Molina v. Lexmark Int'l, Inc., CASE NO. CV 08-04796 MMM (FMx)

• Decision Date: 30 September 2008
• Docket Number: CASE NO. CV 08-04796 MMM (FMx)
• Court: U.S. District Court — Central District of California
• Parties: RON MOLINA, individually and on behalf of all others similarly situated, Plaintiff v. LEXMARK INTERNATIONAL, INC., a corporation, and Does One through Twenty-Five, Inclusive, Defendants.

RON MOLINA, individually and on behalf of all others similarly situated, Plaintiff v. LEXMARK INTERNATIONAL, INC., a corporation, and Does One through Twenty-Five, Inclusive, Defendants.

CASE NO. CV 08-04796 MMM (FMx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

September 30, 2008

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING PLAINTIFF'S REQUEST FOR ATTORNEYS' FEES

Ron Molina filed this class action against his former employer, Lexmark International ("Lexmark"), in Los Angeles Superior Court on August 31, 2005. He filed an amended complaint alleging claims under California Labor Code §§ 203, 218.5, and 1194 and California Business and Professions Code §§ 17200-17208 in June 2006. On July 22, 2008, two weeks before trial, Lexmark removed the case to federal court.¹ Lexmark asserts that the court has jurisdiction under the Class Action Fairness Act ("CAFA"). See 28 U.S.C. § 1332(d) (granting district courts original jurisdiction over any civil action in which the amount in controversy exceeds $5,000,000, and, inter alia, "any member of a class of plaintiffs is a citizen of a State different from any defendant"). Lexmark contends that it first became aware "with any certainty" that the amount in controversy exceeded $5,000,000 on July 7, 2008, when it received a summary of damages prepared by Molina's expert witness.² On August 21, 2008, Molina filed a motion to remand, arguing that Lexmark knew the amount in controversy exceeded $5,000,000 long before its July 22, 2008 removal.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Facts Underlying the Case

Molina alleges that Lexmark has failed to pay its current and former California employees promised vacation and personal day pay.³ Lexmark allows its employees to take two to five weeks of paid vacation a year, depending on length of employment, and four to five paid personal days.⁴ Molina asserts that Lexmark has willfully and deliberately maintained a "use it or lose it" policy governing vacation and personal days in violation of California law. Molina alleges claims under California Labor Code §§ 203, 218.5, and 1194, which seek unpaid vacation wages, unpaid personal day wages, interest, penalties, injunctive and other equitable relief, attorneys' fees, and costs. He also pleads claims under California Business and Professions Code §§ 17200-17208, which seek injunctive relief, restitution, disgorgement of profits generated by the allegedviolations, attorneys' fees, and costs.⁵

B. Procedural History

1. The Initial Complaint

Molina filed his initial complaint in Los Angeles Superior Court on August 31, 2005.⁶ The complaint sought unpaid wages for accrued vacation pay only; it did not include allegations related to pay for accrued personal days.⁷ The complaint sought certification of a class composed of all former, current, and future Lexmark employees in California who were not paid the full amount of vacation pay owed them during a period beginning four years prior to the filing of the complaint.⁸ It did not quantify the amount of damages sought.

2. The May 2, 2006 Mediation

On May 2, 2006, the parties participated in a mediation conducted by Mark Rudy. Attorneys Sheila Thomas, Kendra Tanacea, and Antonio Lawson were present on behalf of Molina.⁹ Attorneys Frank Liberatore, Robert J. Patton, and Joanie McGuire, as well as Lexmark "Human Resources Generalist," Rebecca Cox, represented defendant.¹⁰ The parties have different recollections of what transpired at the mediation.

Prior to the mediation, Lexmark gave Molina salary information for 111 employees that it had employed from 2001 through early 2006.¹¹ Molina's experts "conduct[ed] analysis of potential damages" using this data.¹² Molina contends that during the mediation, his counsel gave Lexmarkattorney Frank Liberatore a copy of the damages analysis prepared by the consultants.¹³ Molina asserts that the attorneys then returned to separate conference rooms, and mediator Mark Rudy shuttled between them.¹⁴ Eventually, Liberatore came to see Molina's attorneys, carrying the damage analysis with him.¹⁵ Liberatore said that the analysis contained an error.¹⁶ (None of Molina's attorneys can recall the nature of the error;¹⁷ Lawson characterizes it as "minor," however.)¹⁸ Thomas contacted the expert and asked him to correct the error.¹⁹ The expert faxed a corrected analysis, which "resulted in a minimal reduction in the overall damages calculation," to Rudy.²⁰ Rudy took the fax to Liberatore.²¹ The expert faxed a copy of the new analysis to Thomas two days after the mediation.²²

Lexmark asserts that Molina's lawyers never shared the damages analysis with its representatives during the mediation.²³ It states that its own calculation of potential damages prior to the mediation estimated potential damages at approximately $1,200,000.²⁴

The documents at the center of this factual dispute²⁵ consist of a series of charts with columns showing calculations of vacation pay,²⁶ statutory waiting penalties,²⁷and interest²⁸ allegedly owed to 62 former and 49 current Lexmark employees.

