Duberry v. J. Crew Grp., Inc.

• Decision Date: 28 July 2015
• Docket Number: CASENO. 2:14-cv-08810-SVW-MRW
• Court: U.S. District Court — Central District of California
• Parties: ANDREW DUBERRY, individually, and on behalf of other members of the general public similarly situated, Plaintiff, v. J. CREW GROUP, INC., an unknown business entity; and DOES 1 through 100, inclusive, Defendants.

ANDREW DUBERRY, individually, and on behalf of other membersof the general public similarly situated, Plaintiff, v. J. CREW GROUP, INC., an unknown business entity; and DOES 1 through 100, inclusive, Defendants.

CASENO. 2:14-cv-08810-SVW-MRW

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

July 28, 2015

ORDER DENYING PLAINTIFF'S MOTION TO REMAND [11], GRANTING DEFENDANT'S MOTION TO DISMISS [9], AND DISMISSING THE COMPLAINT WITHOUT PREJUDICE

I. INTRODUCTION

On, October 14, 2014, plaintiff Andrew Duberry ("Duberry") filed this wage and hour putative class action against defendant J. Crew Group, Inc. ("J. Crew") in California state court. (Dkt. 1.) Duberry asserts claims under California law for: (1) unpaid overtime; (2) unpaid meal period premiums; (3) unpaid rest period premiums; (4) unpaid minimum wages; (5) final wages not timely paid; (6) waiting time penalties for wages not timely paid during employment; (7) non-compliant wage statements; (8) failure to keep accurate business records; and (9) violation of California's Unfair Competition Law ("UCL"), Cal, Bus. & Prof. Code. § 17200 et seq. Duberry brings this case on behalf of himself and "[a]ll current and former hourly-paid or non-exempt individuals employed . . . within the State of California at a 'J.Crew' or 'J .Crew Factory' store at any time during the period from four years preceding the filing of thisComplaint to final judgment." (Compl. ¶ 13.)

On November 13, 2014, J. Crew removed the case to this Court, asserting jurisdiction under the Class Action Fairness Act ("CAFA"). (Dkt. 1.) On November 25, 2014, Duberry filed a motion to remand the case. (Dkt. 11.) After this date, but before Duberry's motion was heard, two cases were decided that arguably alter the legal standard applicable to a motion to remand a CAFA case: Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547 (2014), and Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1199 (9th Cir. 2015). Before these cases, proving the amount in controversy was largely an exercise in mathematical gymnastics whereby defendants attempted to transmute generic words used in the complaint into actual rates of violation. Ibarra and Dart Cherokee at least raise the specter of a sea change. In light of these landmark decisions, the Court granted both parties leave to file additional evidence.¹ (Dkt. 22.)

The Court now addresses Plaintiff's motion to remand upon this supplemented record. For the reasons discussed below, the Court DENIES Plaintiff's motion to remand. The Court also GRANTS J. Crew's motion to dismiss.

II. STATEMENT OF FACTS

Plaintiff asserts that J. Crew employed him "as an hourly-paid, non-exempt employee at a 'J. Crew' and/or 'J. Crew Factory' store" from December 2006 to roughly September 2012. (Compl. ¶ 18.) He asserts that J. Crew engaged in a "uniform policy and systematic scheme of wage abuse against their hourly-paid or non-exempt employees[.]" (Compl. ¶ 25.) According to Duberry, "[t]his scheme involved, inter alia, failing to pay [him and the putative class members] for all hours worked, missed meal periods and rest breaks in violation of California law." (Id.) J. Crew also purportedly failed to provide Duberry and the putative class members with complete and accurate wage statements because, inter alia, J. Crew's statements failed to include the total number of hours that they worked. (Compl. ¶ 33.)

Duberry further alleges that "[a]t all material times set forth herein[,]" J. Crew engaged in a host of purportedly unlawful behaviors, including: failing to pay overtime wages for all hoursworked, failing to provide the requisite uninterrupted meal and rest periods, failing to pay at least minimum wages for all "off the clock" hours worked, failing to pay all wages owed upon discharge or resignation, failing to pay all wages within a permissible time, failing to provide complete or accurate wage statements, failing to keep complete or accurate payroll records, and failing to properly compensate Plaintiff and the other class members. (Compl. ¶¶ 35-43.)

III. MOTION TO REMAND

A. LEGAL STANDARD

CAFA gives federal district courts original jurisdiction over class actions involving at least 100 class members, minimal diversity, and at least $5 million in controversy. 28 U.S.C. § 1332(d). In a notice of removal, a defendant need only plausibly allege that these prerequisites are met. Dart Cherokee, 135 S. Ct. at 553. Once confronted with a motion to remand, however, the defendant bears the burden of establishing jurisdiction by a preponderance of the evidence. Id. at 553-54; Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 978 (9th Cir. 2013). There is no presumption against removal under CAFA. Dart Cherokee, 135 S. Ct. at 554.

