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

Law of the Case Doctrine Controls Remand Decisions Too

Posted in Case Summaries, Wage and Hour

Stafford v Dollar Tree Stores Inc., 2014 WL 1330675 (E.D. Cal. March 27, 2014).

The Eastern District (the transferee court) applied the law-of-the-case doctrine and refused to revisit motion to remand that was denied by the Central District (the transferor) finding that removal was appropriate under CAFA.

The plaintiff brought this wage and hour class action in the state court alleging inter alia failure to provide meal and rest periods; failure to pay minimum, regular and overtime wages. The defendant removed the action under CAFA, and the plaintiffs moved to remand. The defendant removed the case based on the allegations contained in the First Amended Complaint to the U.S. District Court for the Central District of California. After the case was removed to federal court, plaintiff filed a Second Amended Complaint in which he omitted the class action allegations and asserted only PAGA claims.

The District Court in the Central District of California denied plaintiff’s initial motion to remand. The plaintiff renewed his motion to remand after the Ninth Circuit passed Urbino v. Orkin Services of California, Inc., 726 F.3d 1118 (9th Cir. 2013). The Urbino court held that damages from PAGA claims could not be aggregated with damages from individual claims to satisfy the amount-in-controversy for ordinary diversity subject matter jurisdiction. The Ninth Circuit’s decision was issued after the Central District court denied plaintiff’s initial motion to remand. The case was transferred to Eastern District.

The plaintiff argued that the defendant’s aggregation of damages for PAGA claims was improper under the Ninth Circuit’s intervening decision in Urbino. The plaintiff also argued that the defendant’s asserted basis of removal relied on class action claims in a prior complaint that have been superseded by an amended complaint omitting all class allegations. The defendant opposed the plaintiff’s renewed motion to remand arguing the law-of-the-case doctrine prevents this court from reconsidering the decision denying the plaintiff’s initial motion to remand, made by the transferor Central District court.

The law-of-the-case doctrine states that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case. Here, the plaintiff argued that the district court should revisit the decision of its sister court in light of the Ninth Circuit’s decision in Urbino. In Urbino, the Ninth Circuit concluded that when an employee asserts individual claims and claims under PAGA, the aggrieved employee’s individual interest is different from the state’s collective interest in enforcing its labor laws through PAGA. Therefore, the court held that the PAGA claims cannot be aggregated together with an individual’s claims to meet the amount in controversy requirement for ordinary diversity jurisdiction.

The district court observed that in its order, the Central District court held it had diversity jurisdiction because the amount-in-controversy exceeded $75,000 after aggregating PAGA claims. Thus, this portion of the court’s decision may have been different under Urbino; plaintiff argues this court should revisit that decision under the exception to the law-of-the-case doctrine for an intervening change in controlling authority.

The district court observed that Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988), and Hanna Boys Ctr. v. Miller, 853 F.2d 682 (9th Cir.1988) were two persuasive authorities on the issue of whether the law-of-the case doctrine applies to an alternative basis for upholding subject matter jurisdiction. In Christianson, the Supreme Court stated that the law-of-the-case promotes the finality and efficiency of the judicial process by protecting against the agitation of settled issues. The Supreme Court noted that the doctrine must be applied rigorously to transfer decisions that implicate the transferee’s jurisdiction. Similarly, in Hanna Boys Ctr., the Ninth Circuit held that the law-of-the-case doctrine applies not only to the explicit holding of a sister court, but also to issues decided by necessary implication in a coordinate court’s previous disposition.

Based on Christianson, and Hanna Boys Ctr., the district court concluded that the law-of-the-case applies to alternative holdings, even if the other holding has been vacated on appeal, and found that the alternative holding of the transferor court is binding as the law of the case on this court, as the transferee court.

The plaintiff next argued the transferor court’s prior ruling, denying plaintiff’s initial motion to remand and upholding jurisdiction under CAFA was erroneous or worked a manifest injustice. The First Amended Complaint met the first three requirement was met.  But the plaintiff argued that the court lacked CAFA jurisdiction because his complaint omitted class allegations.

The district court ruled that the transferor court’s decision upholding CAFA jurisdiction was not clearly erroneous because plaintiff’s First Amended Complaint, not his Second Amended Complaint, is the controlling complaint. Here, the defendant timely removed the action to federal court based on the allegations contained in the First Amended Complaint. It was not until seven days later, that plaintiff filed his Second Amended Complaint, which asserted only PAGA claims and omits all class allegations. Therefore, the transferor court’s decision upholding CAFA jurisdiction based on allegations in the First Amended Complaint was not clear error.

Next, the plaintiff contended that amount-in-controversy did not exceed $5 million. The district court remarked that the plaintiff made several claims which took the amount-in-controversy past the jurisdictional threshold. For example, the district court noted that plaintiff’s amount-in-controversy challenge on failure to provide meal periods were unavailing. The district court pointed to its decision in Stevenson v. Dollar Tree Stores, 2011 WL 4928753 (E.D.Cal. Oct.17, 2011), where it held it was reasonable to estimate that fifty percent of meal periods were missed because the plaintiff alleged that members of the class were ‘routinely’ denied meal periods as part of a policy and practice. Here, the plaintiff’s complaint contained similar language, therefore, the transferor court could have reasonably credited defendant’s estimate that, for this claim alone, the amount in controversy is $5,314,825.69.

Similarly, the district court concluded that when the other claims of the plaintiff were aggregated along with the attorney fees and the failure to provide meal and rest breaks, the transferor court made no error in retaining jurisdiction.

Accordingly, the district court denied the plaintiff’s motion to remand as barred by the law-of-the-case doctrine. –JR