Armstrong v. Ruan Transp. Corp.

• Decision Date: 25 October 2016
• Docket Number: EDCV 16-1143-VAP (SPx)
• Court: U.S. District Court — Central District of California
• Parties: Melody Armstrong et al., Plaintiffs, v. Ruan Transport Corporation et al., Defendants.

Melody Armstrong et al., Plaintiffs, v. Ruan Transport Corporation et al., Defendants.

EDCV 16-1143-VAP (SPx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

October 25, 2016

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND

On August 22, 2016, Plaintiff Melody Armstrong ("Plaintiff") filed her Motion to Remand ("Motion") the instant action to the Superior Court of the State of California for the County of San Bernardino ("Superior Court"). (Doc. No. 16.) Defendant Ruan Transport Corporation ("Defendant") opposed the Motion on September 26, 2016. (Doc. No. 27.) Plaintiff did not file a reply.

After consideration of the papers filed in support of, and in opposition to, the Motion, as well as the arguments advanced at the hearing, the Court GRANTS the Motion.

I. BACKGROUND

On August 28, 2015, Plaintiff filed her initial complaint against Defendant in Superior Court, alleging violations of various California Labor Code sections. (Doc. No. 1-1.) The alleged violations include failure to pay minimum wages in violation of sections 1194 and 1197 of the California Labor Code (id. ¶ 27); provide rest periods in violation of section 226.7 of the California Labor Code (id. ¶ 41); provide meal periods in violation of section 226.7 and 512 of the California Labor Code (id.); provide accurate wage statements in violation of section 226(a) of the California Labor Code (id. ¶ 27); pay wages upon discharging employees in violation of section 201 of the California Labor Code (id. ¶ 70); and pay wages within 72 hours of employees quitting in violation of section 202 of the California Labor Code (id. ¶ 72).

Based on these violations, Plaintiff brought a class action on behalf of herself and those similarly situated. (Id. ¶¶ 15-31.) Plaintiff served Defendant with the complaint on May 2, 2016, and served Defendant with the summons on May 20, 2016. (Doc. No. 1 ¶ 6.)

Plaintiff seeks to recover unpaid wages, statutory penalties, and attorney's fees. (Doc. No. 1-1 at 29-30.)

II. LEGAL STANDARD

Removal jurisdiction is governed by statute. See 28 U.S.C. §§ 1441 et seq.; Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979) ("The removal jurisdiction of the federal courts is derived entirely from the statutory authorization of Congress" (citations omitted)). Defendants may remove a case to a federal court when a case originally filed in state court presents a federal question or is between citizens of different states. See 28 U.S.C. §§ 1441(a)-(b), 1446, 1453. Only those state court actions that originally could have been filed in federal court may be removed. 28 U.S.C. § 1441(a); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987).

Although the Class Action Fairness Act ("CAFA") gives district courts diversity jurisdiction to hear class actions, defendants must show that "any member of a class of plaintiffs is a citizen of a State different from any defendant" (minimum diversity); the number of members of the proposed plaintiff class exceeds 100 in the aggregate (numerosity); and "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs" (amount in controversy). 28 U.S.C. §1332(d); see also Luther v. Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1033-34 (9th Cir. 2008); Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1020-21 (9th Cir. 2007).

A defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Evidence establishing the amount is required by § 1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant's allegation. Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014). When the removed complaint fails to allege a specific amount in controversy, or when the complaint alleges an amount in controversy less than the jurisdictional threshold, the removing defendant must prove by a preponderance of the evidence the amount in controversy is greater than $5,000,000. Rodriguez v. AT&T Mobility Servs., No. 13-56149, 2013 WL 4516757, at *6-7 (9th Cir. Aug. 27, 2013) (citing Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1348 (2013)); Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010) (citing Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007)). If a defendant fails to meet the requisite burden of proof, a court must remand for lack of subject matter jurisdiction.

In determining the amount in controversy, the Court considers not only the facts alleged in the complaint, taken as true for purposes of calculating the amount, but also "summary-judgment-type evidence relevant to the amount in controversy at the time of removal." Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). "[T]he amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability." Lewis, 627 F.3d at 400.

