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

California District Court Remands Putative Class Action Due to Defendant’s Failure to Provide Evidence to Support its Calculations of the Amount in Controversy

Posted in Case Summaries

Cisneros v. Lerner New York, Inc., 2016 WL 4059612 (C.D. Cal. July 25, 2016).

Plaintiffs, Ana Ciseneros and Farank Safa, filed this putative class action in the Los Angeles County Superior Court against their employer, Lerner New York, Inc. (“Lerner”), alleging eight causes of action including, failure to provide accurate wage statements, failure to pay overtime compensation, failure to pay wages on regularly established paydays and several violations of the California Labor Code. Lerner is a specialty manufacturer and retailer of women’s clothing and accessories. Plaintiff Ana Cisneros is an hourly employee in Lerner’s retail store and working as a Store Sales Leader and Faranak Safa is a former employee, and who was previously employed as a store manager.

In their complaint, the plaintiffs alleged that they were required to make daily “off-the-clock” check deposits using their personal vehicles. The plaintiffs were allegedly instructed, as part of their employment duties, to deliver and deposit checks with at least one other employee, sometime traveling many miles between the store and the bank to make the deposit. The plaintiffs maintained that they were not compensated for their time, mileage, or expenses while making these “off-the-clock” check deposits.

Lerner removed the action to the United States District Court for the Central District of California pursuant to CAFA, and plaintiffs moved to remand.

The plaintiffs first contended that Lerner failed to establish that the putative class consisted of more than 100 members, as required by CAFA. The District Court noted that the complaint described the class as all past and present employees of Lerner, in the United States, who were required to make “off-the-clock” deposits from four years before filing the suit to the present. In their notice of removal, Lerner calculated that there were potentially as many as 3,437 members of this putative class. In response, the plaintiffs pointed out that the class definition only included employees who were required to make the “off-the-clock” deposits, which limited the class to non-exempt, hourly employees in the position of Store Manager, Store Sales Leader, or similar position, who were required to make the “off-the clock” deposits at the end of their shift, but were not reimbursed or paid wages for making those deposits.

In support, Lerner submitted the declaration of a Senior Human Resources Generalist for Lerner, who stated that, during the class period, Lerner employed at least 110 current and former California non-exempt, hourly employees in the position of the Store Manager, Store Sales Leader, or similar position, who worked in stores with off-site banking arrangements and who could have made deposits at the close of their shifts. Because the plaintiffs offered no evidence to contradict this statement, the District Court concluded that the Lerner had met its burden to establish that the putative class consisted more than 100 members.

The plaintiffs next argued that Lerner failed to establish that the amount in controversy exceeded $5 million, as required by CAFA. According to Lerner’s calculations, the amount in controversy was $5,079,780.76. The plaintiffs argued that the calculations were based on conclusory assertions and that Lerner failed to support the calculations with real evidence.

The plaintiffs asserted that California Labor Code § 226.7 requires the employer to pay one additional hour of pay at employee’s regular rate for each workday that the meal or rest break was not provided. Lerner, however, calculated the amount in controversy for this claim at $1,543,256, by assuming (without much evidentiary support) that all class members were denied one rest period during every shift they worked throughout the class period.  The District Court observed that in calculating the amount in controversy for the purposes of CAFA, the courts have been hesitant to accept unsupported assumptions of a 100% violation rate.  Accordingly, the District Court concluded that Lerner had impermissibly assumed a 100% violation rate in calculating the amount in controversy for the plaintiffs’ rest period claims.

The District Court also found that Lerner’s calculations with respect to the plaintiffs’ waiting time penalties suffered from a similar defect. The District Court explained that § 203(a) provides that waiting time penalties may be accumulated for a maximum of 30 days, and that Lerner calculated the amount in controversy by assuming that all class members would be entitled to receive waiting time penalties for the entire 30-day statutory period.

In sum, the District Court observed that many of the assumptions that were key to the Lerner’s damages calculations were not supported by adequate evidence. As such, the District Court found that Lerner failed to establish that the $5 million jurisdictional threshold of CAFA was satisfied and granted the plaintiffs’ motion to remand.

-Melissa L. Broussard