Munoz v. Central Parking Sys., Inc., No. CV 10-6172 PA, 2010 WL 3432239 (C.D. Cal., Aug 30, 2010).
A District Court in California remanded this action to state court holding that to establish federal subject matter jurisdiction either the “four corners” of the complaint or the notice of removal should contain sufficient allegations concerning the amount in controversy.
The plaintiff, Oscar Munoz, brought a class action on behalf of all employees who worked for the defendant, Central Parking System, Inc., in California during the four years prior to the filing of the complaint. The complaint alleged that the defendant violated the California Labor Code and Business & Professions Code, inter alia, by failing to pay its employees minimum wage, overtime pay, and compensation for missed meal breaks.
The defendant removed the action to the federal court asserting jurisdiction based on diversity of citizenship pursuant to CAFA, 28 U.S.C. §1332(d). The District Court, however, remanded the action to state court concluding that the defendant failed to establish that the amount in controversy exceeded $5 million.
Based upon the anticipated size of the class and the amount in controversy for each member of the class, the complaint stated that the total sum owed to the class was less than $5 million. Thus, the Court stated that the defendant had the burden to prove to a legal certainty that the amount in controversy was greater than $5 million.
To support its notice of removal, the defendant submitted the declaration of Hulion Jacks, an employee, who stated that the defendant had employed 4,698 hourly non-exempt employees in California during the class period at an average hourly wage of $11.47. Jacks calculated that approximately 44% of the employees in any given year worked the entire year. To account for the fact that not all employees worked during the entire period the defendant made calculations using 30% of the employees.
The Court observed that in calculating the amount in controversy, the defendant relied on several unsupported assumptions. For instance, in calculating the amount on the claim for failure to provide accurate itemized wage statements under Lab. Code §226(a), the defendant arbitrarily assumed that a class member would be entitled to $2,550 in penalties, even though there was no evidence showing how many times class members failed to receive such statements.
Additionally, in calculating the amount on overtime, minimum wage, and missed meal period claims, the defendant assumed that a class member worked one overtime hour per week, was not paid minimum wage one time per week, and missed one meal period per week. Similarly, the defendant’s calculation on claim for failure to report time pay assumed that the defendant failed to report two hours for a class member per year.
Thus, the Court remarked that not only did the defendant fail to provide any evidentiary support for these assumptions, but the defendant’s calculations were also doubtful because they were made using the average hourly wage for all employees, when the real amount in controversy could be much lower depending on which employees were experiencing violations and their actual hourly wage. Accordingly, the Court observed that the defendant failed to support its assumptions by any “summary-judgment-type” evidence; rather, the defendant’s assumptions were the type of speculation and conjecture that were insufficient to show that the amount in controversy exceeded $5 million.