Opinion
No. 2:13-cv-01798-MCE-KJN
02-27-2014
JESUS ALVAREZ, Plaintiff, v. C&S WHOLESALE GROCERS, INC., et al., Defendants.
MEMORANDUM AND ORDER
Through this action, Plaintiff Jesus Alvarez ("Plaintiff") seeks relief from Defendants C&S Wholesale Grocers, Inc. ("C&S") and Tracy Logistics, LLC ("Tracy Logistics") (collectively "Defendants") for violations of the California Labor Code and California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. Plaintiff originally filed his Complaint in the Superior Court of California, County of San Joaquin. On August 29, 2013, Defendants removed Plaintiff's case to federal court pursuant to the Court's diversity jurisdiction. Presently before the Court is Plaintiff's Motion to Remand. Mot., Nov. 18, 2013, ECF No. 16. Also before the Court is Defendants' Motion to Supplement/Amend Notice of Removal. Mot., Jan. 15, 2014, ECF No. 24.
This motion is also listed at ECF No. 6 and ECF No. 14. This order adjudicates all three motions.
For the reasons set forth below, Plaintiff's Motion to Remand is DENIED and Defendants' Motion to Supplement is GRANTED.
Because oral argument would not be of material assistance, the Court ordered these matters submitted on the briefs pursuant to E.D. Cal. Local Rule 230(g).
BACKGROUND
The following recitation of facts is taken, at times verbatim, from Plaintiff's Complaint. ECF No. 1.
Defendant Tracy Logistics has employed Plaintiff as a Warehouse Supervisor at its Stockton Facility since August 2006. Generally speaking, Plaintiff alleges that he was hired by Defendants, misclassified as an "exempt" employee, and paid on a salary basis without any compensation for overtime hours worked, missed meal periods, or rest breaks.
Plaintiff further claims that he worked over eight hours per day and/or more than forty hours per week during the course of his employment with Defendants. According to Plaintiff, although Defendants knew or should have known that he was entitled to receive certain wages as overtime compensation, he did not receive such wages. Plaintiff also asserts he did not receive all his rest and meal periods; nor did he receive one additional hour of pay when he missed a meal period. Additionally, while Defendants knew or should have known that Plaintiff was entitled to receive at least minimum wages as compensation, he did not receive at least minimum wages for all hours worked.
Plaintiff goes on to allege that he was entitled to timely payment of all wages during his employment and to timely payment of wages earned upon termination of his employment, but he did not receive timely payment of these wages either during his employment or upon termination. Likewise, Defendants did not provide Plaintiff with complete and accurate wage statements, although Defendants knew or should have known that Plaintiff was entitled to these statements.
Plaintiff also asserts that Defendants failed to keep complete and accurate payroll records. Finally, Defendants falsely represented to Plaintiff that the wage denials were proper. Instead, according to Plaintiff, these wage denials were improper and served the purpose of increasing Defendants' profits.
These claims were brought by a different plaintiff in a class action in state court, Tompkins v. C&S Wholesale Grocers, Inc., on February 3, 2011. On March 14, 2011, the defendants in the Tompkins action removed the case to federal court, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). The Tompkins plaintiff then moved to remand the case, on the grounds that the operative complaint alleged an amount in controversy below the $75,000 threshold. The Court granted the plaintiff's motion to remand, finding that there was insufficient evidence to show that the amount in controversy for the plaintiff's individual claims exceeded $75,000. The defendants again removed the case to federal court on October 26, 2011, based on discovery conducted prior to that date. The Tompkins plaintiff again moved to remand, and the Court again granted the plaintiff's motion on the grounds that the defendants had not met their burden of proving that the amount in controversy on the plaintiff's individual claims exceeded the jurisdictional threshold.
All facts relating to the Tompkins action are taken from Defendants' Opposition to Plaintiff's Motion to Remand. ECF No. 14.
On June 15, 2012, after the Court remanded the case a second time, the Tompkins defendants deposed the named plaintiff in that case, David Tompkins. On September 21, 2012, the defendants offered Mr. Tompkins a Joint Offer to Compromise under California Civil Procedure Code § 998(b)(2), in the amount of $75,001. Mr. Tompkins accepted the Joint Offer on October 3, 2012.
