Sanchez v. Res-Care, Inc., 2014 WL 807997 (C.D. Cal. Feb. 28, 2014).

In this action, the District Court remanded the case to the state court finding that the defendant failed to show by preponderance of evidence that the amount-in-controversy exceeded CAFA’s $5 million threshold.

The plaintiff, a certified nursing assistant, filed a class action against her former employer in the state court claiming that the defendants violated the applicable Industrial Wage Commission Wage Orders, California Business and Professions Code §§ 17200, and California Labor Code §§ 204 (“Unpaid Wages Claim”); 1194 and 1194.2 (“Minimum Wage Claim”); 510 (“Overtime Claim”) etc., and sought penalties under the Private Attorney General Act (“PAGA”).

The defendants removed the action to the federal court, and the plaintiff moved to remand.

The plaintiff argued that the defendants cannot satisfy their burden of showing that the amount-in-controversy surpassed $5 million.  To establish the amount-in-controversy, the defendants asserted the following amounts: 1) Minimum Wage Claim: $454,409.28; 2) Overtime Claim: $340,806.96; 3) Discharge Payment Claim: $489,402; 4) Inaccurate Paystub Claim: $570,550; 5) Meal and Rest Claim: $2,272,046.40; 6) Attorney’s fees at 33% of the foregoing: $1,361,980.70; and 7) PAGA Penalties: $5,705,500.

After reviewing the defendants’ calculations, the District Court found that the defendants made assumptions not reasonably supported by any factual basis.  The District Court explained that because the Meal and Rest Claim, PAGA Penalties, and Attorney’s Fees comprise the bulk of the amount in controversy, it would limit its review to those items.

In determining the amount-in-controversy for meal and rest break claims, the defendants asserted that a reasonable and conservative estimate was $2,272,046.40 with associated attorney’s fees of 33 percent, or $749,775.31.  To support those figures, the defendants introduced evidence that 458 employees were employed during the four-year class period, and the average hourly wage for employees in similar positions as the plaintiff was $9.54 an hour, although the plaintiff was paid only $9.00 an hour.  In performing its calculations, the District Court, however, noted that Defendants assumed five missed meal and five missed rest periods per week for fifty-two weeks.  The District Court observed that upon closer inspection there was no factual basis to support the defendants’ assumption.

The defendants cited to an unpublished district court case, Jasso v. Money Mart Express, Inc., 2012 WL 699465 (N.D.Cal. March 1, 2012).  Jasso, however, stands only for the proposition that it was reasonable to assume one missed meal and rest period each, per week, given the uniform and systematic scheme alleged by the plaintiff in that case.  Here, the District Court found no allegations requiring the defendants to make an assumption of five missed meal and five missed rest periods reasonable.  In light of the defendants’ failure to offer any factual basis as to the actual number of violations, the District Court ruled that it would be appropriate to find that the defendants failed to satisfy their burden and attribute no amount in controversy to this claim.

The defendants asked the Court to find guidance in Jasso.  The District Court explained that even if the Court did so, and applied the same one meal and one rest period assumption, the amount-in-controversy for this claim would be significantly reduced.  Specifically, the amount-in-controversy for the Meal and Rest Claim would be $454,409.28.  Assuming the reasonableness of the defendants’ 33 percent in Attorney’s Fees, the fees associated with this claim would be $149,955.06.  Accordingly, the District Court concluded that the amount-in-controversy for the Meal and Rest Claim, along with associated Attorney’s Fees, would total only $604,364.34, over $2,400,000 less than the defendants’ estimate.

As to PAGA penalties, the defendants calculated $5,705,500 as the aggregate amount of potential PAGA penalties.  The defendants argued that this total aggregated amount should be included as part of the amount-in-controversy.  The District Court remarked that it found no binding law squarely addressing whether PAGA penalties may be aggregated to the total amount-in-controversy to reach CAFA’s amount in controversy requirement.

Accordingly, the District Court granted the plaintiff’s motion to remand.