Garcia v. Task Ventures LLC, 2016 WL 7093915 (S.D. Cal. Dec. 6, 2016).
In this action granting the plaintiff’s motion to remand, a District Court in California found that under CAFA’s local-controversy exception, citizenship of the putative class members can be determined through a sampling method, and that the mailing addresses of the employees serves as a proxy for their citizenship.
The plaintiff brought a putative class action in San Diego Superior Court alleging, inter alia, that the defendants failed to pay their employees the proper rate for overtime hours, provide adequate meal periods, timely pay overtime wages, and maintain accurate itemized wage statements in violation of California Labor Code and Wage Order of the Industrial Welfare Commissions (“IWC Wage Order”).
Defendant Albert Martinez, the owner and CEO of the defendant Pinnacle PEO Corporation, removed the action to federal court pursuant to CAFA. The plaintiff moved to remand the action to state court, which the District Court granted.
In the motion to remand, the plaintiff argued that CAFA’s “local controversy exception”—which mandates federal courts to decline jurisdiction if certain conditions are met in cases that are truly local in nature—applied to the instant case. The defendants disputed two conditions of CAFA’s local-controversy exception: (i) that greater than two-thirds of the proposed class members are citizens of California; and (ii) at least one defendant is a citizen of California, whose conduct formed a significant basis for the claims asserted, and from whom the members of the plaintiff class sought significant relief.
To establish citizenship of the putative class, the plaintiff presented address evidence pertaining to a 17.2% sample of the total putative class. This was because, plaintiff asserted, defendant Pinnacle only provided access to such information for an 18% random sample of the putative class (about 461 class members), of which 439 consented to the release of their names and contact information. Out of the 439 putative class members’ information provided, 97% had mailing addresses in California. Relying on the assumption that the mailing addresses of the employees served as a proxy for their citizenship, the plaintiff argued that it could be reasonably inferred that greater than two-thirds of the total class were citizens of California. The District Court agreed and found that by using this sampling method the plaintiff satisfied the two-thirds class-citizenship threshold.
Moreover, the District Court found that the complaint itself further supported the plaintiff’s position. By including “in the state of California” in all five class definitions and only invoking California law, it could infer that plaintiff intended to limit the claims to California plaintiffs. The District Court therefore concluded that, in the absence of contrary evidence, it was reasonable to infer that greater than two-thirds of the putative class members lived and intended to remain in California.
Martinez argued that plaintiff conflated “citizenship” with “residence.” The District Court, however, noted that numerous courts had treated a person’s residence as prima facie evidence of citizenship. Martinez also argued that the plaintiff offered evidence of where the class members resided four years ago but failed to provide any evidence of where the class members resided at the time of removal. But the District Court found that a plaintiff “may rely on the presumption of continuing domicile, which provides that, once established, a person’s state of domicile continues unless rebutted with sufficient evidence of change.” Here, Martinez merely suggested the possibility that employees either left California or never resided there to begin with, but failed to produce any evidence to actually support that suggestion. The District Court held that the putative class members who had residential addresses in California four years ago were presumed to have continued to be domiciled in California. Therefore, the District Court concluded that the plaintiff demonstrated by a preponderance of the evidence that greater than two-thirds of the putative class members were citizens of California.
Plaintiff also asserted that defendant Task Ventures LLC, a limited liability company, held California citizenship because its only two members—Terry Klinker and his wife, Susan Klinker—had lived in San Diego since 2000 and there was no evidence that they were no longer citizens of California. Martinez argued that the plaintiff failed to show that Terry Klinker was a citizen of California at the time of removal. In support of his argument, he produced an email from Terry Klinker to Pinnacle’s payroll coordinator asking her to send all future correspondence to the Klinkers’ new address in Georgia. The District Court, however, found that given the undisputed fact that the Klinkers were California citizens for nearly 15 years prior to Terry Klinker informing Pinnacle of his new address in Georgia, Martinez’s evidence was insufficient to establish that Terry Klinker was no longer a citizen of California or that he intended to remain in Georgia. Additionally, the District Court found that Task Ventures was organized under the laws of California, with its principal place of business in California. Therefore, the District Court held that the plaintiff met her burden to demonstrate that Task Ventures was also a citizen of California.
Next, the District Court noted that to determine whether Task Ventures’ alleged conduct formed a “significant basis” for the plaintiff’s claims for purposes of the local-controversy exception, it may only look to the allegations in the complaint and not consider extrinsic evidence. The District Court held that the plaintiff sufficiently alleged that members of the class had suffered harm as a result of the defendants’ violations of the California Labor Code and IWC Wage Order. Plaintiff had alleged that Task Ventures engaged in the exact same wage-and-hour violations as the other defendants, employed members of the plaintiff class during the relevant period, and violated California law in a number of ways with respect to those employees. Further, the plaintiff sought damages equally from all defendants. As such, the District Court thus ruled that the plaintiff also carried her burden with respect to the “significant relief” requirement from Task Ventures for the local-controversy exception to CAFA.
Accordingly, the District Court concluded that the local-controversy exception to CAFA applied to this action and granted the plaintiff’s motion to remand.
–Barry A. McCain