Cruz v. Mohawk Indus.

• Decision Date: 09 January 2022
• Docket Number: 1:20-cv-01510-JLT-EPG
• Court: U.S. District Court — Eastern District of California
• Parties: NICO CRUZ, individually and on behalf of other members of the general public similarly situated, Plaintiff, v. MOHAWK INDUSTRIES, INC., et al., Defendants.

NICO CRUZ, individually and on behalf of other members of the general public similarly situated, Plaintiff, v. MOHAWK INDUSTRIES, INC., et al., Defendants.

No. 1:20-cv-01510-JLT-EPG

United States District Court, E.D. California

January 9, 2022

ORDER DENYING MOTION TO REMAND (DOC. 7)

Nico Cruz filed a putative class-action complaint in the California Superior Court, Fresno County against Defendants Mohawk Industries, Inc., Daltile Services, Inc., Dal-Tile Services, Inc., and Dal-Tile Corporation on September 14 2020. (Doc. 1-2.) Defendants removed the action to this court on October 23, 2020, invoking federal jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”). (Doc 1.)

BACKGROUND

Plaintiff's complaint asserts nine causes of action for violations of various provisions of the California Labor Code and one violation of the California Business and Professions Code. (Doc. 1-2 (“Compl.”).) Plaintiff alleges that defendants “engaged in a pattern and practice of wage abuse against their hourly-paid or non-exempt employees within the State of California, ” including “failing to pay them for all regular and/or overtime wages earned and for missed meal periods and rest breaks in violation of California law.” (Id. ¶ 28.)

Plaintiff seeks to represent a class of “All current and former hourly-paid or non-exempt employees who worked for any of the Defendants within the State of California at any time during the period from four years preceding the filing of this Complaint to final judgment and who reside in California.” (Id.¶ 16.) Plaintiff alleges that “[t]he amount in controversy for the named Plaintiff . . . is less than seventy-five thousand dollars ($75, 000).” (Id. ¶ 1.)

Defendants removed this action to this court on October 23, 2020, based upon CAFA jurisdiction. (Doc. 1.) Defendants rely upon a declaration of Robin Krueger, the director of human resources for Defendant Daltile Services, Inc., who declared that the defendants were incorporated in or have principal places of businesses in a mixture of Delaware, Georgia, Pennsylvania and Texas. (Doc. 1-6 ¶¶ 3-6.) Krueger further declared that there were 420^[1]individuals falling within Plaintiff's definition of the proposed class, and the amount in controversy exceeded $5 million. (Id. ¶¶ 7-8.)

Plaintiff's sole argument in the motion to remand the matter is that CAFA removal is improper because Defendants failed to prove by a preponderance of the evidence that the amount in controversy exceeds $5 million. (See Doc. 7.)

In their opposition to the motion, Defendants filed additional declarations by Krueger, concerning the size of the proposed class and Defendants' citizenship; Sean Chasworth, a third-party data analyst, concerning the amounts in controversy based on assumptions from the complaint; and Ian Wright, Defendants' counsel concerning attorneys' fees that Plaintiff's counsel had requested in previous cases. (Docs. 10-1, 10-2, 10-3.)

Earlier, the Court noted that it was likely to grant the motion to remand. (Doc. 12.) The Court indicated that Defendants had improperly assumed a 100% violation rate for several of the causes of action they had briefed, and such an assumption is improper. (Id. (citing Ibarra v. Manheim Inv. Inc., 775 F.2d 1193, 1198-99 (9th Cir. 2015).) Because Defendants requested leave to make arguments concerning Plaintiff's sixth, eighth and tenth causes of action if the Court intended to grant the motion to remand, (Doc. 10 at 19), the Court granted leave to do so (Doc. 12 at 3). Defendants supplemental briefing (Docs. 14 & 15), is now before the court.^[2]

LEGAL STANDARD

A suit brought in state court may be removed to federal court if the federal court would have had original jurisdiction over the suit. 28 U.S.C. § 1441(a); see also 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.”). Under CAFA, federal courts have original jurisdiction “over certain class actions, defined in [28 U.S.C.] § 1332(d)(1), if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 84-85 (2014) (citing Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592 (2013)). “Congress enacted CAFA to ‘curb perceived abuses of the class action device which, in the view of CAFA's proponents, had often been used to litigate multi-state or even national class actions in state courts.'” Singh v. Am. Honda Fin. Corp., 925 F.3d 1053, 1067 (9th Cir. 2019) (quoting United Steel v. Shell Oil Co., 602 F.3d 1087, 1090 (9th Cir. 2010)). The Supreme Court has held that there is “no presumption against removal jurisdiction [under CAFA] and that CAFA should be read ‘with a strong preference that interstate class actions should be heard in a federal court if properly removed by any defendant.'” Allen v. Boeing Co., 784 F.3d 625, 633 (9th Cir. 2015) (alteration in original) (quoting Dart Cherokee, 574 U.S. at 89).

