Tiffany v. Hometown Buffets, Inc., No.: 06-2524, 2006 WL 1749557 (C.D. Cal. June 22, 2006).

In this action originally filed in California state court, managers of a chain of undoubtedly fine culinary establishments known as Hometown Buffet Restaurants, brought a class action on behalf of all California salaried managers of the restaurant chain to recover unpaid overtime and other wages. The managerial employees claimed Hometown Buffet wrongfully classified them as exempt employees, thereby denying them overtime pay in violation of California law. The action, which asserted six different California state law claims, was filed in the Superior Court of San Francisco on November 12, 2004, naming Hometown Buffet and fifty fictitious parties as defendants. At the time of filing, the plaintiffs thought Hometown Buffet Incorporated operated all Hometown Buffet restaurants in California.  However, the plaintiffs later discovered a portion of the Hometown Buffet restaurants were actually owned and operated by OCB Restaurant Company, LLC. (OCB stands for Old Country Buffet, a sister subsidiary to Hometown Buffet…as a heads up, we hear the country fried steak at Old Country is much better than at Hometown.)  After several helpings of procedural jockeying, including a failed removal attempt by Hometown alleging jurisdiction under 28 U.S.C. 1332, the plaintiff managers amended their complaint to add Old Country as a defendant on March 15, 2006.

With the same sense of urgency as a portly man scrambling for a fresh batch of corn fritters, Old Country and Hometown seized this opportunity and removed on April 11, 2006, alleging federal jurisdiction under the Class Action Fairness Act. After first recognizing that under the Ninth Circuit’s opinion in Abrego, the burden of proof is the responsibility of the party seeking removal, Old Country, and that CAFA did not alter the presumption against removal, District Judge Saundra Brown Armstrong addressed the commencement issue. (Editors’ Note:  See the CAFA Law Blog summary of Abrego posted on May 25, 2006.)  (An even more important Editors’ Note:  We believe the purposes and legislative history of CAFA, correctly interpreted, combine to create a presumption in favor of finding that federal jurisdiction exists in interstate class actions under the Minimal Diversity standard, and that the burden of proof is on the party opposing federal jurisdiction, despite the contrary decisions of some federal courts which have addressed the burden of proof question.  For a full discussion of the clear mandates of section 2 of CAFA and the burden of proof, see the law review article scheduled for publication in the Spring 2006 edition of the Mississippi College Law Review entitled “CAFA’s New ‘Minimal Diversity’ Standard For Interstate Class Actions Creates A Presumption That Jurisdiction Exists, With The Burden Of Proof Assigned To The Party Opposing Jurisdiction” by Anthony Rollo, Hunter Twiford, and John Rouse.  As an added bonus for you, the entire article is now available to our loyal CAFA Law Blog readers, pre-publication, here.  Also, see the CAFA Law Blog discussion of this issue posted on May 5, 2005.)

Judge Armstrong dutifully followed the Ninth Circuit’s pronouncement in Bush v. Cheaptickets, as well as the overwhelming majority of other courts, that commencement is a matter that is determined under the law of the state where the case was originally filed. (Editors’ Note:  See the CAFA Law Blog’s summary of Bush posted October 23, 2005). Thus, the court decided whether the plaintiffs’ addition of Old Country post-CAFA commenced a new action should be determined by a relation back analysis under California state law. Although Judge Armstrong noted the Fifth Circuit’s stance in Braud on the addition of a new defendant – that such a drastic amendment of adding a new defendant automatically commences a new action for CAFA purposes – the court declined to automatically conclude a new action was commenced, and decided instead to perform a relation back analysis under California law.  (Editors’ Note:  See the CAFA Law Blog’s summary of Braud posted on May 24, 2006.)

While Judge Armstrong may not have completely agreed with the Fifth Circuit on this issue, California state law did. Reviewing California law, the court found that “[t]he general rule is that an amended complaint that adds a new defendant does not relate back to the date of filing the original complaint.” Although California law allowed some exceptions to this general rule, including the fictitious name and misnomer exceptions, Judge Armstrong concluded that none applied. Therefore, the court applied the general rule to the plaintiffs’ amendment, holding that the addition of Old Country commenced a new action for CAFA purposes.

Dismissing the plaintiffs’ arguments for equitable relief from the application of CAFA, Judge Armstrong considered whether all the ingredients for the CAFA recipe were present. Since the plaintiffs did not offer any contravening evidence on these points, the defendants easily persuaded the court that at least 100 plaintiffs existed, the $5 million amount in controversy was satisfied, and that minimal diversity was present. Thus, Judge Armstrong denied the plaintiffs’ motion for remand and set the table for the defendants in federal court.