Holstein v. Sears Holdings Corporation et al
Filing
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MEMORANDUM OPINION AND ORDER granting plaintiff's 8 MOTION to Remand Case to Circuit Court of Kanawha County for Lack of Subject Matter Jurisdiction. Signed by Judge John T. Copenhaver, Jr. on 9/9/2014. (cc: attys; any unrepresented parties; clerk of the Circuit Court of Kanawha County) (tmh)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
MARTIN V. HOLSTEIN, individually
and on behalf of those similarly situated,
Plaintiff,
v.
Civil Action No. 2:14-21166
SEARS HOLDINGS CORPORATION
doing business as
SEARS and
SEARS, ROEBUCK AND CO. and
KMART CORPORATION and
KMART PHARMACY and
SEARS and
SEARS AUTO CENTER and
SEARS HOME SERVICES and
SEARS PROMOTIONS, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
The court is in receipt of the parties’ stipulation, filed
August 25, 2014, wherein they have stated that the defendants do
not oppose plaintiff’s motion to remand, based on the
representations contained in the motion.
The court construes
the references to the motion as including the plaintiff’s
supporting memorandum filed with the motion.
Plaintiff Holstein filed this class action in the Circuit
Court of Kanawha County on May 21, 2014, alleging violations of
the West Virginia Wage Payment and Collection Act (“WPCA”).
Va. Code § 21-5-4.
Defendants Sears, Roebuck and Co., Sears
W.
Holdings Corporation, and Kmart Corporation (collectively
“defendants”) removed the case on July 8, 2014.
They claimed
jurisdiction for removal under the Class Action Fairness Act of
2005 (“CAFA”).
28 U.S.C. 1332(d).
CAFA provides federal
district courts with jurisdiction over class actions in which 1)
the amount in controversy, in the aggregate, exceeds $5,000,000,
2) the proposed class contains at least 100 members, and 3)
there is “minimal diversity.”
Id., see e.g., Caufield v. EMC
Mortg. Corp., 803 F. Supp.2d 519 (S.D. W.Va. 2011).
Plaintiff timely filed the motion to remand on August 7,
2014, arguing that the amount in controversy element is not
satisfied and therefore this court lacks subject matter
jurisdiction.
The other two elements are not in dispute.
Minimal
diversity is achieved when “any member of a class of plaintiffs
is a citizen of a State different from any defendant.”
U.S.C. 1332(d)(2)(A).
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As the plaintiff and all proposed members
of the class are citizens of West Virginia, and the defendants
are all corporations established under the laws of a foreign
state, each having its principal place of business in Illinois,
minimal diversity exists.
¶ 8-10.
See Pl. Coml. ¶ 2; Def. Not. Remov.
Additionally, as discussed below, both sides agree, and
the facts clearly indicate, that the proposed class contains at
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least 100 members.
Thus only the amount in controversy
requirement remains as a potential impediment to this court
exercising jurisdiction under CAFA.
Plaintiff alleges that the applicable class period is the
five years prior to the filing of the complaint.
17.
Pl. Compl. ¶
According to the defendants, a review of their employment
records reflects approximately 11,000 terminations of employees
who worked for them during the class period in West Virginia.
Def. Not. Remov. ¶ 14.
The defendants divide these 11,000
terminations into three classes: “voluntary,” “involuntary,” and
“excluded.” Id. at ¶ 15.
Approximately 7,900 of the
terminations were classified as “voluntary”, 1,900 as
“involuntary”, and 1,200 as “excluded.”
Id.
Defendants assert
that the average gross paycheck amount for these terminated
employees is $360.
Id. at ¶ 17.
The WPCA provides for
liquidated damages equal to three times the amount of an
employee’s final paycheck.
W. Va. Code § 21-5-4(e).
Plaintiff’s motion to remand contains representations
limiting the scope of the putative class, representations which
the defendants have accepted by stipulation.
Specifically,
plaintiff asserts that he did not intend, and the law does not
permit, the class to include any of the 7,900 “voluntary”
terminations.
See Pl. Memo in Support of Mot. Remand.
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In his
complaint, plaintiff defined the parameters of the putative
class as:
All persons formerly employed by the Defendants at any
time in the 5 years prior to filing of this Complaint .
. . in West Virginia who were discharged and not timely
paid all wages.
Pl. Comp. ¶ 17(emphasis added).
Discharge, although not
expressly defined in the WPCA, has been interpreted as referring
only to employees who have been involuntarily terminated.
See
Lehman v. United Bank, Inc., 228 W.Va. 202, 719 S.E.2d 370 (W.
Va. 2011)(discussing the plain meaning of the language of the
WPCA and approvingly citing regulations which define ‘discharge’
as “any involuntary termination or cessation of performance of
work by employee due to employer action.”)(citing W.Va.C.S.R. §
42–5–2.8).
Plaintiff further asserts that the 1,200 “excluded”
terminations do not fall into the putative class because the
WPCA distinguishes between employees who have been “laid-off”
and those who have been “discharged.”
See Pl. Memo in Support
of Mot. to Remand, citing Lehman 228 W.Va. at 206, 719 S.E.2d at
374.
But even if the “excluded” terminations were added to the
“involuntary” terminations, the amount in controversy
requirement would not be satisfied.
Adding the 1,200 “excluded” terminations to the 1,900
“involuntary” terminations would result in a maximum class size
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of 3,100 individuals.
Multiplying that number by the average
gross paycheck amount of $360 found by the defendants, and
trebling the damages as provided for in the WPCA, results in a
figure of $3,348,000.
In their notice of removal, defendants asserted that
because the WPCA allows for injured plaintiffs to recover their
attorney’s fees, such fees can be included in calculations of
the amount in controversy for purposes of removal.
See Def.
Not. Remov., see also Saval v. BL Ltd., 710 F.2d 1027, 1033 (4th
Cir. 1983).
Even adding a one-third attorney’s fee of
$1,116,000 to the above total, the amount in controversy
requirement is not met.
Under CAFA, defendants must provide the basis for federal
jurisdiction in their notice of removal.
Strawn v. AT & T
Mobility LLC, 530 F.3d 293, 297-98 (4th Cir. 2008).
If
jurisdiction is challenged by another party, the defendant must
defend the proffered basis.
Id. (“The removing party bears the
burden of proving that the federal court has jurisdiction over
the removed action.”).
Defendants having stipulated that, based
on plaintiff’s representations, they do not oppose plaintiff’s
motion to remand, do not meet the burden imposed by CAFA and
Strawn.
Moreover, the Fourth Circuit has held that if any ambiguity
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exists as to the propriety of removal, district courts should
decline to exercise jurisdiction.
Mulcahey v. Columbia Organic
Chemicals Co., 29 F.3d 148, 151 (4th Cir. 1994)(“Because removal
jurisdiction raises significant federalism concerns, we must
strictly construe removal jurisdiction.
If federal jurisdiction
is doubtful, a remand is necessary”)(internal citations
omitted).
Accordingly, plaintiff’s motion to remand is granted.
It
is ORDERED that this action be, and it hereby is, remanded.
The Clerk is directed to transmit a copy of this order to
all counsel of record and to any unrepresented parties, and
further directed to forward a certified copy of this order to
the clerk of the Circuit Court of Kanawha County.
DATED: September 9, 2014
John T. Copenhaver, Jr.
United States District Judge
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