Opinion
Case No. 4:22-cv-06501-YGR
2023-01-31
Ricardo AMEZCUA, Plaintiff, v. CRST EXPEDITED INC.; Gamino & Associates, Inc., Defendants.
Chaim Shaun Setareh, David Keledjian, Setareh Law Group, Beverly Hills, CA, for Plaintiff. Ariella Kupetz, Kristen Jeannine Nesbit, Shaun Jordan Voigt, Fisher Phillips LLP, Los Angeles, CA, for Defendant CRST Expedited, Inc.
Chaim Shaun Setareh, David Keledjian, Setareh Law Group, Beverly Hills, CA, for Plaintiff. Ariella Kupetz, Kristen Jeannine Nesbit, Shaun Jordan Voigt, Fisher Phillips LLP, Los Angeles, CA, for Defendant CRST Expedited, Inc.
ORDER DENYING MOTION FOR REMAND; ORDER TO SHOW CAUSE RE SANCTIONS
Yvonne Gonzalez Rogers, United States District Judge
Before the Court is plaintiff's motion to remand. For the reasons given herein, the Court finds removal based on the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2), was proper and denies the motion.
The Court has reviewed the papers submitted by the parties in connection with the pending motion and has determined it is appropriate for decision without oral argument, as permitted by Civil Local Rule 7-1(b) and Federal Rule of Civil Procedure 78. See Lake at Las Vegas Investors Group, Inc. v. Pacific Malibu Dev. Corp., 933 F.2d 724, 729 (9th Cir. 1991).
Additionally, the Court grants plaintiff's unopposed request for judicial notice of two docket items from the state court action and affords the noticed documents their proper evidentiary weight. See Rejoice! Coffee Co., LLC v. Hartford Fin. Servs. Grp., No. 20-cv-06789-EMC, 2021 WL 5823529, at *11, 2021 U.S. Dist. LEXIS 235263 at *32-33 (N.D. Cal. Dec. 8, 2021) (stating a court may take judicial notice of a public record, but not the facts therein when the facts are in dispute).
I. BACKGROUND
On November 20, 2020, plaintiff Ricardo Amezcua filed this putative class action in state court alleging that defendants CRST Expedited, Inc. dba CRST The Transportation Solution, Inc. (Dedicated West Division), formerly known as Gardner Trucking, Inc., and Gamino & Associates, Inc. committed various labor law violations, including failing to provide meal and rest periods and failing to pay wages owed at termination. Plaintiffs filed a First Amended Complaint on November 18, 2021. (Dkt. No. 1-2, Ex. B, "FAC" at 34.)
Relevant here, the FAC alleges that the amount in controversy for plaintiffs' individual claims was below the $75,000 threshold for federal jurisdiction and that their aggregate claims were below the $5 million threshold for CAFA jurisdiction. (Id. at ¶ 6.)
Plaintiff sought to represent a class of "[a]ll persons employed by Defendants and/or any staffing agencies and/or any other third parties in hourly or non-exempt positions in California" beginning four years prior to the filing of the action through judgment. (Id. at ¶ 14.)
Plaintiff seeks to represent various subclasses including the following:
Meal Period Sub-Class: All Hourly Employee Class members who worked a shift in excess of five hours during the Relevant Time Period.(Id.) Plaintiff alleged defendants have a policy and practice of not providing legally compliant meal and rest periods or wages owed upon termination. (Id. at ¶¶ 24-27, 116.)
Rest Period Sub-Class: All Hourly Employee Class members who worked a shift of at least three and one-half (3.5) hours during the Relevant Time Period.
Waiting Time Penalties Sub-Class: All Hourly Employee Class members who separated from their employment with Defendants during the period beginning three years before the filing of this action and ending when final judgment is entered.
On October 25, 2022, defendants removed the case under CAFA. (Dkt. No. 1.) On November 23, 2022, plaintiff filed a motion to remand. (Dkt. No. 15.) Defendants' opposition included a declaration from Angela Stastny, the Director of Human Resources for defendant CRST Expedited, and accompanying evidence. (Dkt. No. 16-1.)
II. LEGAL STANDARD
Generally, CAFA vests federal courts with "original jurisdiction" over class actions where (1) diversity of citizenship exists between at least one class member and at least one defendant; (2) the amount "in controversy exceeds the sum or value of $5,000,000;" (3) "the primary defendants are not States, State officials or other government entities against whom the district court may be foreclosed from ordering relief;" and (4) the class has at least 100 members. 28 U.S.C. §§ 1332(d)(2), (d)(5).