The subject wage and hour claims were subsequently brought in a new class action, Bicek v. C&S Wholesale Grocers, Inc., No. 13-cv-00411, on behalf of the same putative class. Bicek, which is also before this Court, is a class action which this Court has jurisdiction over pursuant to the Class Action Fairness Act
STANDARD
A. Supplement Notice of Removal
28 U.S.C. § 1446 allows a defendant to remove an action to federal court within thirty days from the date of receipt of a copy of the initial pleading. It is well settled that the defendant's notice of removal may be amended freely prior to the expiration of this initial thirty-day period. Smiley v. Citibank (S. Dakota), N.A., 863 F. Supp. 1156, 1158 (C.D. Cal. 1993) (citing Richardson v. United Steelworkers of Am., 864 F.2d 1162, 1159 (5th Cir. 1989), cert. denied, 495 U.S. 946 (1990)). "After the first thirty days, however, the cases indicate that the petition may be amended only to set out more specifically grounds for removal that already have been stated, albeit imperfectly, in the original petition; new grounds may not be added and missing allegations may not be furnished." Id. at 1159 (citing 14A C. Wright, A. Miller, E. Cooper, Federal Practice & Procedure § 3733 (2d ed. 1985)). "The majority of courts, for example, allow defendants to amend 'defective allegations of jurisdiction' in their notice as long as the initial notice of removal was timely filed and sets forth the same legal grounds for removal." Id. (citing Barrow Dev. Co. v. Fulton Ins. Co., 418 F.2d 316, 318 (9th Cir. 1969) (permitting amendment of removal petition to cure inadequate allegation of the citizenship of the defendant corporation)). "If the removing party seeks to cure a defect in the removal petition after the thirty day period has elapsed . . . the court has discretion to prohibit such an amendment." Hemphill v. Transfresh Corp., No. C-98-0899-VRW, 1998 WL 320840, at *4 (N.D. Cal. June 11, 1998).
B. Remand
There are two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 28 U.S.C. § 1331, and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court has federal question jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States." Id. § 1331. A district court has diversity jurisdiction "where the matter in controversy exceeds the sum or value of $75,000, . . . and is between citizens of different states, or citizens of a State and citizens or subjects of a foreign state . . . ." Id. § 1332(a)(1)-(2). Diversity jurisdiction requires complete diversity of citizenship, with each plaintiff being a citizen of a different state from each defendant. 28 U.S.C. § 1332(a)(1); Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996) (stating that complete diversity of citizenship is required).
When a party brings a case in state court in "which the district courts of the United States have original jurisdiction," the defendant may remove it to the federal court "embracing the place where such action is pending." 28 U.S.C. § 1441(a). "The party invoking the removal statute bears the burden of establishing federal jurisdiction." Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citing Williams v. Caterpillar Tractor Co., 786 F.2d 928, 940 (9th Cir. 1986)). A motion to remand is the proper procedure for challenging removal. "The party invoking the removal statute bears the burden of establishing federal jurisdiction." Ethridge, 861 F.2d at 1393 (internal citations omitted). Courts "strictly construe the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (internal citations omitted). "[I]f there is any doubt as to the right of removal in the first instance," the court must grant the motion for remand. Id. Additionally, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded" to state court. 28 U.S.C. § 1447(c).
ANALYSIS
A. Supplement Notice of Removal
Defendants seek to amend or supplement their Notice of Removal to include new allegations and evidentiary support recently obtained through Defendants' deposition of Plaintiff. Plaintiff's deposition was taken on December 16, one day before the Court submitted Plaintiff's Motion to Remand on the briefs. Defendants contend that Plaintiff's deposition testimony establishes that the amount in controversy is met, and the Notice of Removal should be amended or supplemented to include this additional summary judgment-type evidence.
Plaintiff opposes the motion, arguing first that it is a third attempt to oppose Plaintiff's motion to remand. Opp'n, ECF No. 25 at 4. Additionally, Plaintiff argues that the deposition testimony is insufficient to prove that the amount in controversy exceeds $75,000, because Plaintiffs fail to use the actual number of weeks worked by Plaintiff in calculating Plaintiff's damages, and instead use the number of workweeks which Defendants employed Plaintiff.
As set forth above, "[t]he majority of courts . . . allow defendants to amend 'defective allegations of jurisdiction' in their notice as long as the initial notice of removal was timely filed and sets forth the same legal grounds for removal." Smiley, 863 F. Supp. at 1159 (citing Barrow, 418 F.2d at 318) (permitting amendment of removal petition to cure inadequate allegation of the citizenship of the defendant corporation). However, when defendants attempt to assert totally new grounds for removal or "to create jurisdiction where none existed," courts uniformly deny leave to amend. Rockwell Int'l Credit Corp. v. U.S. Aircraft Ins. Grp., 823 F.2d 302, 304 (9th Cir. 1987), overruled on another ground by Partington v. Gedan, 923 F.2d 686 (9th Cir. 1991).
