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

Case Remanded Where Defendant Failed to Provide Sufficient Evidence to Satisfy CAFA’s Jurisdictional Amount in Controversy Threshold

Posted in Case Summaries, Wage and Hour

Dobbs v. Wood Group PSN, Inc., 2016 WL 4367218 (E.D. Cal. Aug. 16, 2016)

The District Court found that the defendant did not satisfy CAFA’s jurisdictional amount-in-controversy threshold. The defendant failed to demonstrate by preponderance of the evidence that its assumption of imputing a 100 percent violation rate was justified. The Court granted the plaintiff’s motion to remand.

The plaintiff filed a complaint in the Superior Court of California for the County of Kern asserting claims against the defendant, his employer, for violations of the California Labor Code and Business and Professions Code, including unpaid meal and rest premiums, unpaid overtime and minimum wages, waiting time penalties, etc. In his complaint, the plaintiff did not specify the amount of damages. The defendant, however, removed the action to federal court under CAFA, 28 U.S.C. § 1332(d), contending that the amount in controversy exceeded $5 million. Thereafter, the plaintiff moved to remand.

The plaintiff challenged the sufficiency of the defendant’s evidence, arguing that, under Ibarra v. Manheim Investments, Inc., 775 F.3d 1193 (9th Cir. 2015), the defendant’s showing was inadequate to meet its burden of showing that the amount in controversy exceeded the amount required under § 1332(d).

The parties did not dispute that the first two requirements of § 1332(d) were satisfied, therefore, the only issue before the District Court was whether the defendant had established the amount-in-controversy requirement. The District Court noted that where a complaint contains generalized allegations of illegal behavior, a removing defendant must supply real evidence grounding its calculations of the amount in controversy. Generally, the spectrum of similar cases has two end-points: the Ninth Circuit distinguishes between (1) complaints of uniform violations, and (2) those alleging pattern and practice of labor law violations.

With regard to the first type, the District Court observed that where a plaintiff’s complaint specifically alleges uniform practice, if a defendant in its amount in controversy calculus assumes a 100 percent violation rate and the plaintiff offers no competent evidence in rebuttal to a defendant’s showing, courts have found a defendant’s assumption to be reasonable. Whereas in the second type of case where a plaintiff alleges a pattern and practice of labor violations, the Ninth Circuit has found that a defendant’s assumption of a 100 percent violation rate would be unreasonable.

Here, the plaintiff alleged that defendant violated the Labor Code sections regularly, or as a pattern and practice, and did not allege uniform violations. Therefore, the District Court opined that the defendant could not reasonably assume a 100 percent violation rate.

To succeed here, the District Court remarked that the defendant must demonstrate that its method of calculation is based on a representative sample from admissible data, from which it extrapolates for the entire class. To that end, the District Court observed that the defendant relied on the testimony from a payroll lead at the defendant’s sister company about two reports submitted as evidence. The District Court noted that the first report was a list of employees by their employee number giving their employment status and individual pay rate, and which lacked any statistical analysis or extrapolated calculation. The District Court observed that the second report was an indecipherable Excel spreadsheet.

Based on this paucity of evidence, the District Court found that defendant’s assumption of a 100 percent violation rate was unreasonable, and thus ruled that the defendant failed to meet its burden to prove that the amount in controversy exceeded $5 million.

Accordingly, the District Court remanded the action to the state court.

Posted by Kerry Cummings