Van Steenhuyse v. UBS Fin. Servs., Inc.

• Decision Date: 05 July 2018
• Docket Number: Case No. 18–cv–02041–YGR
• Citation: 317 F.Supp.3d 1062
• Parties: Larry Van STEENHUYSE, Plaintiff, v. UBS FINANCIAL SERVICES, INC., Defendant.
• Court: U.S. District Court — Northern District of California

317 F.Supp.3d 1062

Larry Van STEENHUYSE, Plaintiff,

v.UBS FINANCIAL SERVICES, INC., Defendant.

Case No. 18–cv–02041–YGR

United States District Court, N.D. California.

Signed July 5, 2018

Marita Murphy Lauinger, James F. Clapp, Clapp & Lauinger LLP, Carlsbad, CA, Edward Joseph Wynne, Wynne Law Firm, Larkspur, CA, for Plaintiff.

Michele Leigh Maryott, Matthew T. Sessions, Gibson Dunn & Crutcher LLP, Irvine, CA, Eugene Scalia, Gibson Dunn & Crutcher LLP, Washington, DC, for Defendant.

ORDER GRANTING MOTION TO REMAND

Yvonne Gonzalez Rogers, United States District Court Judge

Plaintiff Larry Van Steenhuyse moves to remand this action to the Alameda County Superior Court on the grounds that defendant UBS Financial Services, Inc. ("UBS") has not shown established that the amount in controversy exceeds $75,000, as required by 28 U.S.C. § 1332(a). In addition, pursuant to 28 U.S.C. § 1447(c), plaintiff requests an award of reasonable costs and attorney's fees in the amount of $7,700 incurred a result of the removal.

Having carefully considered the papers submitted, for good cause shown, and for the reasons explained below, the Court GRANTS plaintiff's motion to remand. UBS, as the removing party, has failed to meet its burden to establish that the amount in controversy on plaintiff's claims here meets the jurisdictional threshold for removal based upon diversity jurisdiction. The request for attorneys' fees and costs under section 1447(c) is DENIED .

I. BACKGROUND

The instant action was filed in the Superior Court of the State of California, County of Alameda on February 26, 2018, and removed to this Court on April 3, 2018. (See Dkt. No. 1, Notice of Removal ("NOR"); Dkt. No. 17, Exhibits to Notice of Removal ("NOR Exh."), at NOR Exh. 2.) The matter was removed pursuant to 28 U.S.C. §§ 1332 and 1441, on the grounds that there is complete diversity of citizenship between the parties, and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a).

Plaintiff's complaint alleges he is employed by UBS as a financial advisor (NOR Exh. 2) and asserts a single claim for civil penalties under the California Labor Code Private Attorney's General Act ("PAGA"), Cal. Lab. Code § 2698 et seq.¹ (Id. ) The complaint alleges that UBS failed to compensate plaintiff and other financial advisors in accordance with the requirements of California's Labor Code, entitling plaintiff to seek penalties for those violations based upon:

1. failure to reimburse for reasonable and necessary business expenses in violation of §§ 2802, 221–224, 400–410, and 1198;

2. failure to pay sales commissions when "reasonably calculable," in violation of § 204;

3. failure to pay overtime, in violation of §§ 558 and 1194;

4. failure to provide meal and rest breaks, in violation of § 512;

5. failure to furnish complete and accurate wage statements, in violation of § 226;

6. failure to pay terminated or quitting employees their final paychecks within the deadlines set forth in §§ 201–202, or pay waiting time penalties as required by § 203; and

7. a requirement that employees sign documents containing illegal class and representative action waivers, in violation of § 432.5. (Id. ¶¶ 9–13.)

UBS removed the action pursuant to 28 U.S.C. § 1332(a), alleging that the parties are diverse and that the civil penalties attributable to California Labor Code violations against plaintiff plus reasonable attorney's fees exceed $75,000. (NOR at 4–7.) Plaintiff concedes he and UBS are citizens of different states, but contends that UBS's calculations of the penalties at issue are overstated, and UBS cannot prove by a preponderance of evidence that the jurisdictional threshold is met. Plaintiff argues that the amount in controversy here does not exceed $475 in overtime penalties under section 558, $4,800 in other PAGA penalties, and a pro-rata share of attorneys' fees at $42, for a total of $5,317.00.

Plaintiff further argues that the Court should exercise its discretion pursuant to 28 U.S.C. section 1447(c) to award "just costs and any actual expenses, including attorney fees, incurred as a result of the removal."

II. APPLICABLE STANDARDS

The Ninth Circuit "strictly construe[s] 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) (citing Boggs v. Lewis , 863 F.2d 662, 663 (9th Cir. 1988). "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) ).

