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

Defendant’s Assumptions Deemed Appropriate In Determining Amount In Controversy

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Grozco v. Illinois Tool Works, Inc., 2015 WL 411209 (E.D. Cal. Jan. 30, 2015).

A district court in California denied a motion to remand, finding that the defendant had sufficiently established by a preponderance of the evidence that the amount-in-controversy exceeded $5 million.

The plaintiff class, comprising of current and former non-exempt hourly workers of the defendant, alleged unfair business practices and labor law violations. Their complaint alleged a failure to provide overtime pay, meal breaks and rest periods, among other claims. The dispute presented in the motion to remand was whether the class presented an amount-in-controversy that exceeded the jurisdictional threshold of $5 million.

The defendant contended that the aggregate potential liability based on the class’s claims regarding meal breaks and rest periods alone exceeded the statutory requirement. In support, the defendant attached a spreadsheet containing data regarding all members of the class, including the plaintiffs. The spreadsheet contained, among other things, the identification numbers, dates of hire, work locations, and hourly rates of pay of class members. The plaintiffs did not dispute the authenticity of the spreadsheet. Thus, the District Court ruled that the defendant appropriately relied on the spreadsheet to calculate its potential liability based on the meal break and rest period claims.

The class alleged that class members were denied 30 minute meal breaks each day. For each of the years at issue, the defendant used the class members’ actual rates of pay and assumed that each member was entitled to just one additional hour of pay for each workweek based on the alleged missed meal periods. For a class of at least 800 members, and a time period spanning 5 years, the defendant calculated its total potential liability for missed meal periods to be $2,714,117 on the basis of this assumption.

Utilizing the same actual rates of pay and same assumption that class members were each entitled to one additional hour of pay for each workweek, the defendant performed similar calculations to arrive at its potential liability regarding missed rest periods. Together, the defendant calculated its total potential liability based on the plaintiffs’ meal and rest period claims at $5,428,234, which exceeds the $5,000,000 CAFA jurisdictional threshold.

The plaintiffs took issue with the defendant’s assumed violation rate, i.e., that each class member would be entitled to one additional hour of pay for each workweek on the meal period and rest period claims, respectively. However, based on the plaintiffs’ allegations, the Court found the defendant’s assumption that each class member would be entitled to one additional hour of pay for each workweek based on the meal period claim reasonable and appropriate, and in fact, conservative. Following Rodriguez v. AT & T Mobility Servs. LLC, 728 F.3d 975 (9th Cir. 2013), the Court noted that the defendant did not need not to show through a legal certainty that the amount-in-controversy exceeded the jurisdiction minimum, but rather, only through a preponderance of the evidence. Accordingly, the District Court retained jurisdiction over the action and denied the motion to remand.