The analysis reflects a total of $1,292,092 in vacation pay, $429,144 in waiting penalties, and $377,840 in interest owed to the 62 former employees, or a total of $2,099,076.²⁹ It reflects vacation pay of $2,367,195 and penalties of $924,350, or a total of $3,291,545, owed to the 49 current employees. On its face, therefore, the damages analysis reveals an amount in controversy, "exclusive of interests and costs," of $5,012,781.³⁰ See 28 U.S.C. § 1332(d)(2) (the $5 million amount in controversy minimum under CAFA is "exclusive of interests and costs").

3. The Amended Complaint, Class Certification and Removal

On June 6, 2006, Molina sought leave to amend his complaint.³¹ The proposed amended complaint added allegations regarding Lexmark's failure to pay employees for accrued personal days.³² It also sought to expand the definition of the proposed class in two significant ways: (1) the proposed new class included employees who were not paid for personal days; and (2) it alleged that the class period commenced in 1991 rather than 2001.³³ The proposed complaint also added a request for punitive damages.³⁴

The Superior Court approved Molina's request to file an amended complaint on June 29, 2006.³⁵ Thereafter, Lexmark moved to strike references to current and future employees from the complaint; the court struck references to future employees.³⁶ Molina filed a modified first amended complaint on October 2, 2006,³⁷ and the state court certified a class on June 20, 2007.³⁸ The class that was certified differed from the class defined in the June 2006 proposed amended complaint only in that it did not include future employees.³⁹

The court set trial for May 20, 2008.⁴⁰ At Lexmark's request, this date was later continuedto August 8, 2008.⁴¹ On July 22, 2008, Lexmark removed the case to federal court,⁴² arguing that there is federal jurisdiction under the Class Action Fairness Act. See 28 U.S.C. § 1332(d) (granting the district courts original jurisdiction over any civil action in which the amount in controversy exceeds $5,000,000, and, inter alia, "any member of a class of plaintiffs is a citizen of a State different from any defendant"). The notice of removal asserts that Lexmark first became aware "with any certainty" that the amount in controversy exceeded $5,000,000 on July 7, 2008, when it received a Summary of Damages prepared by Molina's expert witness.⁴³ On August 21, 2008, Molina filed a motion to remand, arguing that Lexmark knew that the amount in controversy exceeded $5,000,000 long before July 22, 2008.

II. DISCUSSION

A. Standard Governing Removal to Federal Court Under CAFA

Unless expressly excepted by some other federal statute, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Under CAFA, federal courts have subject matter jurisdiction to hear class actions in which the citizenship of the defendant and at least one member of the plaintiff class is diverse, and the amount in controversy exceeds $5,000,000. See 28 U.S.C. § 1332(d). "According to the Report of the Senate Committee on the Judiciary on CAFA, the requirement under CAFA that the amount in controversy exceed $5 million in the aggregate may be established 'either from the viewpoint of the plaintiff or the viewpoint of the defendant, and regardless of the type of relief sought (e.g., damages, injunctive relief, or declaratory relief).'" Rippee v. Boston Market Corp., 408 F.Supp.2d 982, 984 (S.D. Cal. 2005) (quoting S. Comm. on the Judiciary, Class Action Fairness Act of 2005, S.Rep. No.109-14, at 40 (Feb. 28, 2005), reprinted in 2005 U.S.C.C.A.N. 3, 2005 WL 627977).

The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988), and Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985)). "The 'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990), and Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)); Befitel v. Global Horizons, Inc., 461 F.Supp.2d 1218, 1221 (D. Haw. 2006) ("In diversity cases, the burden of proving all jurisdictional facts rests on the party seeking jurisdiction," citing Kanter v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001)).

If there is any doubt regarding the existence of federal jurisdiction, the court must resolve those doubts in favor of remanding the action to state court. Gaus, 980 F.2d at 566 ("[f]ederal...