Where the complaint contains generalized allegations of illegal behavior, a removing defendant must supply "real evidence" grounding its calculations of the amount in controversy.² Ibarra, 775 F.3d at 1199. Therefore, a defendant cannot assume a 100% violation rate based on the plaintiff's general allegation of a "pattern and practice" and "institutionalized unwritten policy that mandates these unlawful practices." Id. at 1198-99 & n.3. In contrast, a defendant may establish the amount in controversy by relying on admissible statistical evidence taken from a representative sample and extrapolated to calculate the potential liability for the full class. LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1202-03 (9th Cir. 2015).

Notwithstanding these goal posts, significant questions remain unanswered by the appellate courts. For example, although both parties may submit summary-judgment-style evidence, it is unclear whether a plaintiff must submit affirmative evidence to prevail on amotion to remand. Ibarra, 775 F.3d at 1199-1200. It is also unclear what kind of evidence allows a defendant to carry its burden—all that is clear is that such evidence must be sufficient to prove the amount in controversy by a preponderance. Id. at 1197.

Dart Cherokee and Ibarra put all involved on the horns of a dilemma: the questions they raise implicate fundamental tensions and evade easy answers. See, e.g., Mejia v. DHL Express (USA), Inc., No. CV 15-890-GHK (Jcx), 2015 WL 2452755, at *1-2 (C.D. Cal. May 21, 2015). On the one hand, these cases require a defendant to do more than pull an assumed rate of violation from the ether of generalized allegations of illegal behavior. See Ibarra, 775 F.3d at 1199. On the other hand, defendants should not be required to fall on their swords to establish the propriety of removal jurisdiction. Unutoa v. Interstate Hotels and Resorts, Inc., No. 2:14-cv-9809-SVW-PJW, 2015 WL 898512, at *3 (C.D. Cal. Mar. 3, 2015). Striking this Goldilocks balance is a befuddling task; in the absence of guidance, district courts have struggled to get the temperature between Ibarra and LaCrosse just right.

The cases are not perfectly consistent, but courts have generally found the amount in controversy satisfied under two circumstances. First, courts are satisfied when defendants essentially confess by submitting calculations derived from actual evidence of potential violations³ observed in a sample of data, which the defendant then extrapolates to the putative class. See Varsam v. Lab. Corp. of Am., No. 14CV2719 BTM JMA, 2015 WL 4199287, at *2-3 (S.D. Cal. July 13, 2015) (accepting the defendant's 25% meal break violation rate based on the number of violations observed in the eligible shifts worked by putative class members). And second, courts have generally found the amount in controversy satisfied where a defendant assumes a 100% violation rate based on allegations of a "uniform" illegal practice (or other similar language) and where the plaintiff offers no evidence rebutting this violation rate. Unutoa, 2015 WL 898512, at *2-3; see also Ibarra, 775, F.3d at 1199 (suggesting that anallegation that the defendant "universally, on each and every shift" would be sufficient to ground an assumed 100% violation rate). Although these cases may not set the baseline for what is necessary, they demonstrate what is sufficient to satisfy the amount in controversy.

In contrast, Ibarra and similar cases have found that a generalized allegation of an illegal "pattern and practice" or of violations occurring on "multiple occasions" are insufficient to support an assumed 100% rate of violation. The Court agrees with these cases that, following Ibarra, a defendant cannot rely on such generalized allegations to support an assumed 100% rate of violation.

What remains unclear is how to resolve cases in the middle: For example, cases involving generalized allegations of an illegal "pattern and practice" used to support an assumed violation rate less than 100% or cases involving competing evidence offered by both parties of different types and degrees of persuasiveness. The cases venturing into this murky area are not all of one mind. Compare Johnson v. Sunrise Sr. Living Mgmt., Inc., No. CV 15-02297 BRO VBKX, 2015 WL 3830291, at *6 (C.D. Cal. June 18, 2015) (rejecting amount in controversy calculations, in part, because the defendant failed to submit evidence essentially confessing liability), with Tajonar v. Echosphere, L.L.C., No. 14CV2732-LAB RBB, 2015 WL 4064642, at *3-5 (S.D. Cal. July 2, 2015) (quoting Oda v. Gucci Am., Nos. 2:14-cv-7468-SVW (JPRx), 2:14-cv-07469-SVW (JPRx), at *5 (C.D.Cal. Jan.7, 2015)) (accepting reasonable assumptions based on the complaint and generalized employment data and stating that a defendant "is not required to comb through its records to identify and calculate the exact frequency of violations"), and Mejia, 2015 WL 2452755, at *3-6 (C.D. Cal. May 21, 2015) (accepting reasonable assumptions based on the complaint and generalized employment data). The life of this law will be experience, not logic—in the meantime, these in-between cases will turn on context and fact-specific considerations. Bearing this in mind, the Court dives head-first...