Indeed, courts frequently repeat Barrow's statement that "the removal petition cannot be . . . amended to add allegations of substance but solely to clarify 'defective' allegations of jurisdiction previously made." 418 F.2d at 317; see also Emeryville Redev. Agency v. Clear Channel Outdoor, No. C 06-01279 WHA, 2006 WL 1390561, at *3 (N.D. Cal. May 22, 2006) (discussing "allegations of substance" rule); Hemphill, 1998 WL 320840 at *4 (citing Barrow, 418 F.2d at 317); Nat'l Audobon Soc. v. Dep't of Water & Power of City of L.A., 496 F. Supp. 499, 503 (E.D. Cal. 1980) (same). In Barrow, the defendant's removal notice alleged "simply that plaintiff was a citizen of Alaska and defendant of New York," rather than "disclos[ing] both the state of incorporation and the location of the corporation's principal place of business." 418 F.2d at 318. The Ninth Circuit followed other circuit courts in holding that these "allegations [were] defective in form but not so lacking in substance as to prevent their amendment." Id. (citing Hendrix v. New Amsterdam Cas. Co., 390 F.2d 299 (10th Cir. 1968)).
Furthermore, when a defendant must show that the amount in controversy exceeds the statutory amount, the defendant "may rely upon affidavits and declarations to make that showing; the law in the Ninth Circuit expressly contemplates the district court's consideration of some evidentiary record." Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010); see also Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004) (court may consider "summary-judgment-type evidence relevant to the amount in controversy at the time of removal"). While "[i]t is best to make this showing in the notice of removal itself, . . . a party can supplement its showing in an opposition to a motion to remand." Waller v. Hewlett-Packard Co., 11CV0454-LAB RBB, 2011 WL 8601207, at *2 (S.D. Cal. May 10, 2011) (citing Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002)).
In Cohn v. Petsmart, the Ninth Circuit noted that "Petsmart's notice of removal was deficient because it only summarily alleged that the amount in controversy exceeded $75,000, without alleging any underlying facts to support this assertion." 281 F.3d at 843 (citing Gaus, 980 F.2d at 567). However, Petsmart's opposition to the plaintiff's motion to remand provided further factual basis for the amount in controversy alleged in the notice of removal, explaining that the $75,000 amount was based on the plaintiff's settlement demand. The Ninth Circuit found that "the district court did not err in construing Petsmart's opposition as an amendment to its notice of removal." Id. (citing Willingham v. Morgan, 395 U.S. 402, 407 n.3 (1969) ("It is proper to treat the removal petition as if it had been amended to include the relevant information contained in the later-filed affidavits"); 28 U.S.C. § 1653 ("Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.")).
Subsequently, the Ninth Circuit stated that Cohn distinguished Gaus, and stands for the proposition "that a district court may consider later-provided evidence as amending a defendant's notice of removal." Gen. Dentistry For Kids, LLC v. Kool Smiles, P.C., 379 F. App'x 634, 636 (9th Cir. 2010); see also Morella v. Safeco Ins. Co. of Ill., 2:12-CV-00672 RSL, 2012 WL 2903084, at *1 (W.D. Wash. July 16, 2012) (citing Cohn, 281 F.3d 837) ("[T]he post-removal submission of supporting evidence can be treated as amending the notice of removal.").
Here, Defendants have not changed their ground for removal from that originally asserted in the notice of removal—Defendants originally asserted diversity jurisdiction, and still assert only that ground. Cf. Rockwell Int'l Credit Corp., 823 F.2d at 304. Defendants merely seek to supplement their original Notice of Removal with facts that support these bases for jurisdiction. Furthermore, Defendants' Notice of Removal is not so lacking in substance that it could not be amended or supplemented with the information contained in Plaintiff's deposition. While it is true that Defendants seek to amend their notice of removal not through evidence submitted in opposition to a motion to remand, but through a separate noticed motion, the Court will not "exalt form over substance and legal flaw-picking over the orderly disposition of cases properly committed to federal courts." Piazza v. EMPI, Inc., 1:07-CV-00954-OWW-GSA, 2008 WL 590494, at *8 (E.D. Cal. Feb. 29, 2008) (quoting Barrow, 418 F.2d at 318).
Accordingly, Defendants' Motion to Amend/Supplement Notice of Removal is GRANTED, ECF No. 24, and Defendants' Notice of Removal, ECF No. 1, is amended to include the portions of Plaintiff's deposition testimony submitted by Defendants at ECF No. 24-2 at 5-8.
