Fritsch v. Swift Transp. Co. of Ariz., LLC

• Decision Date: 08 August 2018
• Docket Number: No. 18-55746,18-55746
• Parties: Grant FRITSCH, an individual, Plaintiff-Appellee, v. SWIFT TRANSPORTATION COMPANY OF ARIZONA, LLC, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

899 F.3d 785

Grant FRITSCH, an individual, Plaintiff-Appellee,
v.
SWIFT TRANSPORTATION COMPANY OF ARIZONA, LLC, Defendant-Appellant.

No. 18-55746

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 12, 2018 Pasadena, California
Filed August 8, 2018

899 F.3d 787

Paul Scott Cowie (argued), Karin Dougan Vogel, John D. Ellis, and Reanne Swafford-Harris, Sheppard Mullin Richter & Hampton LLP, San Francisco, California, for Defendant-Appellant.

Michael A. Strauss (argued), Strauss & Strauss, Ventura, California; Daniel J. Palay and Brian D. Hefelfinger, Palay Hefelfinger APC, Ventura, California; for Plaintiff-Appellee.

Before: Sandra S. Ikuta and N. Randy Smith, Circuit Judges, and Stephen M. McNamee,^* District Judge.

IKUTA, Circuit Judge:

899 F.3d 788

Swift Transportation Company of Arizona (Swift) removed Grant Fritsch's third amended class action complaint to district court, alleging that it had subject matter jurisdiction under the Class Action Fairness Act (CAFA), 28 U.S.C. §§ 1332(d), 1453, and 1711 – 1715. The district court remanded the action to state court on the ground that Swift failed to prove that the matter in controversy exceeded the sum or value of $5 million, as required for jurisdiction under CAFA. In reaching this conclusion, the court held that only attorneys' fees that had been incurred as of the date of removal could be included in the amount in controversy. We conclude that if a plaintiff would be entitled under a contract or statute to future attorneys' fees, such fees are at stake in the litigation and should be included in the amount in controversy. The defendant retains the burden, however, of proving the amount of future attorneys' fees by a preponderance of the evidence.

I

Because the issues in this appeal arise from a defendant's removal of a case filed in state court to federal court, we begin with the relevant background principles for such a removal.

Under 28 U.S.C. § 1441(a), a defendant may remove certain actions filed in state court to a district court so long as a federal court has jurisdiction over the action, and certain procedural requirements are met. The defendant starts the process by filing a notice of removal in the appropriate district court, 28 U.S.C. § 1446(a), and giving notice to the adverse parties and the state court, id. § 1446(d). The filing of a copy of the notice in state court "effect[s] the removal and the State court shall proceed no further unless and until the case is remanded." Id.

In this case, Swift alleged that the district court had jurisdiction over Fritsch's action under CAFA, which gives district courts jurisdiction over civil actions in which "the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs," the proposed class consists of more than 100 members, and "any member of [the] class of plaintiffs is a citizen of a State different from any defendant." Id. § 1332(d)(2).

The defendant must also meet certain procedural requirements. Most important here, the removal must be timely. A defendant must generally remove a case within 30 days of receiving the complaint. See id. § 1446(b)(1) ; Rea v. Michaels Stores Inc. , 742 F.3d 1234, 1237 (9th Cir. 2014). If the complaint itself does not provide a basis for removal, however, a defendant may file a notice of removal within 30 days after receipt of information "from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b)(3). "[I]nformation relating to the amount in controversy in the record of the State proceeding, or in responses to discovery" triggers the 30-day time limit. Id. § 1446(c)(3)(A).

The notice of removal "need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold," and need not contain evidentiary submissions. Dart Cherokee Basin Operating Co., LLC v. Owens , ––– U.S. ––––, 135 S.Ct. 547, 554, 190 L.Ed.2d 495 (2014). If the amount in controversy is not clear from the face of the complaint, "the defendant seeking removal bears the burden to show by a preponderance of the evidence that the aggregate amount in

899 F.3d 789

controversy exceeds $5 million when federal jurisdiction is challenged." Ibarra v. Manheim Invs., Inc. , 775 F.3d 1193, 1197 (9th Cir. 2015).

If the district court decides that a removed case does not satisfy the requirements for removal, the court must remand the action to state court. A party may appeal a district court's order "granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not more than 10 days after entry of the order." 28 U.S.C. § 1453(c)(1).

