Ray v. Wells Fargo Bank, No. CV 11-01477 AHM (JCx), 2011 WL 1790123 (C.D. Cal. May 9, 2011).
While declining to remand the action to state court, a District Court in California held that if a plaintiff does not limit his claim to “all possible forms of relief” but only to “damages,” the preponderance of the evidence standard applies to establish the amount in controversy.
The plaintiff brought a putative class action on behalf of Wells Fargo Bank branch managers who were allegedly misclassified as ‘exempt’ employees for purposes of the payment of overtime compensation, and sought unpaid overtime wages, meal and rest break premium pay, waiting time penalties, wage statement penalties and attorneys’ fees for various violations of the California Labor Code and the UCL.
As related to the amount in controversy, the plaintiff stated that the total “damages” for the entire case did not exceed $5 million. The plaintiff, however, did not allege a total amount in controversy.
The defendant removed this action to federal district court under CAFA. The plaintiff moved to remand arguing that Wells Fargo failed to meet the amount in controversy requirement for CAFA removal.
The District Court, however, denied the motion.
At the very outset, the Court discussed the applicable burdens of proof regarding CAFA’s amount in controversy requirement. It noted, in Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996), the Ninth Circuit identified three different burdens of proof which might be placed on a removing defendant concerning the amount in controversy requirement, depending on the allegations in the complaint.
In subsequent decisions in Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 683 (9th Cir. 2006), Lowdermilk v. U.S. Bank National Association, 479 F.3d 994, 1000 (9th Cir. 2007) and Guglielmino v. McKee Foods Corp., 506 F.3d 696, 697 (9th Cir. 2007), the Ninth Circuit applied these burdens of proof to cases under CAFA. (Editors’ Note: See the CAFA Law Blog analysis of Abrego Abrego posted on May 25, 2006, the CAFA Law Blog analysis of Lowdermilk posted on July 30, 2007, and the CAFA Law Blog analysis of Guglielmino posted on November 6, 2007).
First, when a complaint alleges on its face an amount in controversy sufficient to meet the federal jurisdictional threshold, such requirement is presumptively satisfied unless it appears to a “legal certainty” that the plaintiff cannot actually recover that amount.
Second, when it is unclear or ambiguous from the face of a complaint whether the requisite amount in controversy is pled, “the removing defendant bears the burden of establishing, by a ‘preponderance of the evidence,’ that the amount in controversy exceeds the jurisdictional amount”.
Third, Lowdermilk heldthat when a state court complaint affirmatively alleges that the amount in controversy is less than the jurisdictional threshold, the “party seeking removal must prove with ‘legal certainty’ that CAFA’s jurisdictional amount is met.”
Finally, in Guglielmino, the Ninth Circuit addressed the proper burden of proof to be borne by the removing defendant when the complaint alleges damages less than the jurisdictional threshold for diversity cases but does not specify a total amount in controversy. In Lowdermilk, the complaint referred to “aggregate total of claims’ to include everything sought, including attorneys’ fees.” Whereas, in Guglielmino,the complaint did not use the word “claim” but instead referenced only “damages and injunctive relief,” within neither of which attorneys’ fees and other reliefs comfortably fit. The key distinction, therefore, between Guglielmino and Lowdermilk was that the plaintiffs in Guglielmino did not mention the total amount in controversy, and sought payment which would be outside the realm of damages which could, even assessed by a preponderance of the evidence standard, bring the total amount in controversy to beyond the jurisdictional minimum. The Guglielmino court thus held that the uncertainty which is inherent in the plaintiffs’ Prayer for Relief made it to apply the “preponderance of the evidence” burden of proof to the removing defendant.
Here, as in Guglielmino, the plaintiff’s Prayer for Relief: (1) failed to state the total dollar amount in controversy for all claims alleged and all remedies sought; and (2) sought not only compensatory damages, but also restitution, statutory penalties, attorneys’ fees, and injunctive relief–elements of the total amount in controversy that were not clearly included as part of the less than $5 million in “damages” sought. Because the plaintiff had not limited his claim to “all possible forms of relief” but only to “damages,” the Court applied Guglielmino’s preponderance of the evidence standard.
The Court explained that under the “preponderance of the evidence” standard, a defendant must show that it is “more likely than not” that the jurisdictional threshold is met. This “burden is not daunting, as courts recognize that under this standard, a removing defendant is not obligated to research, state, and prove the plaintiffs’ claims for damages.”
The Court observed that in its notice of removal, the defendant calculated the amount in controversy based on the plaintiff’s allegations in the complaint and evidence regarding the putative class members. To support these calculations, the defendant supplied a declaration from its compensation manager, who based on his personal knowledge and review of relevant business records, set forth the estimated number of putative class members, their average hourly pay, and other relevant information.
Given that the defendant’s burden was “not daunting” and was simply to prove “more likely than not” that the damages would exceed $5 million, the Court found that the defendant had met its burden of proving the requisite amount in controversy by a preponderance of the evidence. The Court maintained that a declaration or affidavit may satisfy the burden, and the defendant need not produce extensive business records to prove or disprove liability and/or damages with respect to plaintiff or the putative class members.
Specifically, the Court stated that as to the plaintiff’s claim for unpaid overtime compensation, the plaintiff alleged that he and the putative class members routinely worked in excess of forty hours per week and/or eight hours per day, and that “statistically, one hundred percent of the class members were paid on a salary basis with no overtime compensation.” Based on this allegation of “consistent” overtime work, the defendant estimated one hour of unpaid overtime compensation per week for each putative class member and arrived at a figure of $812,436 for the class period. Even if the defendant’s estimate was halved to one hour of unpaid overtime every two weeks, the total amount in controversy easily exceed $5 million when the plaintiff’s other claims and attorneys’ fees were included.
Accordingly, the Court declined to remand the action to state court.