“The burden of establishing removal jurisdiction, even in CAFA cases, lies with the defendant seeking removal.” Washington v. Chimei Innolux Corp., 659 F.3d 842, 847 (9th Cir. 2011) (citation omitted); see also Guglielmino v. McKee Foods Corp., 506 F.3d 696, 700 (9th Cir. 2007) (“[T]he plaintiff is ‘master of her complaint' and can plead to avoid federal jurisdiction.”). “A defendant seeking removal must file in the district court a notice of removal ‘containing a short and plain statement of the grounds for removal . . .'” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (quoting 28 U.S.C. § 1446(a)). “‘[W]hen a defendant seeks federal-court adjudication, the defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court.' ‘[A] defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold, '” and “need not contain evidentiary submissions.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 922, 927 (9th Cir. 2019) (emphasis added) (quoting Dart Cherokee, 574 U.S. at 87-89; Ibarra, 775 F.3d at 1197); see also 28 U.S.C.A. § 1446(c)(2) (With certain exceptions, “the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy”). “Where a removing defendant has shown potential recovery could exceed $5 million and the plaintiff has neither acknowledged nor sought to establish that the class recovery is potentially any less, the defendant has borne its burden to show the amount in controversy exceeds $5 million.” Arias, 936 F.3d at 927 (internal quotation marks and citation omitted).

“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, 574 U.S. at 89. If evidence is required, “[b]oth parties may submit evidence supporting the amount in controversy before the district court rules.” Harris v. KM Indus., Inc., 980 F.3d 694, 699 (9th Cir. 2020). Nonetheless, the defendant seeking removal bears the ultimate burden of showing “by a preponderance of the evidence that the aggregate amount in controversy exceeds $5 million when federal jurisdiction is challenged.” Ibarra, 775 F.3d at 1197; see also Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996) (observing that a preponderance of the evidence means “it is ‘more likely than not' that the amount in controversy exceeds” the jurisdictional threshold.). This burden may be satisfied by submitting “affidavits or declarations, or other ‘summary-judgment-type evidence relevant to the amount in controversy at the time of removal, '” Ibarra, 775 F.3d at 1197, or by relying on a chain of reasoning that includes reasonable assumptions, LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1202 (9th Cir. 2015); see also Arias, 936 F.3d at 925 (holding that “[a]n assumption may be reasonable if it is founded on the allegations of the complaint.”). Removal is proper “if the district court finds, by a preponderance of the evidence, that the amount in controversy exceeds” the jurisdictional threshold. Dart Cherokee, 574 U.S. at 88 (citations omitted).

The amount in controversy is not the amount of damages that Plaintiff will likely recover, see Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 417 (9th Cir. 2018), nor is it “a prospective assessment of defendant's liability, ” Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 401 (9th Cir. 2010). Rather, it “is simply an estimate of the total amount in dispute.” Id. Thus, the amount in controversy merely “reflects the maximum recovery the plaintiff could reasonably recover.” Arias, 936 F.3d at 927 (emphasis added).

ANALYSIS

A. Minimal Diversity

Krueger has averred that Defendants are corporations with states of incorporation or principal places of business in Delaware, Georgia, Pennsylvania and Texas. (Doc. 1-6 ¶¶ 3-6.) Defendants allege that Plaintiff is a citizen of California. (Doc. 1 ¶ 18.) Thus, they have alleged minimal diversity as required for jurisdiction under CAFA. Ehrman v. Cox Commc'ns, Inc., 932 F.3d 1223, 1226-27 (9th Cir. 2019) (discussing diversity requirements of CAFA). Because “[D]efendant[s'] allegations of citizenship are unchallenged, nothing more is required” to establish CAFA's diversity requirement. Id. at 1228.

B. Size of Class

In Krueger's supplemental declaration, Kreuger declared that she is the custodian of employee records and that she has reviewed their records to determine 490 employees fit the definition of plaintiff's proposed class. (Doc. 10-2 ¶¶ 3-4.) Though Plaintiff argues...