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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Defendants’ Assumption Of A 100% Violation Rate of Labor Laws in Calculation of Amount in Controversy Deemed Unreasonable

Posted in Case Summaries

Hernandez v Starbucks Corporation, 2017 WL 2971858 (C.D. Cal. July 12, 2017)

A California court granted a plaintiff’s motion to remand, finding that the defendants’ amount in controversy calculation, made under an assumption of a 100% violation rate, was unreasonable.

The plaintiff brought a putative class action in Ventura County Superior Court alleging claims against the defendants for various violations of the California Labor Code, including the failure to provide meal and rest breaks.

The defendants removed the action to federal court pursuant to CAFA.  The plaintiff moved to remand, arguing that the defendants failed to meet their burden to show that the amount in controversy exceeded $5,000,000.

The defendants calculated the amount in controversy to be at least $5,118,969.  They estimated that the amount in controversy for the plaintiff’s meal break claim was $1,152,989, which accounted for a 100% meal break violation rate. The defendants argued that the assumption of a 100% violation rate was reasonable in light of the plaintiff’s allegation in her complaint that it was the corporate defendants’ “pattern and practice” to regularly deny meal breaks.

While the defendants provided no evidence of a 100% violation rate, the plaintiff presented evidence that she was unable to take an off-duty meal period approximately 70% of the time, rather than 100% of the time. Based on the plaintiff’s amount in controversy calculation, the amount in controversy was below the required $5,000,000.

In the court’s analysis of whether the defendants’ calculation was reasonable, it noted that while the assumption of a 100% violation rate has been found to be reasonable when allegations refer to “uniform” practices, the 100% violation rate has been found to be unreasonable when allegations are just of a “pattern and practice” of labor violations.

Because the plaintiff’s complaint alleged a “pattern and practice” of labor law violations rather than “uniform” violations, the court held that the defendants’ assumption of a 100% violation rate was unreasonable and accordingly granted the plaintiff’s motion to remand.

Posted by Amanda Laviage