After a remand, the defendant may generally not remove the case a second time. Reyes v. Dollar Tree Stores, Inc. , 781 F.3d 1185, 1188 (9th Cir. 2015) ; Kirkbride v. Cont'l Cas. Co. , 933 F.2d 729, 732 (9th Cir. 1991). Nevertheless, a defendant "who fails in an attempt to remove on the initial pleadings can file a removal petition when subsequent pleadings or events reveal a new and different ground for removal." Kirkbride , 933 F.2d at 732 (quoting FDIC v. Santiago Plaza , 598 F.2d 634, 636 (1st Cir. 1979) (emphasis omitted) ). An intervening change in the law that "gives rise to a new basis for subject-matter jurisdiction" qualifies as a subsequent event that justifies a successive removal petition. Reyes , 781 F.3d at 1188 ; see also Rea , 742 F.3d at 1238 ; Kirkbride , 933 F.2d at 732. A defendant can file a successive removal notice within 30 days after a change in law that revealed the facts necessary for federal court jurisdiction. Rea , 742 F.3d at 1237–38.

II

We now turn to the facts of this case. Fritsch filed this wage-and-hour class action in San Bernardino Superior Court. According to the third amended complaint filed in state court, Fritsch worked for Swift, a trucking and transportation company, as a local driver. He alleged that Swift denied him and other employees proper overtime pay, meal periods, and appropriate wage statements. Fritsch sought wages and premiums owed, prejudgment interest, statutory penalties, attorneys' fees under California Labor Code §§ 218.5 and 1194,¹ and costs of suit. He also asked for equitable relief under California's unfair competition law and statutory damages under California's Private Attorneys General Act (PAGA).

On October 18, 2017, Fritsch delivered a mediation brief to Swift. The brief included a damages chart that contained the following information:

• $1,806,080 Unpaid Overtime Wages

• $361,216 Unpaid Double-time Wages

• $531,404 Interest on Unpaid Overtime Wages

• $948,192 Unpaid Meal Period Premiums

899 F.3d 790

• $948,192 Unpaid Rest Period Premiums

• $150,000 Attorneys' Fees and Costs (as of October 18, 2017)

• $515,000 Wage Statement Penalties

• $664,020 Waiting Time Penalties

Total: $5,924,104.

Fritsch also estimated that Swift faced PAGA penalties of $5,874,079.

On October 31, 2017, Swift filed a notice of removal in district court, alleging that the district court had jurisdiction under CAFA. To establish that the action exceeded $5 million, Swift relied on the damages chart. Subtracting estimated interest payments and PAGA penalties (which are not included in the amount in controversy, see 28 U.S.C. § 1332(d)(2) ; Yocupicio v. PAE Grp., LLC , 795 F.3d 1057, 1060–61 (9th Cir. 2015) ), Swift alleged that the amount in controversy was $5,392,700. In addition to the $150,000 in attorneys' fees and costs that had been incurred as of October 18, 2017 (according to the damages chart), Swift noted that the court could also recognize future attorneys' fees that would accrue over the course of the case. Based on Swift's estimate, such future fees would increase the amount in controversy to $6,553,375.

In determining its jurisdiction under CAFA, the district court first noted that the parties did not dispute that CAFA's minimum diversity and class numerosity requirements were met. The court rejected Fritsch's argument that the removal notice was untimely. The court reasoned that Fritsch's complaint did not establish the amount in controversy, and therefore Swift's first notice that Fritsch's claims were removable occurred when Swift received the damages chart on October 18, 2017. Swift timely removed the action within thirty days after receiving the chart.

Turning to the amount in controversy, the court held that because Fritsch's complaint did not include a claim for failure to provide rest periods, the entry in the damages chart—"$948,192 Unpaid Rest Period Premiums"—could not be included as part of the jurisdictional amount. With respect to the attorneys' fees, the court explained "that when calculating attorneys' fees to establish jurisdiction, the only fees that can be considered are those incurred as of the date of removal." (internal quotations omitted).² The court therefore included only the $150,000 of attorneys' fees that Fritsch had set forth in the damages chart as having been incurred prior to removal. The court held that Swift had not been able to prove by a preponderance of the evidence that the amount in...