Johnson v. U.S. Vision, Inc., No. 11-55020, 2011 U.S. App. LEXIS 3698 (9th Cir. Cal. Feb. 24, 2011).
While reversing the district court’s order declining to remand the action to state court, the Ninth Circuit held that under the “legal certainty” standard, the defendants must produce enough evidence to allow a court to estimate with some certainty the actual amount in controversy.
The plaintiff filed a wage and hour action on behalf of herself and a class of non-exempt employees employed by the defendants during the four-year period before the complaint was filed, alleging violation of California labor laws.
The defendants removed the action to the federal court asserting that the amount in controversy far exceeded CAFA’s jurisdictional threshold of $5 million.
Naturally, the plaintiff moved to remand, which the district court denied holding that the defendants provided detailed and competent evidence supporting their calculations and showing, to a “legal certainty,” that the jurisdictional threshold under CAFA was met.
Upon the plaintiff’s appeal, the Ninth Circuit reversed and remanded.
The Ninth Circuit noted that under the “legal certainty” standard as laid down in Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994, 998-1001 (9th Cir. 2007), the defendants must produce enough evidence to allow a court to estimate with some certainty the actual amount in controversy. (Editors’ Note: see the CAFA Law Blog analysis of Lowdermilk posted on July 30, 2007).
The Ninth Circuit observed that as in Lowdermilk, the defendants provided some evidence that the plaintiff’s actual claims necessarily exceeded $5 million; however, they produced very little or no evidence that would allow for an accurate approximation of the amount in controversy. The defendants produced evidence giving only a snapshot of a potential workday for optechs and a potential workweek for managers. The defendants also frequently assumed that all class members would be entitled to maximum damages under California law and provide no evidence to support their assumptions in violation of Lowdermilk.
Even where the defendants did not assume maximum damages, they did not provide sufficient evidence to meet their burden of proving the amount in controversy to a legal certainty. Specifically, the defendants had provided no evidence regarding (1) the number of days per year worked by optechs, (2) the number of vacation days lost by employees due to the use it or lose it policy, (3) how many employees’ shifts exceeded five hours in length (which would determine their eligibility for meal breaks under California law), (4) how many employees may have used check cashing services, making them eligible to sue under Labor Code §§ 212 and 213, and (5) the average hourly pay of employees who were actually separated from their employment during the four-year period at issue. Therefore, the Ninth Circuit concluded that without such necessary evidence to support their calculations, the defendants had failed to carry their burden to demonstrate the amount in controversy exceeded $ 5 million.
Accordingly, the Ninth Circuit reversed the order and remanded the action with instructions to remand to state court.