Naiyan v. Sodexo, Inc., 2011 WL 1543371 (C.D. Cal. April 25, 2011).

Denying the motion to remand, a District Court in California opined that the amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant’s liability.

The plaintiff, for herself and on behalf of other employees of Sodexo, Inc. and SDH Services West, LLC, brought this class action seeking, among other things, unpaid wages and penalties under California Labor Code.

The complaint included the following causes of action on behalf of a class of exempt individuals employed by the defendants in California: (1) failure to pay wages upon termination in violation of Lab. Code §§ 201 and 202; (2) failure to provide accurate wage statements in violation of Lab. Code § 226; (3) and unfair competition within the meaning of Cal. Bus. & Prof. Code § 17200.

The defendants removed the case to the federal court, and the plaintiff moved to remand, which the District Court denied.

In this case, the question before the Court was whether the defendants had met their burden to establish, by a preponderance of the evidence, that the amount in controversy exceeded $5 million. The defendants, accordingly, submitted the declaration of a Human Resources Information Systems Analyst for Sodexo, Inc., stating that the plaintiff’s first claim for relief was at least $5,882,575.87, and the second claim for relief was at least $6,489,650, exclusive of interest and costs.

Agreeing with the defendants, the Court stated that the plaintiff accepted the defendants’ assertion that there were 838 putative class members who might have waiting time claims against the defendants under the first cause of action.

The complaint alleged that in addition to the timely payment of all wages earned and unpaid prior to termination, the class members were also entitled to penalty wages from the date their earned and unpaid wages were due, upon termination, until paid, up to a maximum of 30 days. Based on this allegation, the defendants determined the hourly wage of each of the 838 putative class members, multiplied that by eight hours for an eight hour work day, then multiplied that resulting number by 30 for a maximum of a 30 day penalty as called for in the complaint. This resulted in a total potential recovery of $5,882,575.87 for the putative class related to the plaintiff’s first cause of action. Under this calculation, the defendant did not include any employee who was terminated less than thirty days before the Systems Analyst’s declaration.

The plaintiff, in contesting the accuracy of the defendants’ calculations, also relied on an earlier settlement agreement reached in a similar wage and hour case to argue that some of the potential class members in this case might have already recovered in the earlier litigation and were barred from recovery now.

The Court noted that in 2005, two plaintiffs filed class action suits against Sodexo for unpaid vacation wages. The parties ultimately settled the cases, resolving the vacation claims and related claims of all Sodexo employees through November 21, 2006. However, any claim arising after November 21, 2006 was “unaffected by the settlement.”

The defendants pointed out that while the settlement extinguished waiting-time penalty claims associated with vacation claims for those members of the class whose employment had terminated by November 21, 2006, it did not do so for those class members who continued their employment with Sodexo as of November 21, 2006, or, of course, for non-class members who became Sodexo employees after that date. The Court found that of the 838 putative class members used to determine the amount in controversy, none of them terminated their employment “on or before November 21, 2006,” and the settlement did not alter the class in this case.

Accordingly, the Court concluded that the defendants had carried their burden to establish, by a preponderance of the evidence, that the amount in controversy exceeded $5 million. The Court maintained that the defendants are not required to prove the case against them to establish that a federal court has jurisdiction to hear the lawsuit.

The Court denied the plaintiff’s motion with a final note that “the amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant’s liability”.