A defendant claiming federal jurisdiction under CAFA bears the burden of establishing that the amount in controversy exceeds $5,000,000 by a preponderance of the evidence. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citation omitted). Although "a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold," a defendant must present "[e]vidence establishing the amount . . . when the plaintiff contests, or the court questions, the defendant's allegation." Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).
III. PLAINTIFF'S MISREPRESENTATIONS TO THE COURT
Before beginning its remand analysis, the Court addresses plaintiff's repeated and flagrant misrepresentations of the law throughout his motion.
Plaintiff asserts that there is a "strong presumption" against removal while citing cases that state no such presumption exists in the CAFA context. (Dkt. No. 15 at 8.) He claims removal is untimely under 28 U.S.C. section 1446(c)(1), while citing to cases holding that limitation does not apply to class actions. (Id. at 9.) Plaintiff argues that the Ninth Circuit and Supreme Court "have been repeatedly clear" that a notice of removal is subject to the same admissibility standards as summary judgment," (Dkt. No. 15 at 3) when the Supreme Court and Ninth Circuit have repeatedly held the contrary, including recently, in a case in which Setareh Law Group was counsel. Harris v. KM Indus., Inc., 980 F.3d 694, 699 (9th Cir. 2020) (stating that where plaintiff has not enumerated putative class's claimed damages, removing defendant "need only allege in its notice of removal that the amount in controversy requirement is met"). Plaintiff argues that this Court must follow the Ninth Circuit's "seminal opinion" in Gariby v. Archstone Communities LLC that "expressly prohibited" the assumption of weekly violations in calculating an amount in controversy, (Dkt. No. 18) yet omits that this case is unpublished and "is not precedent" even though this has been explicitly pointed out to plaintiff's counsel by courts in this district. Garay v. Sw. Airlines Co., No. 19-CV-05452-PJH, 2019 WL 6977114, at *5 (N.D. Cal. Dec. 20, 2019). Though defendant raises nearly all these inaccuracies in its opposition, plaintiff made no attempt to correct or clarify his position in his reply.
Dart Cherokee Basin Operating Sys. Co., LLC v. Owens, 574 U.S. 81, 83, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014); Salter v. Quality Carriers, Inc., 974 F.3d 959, 963 (9th Cir. 2020) ("a removing defendant's notice of removal 'need not contain evidentiary submissions but only plausible allegations of the jurisdictional elements' ") (quoting Arias v. Residence Inn by Marriott, 936 F.3d 920 (9th Cir. 2019)).
Garibay v. Archstone Communities LLC, 539 F. App'x 763, 764, n. 3 (9th Cir. 2013).
Accordingly, plaintiff's counsel is ORDERED TO SHOW CAUSE IN WRITING by February 6, 2023, why they should not be fined $250.00 for the conduct described in this section. The motion not only relies on cases that directly contradict plaintiff's assertions, but counsel's extensive experience litigating CAFA cases and the warning by Judge Hamilton, suggest that counsel's conduct is not only unprofessional, but may in fact represent an actual attempt to mislead the Court. "A court may sanction a lawyer who recklessly misrepresents the law for an improper purpose." In re Carlson, 650 F. App'x 307, 309 (9th Cir. 2016) (citing Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001)); Jeffrey C. Stone Inc. v. Greenberg Traurig LLP, 467 F. App'x 582 (9th Cir. 2012). Further, the conduct imposes an unnecessary burden on the Court and opposing counsel.
An in-person hearing on the Order to Show Cause shall occur on February 9, 2023 at 11:01 a.m. in United States Federal Court in Oakland, California, Courtroom One. If the Court is satisfied with the written submission, it may vacate the hearing.
IV. ANALYSIS
Plaintiff argues that remand is proper (1) under the local controversy and home state exceptions, (2) because removal was untimely under 1446(b)(1) and (b)(3), and (3) because defendant has not adequately proven the amount in controversy requirement is met for CAFA jurisdiction. The Court addresses each in turn.
A. Local Controversy and Home State Exceptions
For either exception to apply, the party seeking remand must show at a minimum, and by a preponderance of the evidence, that at least two-thirds of the class are California citizens and that a defendant is a California citizen. Adams v. West Marine Products, Inc., 958 F.3d 1216, 1220 (9th Cir. 2020).
To show two-thirds of the class are California citizens, plaintiff "must provide 'some facts in evidence from which the district court may make findings regarding class members' citizenship." Brinkley v. Monterey Fin. Servs., Inc., 873 F.3d 1118, 1121 (9th Cir. 2017) (citations omitted). A "complete lack of evidence does not satisfy this standard." Mondragon v. Cap. One Auto Fin., 736 F.3d 880, 884 (9th Cir. 2013). Here, plaintiff cites to no facts regarding the citizenship of class members. He only points to his allegation that all class members worked in California. This is insufficient. Working in California does not necessarily mean that a class member is a citizen of California (which is also separate and distinct from being a resident).
