Dudley-Baton v. Service Corp. Int’l, No. 10-cv-03091-CMA-KLM, 2011 WL 1321955 (D. Col. April 5, 2011).

“I see dead people,” said these plaintiffs, who are employees of a funeral home operator.

A District Court in Colorado remanded the action to state court holding that the fact that a smaller class in a similar action was seeking $5 million did not relieve the defendants of their burden to prove the jurisdictional amount was satisfied in this action, because a larger class size does not necessarily translate to greater potential damages. In other words, the excuse that some of the contributors to the CAFA Law Blog use frequently is true after all: Size does NOT matter.

The plaintiffs, who are employees of the defendants, brought a class action against Service Corporation International, et al, large funeral home operators, seeking to recover unpaid wages allegedly resulting from the defendants’ employment policies and practices.  (Editors’ Note: See the CAFA Law Blog analysis of Anthony v. Service Corp. Int’l posted on July 1, 2011, which is a North Carolina case involving similar parties and claims).

The employees initially filed a federal class action against the defendants and their subsidiary, under both the FLSA and various state laws, Prise v. Alderwoods Grp., Inc., No. 06-cv-1641 (W.D. Pa. Dec. 8, 2006).  The court in Prise declined to exercise supplemental jurisdiction over the state law claims, and heard claims only against the defendants’ subsidiary; thus, the employees filed their state law claims in California State court, Bryant v. Service Corp. Int’l., and their FLSA claims in the district court in Arizona, Stickle v. SCI Western Mkt. Support Ctr., L.P., 2009 WL 3241790 (D. Ariz. Sept. 30, 2009). The court in Bryant subsequently dismissed all state law claims other than those arising under California state law.  Accordingly, the employees re-filed their remaining state law claims in eighteen separate states, including the instant action, which was filed in Colorado State court.

The defendants filed a joint notice of removal, and the plaintiffs filed a motion to remand. The District Court granted the motion to remand.

First, the defendants contended that, based on the number of projected class members and answers to interrogatories in Stickle, the amount in controversy exceeded $5 million. In Stickle, the plaintiffs’ counsel obtained a list of employees who worked in various states for the defendants.  This list indicated that 319 employees worked within the State of Colorado for the relevant time period.  Using wage data and the number of hours claimed in Stickle, the defendants claimed that the amount in controversy exceeded $5 million.

In their responses to interrogatories in Stickle, the five named plaintiffs in this case stated the number of hours they were claiming as unpaid in that action. The defendants multiplied these total hours by the federal minimum wage, averaged the amounts, and found that the five named plaintiffs were claiming an average of $19,035 each. Multiplying this figure by 319, the amount in controversy would exceed $6,072,356.

The Court remarked that a closer inspection of the Stickle interrogatories undermined the defendants’ calculations because the hours claimed in Stickle were based on eight separate employer policies, and in this action, however, the complaint detailed only six policies, and only five of these were policies challenged in Stickle.  After filtering out the hours claimed under policies that were not at issue here, the average named plaintiff claims was only $11,170 in unpaid wages, and thus the total class claims would be 3,500,000 for 319 employees. Thus, the Court concluded that the defendants’ own evidence demonstrated that the amount in controversy was actually less, not greater, than $5 million.

Second, the defendants contended that the employees in the other state law actions had indicated that the amount in controversy in those cases exceeded $5 million. The plaintiffs in the Virginia action specifically asserted federal jurisdiction under CAFA, claiming an amount in controversy of at least $5 million. The plaintiffs in the Massachusetts action submitted a settlement proposal valuing their suit at $5 million. The defendants argued that the Colorado class must meet the amount-in-controversy requirement if the smaller classes in the other pending actions cases satisfy it.  (There were 300 plaintiffs in the Virginia class and 162 plaintiffs in the Massachusetts class, compared to the 319 plaintiffs in this case.)

The Court observed that a smaller class in a similar action was seeking $5 million did not relieve the defendants of their burden to prove the jurisdictional amount was satisfied in this action, because a larger class size does not necessarily translate to greater potential damages.  The Court remarked that the defendants only speculated that the potential damages recoverable in this action would be similar to the other actions, and they offered no estimates of the value of the state law claims unique to this case.  Further, the settlement demand was made in a different action with different plaintiffs under a different state’s laws.

Accordingly, the Court, after considering all of the evidence in its totality, found that the defendants had not met their burden of establishing, by a preponderance of evidence, that $5 million was in controversy.