Jauregui v. Roadrunner Transp. Servs., Inc.

• Decision Date: 17 March 2022
• Docket Number: No. 22-55058,22-55058
• Citation: 28 F.4th 989
• Parties: Griselda JAUREGUI, individually, and on behalf of other members of the general public similarly situated, Plaintiff-Appellee, v. ROADRUNNER TRANSPORTATION SERVICES, INC., an unknown business entity, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

28 F.4th 989

Griselda JAUREGUI, individually, and on behalf of other members of the general public similarly situated, Plaintiff-Appellee,

v.ROADRUNNER TRANSPORTATION SERVICES, INC., an unknown business entity, Defendant-Appellant.

No. 22-55058

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 7, 2022 San Francisco, California

Filed March 17, 2022

Jules S. Zeman (argued), Frederic W. Norris, and Jennifer N. Hinds, Husch Blackwell LLP, Los Angeles, California, for Defendant-Appellant.

Eileen B. Goldsmith (argued) and Michael Rubin, Altshuler Berzon LLP, San Francisco, California; Arby Aiwazian, Edwin Aiwazian, and Joanna Ghosh, Lawyers for Justice, PC, Glendale, California; for Plaintiff-Appellee.

Before: Andrew D. Hurwitz and Lawrence VanDyke, Circuit Judges, and Joan N. Ericksen,^* District Judge.

VANDYKE, Circuit Judge:

I. INTRODUCTION

We are asked in this case to review the district court's order remanding a class action to California state court after it determined that the $5 million amount in controversy requirement of the Class Action Fairness Act was not met. Because the district court erred in its amount in controversy analysis by assigning a $0 valuation to several claims, we reverse and remand.

II. BACKGROUND

Plaintiff Griselda Jauregui filed a putative class action in California Superior Court against Defendant Roadrunner Transportation Services (Roadrunner) on behalf of all Roadrunner current and former California hourly workers. The complaint alleged numerous violations of California labor law focused primarily on wage and hour violations.¹ Roadrunner removed the case to federal court, invoking Class Action Fairness Act (CAFA) jurisdiction. Plaintiff responded with a motion to remand, arguing that the district court lacked jurisdiction under CAFA because the requisite $5 million minimum for the amount in controversy had not been met.² As authorized under CAFA, Roadrunner responded with "summary judgment style evidence" to establish the amount in controversy. Roadrunner relied primarily on the declaration of its senior payroll lead who concluded that, based on the company's payroll data and Plaintiff's allegations, the amount in controversy was $14,780,377.06.³

The district court found that Roadrunner failed to meet its burden and remanded the case to the state court. The court reached this conclusion after independently evaluating Roadrunner's amount in controversy calculations for each of the seven alleged violations. The court found that Roadrunner had sufficiently demonstrated the claimed amount in controversy for only two of the claims (overtime claims and meal and rest break claims). For the remaining five claims, the court found that Roadrunner erred in its calculation of the amount in controversy, mostly because of reliance on incorrect variables or assumptions. Critical for our purposes, the district court assigned a $0 value for the amount in controversy for each of the five claims where it disagreed with Roadrunner's calculations. As a result, the district court concluded that the amount in controversy was only $2.1 million—the total for the two claims in which the district court agreed with Roadrunner's calculations. Because this was less than the $5 million CAFA threshold, the court granted Plaintiff's motion to remand. Roadrunner timely appealed.⁴

III. ANALYSIS

Remand orders in cases involving CAFA are reviewed de novo. Fritsch v. Swift Transp. Co. of Ariz. , 899 F.3d 785, 792 (9th Cir. 2018). A defendant's amount in controversy allegation is normally accepted when invoking CAFA jurisdiction, unless it is "contested by the plaintiff or questioned by the court." See Dart Cherokee , 574 U.S. at 87, 135 S.Ct. 547. When a plaintiff contests the amount in controversy allegation, "both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied." Id. at 88, 135 S.Ct. 547.

A.

Much of the district court's analysis underlying the order granting the remand consists of granular evaluations of Defendant's evidence, assumptions, and arguments. That evaluation was appropriate, but in the end the district court lost sight of the ultimate question: whether Roadrunner met its burden of showing the amount in controversy exceeded $5 million. The two primary errors affecting the remand order were putting a thumb on the scale against removal and assigning a $0 amount to most of the claims simply because the court disagreed with one or more of the assumptions underlying Roadrunner's amount in controversy estimates.