Next, plaintiff fails to show that a defendant is a California citizen. Plaintiff maintains that the only significant defendant entity in this litigation is Gardner Trucking, Inc., a registered California corporation. However, plaintiff does not dispute the representation in defendants' notice of removal that Gardner Trucking merged with CRST Expedited, Inc., an Iowa citizen, before this litigation was initiated, and well before removal, and that CRST is the surviving entity. The Court determines citizenship for purposes of CAFA at the time of removal. Broadway Grill, Inc. v. Visa Inc., 856 F.3d 1274, 1279 (9th Cir. 2017). The Court thus denies remand under the local controversy and home state exceptions.
B. Section 1446
Plaintiff argues that removal was untimely under 28 U.S.C. section 1446(b)(1) and (b)(3), and (c)(1). As already addressed, the one-year limit under section 1446(c)(1) does not apply to removal of class actions and is inapplicable here. Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121, 1126 (9th Cir. 2013) (citing 28 USC § 1453(b)).
A "CAFA case may be removed at any time, provided that neither of the two thirty-day periods under § 1446(b)(1) and (b)(3) has been triggered." Id. "Section 1446(b)(1) and (b)(3) specify that a defendant must remove a case within thirty days of receiving from the plaintiff either an initial pleading or some other document, if that pleading or document shows the case is removable." Id. at 1123. That is, Section "1446(b)(1) and (b)(3) place strict limits on a defendant who is put on notice of removability by a plaintiff." Id. (emphasis supplied). However, "a defendant does not have a duty of inquiry if the initial pleading or other document is 'indeterminate' with respect to removability." Id. at 1125. "[E]ven if a defendant could have discovered grounds for removability through investigation, it does not lose the right to remove." Id.
The FAC alleges that the amount in controversy for plaintiff's individual claims is below the $75,000 threshold for federal jurisdiction and that the aggregate claims are below the $5 million threshold for CAFA jurisdiction. Plaintiff argues that "[i]f Defendant disagreed with Plaintiff's assertion regarding the value of the claims in this case, it had 30 days to remove the action to federal court." (Dkt. No. 15 at 9.) Not so. The face of the complaint alleged that the amount in controversy was not met. That means that the removability of the action was not clear from the face of the complaint. Plaintiff has not identified any other documentation it gave to defendants from which defendants could have determined removability, which is the other basis for triggering the thirty-day clock. The thirty-day clock therefore was not triggered.
As defendants point out, the complaint also lacks specific facts from which they could have reasonably calculated if the amount in controversy allegations were accurate, such as the number of class members, frequency of violations, or hours worked.
It is immaterial how long defendants had access to the information upon which the removal request was made. Rea v. Michaels Stores Inc., 742 F.3d 1234, 1238 (9th Cir. 2014) ("In other words, as long as the complaint or 'an amended pleading, motion, order or other paper' does not reveal that the case is removable, the 30-day period never starts to run and the defendant may remove at any time."). Such information only triggers the 30-day deadlines if it was received from plaintiff. Here, it was not. Accordingly, the motion for remand based on untimeliness is denied.
Plaintiff's general appeals to fairness are also unavailing. The Ninth Circuit has recognized that it is possible that the law allows room for gamesmanship as it is "possible in a CAFA case for a defendant to wait until the state court has shown itself ill-disposed to defendant, or until the eve of trial in state court, before filing a notice of removal." Roth, 720 F.3d at 1126. The Ninth Circuit advises that "Our best answer—and a likely sufficient answer—is that plaintiffs are in a position to protect themselves. If plaintiffs think that their action may be removable and think, further, that the defendant might delay filing a notice of removal until a strategically advantageous moment, they need only provide to the defendant a document from which removability may be ascertained. 28 U.S.C. § 1446(b)(3). Such a document will trigger the thirty-day removal period, during which defendant must either file a notice of removal or lose the right to remove." Id.
