Urbino v. Orkin Servs. of Cal., Inc.

• Decision Date: 05 October 2011
• Docket Number: Case No. 2:11–cv–06456–CJC(PJWx).
• Court: U.S. District Court — Central District of California
• Parties: John URBINO, for himself and on behalf of other current and former employees, Plaintiffs, v. ORKIN SERVICES OF CALIFORNIA, INC., a Delaware corporation; Rollins, Inc., a Delaware corporation; and Does 1 Through 100, inclusive, Defendants.

882 F.Supp.2d 1152

John URBINO, for himself and on behalf of other current and former employees, Plaintiffs,

v.ORKIN SERVICES OF CALIFORNIA, INC., a Delaware corporation; Rollins, Inc., a Delaware corporation; and Does 1 Through 100, inclusive, Defendants.

Case No. 2:11–cv–06456–CJC(PJWx).

United States District Court,

C.D. California,

Southern Division.

Oct. 5, 2011.

Amber S. Healy, Kimberly Anne Westmoreland, Peter M. Hart, Law Offices of Peter M. Hart, Kenneth H. Yoon, Kenneth H. Yoon Law Offices, Los Angeles, CA, for Plaintiffs.

Christopher C. Hoffman, James C. Fessenden, Fisher and Phillips LLP, San Diego, CA, John E. Lattin, IV, Fisher and Phillips LLP, Irvine, CA, for Defendants.

ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION

CORMAC J. CARNEY, District Judge.

I. INTRODUCTION

Plaintiff John Urbino brought this representative action against Orkin Services of California, Inc. and Rollins, Inc. (collectively, “Defendants”) for violations of the California Labor Code as an aggrieved employee, on behalf of himself and other current and former employees, under the Labor Code Private Attorneys General Act of 2004 (“PAGA”), Cal. Lab.Code §§ 2698–2699, in Los Angeles Superior Court. Defendants subsequently removed the action to this Court based on diversity jurisdiction. Defendants now move to compel arbitration of Plaintiff's PAGA claim based on a written arbitration agreement between Plaintiff and Defendants. At the same time, Plaintiff moves to remand the action, alleging that there is no diversity jurisdiction because the amount in controversy does not exceed $75,000.

Because there is complete diversity of citizenship and Defendants have shown more likely than not that the projected total amount in controversy exceeds $75,000, as calculated by aggregating the claims of the aggrieved employees under the “common and undivided” exception to the anti-aggregation rule, Plaintiff's motion to remand is DENIED. Defendants' motion to compel arbitration is also DENIED because the arbitration agreement contains an unconscionable PAGA arbitration waiver, rendering the agreement unenforceable under California law.

II. BACKGROUND

Plaintiff worked for Defendants as a nonexempt, hourly-paid employee in Los Angeles from June 2005 until July 2010. (Compl. ¶¶ 4, 8; Decl. of J. Blandford in Supp. Pet. to Compel Arbit. ¶ 3.) Defendants are incorporated in Delaware and provide pest control services in the State of California, including in Los Angeles County. (Compl. ¶¶ 5–6.) At the time of his hire, Plaintiff signed an arbitration agreement (the “Agreement”), which also incorporated Defendants' Dispute Resolution Policy (“DRP”). (Decl. of J. Blandford in Supp. Pet. to Compel Arbit. ¶¶ 3–4 & Exh. A; Defs.' Notice of Errata Re Decl. J. Blandford, Exh. 1.) Under the Agreement, executed on June 17, 2005, Plaintiff agreed “to arbitrate any dispute, claim or controversy regarding or arising out of [his] employment.” (Decl. of J. Blandford in Supp. Pet. to Compel Arbit., Exh. A.) The Agreement also stated that the arbitral procedures would be governed by the Federal Arbitration Act (“FAA”). ( Id.) The Agreement further contains the following limitation on arbitration proceedings:

any arbitration proceeding under this Agreement will not be consolidated or joined with any action or legal proceeding under any other agreement or involving any other employees, and will not proceed as a class action, private attorney general action or similar representative action.

( Id.) The DRP also includes the same provision. ( See Defs.' Notice of Errata Re Decl. J. Blandford, Exh. 1, at 12.) On June 21, 2011, Plaintiff filed this instant PAGA action against Defendants in Los Angeles Superior Court, alleging that Defendants deprived him and other current and former nonexempt employees of their rightful meal periods, overtime and vacation wages, and accurate itemized wage statements, in violation of various sections of the California Labor Code. (Compl. ¶¶ 1–4, 16.) Specifically, pursuant to California Labor Code § 2699(f), Plaintiff, as an aggrieved employee, on behalf of himself and other current and former employees, seeks civil penalties for Defendants' purported violations of California Labor Code §§ 2699(f), 558, 226.3, 1174.5, and 1197.1. ( Id. ¶ 18.) ¹

