Marciela_Reyes_v_Carehouse_Healthcare_Center_LLC_et_al., 2017 WL 2869499 (C.D. Cal. July 5, 2017).
In this action, while denying Plaintiff Maricela Reyes’ (“Plaintiff”) motion to remand, the United States District Court, Central District of California (the “District Court”), held a motion to remand challenging subject matter jurisdiction can be filed at any time, and such motions are not subject to the thirty-day time limit required by 28 U.S.C. § 1447(c).
Plaintiff brought a putative class action in the Orange County Superior Court alleging, inter alia, that defendants failed to pay overtime compensation, provide meal and rest breaks, and provide accurate wage statements in violation of California’s Labor Code.
Defendant Southwest Payroll Services, LLC (“SPS”), removed the action to the District Court pursuant to the Class Action Fairness Act (“CAFA”). Almost one year after the removal, Plaintiff moved to remand based on the alleged failure to meet the amount in controversy requirement. The District Court denied this motion.
At the outset, defendants argued Plaintiff’s motion was untimely, and it was subject to the thirty-day time limit required by 28 U.S.C. § 1447(c), which requires that a motion to remand a case on the basis of any defect other than lack of subject matter jurisdiction be made within 30 days after the filing of the notice of removal. Defendants contended Plaintiff’s motion was a belated attack on the sufficiency of its allegations of the amount in controversy contained in its removal petition, which was an alleged ‘defect’ in removal procedure. The District Court, however, found Plaintiff’s motion was entirely premised on defendants’ purported failure to satisfy the amount in controversy, which was a substantive requirement for subject matter jurisdiction based under CAFA. The District Court thus ruled Plaintiff’s motion was timely as it questioned the subject matter jurisdiction, which may be challenged at any time.
Plaintiff contended defendants had not met their burden of establishing the amount in controversy under CAFA because their calculations were based on “unreasonable assumptions” about her claims. The defendants offered calculations for Plaintiff’s claims for unpaid meal and rest period premiums, unpaid overtime compensation, waiting time penalties, and attorneys’ fees in order to reach the jurisdictional threshold.
First, regarding the unpaid meal and rest period claims, the defendants assigned a violation rate of one meal break violation and one rest break violation per week per class member, and cited numerous CAFA cases within the Ninth Circuit in support of this assumption. The defendants also offered the declaration of Christina Young, the Senior Director of Business Applications for Genesis Curative Services LLC, the company that provided contracted payroll services to SPS, who attested that the putative class members worked a total of 43,829 workweeks during the relevant four-year statutory period at an average hourly rate of pay of $21.27. The defendants thus calculated the total amount of missed meal/rest break premiums as $1,864,485.66.
Second, as to the unpaid overtime compensation claim, the defendants estimated one violation per workweek per class member, and based on the same average hourly pay rate of $21.27, calculated the average overtime rate for the putative class members as $31.91 per hour. The defendants thus, assuming one hour of unpaid overtime wages for each putative class member for each workweek during the four-year statutory period, calculated that the total amount of unpaid overtime wages would amount to $1,398,583.39.
Third, regarding the waiting time penalty claims, the defendants calculated the total amount of potential waiting time penalties as $1,776,470.40. Finally, for the attorneys’ fees, the defendants maintained that 25% of the recovery was a reasonable amount of fees. The defendants contended Plaintiff was not entitled to attorneys’ fees for her meal and rest break or for her waiting time claims, so 25% of her unpaid overtime claims would total $349,645.85. The defendants therefore asserted that the total amount in controversy was at least $5,389,185.30.
Plaintiff contended the defendants assumed that every single class member suffered a violation under each claim during every single week of their employment, and relied on the proposition that a ‘pattern and practice’ of doing something did not necessarily mean always doing something. The plaintiff also argued the Second Amended Complaint (“SAC”) did not allege her complained-of violations were regular and consistent or that the defendants never provided meal and rest periods.
The District Court, however, found the defendants did not assume that a violation occurred on each and every shift but employed more reasonable estimates of one violation per week per employee for the meal and rest break and overtime claims. The District Court further found Plaintiff conceded the SAC alleged that the defendants’ wage and hour violations were “systematic,” the overtime violations were “regular,” and that the class members “routinely worked shifts in excess of eight hours per day” but were not permitted to take breaks. The District Court opined those allegations went beyond mere claims of a “pattern and practice” that led to “multiple” violations. The District Court thus ruled it was not unreasonable to assume the company applied the allegedly unlawful policies to all putative class members, especially since there were no fact-specific allegations precluding such an assumption.
Additionally, the District Court found the defendants had presented evidence their calculations were conservative. The District Court noted in Plaintiff’s discovery responses, she stated she was not properly paid for all hours worked every day that she worked for the defendant. Further, at her deposition, Plaintiff estimated the defendants did not allow her to take rest breaks three or four days per week and they did not provide her with meal breaks six days per week. The District Court thus found the defendants’ estimates were lower than the rates Plaintiff herself previously suggested and were reasonably calculated. Plaintiff argued those responses were only solicited with regard to her own employment record, which spanned from 2006 until 2012, while the class period began in 2009 and extended until removal in 2016. The District Court, however, found Plaintiff alleged her claims were typical of the class, and the SAC did not support her contention the latter part of her employment contained far fewer violations and was more representative of the class period.
Next, Plaintiff offered her own calculations to challenge defendants. Plaintiff argued her rest break claims were based on the defendants’ policy that only allowed two fifteen-minute breaks for work periods greater than six hours in duration, so the defendants’ estimates should only have included shifts over ten hours, when employees would be entitled to a third rest period. Plaintiff further argued her overtime claim was based on the defendants’ policy of automatically deducting thirty minutes from the total hours worked by an employee for meals. The District Court, however, found Plaintiff’s calculations conflicted with her own discovery responses and deposition testimony, and were based on contentions made in a motion filed in state court that were much more specific than the allegations in the SAC. The District Court therefore concluded that because the defendants’ calculations were reasonable based on the evidence available and the allegations of the SAC, the defendants had demonstrated that the amount in controversy was met by a preponderance of the evidence.
Accordingly, the District Court denied Plaintiff’s motion to remand.