Bryant v. Service Corp. Int’l, 3:08-cv-01190 (N.D. Cal. May 7, 2008).

Amount in Controversy again – the Northern District of California says “Show me the money!” and denied the plaintiff’s motion to remand when Service Corp. met its burden.

On December 5, 2007, employees who sought unpaid wages and penalties for violations of labor laws, brought a potential class action claim against Service Corporation International (SCI) and its various affiliates in Alameda Superior Court. Their complaint alleged that the class included all employees and former employees of SCI and affiliates who were not paid the regular or statutorily required rate of pay for all hours worked. Ten causes of action were alleged in the complaint, including violation of California labor laws, violation of the wage and hour laws of thirty-two other states and Puerto Rico, and various state common law claims.

On January 25, 2008, the plaintiffs filed an amended complaint in Superior Court. Subsequently on February 28, 2008, the defendants removed the case to United States District Court for the Northern District of California. The current matter before the court concerned the plaintiffs’ motion to remand the suit to state court.

The Court agreed with both parties’ concession that the minimal diversity and numerosity requirements of CAFA were met. The only dispute between the parties was whether the defendants met their burden of establishing, by a preponderance of the evidence, that the amount in controversy was met. The Court briefly addressed the defendants’ concern that since the plaintiffs previously argued that jurisdiction in federal court was proper under CAFA, they should be judicially estopped from arguing that the matter in controversy did not exceed $5,000,000.

The Court noted that the plaintiffs previously argued in the first iteration of the litigation, in the Western District of Pennsylvania, that original jurisdiction over the state law claims at issue in the present case was proper because CAFA’s $5,000,000 amount in controversy had been met. Although that position was inconsistent with the plaintiff’s current position, the Court declined to find the plaintiffs were judicially estopped from making the argument since the federal court in Pennsylvania did not accept the plaintiffs’ earlier position, therefore, there was no risk of inconsistent court determinations.

The Court then shifted its analysis to determine whether, under a preponderance of the evidence standard, it was more likely than not that the amount in controversy exceeded $5,000,000.

To meet their burden, the defendants focused on a few of the statutory violations alleged in the plaintiffs’ amended complaint by class members who worked in California. In evaluating plaintiffs’ claims regarding inaccurate wage statements, failure to pay all wages owed to terminated employees, and claims of missed meal and rest periods in violation of California Labor Code, the defendants sought to demonstrate that the sum of those alleged violations met the amount in controversy requirements under CAFA. In response, the plaintiffs contended that not every non-exempt employee who worked in California during the class period may be a class member because some unknown number of those employees may not have been subject to any of the wage and hour violations alleged in the complaint.

While the Court agreed with the plaintiffs’ contention, it found that the defendants put forth enough evidence to demonstrate that it was more likely than not that CAFA’s amount in controversy requirement was met based on the following reasons.

First, the Court did not believe that the plaintiffs contemplated that only a few of the defendants’ non-exempt employees had experienced the wage and hour violations alleged in their complaint. The plaintiffs’ complaint stated that the class size was believed to be over 10,000 employees with a significant portion within California. Further, some of the violations appeared to be the result of company-wide policies applied to all non-exempt employees, not just to those in specific positions or job duties.

Second, the Court found that even if only one-third of the total number of non-exempt California employees were effected by the alleged violations, the amount in controversy would still exceed $5,000,000.

Third, the calculations discussed by the defendants did not include any damages as a result of defendants’ alleged failure to pay overtime, nor did they include attorney’s fees, to which plaintiffs would be entitled to for at least some of their claims.

Fourth, due to the structure of the California Labor Code (CLC), if plaintiffs proved any of their many allegations regarding unpaid or insufficient wages, the penalties for inaccurate wage statements would kick in for each affected employee. Therefore, if only a smaller subset of the non-exempt California employees were included in the class, they would be able to collect statutory damages under multiple provisions of the CLC.

Finally, the Court found that if it required the defendants to conduct a fact-specific inquiry into whether the rights of each and every potential class member were violated (as plaintiffs argued was required of the defendants) defendants would be expected to try the ultimate question that the litigation presented for the purpose of establishing jurisdiction and then admit to the opposing party and the Court that a certain number of wage and hour violations did indeed occur.

Because the plaintiff’s complaint did allege an amount in controversy less than $5,000,000 and provided no information indicating the size of the class potentially affected by the alleged policies and actions of the defendants, the Court believed the defendants’ evidence was sufficient to meet their burden. Therefore, the Court denied the plaintiffs’ motion to remand.