Salazar v. Avis Budget Group, Inc., 2013 WL 1728275 (S.D. Cal. April 23, 2013).

Plaintiffs, a group of mechanics, filed a putative wage-and-hour class action in the Superior Court of California, San Diego County.  Defendants quickly removed the action to the District Court under CAFA, and plaintiffs then filed their First Amended Complaint (“FAC”).  The FAC alleged that defendants failed to comply with various California wage-and-hour laws. 

Subsequently, the District Court remanded the action, and the state court issued a stay pending the California Supreme Court’s decision in Brinker v. Superior Court, 53 Cal. 4th 1004 (Cal. 2012), a case addressing whether meal period violations were amenable to class treatment.  After, the California Supreme Court published its opinion in Brinker, the state court lifted the stay.  Defendants refused to stipulate to the filing of a Second Amended Complaint (“SAC”), so plaintiffs sought leave to amend their complaint.

The proposed SAC indicated plaintiffs would: (1) pursue class-wide claims for meal periods only (and not business reimbursement claims), (2) forego their punitive damages claim, and (3) forego claims for attorneys’ fees.  Because of the aforementioned stipulations, plaintiffs asserted that the proposed SAC significantly reduced their recovery to less than $5 million.

In light of Brinker, plaintiffs filed a renewed motion for class certification, and defendants, again, removed the case to the District Court pursuant to CAFA.  Plaintiffs then moved for remand.  Plaintiffs argued that because their proposed SAC asserted that damages did not exceed $5,000,000, the defendants must prove to a legal certainty that the amount in controversy requirement had been met.  Plaintiffs further argued that defendants must use the SAC to determine the amount in controversy.

However, defendants argued that a preponderance of the evidence standard applied because the renewed motion was ambiguous regarding the amount in controversy and because the operative FAC was silent on the issue.  Further, defendants contended that plaintiffs mistakenly asserted that defendants failed to consider the inherent limits of the proposed SAC.

The District Court reasoned that the operative state-court complaint was the FAC because plaintiffs’ motion for leave to file their proposed SAC was not decided by the state court.  The court also found plaintiffs’ argument that defendants should not be allowed to remove the action based on the renewed motion while ignoring the proposed SAC unpersuasive.  The renewed motion stated that the meal period class allegations asserted in the FAC were the same as those in the proposed SAC.  Thus, the District Court found that plaintiffs could have filed their renewed motion even if they did not also seek leave to file a SAC, and the Renewed Motion and the proposed SAC were not inextricably linked.

Because both the renewed motion and the FAC were unclear as to the amount in controversy, the District Court opined that defendants had to show by a preponderance of the evidence that the amount in controversy exceeded the statutory amount.

The District Court observed that if the amount in controversy is not facially apparent from the Complaint, the court can consider facts in the removal petition and summary judgment type evidence.  Plaintiffs’ FAC alleged that, four years prior to filing their Complaint, they worked more than five hours per day but were not provided full 30 minute meal periods “during each and every such work day.”  The parties disagreed on the interpretation of the phrase, “during each and every such work day.” 

Keeping in mind that federal jurisdiction must be rejected if there is any doubt as to the right of removal, the District Court interpreted the phrase in favour of plaintiffs, meaning that auto mechanics were not always provided with meal periods on the days they worked.  The District Court refrained from assuming a 100% violation rate in determining whether defendants satisfied the amount in controversy requirement.

Defendants submitted a declaration containing the amount in controversy.  In that declaration, the defendants multiplied the number of days between January 15, 2005, and June 15, 2012, that each employee worked six or more hours, by the employee’s lowest hourly wage while employed during that period.  Defendants then aggregated the amounts calculated for each employee to arrive at the amount of $5,711,140.91.  Defendants then calculated the plaintiffs’ claims for waiting time and wage statement penalties using similar methods arriving at $2,105,434.48, for a total amount in controversy of $7,816,575.39.  Defendants also asserted that, based on similar cases, the court should value the plaintiffs’ remaining claims for attorney fees at $500,000.

Plaintiffs provided their own Time Details, which showed meal periods were sometimes provided, indicating something less than a 100% violation rate.  Although, it appeared from the Time Details that the plaintiffs did take several meal periods, it was not clear how many breaks they took.

Because the Time Details indicated when meal periods were taken, the defendants had the ability to approximate the actual number of missed meal periods to arrive at a more accurate violation rate.  The defendants, however, relied on their interpretation of plaintiff’s FAC using a 100% violation rate.  Without the ability to estimate the value of plaintiffs’ meal period claims, the District Court observed that defendants’ penalty and attorney fees calculations were insufficient, and defendants did not value plaintiffs’ individual business expenses reimbursement claims. 

Thus, because defendants’ failed to meet their burden of proving the amount in controversy exceeded the jurisdictional threshold, the District Court remanded the action for lack of jurisdiction.