III. DISCUSSION

Plaintiff contends that removal was improper because Defendant failed to provide evidence (1) of diversity of citizenship, (2) to show there are more than 100 class members, and (3) that there is more than $5,000,000 in controversy. (Doc. No. 16-1 at 3-4.) As the Court finds Defendant fails to carry its burden to show there is more than $5,000,000 in controversy, the Court declines to consider the diversity of citizenship and numerosity requirements.

A. THE AMOUNT-IN-CONTROVERSY REQUIREMENT

A class action cannot be removed to the district court under CAFA unless "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs." 28 U.S.C. §1332(d). "[A] damages assessment may require a chain of reasoning that includes assumptions. When that is so, those assumptions cannot be pulled from thin air but need some reasonable ground underlying them." Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1199 (9th Cir. 2015).

Based on the allegations in the complaint, Defendants contends that when Plaintiff's damages for meal and rest-period penalties, waiting-time penalties, wage-statement penalties, minimum-wage penalties, and attorneys' fees are combined, the amount in controversy is "at least $12,726,330.07." (Doc. No. 27 at 24.)

1. Meal- and Rest-Period Penalties

California law states:

If an employer fails to provide an employee a meal or rest or recovery period in accordance with a state law, including, but not limited to, an applicable statute or applicable regulation, standard, or order of the Industrial Welfare Commission . . . the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each workday that the meal or rest or recovery period is not provided.

Cal. Lab. Code § 226.7.

Defendant argues a conservative estimate of its exposure for meal- and rest-period premiums is "$4,259,764.57." (Doc. No. 27 at 18.) To support this figure, it argues Plaintiff alleges, "Defendant had a practice of failing to provide 'all the legally required unpaid, off-duty meal periods and all the legally required off-duty rest periods to Plaintiff and the other California Class Members." (Id. at 17 (emphasis in original).) Based on this allegation, Defendant states, "although Plaintiff alleges that Defendant had a practice of failing to provide 'all' meal breaks and 'all' rest breaks, Defendant will use a conservative estimate of assuming one meal and rest period violation per workweek for purposes of its [exposure] calculations." (Id.) Thus, based on 1,099 class members, who worked a total of118,015 workweeks during the relevant class period at an average hourly wage of $18.05, Defendant concludes the total exposure would be "$4,259,764.57 for meal and rest period premiums." (Id. at 18.)

Defendant's calculations, however, are flawed for two reasons: (1) they misstate the claims in Plaintiff's complaint and (2) they lack adequate factual support. First, paragraph nine of Plaintiff's complaint states, "Defendant failed to provide all the legally required unpaid, off-duty meal periods and all the legally required off-duty rest periods to Plaintiff and the other California Class Members as required by the applicable Wage Order and Labor Code." (Doc. No. 1-1 ¶ 9.) From this, Defendant jumps to the conclusion that "one meal and rest period violation per workweek" is a "conservative estimate" for its exposure (Doc No 27 at 17). Defendant's reasoning appears to be based on an assumption that by stating, "Defendant failed to provide all the legally required unpaid, off-duty meal [and rest] periods," Plaintiff means "Defendant failed to provide [each and every] legally required unpaid, off-duty meal [and rest] period [to every class member.]" This is far from a reasonable assumption. The allegation "Defendant failed to provide all the legally required. . . meal [and rest] periods" could also mean: (1) Defendant denied one class member one meal and rest break once per year, (2) Defendant denied a small group of class members one meal and rest period once a month, or (3) Defendant denied half the class members all meal and rest periods every week. In each of these scenarios, Defendant "failed to provide all the legally required. . . meal [and rest] periods." Hence, there is no logical basis for the Court to assume Plaintiff means "Defendant filed to provide [each and every] legally required unpaid, off-duty meal [and rest] period [to every class member,]" as Defendant contends.

Second, Defendant did not present any facts supporting its assumption that "one meal and rest period violation per workweek" per class member is appropriate "for . . . its [exposure] calculations." The only evidence Defendant presents to support its assumption is a declaration by its Human Resources Business Partner Ben Williams. (Doc. No 27 at 16.) Williams's declaration only sets forth (1) the number of class members (Doc. No. 27-2 ¶¶ 5-6), (2) the average amount of days worked each week (id. ¶ 8), (3) the...