Rea v. Michaels Stores Inc.

• Citation: 742 F.3d 1234
• Decision Date: 18 February 2014
• Docket Number: No. 14–55008.,14–55008.
• Parties: P. REA; S. Sadlowski; D. Sperline; A. Sarabia, Plaintiffs–Appellees, v. MICHAELS STORES INC., a Delaware corporation, Defendant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

742 F.3d 1234

P. REA; S. Sadlowski; D. Sperline; A. Sarabia, Plaintiffs–Appellees,

v.MICHAELS STORES INC., a Delaware corporation, Defendant–Appellant.

No. 14–55008.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Feb. 3, 2014.

Filed Feb. 18, 2014.

Cathy A. Conway, Jesse A. Cripps, Justin T. Goodwin, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, for Defendant–Appellant.

David J. Gallo, Law Offices of David J. Gallo, Del Mar, CA, for Plaintiffs–Appellees.

Appeal from the United States District Court for the Central District of California, George H. Wu, District Judge, Presiding. D.C. No. 8:13–cv–00455–GW–AGR.

Before: ANDREW J. KLEINFELD, BARRY G. SILVERMAN, and ANDREW D. HURWITZ, Circuit Judges.

OPINION

PER CURIAM:

Plaintiffs brought the present action against Michaels Stores, Inc. on behalf of Michaels' California store managers, alleging that Michaels had improperly classified the managers as exempt from overtime. Michaels removed the case within 30 days to federal district court under the Class Action Fairness Act. The district court remanded the case back to state court, finding that CAFA's $5,000,000 amount-incontroversy requirement was not met because the plaintiffs expressly disclaimed any recovery for the class over $4,999,999.99.

On March 19, 2013, the Supreme Court held in Standard Fire Insurance Co. v. Knowles that attempted damages waivers, such as the plaintiffs', are ineffective, and will not defeat removal under CAFA. ––– U.S. ––––, 133 S.Ct. 1345, 1347, 185 L.Ed.2d 439 (2013). The next day, Michaels removed again under the Class Action Fairness Act. And the district court remanded again, this time on the basis that the removal ran afoul of CAFA's 30–day time limit. The court held in the alternative that Michaels had failed to carryits burden to demonstrate that the amount in controversy exceeded $5,000,000.

Michaels appeals. We have jurisdiction under 28 U.S.C. § 1453(c). We review the remand decision de novo, Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1020 (9th Cir.2007), but review the district court's factual findings for clear error, Fed. R. Civ. Pro. 52(a)(6). “Under CAFA, we have 60 days from the time we accept the appeal to complete all action on such appeal, including rendering judgment.” Lowdermilk v. United States Bank Nat'l Ass'n, 479 F.3d 994, 996 (9th Cir.2007), abrogated on other grounds by Standard Fire Insurance Co., 133 S.Ct. 1345 (internal quotation marks omitted).

As a preliminary matter, we must consider the plaintiffs' argument that this appeal is now moot in light of post-remand developments. We have already considered this argument once before on a motion to dismiss Michaels' petition to appeal, which we denied in a two judge order. However, “[t]he fact that the motions panel denied the ... motion to dismiss this appeal does not free this court from the independent duty to decide whether we have jurisdiction.” United States v. Houser, 804 F.2d 565, 568 (9th Cir.1986) (internal quotation marks omitted).

The plaintiffs argue that after the most recent remand, the amount in controversy cannot exceed $5,000,000 for two reasons. First, they point out that a class has now been certified in state court, which they contend makes the damages waiver in their complaint binding notwithstanding Standard Fire. Second, they argue that the certified class is significantly smaller than the proposed class was, so much so that it could not possibly recover more than $5,000,000. We need not consider whether either of these propositions are correct, however, because the general rule is that “the amount in controversy is determined from the pleadings as they exist at the time a petition for removal is filed.” Eagle v. Am. Tel. & Tel. Co., 769 F.2d 541, 545 (9th Cir.1985). This action is not moot based on the state court's subsequent determination to certify the class because “post-filing developments do not defeat jurisdiction if jurisdiction was properly invoked as of the time of filing.” Visendi v. Bank of America, N.A., 733 F.3d 863, 868 (9th Cir.2013) (internal quotation marks omitted).

Plaintiffs point us to a Tenth Circuit case, Dudley–Barton v. Serv. Corp. Int'l, 653 F.3d 1151 (10th Cir.2011). That decision is inapposite. There, the Tenth Circuit dismissed a CAFA appeal as moot when the plaintiffs had dismissed their case in state court, noting that there was “no meaningful dispute remaining between the parties.” Id. at 1152. That is not the case here. The plaintiffs continue to claim damages for wage and hour violations against the defendant and the defendant continues to dispute them. This case is therefore not moot.

As to timeliness, Michaels did remove this case within 30 days. The removal statutes generally require a party to remove a case within 30 days of receiving the complaint. See28 U.S.C. § 1446, 1453(b). The statutes provide an exception to this rule: “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” Id. § 1446(b)(3) (emphasis added). Thus, we have held “that the thirty day time period [for removal] ... starts to run from defendant's receipt of the initial pleading only when that pleading affirmatively reveals on its face the facts necessary for federal court jurisdiction.” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 691–92 (9th Cir.2005) (internal quotation marks omitted). We also recently held in Roth v. CHA Hollywood Medical Center, L.P., that the two 30–day periods are not the exclusive periods for removal. 720 F.3d 1121, 1124–25 (9th Cir.2013). In other words, as long as the complaint or “an amended pleading, motion, order or other paper” does not reveal that the case is removable, the 30–day time period never starts to run and the defendant may remove at any time.

Here, the district court first remanded this case on grounds that subsequently became incorrect. Michaels removed it again the day after the Supreme Court announced its decision in Standard Fire. When Michaels first received the plaintiffs' complaint, it had a damage waiver, purporting to waive any recovery over $4,999,999.99, one penny shy of the jurisdictional threshold. At the time, our decision in Lowdermilk controlled, which had held that such damage waivers were valid and effective, unless the defendant could prove to a “legal certainty” that damages exceeded $5 million. Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 997–99 (9th Cir.2007). Thus, under the controlling law at the time Michaels received the complaint, it did not “affirmatively reveal[ ] on its face the facts necessary for federal court jurisdiction,” so the initial 30–day removal period was never triggered. See Harris, 425 F.3d at 691 (internal quotation marks omitted); Roth, 720 F.3d at 1125. Because the two thirty-day removal periods are nonexclusive under our decision in Roth, Michaels' second CAFA removal was timely. See Roth, 720 F.3d 1121, 1124–25.

Citing our decision in Seedman v. U.S. Dist. Court for Cent. Dist. of California, 837 F.2d 413 (9th Cir.1988), the plaintiffs argue that the district court could not sustain a successive removal attempt based on the same grounds as the first. In Seedman, we interpreted the provision in 28 U.S.C. § 1447(d) stating that a remand order “is not reviewable on appeal or otherwise” as preventing the district court from considering a removal based on the same grounds as one the court had previously remanded. Id. at 414. Seedman does not dictate the result in this case because CAFA explicitly allows review of remand orders “notwithstanding section 1447(d)[.]” See28 U.S.C. § 1453(c)(1). Moreover, the Supreme Court's decision in Standard Fire is “a relevant change of circumstances ... justify[ing] a reconsideration of a successive, good faith petition for removal.” Kirkbride v. Cont'l Cas. Co., 933 F.2d 729, 732 (9th Cir.1991)....