B. Remand
Defendants removed the instant case pursuant to the Court's diversity jurisdiction. As set forth above, a district court has diversity jurisdiction "where the matter in controversy exceeds the sum or value of $75,000, . . . and is between citizens of different states, or citizens of a State and citizens or subjects of a foreign state . . . ." Id. § 1332(a)(1)-(2).
1. Citizenship
Diversity jurisdiction requires complete diversity of citizenship, with each plaintiff being a citizen of a different state from each defendant. 28 U.S.C. § 1332(a)(1); Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996) (stating that complete diversity of citizenship is required).
Here, it is clear that Plaintiff is a citizen of California. The complaint alleges that "Plaintiff Jesus Alvarez is an individual residing in the State of California." ECF No. 1-2 at 5. The Notice of Removal also states that "Plaintiff alleges that he 'is an individual residing in the State of California' . . . . Therefore, Plaintiff was domiciled in the State of California at the time he filed this action and is a citizen of California for the purposes of diversity jurisdiction in this matter.'" ECF No. 1 at 6.
C&S is a corporation, and thus has dual citizenship for diversity purposes. See 28 U.S.C. § 1332(c). A corporation is a citizen both of the state where it was incorporated and the state where it has its primary place of business. Id. Because C&S is incorporated in Vermont with its principal place of business in New Hampshire, it is a citizen of Vermont and New Hampshire for purposes of diversity jurisdiction.
Next is the issue of Tracy Logistics' citizenship. Defendants state that an LLC such as Tracy Logistics is "also a citizen of every state of which its owners/members are citizens and is a citizen of the State under whose laws it is organized and the State where it has its principal place of business." Opp'n at 14. However, for purposes of diversity jurisdiction in a case removed pursuant to 28 U.S.C. § 1441, "like a partnership, an LLC is a citizen of every state of which its owners/members are citizens." Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (citations omitted). It is true that under the Class Action Fairness Act, the citizenship of an LLC is determined by reference to its principal place of business and the state of organization. However, this case was not removed pursuant to the Class Action Fairness Act, and is not a class action. Accordingly, the rule for determining the citizenship of Tracy Logistics is that set forth by the Ninth Circuit in Johnson.
Defendants' removal papers make clear that Tracy Logistics is diverse from Plaintiff. Notice of Removal, ECF No. 1 at 7. Tracy Logistics is owned by its sole member, C&S Logistics of Sacramento/Tracy LLC, which in turn is wholly owned by its sole member, C&S Acquisitions LLC. C&S Acquisitions LLC is wholly owned by its sole member, C&S Wholesale Grocers, Inc., which is a citizen of both Vermont and New Hampshire. Tracy Logistics, like C&S Wholesale Grocers, Inc., is therefore a citizen of Vermont and New Hampshire.
Thus, because Plaintiff is a citizen of California, while Defendants are citizens of Vermont and New Hampshire, there is complete diversity between Plaintiff and Defendants.
2. Amount in Controversy
a. Defendants' Burden
Plaintiff contends that the Court lacks jurisdiction because he alleges that the amount in controversy for their individual claims is less than $75,000 and Defendants have failed to prove with legal certainty that the jurisdictional amount is met. Specifically, the Complaint states in the Jurisdiction and Venue allegations that "the 'amount in controversy' for the named Plaintiff, including claims for compensatory damages, restitution, penalties, and pro rata share of attorneys' fees is less than [$75,000]." ECF No. 1-2 at 5. No specific amount is stated in Plaintiff's prayer for relief. See Compl. at 21-25. The prayer for relief lists civil and statutory penalties; reasonable attorneys' fees and costs of the suit; actual, consequential, and incidental losses and damages; and other and further relief as the Court deems just and proper. Defendants, on the other hand, contend that the standard for establishing the amount in controversy is a preponderance of the evidence.
For the reasons set forth in the related case Cagle v. C&S Wholesale Grocers, Inc., No. 2:13-cv-02134, in the Court's February 19, 2014, Order, the Court finds that the standard for determining whether Defendants meet their burden of establishing the amount in controversy is the preponderance of the evidence. Under this standard, "the removing party's burden is 'not daunting,' and defendants are not obligated to 'research, state, and prove the plaintiff's claims for damages.'" Behrazfar v. Unisys Corp., 687 F. Supp. 2d 999, 1004 (C.D. Cal. 2009) (quoting Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1204-05 (E.D. Cal. 2008)). When a "[d]efendant's calculations [are] relatively conservative, made in good faith, and based on evidence wherever possible," the court may find that the "[d]efendant has established by a preponderance of the evidence that the amount in controversy" is met. Id. (citing Neville v. Value City Dep't Stores, LLC., No. 07-cv-53-DRH, 2008 WL 2796661, *5-6 (S.D. Ill. July 18, 2008); Eisler v. Med. Shoppe Int'l, Inc., NO. 4:05CV2272 JCH, 2006 WL 415953, *2 (E.D. Mo. 2006)).
