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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

A Removing Defendant Is Not Obligated To Research, State, And Prove The Plaintiff’s Claims

Posted in Case Summaries, Wage and Hour

Ritenour v. Carrington Mortgage Services LLC, 2017 WL 59069 (C.D. Cal.  Jan. 5, 2017).

In this action, while denying the plaintiffs’ motion to remand, a district court in California, found that  the defendant only needs to offer evidence sufficient to establish that CAFA’s amount-in-controversy requirement was met by a preponderance of the evidence and was not obligated to research, state, and prove the plaintiffs’ claims for damages.

The plaintiffs brought a putative class action in California Superior Court alleging that the defendant, inter alia, failed to pay minimum and overtime wages, and to provide meal and rest periods in violation of California Labor Code.

The defendant removed the action to the federal court pursuant to CAFA. Subsequently the plaintiffs moved to remand, arguing that the defendant had not met the burden of establishing the amount-in-controversy required by CAFA.  The District Court denied the plaintiffs’ motion to remand.

The defendant explained that just three of the plaintiffs’ ten causes of action alone established that the amount in controversy exceeded $6 million, without even calculating the amount of damages sought for the other causes of action, the costs of the requested injunctive relief, or attorneys’ fees. In support of its argument, the defendant provided detailed calculation based primarily on the declaration of its senior vice president of human resources.

First, the defendant explained that as to the plaintiffs’ fifth cause of action for failure to pay final wages timely, the plaintiffs sought “30 days of waiting time penalties at the daily rate of pay of each member of the putative class who had been terminated.” The defendant used an average hourly rate of $19.41, which totaled $155.25 in pay per day, and thus, for the 30 day penalty period, each employee would be entitled to at least $4,657.50.  The defendant identified at least 611 non-exempt employees who worked in California during the alleged class period and were no longer employed by the defendant, and who would therefore be entitled to at least $4,657.50 per day, if the plaintiffs’ allegations were meritorious.  As a result, the plaintiffs’ fifth cause of action put at least $2,845,732.50 in controversy.

Second, with regard to the plaintiffs’ seventh cause of action for alleged failure to provide accurate wage statements, the defendant contended that a violation provided for a penalty of $50 for the initial pay period in which the violation occurred and then an additional $100 per employee for each violation in a subsequent pay period. The defendant identified 358 employees who were employed for the entire year prior to the filing of the instant suit, who each received 26 wage statements for the year thus, putting at issue $2,550 per employee, for a total of $912,900.

Finally, for the plaintiffs’ fourth cause of action for failure to pay minimum wages for all hours worked, the defendant identified a minimum of 358 employees who would be entitled to relief for 26 pay periods, pursuant to the plaintiffs’ allegations. Each employee would be entitled to $6,350, resulting in total of $2,273,300 at issue.  Based solely on the three causes of action identified by the defendant, the District Court found that the defendant met its burden of establishing that the amount-in-controversy exceeded $5 million, as required by CAFA.

The plaintiffs argued that the notice of removal was based exclusively on “conjecture” and was not based on actual allegations from the complaint. The District Court, however, found that the complaint was so lacking in factual allegations that the defendant was justified in employing reasonable estimates based on the number of employees, average rates of pay, and average pay periods.

In response, the plaintiffs argued that the defendant failed to provide enough evidence to support removal. The District Court, however, found that the plaintiffs did not sufficiently contest the defendant’s assertions because the plaintiffs never contended that the amount-in-controversy was less than $5 million, nor did they offer any conflicting evidence that called the defendant’s estimates into question. Instead, the plaintiffs simply questioned the strength of the defendant’s supporting declaration from the senior vice president of human resources that explained the detailed calculations.

The District Court thus opined that the defendant’s detailed, reasonable calculations, supported by the declaration of the vice president, were sufficient to meet its burden, especially because the plaintiffs offered no alternative amount-in-controversy or rebuttal evidence. Accordingly, the District Court denied the plaintiffs’ motion to remand.

Melissa Broussard