In both its "Judicial Standard" section and subsequent analysis, the district court imposed a heavy burden on Defendant to prove that the case belongs in federal court. This threshold posture contravenes the text and understanding of CAFA and ignores precedent.

CAFA "significantly expanded federal jurisdiction in diversity class actions." Lewis v. Verizon Commc'ns, Inc. , 627 F.3d 395, 398 (9th Cir. 2010) ; see also Dart Cherokee , 574 U.S. at 89, 135 S.Ct. 547 ("Congress enacted [CAFA] to facilitate adjudication of certain class actions in federal court."). Congress expressly noted in CAFA's "Findings and Purposes" that the statute was designed to "restore the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction." Class Action Fairness Act of 2005, 28 U.S.C. § 1711 (2005).

Given this statutory background, the Supreme Court has advised "that no antiremoval presumption attends cases invoking CAFA," in part because the statute was enacted "to facilitate adjudication of certain class actions in federal court." Dart Cherokee , 574 U.S. at 89, 135 S.Ct. 547. The Court has explained that "CAFA's provisions should be read broadly, with a strong preference that interstate class actions should be heard in a federal court if properly removed by any defendant." Id. (cleaned up); see also Ibarra v. Manheim Invs., Inc. , 775 F.3d 1193, 1197 (9th Cir. 2015) ("Congress intended CAFA to be interpreted expansively.").

Here, the district court imposed—both explicitly and in its analysis—a presumption against CAFA's jurisdiction. The district court's "Judicial Standard" section, which explained the legal framework for the case, states that

courts "strictly construe the removal statute against removal jurisdiction" and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992). The defendant always bears the burden of establishing that removal is proper. Id. The enactment of CAFA does not alter this rule. Serrano v. 180 Connect, Inc. , 478 F.3d 1018, 1021 (9th Cir. 2007) ("[When enacting CAFA] Congress intended to maintain the historical rule that it is the proponent's burden to establish a prima facie case of removal jurisdiction.").

This threshold explanation does not square with the numerous statements quoted above insisting on an expansive understanding of CAFA. While the district court went on to cite Dart Cherokee for the proposition that "no antiremoval presumption attends cases invoking CAFA," it is difficult to reconcile that citation with the court's earlier statements in the "Judicial Standard" section. Regardless of how one interprets these competing statements, it appears the district court had some notion that removal under CAFA should be met with a level of skepticism and resistance. That was incorrect.

Presumably because of this, latent throughout the order was an inappropriate demand of certitude from Roadrunner over its assumptions used in calculating the amount in controversy. The problem with that approach is that a CAFA defendant's amount in controversy assumptions in support of removal will always be just that: assumptions. At that stage of the litigation, the defendant is being asked to use the plaintiff's complaint—much of which it presumably disagrees with—to estimate an amount in controversy. This is also at a stage of the litigation before any of the disputes over key facts have been resolved. We have therefore made it clear that when calculating the amount in controversy, "the parties need not predict the trier of fact's eventual award with one hundred percent accuracy." Valdez v. Allstate Ins. Co. , 372 F.3d 1115, 1117 (9th Cir. 2004). As is inescapable at this early stage of the litigation, the removing party must be able to rely "on a chain of reasoning that includes assumptions to satisfy its burden to prove by a preponderance of the evidence that the amount in controversy exceeds $5 million," as long as the reasoning and underlying assumptions are reasonable.⁵ LaCross v. Knight Transp. Inc. , 775 F.3d 1200, 1201 (9th Cir. 2015).

The district court did not afford Roadrunner this latitude when analyzing the amount in controversy. As one example, the court rejected Roadrunner's assumption that each terminated employee would have been entitled to the maximum 30-day waiting time penalty because Roadrunner "provides no evidence" supporting that fact. But it was not unreasonable for Roadrunner to assume that the vast majority (if not all) of the alleged violations over the four years at issue in this case would have happened more than 30 days before the suit was filed, which would entitle the employees to the 30-day penalty. The fact that a very small percentage of employees might possibly not be entitled to the maximum penalty is not an appropriate reason to dismiss altogether Defendant's estimate for this claim.

B.

The district court also erred in how it approached the amount in controversy analysis. Because Plaintiff contested removal, Roadrunner was required to show the amount in controversy by a preponderance of the evidence. Dart Cherokee , 574 U.S. at 88, 135 S.Ct. 547.

Our court has defined the amount in controversy as simply "the amount at stake in the...