C. Amount in Controversy
1. Standard
"[T]he proper burden of proof imposed upon a defendant to establish the amount in controversy is the preponderance of the evidence standard." Rodriguez v. AT & T Mobility Servs. LLC, 728 F.3d 975, 977 (9th Cir. 2013). "When calculating the amount in controversy, 'the parties need not predict the trier of fact's eventual award with one hundred percent accuracy.' " Jauregui v. Roadrunner Transportation Servs., Inc., 28 F.4th 989, 993 (9th Cir. 2022) (citation omitted). "When measuring the amount in controversy, a court must assume that the allegations of the complaint are true, and that a jury will return a verdict for the plaintiff on all claims made in the complaint." Gyorke-Takatri v. Nestle USA, Inc., No. 15-cv-03702-YGR, 2015 WL 6828258, at *3 (N.D. Cal. Nov. 6, 2015). The amount in controversy is "determined by the complaint operative at the time of removal and encompasses all relief a court may grant on that complaint." Fritsch v. Swift Transp. Co. of Arizona, 899 F.3d 785, 791 (9th Cir. 2018) (quoting Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 414-15 (9th Cir. 2018)).
The "legal certainty standard" asserted by plaintiff (Dkt. No. 15 at 13) has not been the standard for nearly a decade. Id.
A defendant's amount in controversy calculation is generally accepted until challenged, at which point, the defendant must support facts with summary-judgment-type evidence. Summary-judgment-type evidence is only required where the challenges are factual, as opposed to facial. Harris v. KM Indus., Inc., 980 F.3d 694, 699 (9th Cir. 2020) (explaining this distinction in case argued by Shaun Setareh). "For a facial attack, the court, accepting the allegations as true and drawing all reasonable inferences in the defendant's favor, determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction." Salter v. Quality Carriers, Inc., 974 F.3d 959, 964 (9th Cir. 2020) (citation omitted).
2. Defendants' Calculations
Plaintiff argues that defendants have not adequately shown that the amount in controversy requirement under CAFA has been met. As such, plaintiff's evidentiary objections are denied. Plaintiff has not raised any evidentiary challenges regarding the evidence submitted by defendants in response to the motion for remand.
Here, plaintiff focuses on (a) the evidence supporting the notice of removal, and (b) the number of work weeks, (c) violation rate, and (d) hourly pay used to calculate the amount in controversy.
a. Evidentiary Objections
Plaintiff brings evidentiary objections regarding the evidence supporting defendants' notice of remand, alleging it is not "summary judgment-type evidence." (Dkt. No. 15 at 3.) The Court denies these objections, as summary-judgment-type evidence is not required in a notice of removal. Jauregui, 28 F.4th at 992 ("A defendant's amount in controversy allegation is normally accepted when invoking CAFA jurisdiction, unless it is 'contested by the plaintiff or questioned by the court.' ") (quoting Dart Cherokee, 574 U.S. at 87, 135 S.Ct. 547). Only after a plaintiff contests the amount in controversy allegation do "both sides submit proof [so that the Court can decide] by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied." Id. As such, plaintiff's evidentiary objections regarding the notice of removal are denied.
As addressed, defendants support their opposition to plaintiff's motion with a declaration from their Director of Human Resources and supporting documentation. Plaintiff has not raised any evidentiary challenges regarding this evidence.
b. Work Weeks
Plaintiff first argues that defendants' notice fails to explain why it used a 500,000-workweek figure for its calculations in the notice of removal. (Dkt. No. 15 at 12.) The Stastny Declaration accompanying defendants' opposition explains that, relying on records included as an exhibit, this figure was based on the number of truck drivers during the relevant period and their hire and termination dates, putative class members worked for defendants for 526,701 weeks, which defendants reduced to a round figure, 500,000, for their calculations. (Dkt. No. 16-1, Stastny Decl. at ¶ 6.) Plaintiff's reply does not challenge this figure or acknowledge defendants' explanation of how it was reached, which the Court takes as a concession that 500,000 weeks is reasonable. The Court finds the 500,000 figure well-founded and reasonable.
c. Violation Rate
Second, plaintiff contends that the notice of removal assumes a "100% violation rate." (Dkt. No. 15 at 12.) Plaintiff's briefing is hard to parse, but appears to argue that defendants cannot assume that the workers experienced an alleged injury (i.e. denial of overtime, meals, etc.) every day they worked and cannot assume that 100% of the putative class members experienced each alleged injury.
Plaintiff's assertions are not well taken. The calculations in the notice of removal assume a violation rate of twice a week, not one for every day worked. The Court finds this calculation reasonable. Plaintiff alleges that defendants had a policy and practice of denying meal periods and "as such, at this juncture, every meal period of every putative class member during the class period is in controversy." (Dkt. No. 1 at ¶ 32.) It is not unreasonable to assume that a "policy" that plaintiff alleges was enforced was enforced most of the time. A twice-per-week violation rate is thus reasonable. Mendoza v. Nat'l Vision, Inc., No. 19-CV-01485-SVK, 2019 WL 2929745, at *4 (N.D. Cal. July 8, 2019) (finding assumption of weekly violations reasonable where plaintiff alleged defendant regularly and repeatedly failed to provide class members with meal and rest breaks and that this was a policy and practice) (collecting cases finding same); Salonga v. Aegis Senior Communities, LLC, No. 22-CV-00525-LB, 2022 WL 1439914, at *6 (N.D. Cal. May 6, 2022) ("requiring the defendant to produce evidence establishing a violation rate with precision would come too close to requiring the defendant to prove its own liability"). For the same reason, the Court finds the assumption that all workers experienced each violation reasonable.