b. Amount in Controversy Calculations
Plaintiff first takes issue with Defendants' use of a declaration made by Plaintiff in April 2011, which Defendants offer as evidence of the hours Plaintiff worked through August 2013. Mot. at 10. Plaintiff also argues that Defendants' calculation of overtime hours worked are "fundamentally flawed" because they rely on "unverified assumptions" and incorrect math. Mot. at 10-11. Next, Plaintiff argues—in one sentence—that because Defendants have not attempted to calculate their attorneys' fees, those fees cannot be included in the calculation of the amount in controversy. Finally, Plaintiff asserts that Defendants may not rely on the $75,001 settlement in the Tompkins action.
Plaintiff does not take issue with Defendants' calculation of the amount in controversy for Plaintiff's Non-Compliant Wage Statement Claim, which Defendants estimate is $4000, and Plaintiff's claim for Failure to Keep Accurate Payroll Records, which Defendants estimate is $500.
Overtime Claim
Defendants' Notice of Removal cites to Plaintiff's declaration, which states that in April 2011, Plaintiff worked from 2:30 AM to 1:30 PM Monday through Friday; from August 1, 2010, to April 2011, Plaintiff's schedule alternated each week between a Wednesday-Saturday schedule and a Tuesday-Saturday schedule, from 4:30 AM to 3:30 PM on Tuesdays, Wednesdays and Thursdays, and from 4:30 AM to approximately 5:00 PM on Fridays and Saturdays. From 2009 to July 2010, Plaintiff typically worked 5 days per week, from 5:30 AM to 4:30 PM.
Because Defendants submitted Plaintiff's deposition testimony, which states that in 2011 and 2012, Plaintiff worked approximately 12 to 14 hours per day, four to five days per week, ECF No. 24-2 at 6-7, the Court need not rely on Defendants' assertions that the 2011 declaration is representative of the hours Plaintiff worked through 2013.
Thus, at a bare minimum, there is summary-judgment type evidence before the Court that from 2009 to July 2010 (82 weeks), Plaintiff worked 11-hour days, 5 days per week; from August 2010 to April 2011 (34 weeks), Plaintiff worked 11-hour days 2 or 3 days per week, and 12.5-hour days 2 days per week; in April 2011 Plaintiff worked 11-hour days 5 days per week (3 weeks); for the remainder of 2011 (36 weeks) and 2012 (52 weeks), Plaintiff worked, at a minimum 12-hour days 4 days per week. Plaintiff's salary was $29.47 per hour.
Although Plaintiff contends that there is not sufficient evidence to use this amount to calculate the amount in controversy, the Court finds that there is sufficient evidence to use this amount under the applicable preponderance of the evidence standard.
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The Court therefore calculates the amount in controversy for Plaintiff's overtime claim as follows: for 2009 to July 2010: (82 weeks x 15 hours OT x $29.47 per hour x 1.5) = $54,372.15. For August 2010 through April 2011: (17 weeks x 14 OT x $29.47 per hour x 1.5 = $10,520) + (17 weeks x 17 hours OT per week x $29.47 per hour x 1.5 = $12,775.25) + (34 weeks x 1 hour DT per week x 29.47 x 2 = $2,003.96)= $25,299.21. For the remainder of 2011: (36 weeks x 16 hours OT per week x $29.47 per hour x 1.5 = $25,462.08). Finally, for 2012: (52 x 16 hours OT per week X $29.47 per hour x 1.5 = $36,778.56). Thus, the total amount in controversy for Plaintiff's overtime claim is $141,912, which is well above the jurisdictional threshold.
The jurisdictional amount in controversy is therefore satisfied, and the Court need not address the calculation of attorneys' fees, nor the weight afforded to the Tompkins settlement. Plaintiff's Motion to Remand is DENIED.
CONCLUSION
For the reasons just stated, IT IS HEREBY ORDERED THAT:
1. Plaintiff's Motions to Remand are DENIED, ECF No. 6, 14, 16; and
2. Defendants' Motion to Supplement/Amend Notice of Removal is GRANTED, ECF No. 24.
IT IS SO ORDERED.
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MORRISON C. ENGLAND, JR., CHIEF JUDGE
UNITED STATES DISTRICT JUDGE