Under 28 U.S.C. § 1332(a), district courts have jurisdiction over civil actions in which citizenship of the parties is diverse and "the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs." When it is unclear from the face of the complaint whether the amount in controversy is met, the removing defendant bears the burden of establishing that the amount in controversy exceeds the jurisdictional threshold by a preponderance of the evidence. Urbino v. Orkin Servs. of California, Inc. , 726 F.3d 1118, 1121–22 (9th Cir. 2013). A court may consider facts in the notice of removal, as well as "summary-judgment-type evidence" relevant to the amount in controversy at the time of removal. Singer v. State Farm Mutual Auto. Ins. Co. , 116 F.3d 373, 377 (9th Cir. 1997). "[A] defendant cannot establish removal jurisdiction by mere speculation and conjecture, with unreasonable assumptions."

Ibarra v. Manheim Investments, Inc. , 775 F.3d 1193, 1197 (9th Cir. 2015). Unlike removal under CAFA, in which the Congressional intent underlying the statute favors a finding of federal court jurisdiction, Dart Cherokee Basin Operating Co., LLC v. Owens , ––– U.S. ––––, 135 S.Ct. 547, 554, 190 L.Ed.2d 495 (2014), a strong presumption against removal jurisdiction exists in a non-CAFA case. Grancare, LLC v. Thrower by & through Mills , 889 F.3d 543, 550 (9th Cir. 2018) (presumption against removal jurisdiction requires a strict construction and rejection of jurisdiction if there is "any doubt as to the right of removal in the first instance") (quoting Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992) (per curiam) ).

Under 28 U.S.C. section 1447(c), the Court has the discretion to award plaintiff "just costs and any actual expenses, including attorney fees, incurred as a result of the removal." "Absent unusual circumstances, courts may award attorney's fees under [ section] 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees should be denied." Martin v. Franklin Capital Corp. , 546 U.S. 132, 141, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005). "Removal is not objectively unreasonable 'solely because the removing party's arguments lack merit, or else attorney's fees would always be awarded whenever remand is granted.' " Grancare, LLC v. Thrower by & through Mills , 889 F.3d 543, 552 (9th Cir. 2018) (quoting Lussier v. Dollar Tree Stores, Inc. , 518 F.3d 1062, 1065 (9th Cir. 2008) ).

III. DISCUSSION

A. Calculation of the Amount In Controversy

UBS premises its calculation of penalties for the alleged violations on myriad assumptions:

(1) that plaintiff worked 31 full pay periods between December 21, 2016, and the date of removal;

(2) for all but section 1994, penalties would be $100 for the first pay period, and $200 per pay period for each subsequent pay period (citing § 2699(f)(2) );

(3) for overtime violations, penalties under section 558 would be $50 for the first pay period, and $100 for each subsequent violation, plus "an amount sufficient to recover underpaid wages." Cal. Lab. Code § 558(a) ;

(4) plaintiff worked an average of 2 hours overtime every week, or 4 hours per pay period, based on the allegation that he did so "routinely;"

(5) plaintiff's underpaid wages would be $21,122.48 per pay period; and

(6) attorneys' fees would be equal to 25% of the total civil penalties at issue. Based upon these assumptions, UBS calculates that section 558 penalties would be $24,172.48, all other Labor Code section penalties would be $52,500, and attorneys' fees would be $19,055.62, for a total amount in controversy of $95,278.10. Plaintiff argues that the assumptions underlying UBS's calculations are incorrect, for several reasons. The Court considers each argument in turn.

1. "Initial" vs. "Subsequent" Violations

First, plaintiff contends that UBS has assumed incorrectly all violations after the first pay period are penalized at the "subsequent" violation amount. Despite having made this assumption in the NOR, UBS apparently concedes this point in response to the motion.

California law is clear that a "subsequent violation" level applies only to violations after the employer is on notice that its continued conduct is unlawful. Until "notified that it is violating a Labor Code provision (whether or not the Commissioner or court chooses to impose penalties), the employer cannot be presumed to be aware that its continuing underpayment of employees is a "violation" subject to penalties." Amaral v. Cintas Corp. No. 2 , 163 Cal. App. 4th 1157, 1209, 78 Cal.Rptr.3d 572 (2008) ; see Trang v. Turbine Engine Components Technologies Corp., 2012 WL 6618854, at *5 (C.D. Cal. 2012) (" 'subsequent' violations in the PAGA context means not just later in time but following notice to the employer that it is in violation of the Labor Code," citing Amaral ); Patel v. Nike Retail Servs., Inc. , 58 F.Supp.3d 1032, 1042 (N.D. Cal. 2014) (same).

Here, plaintiff served his LWDA notice on December 22, 2017. There were 24 pay periods between December 22, 2016 and December 22, 2017 and 7 pay periods between December 22, 2017, and the date of removal. (NOR Exh. 10). Thus, the 24 pay periods before the LWDA notice should therefore be...