Plaintiff cites cases which it purports hold that a violation rate of once or twice a week is improper. They do not persuade. Hernandez v. Towne Park Ltd., 2012 WL 2373372 *4 (C.D. Cal. 2012) was decided under the no longer applicable legal certainty standard. Garibay v. Archstone Communities LLC, 539 F. App'x 763, 764 (9th Cir. 2013) is unpublished and did not find that a twice a week violation is never permissible. Rather, it held that the defendant had failed to provide any support for such a violation rate. That is not the case here. In Armstrong v. Ruan Transport Corp., 2016 WL 6267931, at *34 (C.D. Cal. October 25, 2016), the district court found a violation rate of once per week unreasonable because the plaintiffs had merely alleged defendant "failed to provide all the legally required unpaid, off-duty meal periods" and other wages owed. Id. (internal quotation marks omitted).
d. Hourly Pay
Third, plaintiff argues that it is unreasonable for defendants to assume that all workers were paid the same wage as plaintiff, $18.00 an hour, when the lowest minimum wage at some points in the class period was $10.50 an hour. As the Court finds this distinction will not change the result, it need not determine which rate is reasonable.
For the meal period claim alone, the amount in controversy is met, even if we assume all class members were paid $10.50 an hour and that there was only one violation a week. Under California Labor Code § 226.7(b) employees may recover one additional hour of pay at the employee's regular rate of compensation for each workday a meal period was not provided. (500,000 work-weeks x 1 violation x $ 10.50 an hour = $5,250,000). The calculation is the same for the rest period claim, doubling the $5,250,000 figure.
3. Additional Claim for Waiting-Time Penalties
While the rest and meal claims each independently exceed the amount in controversy requirement, the Court also finds defendants adequately show the amount in controversy is also met by the Section 203 claim.
Plaintiff asserts that the notice of removal impermissibly assumes that all employees who separated during the class period are owed 30 days of wages. (Dkt. No. 15 at 15.) As addressed regarding the meal and rest claims, the allegations in the FAC support defendant's assumption. The FAC alleges that defendant has a policy and practice of failing to provide wages owed at separation, and that all separated employees during the applicable period are in the waiting time subclass. See Salonga, 2022 WL 1439914, at *3 (reaching same result based on similar facts and argument) ("The defendant has submitted a declaration stating that 2,087 employees were terminated on or after May 30, 2018. Thus, the Waiting Time Subclass [defined to include all employees separated during the applicable period] includes 2,087 potential members"); id. at *4 (collecting cases finding same).
While the motion is not entirely clear, plaintiff appears to argue defendant cannot assume that all workers who separated during the applicable period are still owed wages and that defendants must use payroll data to prove they denied wages, presumably through violation of the meal, rest, and other labor code requirements alleged in the complaint. Defendants have no such obligation. See supra, Salonga, 2022 WL 1439914, at *6 ("[D]efendants should not be required to fall on their swords to establish the propriety of removal jurisdiction."). Plaintiff alleges that defendants had policies that led to regular violations of the labor code. It is reasonable for defendants to assume in their calculation that all separated employees were owed some wages based on such violations at the time of termination. This is especially true given that plaintiff alleges all separated workers are in the waiting time penalty class.
California law provides that the penalty for violating Sections 201 and 202 is the employee's wages "from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days." Cal. Lab. Code § 203. Defendants provided evidence with their opposition (which plaintiff has not challenged) indicating that 6,800 putative subclass members separated from their employment with defendant between November 20, 2017 (three years prior to the filing of the initial complaint) and July 27, 2022, more than 30 days before defendant removed. Even if the Court applies the lowest wage paid during the period, and only an eight-hour workday (the complaint alleges the class consistently worked more than ten hours a day (FAC at ¶ 89), penalties for this claim would be $17,136,000. Accordingly, this is a separate basis through which defendants prove the amount in controversy requirement met. V. CONCLUSION
6,800 putative class members x 8 hours x 30 days x $10.50 = $17,136,000.
Plaintiff's motion for remand is DENIED.
This terminates docket number 15.
IT IS SO ORDERED.