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

Projected PAGA Penalties Cannot Be Considered In The CAFA Amount In Controversy Analysis When PAGA Is Pleaded As A Representative Claim

Posted in Case Summaries

Arnold v. OSF International Inc, et al, 2017 WL 2841697 (C.D. Cal. June 30, 2017).

In this action, a California district court found that the amount sought by the plaintiff pursuant to her representative PAGA claim could not be aggregated with the amount sought pursuant to her class claims for the purpose of satisfying CAFA’s minimum amount in controversy requirement.The plaintiff brought a putative class action in the Superior Court for the County of San Bernardino alleging that the defendant, OSF International, Inc. (“OSF”), failed to accurately pay the plaintiff and the putative class members for hours worked. The complaint alleged, inter alia, the failure to pay reporting time pay and wages for hours worked and for overtime wages, and sought enforcement of the Private Attorneys General Act (“PAGA”).

OSF removed the action to federal court pursuant to CAFA. The plaintiff moved to remand, arguing that OSF failed to prove that the amount in controversy exceeded the $5,000,000 jurisdictional minimum under CAFA. The District Court granted the motion.

The defendant estimated that the amount in controversy was $6,117,372, after a downward adjustment made in response to the plaintiff’s Motion to Remand. The plaintiff contended that OSF inflated its calculations and should not have included projected PAGA penalties or post-removal attorneys’ fees.

Projected PAGA penalties made up approximately one-third of OSF’s amount in controversy calculation. The plaintiff argued that the inclusion of PAGA penalties for CAFA purposes was improper because under Ninth Circuit precedent, a PAGA claim is a representative claim, not a class action claim. The Court noted, however, that a PAGA claim may be brought as a class claim, if pleaded appropriately.

OSF argued that the projected PAGA penalties could be included in the amount in controversy calculation because the plaintiff pleaded the PAGA claim as a class claim rather than as a representative claim, pointing to particular verbiage in the complaint.

The plaintiff responded that she did not seek class treatment of her PAGA claim, pointing to the fact that the claim itself was titled “Representative Claim for Enforcement of Private Attorneys General Act of 2004” and that the complaint did not seek recovery of PAGA penalties on behalf of the putative class or proposed subclass.

The District Court ultimately found that the PAGA claim was brought as a representative claim rather than as a class action claim and accordingly declined to consider potential PAGA penalty amounts in the amount in controversy requirement.

Because the amount in controversy dipped to below $5,000,000 when PAGA penalty projections were taken out, the Court did not address the plaintiff’s other concerns, including whether the inclusion of post-removal attorneys’ fees would be appropriate. Because OSF could not show that the amount in controversy met the CAFA minimum, the case was remanded to state court.

Posted by Amanda Laviage