorney’s fees
under § 653.055. Further, because attorney’s fees under § 653.055 may be awarded to any
prevailing party, Defendants argue that the Court may consider Defendants’ evidence of the
attorney’s fees that Defendants previously incurred in defending a different case based on similar
facts, although alleging different claims. That case was brought by Plaintiff’s attorney on behalf
of different plaintiffs in a case that was certified as a class action. Defendants’ argument is
without merit. Plaintiff may have threatened to file several claims, but she only filed one in this
lawsuit.
The sole claim alleged by Plaintiff has a statutory basis on which Plaintiff may recover
attorney’s fees. “[W]here an underlying statute authorizes an award of attorneys’ fees, either
with mandatory or discretionary language, such fees may be included in the amount in
controversy.” Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994, 1000 (9th Cir. 2007),
overruled on other grounds as recognized by Rodriguez v. AT & T Mobility Servs. LLC, 728 F.3d
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975, 976-77 (9th Cir. 2013). “[C]ourts are split as to whether only attorneys’ fees that have
accrued at the time of removal should be considered in calculating the amount in controversy, or
whether the calculation should take into account fees likely to accrue over the life of the case.”
Hernandez v. Towne Park, Ltd., 2012 WL 2373372, at *19 (C.D. Cal. 2012) (collecting cases);
see also Reames v. AB Car Rental Servs., Inc., 899 F. Supp. 2d 1012, 1018 (D. Or. 2012) (“The
Ninth Circuit has not yet expressed any opinion as to whether expected or projected future
attorney fees may properly be considered ‘in controversy’ at the time of removal for purposes of
the diversity-jurisdiction statute, and the decisions of the district courts are split on the issue.”).
Courts that reject consideration of future fees do not consider them “because the amount
in controversy is to be determined as of the date of removal” and “[f]uture attorneys’ fees are
entirely speculative, may be avoided, and are therefore not ‘in controversy’ at the time of
removal.” Dukes v. Twin City Fire Ins. Co., 2010 WL 94109, at *2 (D. Ariz. 2010); accord
Gardynski–Leschuck v. Ford Motor Co., 142 F.3d 955, 958 (7th Cir. 1998). Other courts,
however, consider the realities of modern litigation and the fact that significant resources will
likely need to be spent before a case will be resolved, and thus conclude that a reasonable
estimate of future attorney’s fees, based on evidence, may be included in the calculation of the
amount in controversy. See Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998);
Sasso v. Noble Utah Long Beach, LLC, 2015 WL 898468, at *5 (C.D. Cal., Mar. 3, 2015); Brady
v. Mercedes-Benz USA, Inc., 243 F. Supp. 2d 1004, 1011 (N.D. Cal. 2002).
Plaintiff does not argue that the Court should not consider future attorney’s fees in
calculating the amount in controversy. Instead, Plaintiff argues that Defendants do not provide
sufficient evidence to meet Defendants’ burden to show that a reasonable estimate will result in

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total damages exceeding $75,000. Plaintiff also argues that any estimate of future attorney’s fees
must be allocated among all members of the putative class.
Assuming without deciding that it is appropriate to consider future attorney’s fees, the
Court agrees with Plaintiff that Defendants fail to meet their evidentiary burden of showing by a
preponderance of the evidence a reasonable estimate of future attorney’s fees. The type of
evidence that courts have considered to estimate reasonable future attorney’s fees include a
percentage of economic damages alleged, fee awards in similar cases, and estimates of the
number of hours that will likely be required to litigate the pending case multiplied by the
opposing counsel’s hourly rate. See Cayer v. The Vons Companies, 2017 WL 3115294, at *2 (D.
Nev. July 21, 2017); Sley v. USAA Cas. Ins. Co., 2017 WL 2114773, at *3 (N.D. Cal. May 16,
2017); Edwards v. Ford Motor Co., 2016 WL 6583585, at *5 (C.D. Cal. Nov. 4, 2016);
Brady, 243 F. Supp. 2d at 1011. Defendants provide no such evidence here.
The only evidence submitted by Defendants is a statement contained in the declaration of
Defendants’ counsel regarding the amount of attorney’s fees that each party incurred in
prosecuting and defending a different class action lawsuit, Hurst v. First Student, Inc., Case No.
3:15-cv-0021-HZ. Defendants’ counsel states that defendants in Hurst spent approximately
$300,000 in attorney’s fees. Defendants’ counsel further states that Plaintiff’s counsel in the
present case, who was also counsel for the plaintiffs in Hurst, informed Defendants’ counsel
during a mediation in Hurst that the plaintiffs in Hurst had incurred a similar amount in
attorney’s fees. Plaintiff’s counsel disputes the latter statement.
The Court finds Defendants’ reliance on the purported attorney’s fees incurred in Hurst
to be insufficient evidence to estimate future attorney’s fees in the present case for several
reasons. First, the Court does not find Defendants’ evidence regarding how much the plaintiffs

