Quinonez v. Empire Today, LLC, No. C 10-02049 WHA, 2010 WL 5211501 (N.D. Cal. Dec. 16, 2010).

A District Court in California remanded the action to state court holding that if two claims are subsumed to each other, they cannot be considered as independent claims while calculating the amount in controversy.

The plaintiff, German Quinonez, brought a wage and hour class action, seeking to represent a class of individuals who were hired by the defendant, Empire Today, LLC( a/ka The Evil Empire) a floor-installation company, who were allegedly misclassified as independent contractors rather than employees in violation of the California Labor Code.

The defendant hired the plaintiff as an “independent contractor” under the terms of a contract between the parties to deliver and install carpet and flooring.  The plaintiff filed a class action complaint in the state court seeking damages for failure to pay overtime and meal benefits in violation of the Labor Code.  Specifically, the complaint alleged that the defendant illegally classified the plaintiff as an independent contractor and: (1) failed to properly pay overtime wages for work done in excess of eight hours in a day or 40 hours in a week; (2) failed to pay wages due upon termination of employment; (3) failed to provide meal periods or pay a premium for missed meal periods; and (4) failed to provide wage statements that complied with the Labor Code.

The Court remarked that similar to a Star Wars bar scene, the procedural history in this action was bizarre.  Initially, the defendant removed this action to the federal court asserting, based on the plaintiff’s complaint, that the amount in controversy requirement for CAFA was met.  The very same defendant, however, now moved to remand based on new information from the plaintiff about the amount in controversy.  The District Court agreed and remanded the action.

While holding so, the Court remarked that federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance. Moreover, the burden is on the removing party to prove the amount in controversy by a preponderance of the evidence.

After the plaintiff muttered, “These are not the droids you are looking for,” the defendant argued that the action should be remanded because the amount in controversy did not exceed $5 million.  Initially, while removing the action, the defendant had asserted that the amount in controversy requirement under CAFA was met.  The defendant based this assertion on the plaintiff’s complaint which stated, in separate paragraphs, that the relief sought was $2 million for compensatory damages, $3 million for restitution, and $300,000 for penalties under California law.  The defendant combined these amounts and asserted in the notice of removal that the total amount in controversy exceeded $5 million.

Subsequently, however, counsel for the defendant spoke with the plaintiff’s counsel and learned that the $2 million for compensatory damages referenced in the plaintiff’s complaint was subsumed in the $3 million requested for restitution.  In addition, the plaintiff also admitted that the relief sought in this class action did not meet the amount in controversy requirement.

Accordingly, the Court concluded that the amount in controversy in this action did not exceed $5 million, and remanded the action.