On August 5, 2011, Defendants removed the action to this Court based on diversity jurisdiction. (Dkt. No. 1; Defs.' Notice of Removal ¶¶ 5–25.) On August 15, 2011, Defendants moved to compel arbitration. (Dkt. No. 12.) At the same time, Defendants filed a counterclaim for declaratory relief against Plaintiff under 28 U.S.C. § 2201, requesting a judicial declaration that Mr. Urbino's claims are subject to the parties' Agreement and DRP; that all of Mr. Urbino's claims against Defendants be resolved in the arbitral forum; and that Mr. Urbino be prohibited from bringing any claims under PAGA. (Defs.' CounterClaim ¶ 13; Dkt. No. 14.) On September 2, 2011, Plaintiff moved to remand the action based on lack of subject matter jurisdiction. (Dkt. No. 21.) The Court continued Defendants' motion to compel arbitration to coincide with Plaintiff's motion to remand, scheduled for October 3, 2011. (Ct. Order, Dkt. No. 28, Sept. 15, 2011.) On September 29, 2011, the Court took Defendants' motion to compel arbitration and Plaintiff's motion to remand under submission. (Ct. Order, Dkt. No. 31, Sept. 29, 2011.)

III. PLAINTIFF'S MOTION TO REMAND

The Court has proper subject matter jurisdiction over this action because there is complete diversity of the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1).

A. Legal Standard

A civil action brought in a state court, but over which a federal court may exercise original jurisdiction, may be removed by the defendant to a federal district court. 28 U.S.C. § 1441(a). However, “[a] suit may be removed to federal court under 28 U.S.C. § 1441(a) only if it could have been brought there originally.” Sullivan v. First Affiliated Sec., Inc., 813 F.2d 1368, 1371 (9th Cir.1987); Infuturia Global Ltd. v. Sequus Pharmaceuticals, Inc., 631 F.3d 1133, 1135 n. 1 (9th Cir.2011) (“[A] federal court must have both removal and subject matter jurisdiction to hear a case removed from state court.”) The burden of establishing subject matter jurisdiction falls on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.”) A federal court can assert subject matter jurisdiction over cases that (1) involve questions arising under federal law or (2) are between diverse parties and involve an amount in controversy that exceeds $75,000. 28 U.S.C. §§ 1331, 1332. If it appears that the federal court lacks subject matter jurisdiction at any time prior to the entry of final judgment, the federal court must remand the action to state court. 28 U.S.C. § 1447(c).²

B. Diversity Jurisdiction

A district court has original “diversity” subject matter jurisdiction over all “civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and cost,” and the action is “between citizens of different States.” 28 U.S.C. § 1332(a)(1). The district court has jurisdiction only if there is “complete diversity” between the parties, meaning that each plaintiff is a citizen of a different state than each defendant. See id.; Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996) (citing Strawbridge v. Curtiss, 3 Cranch 267, 2 L.Ed. 435 (1806)).

The parties do not contest that complete diversity of the parties exists. The parties, however, disagree over whether the amount in controversy exceeds $75,000. Plaintiff's Complaint does not allege a specific amount in controversy. Although Plaintiff alleges specific amounts per initial and subsequent violations under California Labor Code §§ 2699(f), 558(a)(1), 226.3, 1174.5, 1197.1, it is uncertain how many employees or pay periods are at issue. Where, as here, the state court complaint is unclear as to whether the requisite amount of controversy is pled, defendant bears the burden of establishing by a “preponderance of the evidence” that the amount in controversy exceeds $75,000. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir.2007).³ To meet this standard, the defendant needs to “provide evidence establishing that it is ‘more likely than not’ that the amount in controversy exceeds” $75,000. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir.1996). The district court considers facts presented in the defendant's removal petition as well as summary judgment-type of evidence relevant to the amount of controversy at the time of removal, but conclusory allegations regarding the amount in controversy are insufficient. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090–91 (9th Cir.2003) (per curiam).

In this case, Defendants have submitted a declaration by Tamera Roberson, an employee of Rollins, Inc., who provides system analysis and data retrieval services for Defendants, attesting to the fact that there were 811 individuals employed by Orkin as nonexempt employees in California, and that from June 21, 2010 (the date Plaintiff filed this action) through the present, Orkin issued at least 17,182 paychecks for the time worked by the 811 nonexempt employees in California. (Decl. of T. Roberson in Supp. Defs.' Removal ¶¶ 9–11; Defs.' Notice of Removal ¶ 6.) Using these figures and the statutory penalty amounts, Defendants calculate the total amount in controversy for the statutory penalties related to the alleged initial violations of the Labor Code §§ 2699(f), 558(a)(1), 226.3, and 1197.1(a)(1), to be $405,500,⁴ and the total amount in controversy for subsequent violations of Labor Code §§...