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

New York Record Company’s Unpaid Interns Must Stay in Federal Court Following Removal Pursuant to CAFA Jurisdiction

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Henry v. Warner Music Group Corp., 2014 WL 1224575 (S.D.N.Y. March 24, 2014).

In an action filed by an interns seeking unpaid wages, the District Court retained jurisdiction over the case finding, among many things, that the plaintiff had not demonstrated that more than two-thirds of the putuative class members were citizens of New York.  The District Court ruled that the local controversy or the home state exceptions were not established to divest it of subject matter jurisdiction over the case and the other requirements for CAFA jurisdiction were met.

The plaintiff filed this putative class action in the Supreme Court of the State of New York, against the defendants Warner Music Group (“WMG”) and Atlantic Recording Corporation alleging that they violated various provisions of the New York Labor Law by misclassifying him and other similarly situated persons as “unpaid interns.”  The defendants removed the action pursuant to CAFA.  The plaintiff moved to remand arguing that the defendants failed to meet their burden of demonstrating that the amount-in-controversy satisfied the CAFA’s jurisdictional requirements.

At the outset, the District Court noted that, in determining whether the removing defendant has met the burden for CAFA jurisdiction, courts look first to the plaintiffs’ complaint, and then to the defendant’s petition for removal.  And, where the pleadings themselves are inconclusive as to the amount-in-controversy, courts may look outside those pleadings to other evidence in the record.  Here, the complaint did not make a specific demand for damages, and the aggregate value of the claims at issue was not apparent from the face of the complaint.  The complaint, however, alleged that the plaintiff typically worked five days each week, routinely worked from at least 10:00 a.m. until 5:00 or 6:00 p.m., but was sometimes required to stay later.  Moreover, the plaintiff–who was employed by the defendants for eight months–alleged that his claim was typical of the claims of the putative class.

The defendants, however, offered evidence–in the form of a declaration from a WMG Human Resources Specialist, that the size of the putative class exceeded 2,800 individuals, a figure that the plaintiff did not contest.  The District Court then did the math thus: assuming that the average intern works 30 hours per week–less than the plaintiff–and applying minimum wage in New York during the class period @ $7.15-7.25 per hour it was apparent that the jurisdictional amount set forth in the CAFA was satisfied.  Multiplying the number of putative class members (2,800) times the average hourly work week (30) times the average hourly minimum wage ($7.15 or $7.25 per hour), yields a figure that exceeded $6 million, well above CAFA’s jurisdictional minimum.  Additionally, the District Court observed that the defendants were also entitled to make a reasonable allowance for attorney’s fees when calculating the potential amount-in-controversy.  Accordingly, the District Court found that the amount-in-controversy requirement was satisfied.

Next, the District Court observed that the plaintiff had not submitted any evidence regarding the citizenship of the putative class members, and instead had made a bald assertion that the majority of the members were presumed to be residents of the State of New York.  The defendants however, submitted ample evidence, such as residency records maintained by the defendants and submitted in connection with their notice of removal, showing at least 45% of the putative class members were citizens of states other than New York at the time of their internships.  The District Court therefore ruled out the possibility of the either local controversy or home state exceptions divesting it of its jurisdiction.

Finally, the District Court noted that this was not an interstate case of national importance, because the plaintiff only asserted New York Labor Law claims, pertaining only to work performed at the defendants’ headquarters within the State of New York.  Therefore, this case did not fall under the interests of justice exception.

Accordingly, the District Court concluded that the plaintiff did not meet his burden to establish that the court did not have subject matter jurisdiction over the case, and retained jurisdiction.