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spent in Hurst to be persuasive. It purports to be a statement from counsel for the plaintiffs in
that case during mediation, but Plaintiff’s counsel disputes that any direct communication took
place during the mediation. Second a court certified Hurst as a class action. Whether the Court in
the present case will certify a class, and, if so, the size of any certified class, is speculative.
Third, Hurst involved different claims from those at issue in the present case.
Finally, Hurst involved a class with 3,092 members. The Court rejects Defendants’
argument that the full amount of attorney’s fees in Hurst, even if proven, should apply to
Plaintiff in the pending case for purposes of considering the amount in controversy. In
considering the amount in controversy in a putative class action, the Ninth Circuit directs courts
to look at the specific statutory text governing the applicable fee award to determine whether the
fee award goes to the representative parties or to the entire class. See Gibson v. Chrysler
Corp., 261 F.3d 927, 942-943 (9th Cir. 2001). When a fee award goes to the entire class, then the
full amount of estimated attorney’s fees cannot be attributed solely to the named plaintiff for
purposes of calculating the amount in controversy. Id. at 943.
Defendants cite to Rule 32 M(1)(b) of the Oregon Rules of Civil Procedure (“ORCP”) as
allocating attorney’s fees only to the representative plaintiff and individual class members who
have appeared. Defendants misunderstand ORCP 32 M. The specific provision cited to by
Defendants only applies to the liability of class plaintiffs for an award of attorney’s fees that they
may owe to a prevailing defendant class. See ORCP 32 M(1)(b) (“If under an applicable
provision of law a defendant or defendant class is entitled to attorney fees, costs, or
disbursements from a plaintiff class, only representative parties and those members of the class
who have appeared individually are liable for those amounts.”). The provisions of ORCP 32 M
that apply to awards of attorney’s fees to plaintiffs in a class action include ORCP 32 M(1)(d)

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and (1)(e). These provisions provide that an award of attorney’s fees benefitting a class is made
to the entire class and not only to the representatives and individual class members who have
appeared. See ORCP 32 M(1)(d) (“The court may order the adverse party to pay to the prevailing
class its reasonable attorney fees and litigation expenses if permitted by law in similar cases not
involving a class.” (emphasis added)); ORCP 32 M(1)(e) (“In determining the amount of
attorney fees for a prevailing class the court shall consider the following factors….” (emphasis
added)).
Accordingly, even if Defendants had provided sufficient evidence that Hurst was a
similar case involving similar claims with a similar class size and the pending case could be
expected to have similar attorney’s fees as Hurst, those fees must be allocated across the class
for purposes of calculating the amount in controversy. With a class of approximately 3,000
members, a fee estimate of $300,000 results in only $100 in fees attributable to each member.
Even if that amount were added to Plaintiff’s claim of $3,900 in actual damages, the resulting
amount remains well below the jurisdictional minimum.
In cases where the damages alleged are close to meeting the jurisdictional threshold, it
may be reasonable to estimate that including attorney’s fees will exceed $75,000. But Plaintiff
alleges only $3,900 in damages. Defendants offer little beyond speculation that Plaintiff’s
attorney’s fees will result in another $71,101 needed to satisfy the jurisdictional amount in
controversy. See Wastier v. Schwan’s Consumer Brands, 2007 WL 4277552, at *3 (S.D. Cal.
Dec. 5, 2007) (“Further, even assuming that the correct approach is to include a reasonable
estimate of fees likely to be recovered, [d]efendant[’s] calculations are speculative, lack
evidentiary support, and are conclusory at best.”).

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CONCLUSION
Plaintiff’s Motion to Remand (ECF 8) is GRANTED. This case is REMANDED to the
Circuit Court of the State of Oregon for the County of Multnomah. The Clerk of the Court is
directed to send the files in this case to the Clerk of the Multnomah County Circuit Court.
IT IS SO ORDERED.
DATED this 2nd day of August, 2017.

/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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