Opinion
2:21-cv-02063-KJM-DB
05-31-2022
Denise Lopez, Plaintiff, v. Bio-Reference Laboratories, Inc., et al., Defendants.
ORDER
Plaintiff Denise Lopez brought this putative wage-and-hour class action against her employers, defendants Bio-Reference Laboratories, Inc. and Opko Health, Inc., in Amador County Superior Court. Defendants timely removed to this court, invoking the court's jurisdiction under the Class Action Fairness Act (CAFA). Plaintiff has moved to remand, arguing defendants failed to establish the amount in controversy exceeds $5 million. As explained below, the court finds defendants have established it is more likely than not the amount in controversy exceeds $5 million; the court therefore denies plaintiff's motion.
I. BACKGROUND
Plaintiff has worked as a phlebotomist for defendants since in or about 2016. Compl. ¶ 19, Not. Removal Ex. A, ECF No. 1-1. Plaintiff sued defendants in 2021, alleging unfair business practices and eight violations of the California Labor Code: (1) failure to pay overtime wages in violation of sections 510 and 1198; (2) failure to provide meal period premiums in violation of sections 226.7 and 512(a); (3) failure to provide rest break premiums in violation of section 226.7; (4) failure to pay minimum wage in violation of sections 1194, 1197, and 1197.1; (5) failure to timely pay wages upon termination in violation of sections 201 to 203; (6) failure to timely pay wages during employment in violation of sections 204 and 210; (7) failure to provide complete itemized wage statements in violation of section 226(a); and (8) failure to reimburse business expenses in violation of sections 2800 and 2802. See generally Compl. Plaintiff seeks to represent a class comprising current and former non-exempt California employees who worked for defendants within the last four years. Id. ¶ 13.
As noted, defendants timely removed to this court, invoking this court's jurisdiction under CAFA. See generally Not. Removal, ECF No. 1. Plaintiff moved to remand, arguing this court lacks subject matter jurisdiction because defendants have not shown that more than $5 million dollars is in controversy. See generally Mot. Remand, ECF No. 5. The court received full briefing and submitted the matter without oral argument. See Opp'n, ECF No. 6; Reply, ECF No. 8; Min. Order, ECF No. 7.
II. DISCUSSION
Under the federal removal statute, “any civil action brought in a State court of which the district courts of the United States have original jurisdiction may be removed by the defendant . . . to the district court of the United States for the district . . . where such action is pending.” 28 U.S.C. § 1441(a). Under CAFA, the federal courts have original jurisdiction over class actions in which the parties are minimally diverse, the proposed class has at least one hundred members, and the aggregated amount in controversy exceeds $5 million dollars. See 28 U.S.C. § 1332(d)(2), (5). The parties do not dispute that they are diverse or that the proposed class has at least one hundred members; the only issue before the court is whether the amount in controversy exceeds $5 million.
Because plaintiff's complaint does not quantify damages, the defendants must show by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional threshold. Canela v. Costco Wholesale Corp., 971 F.3d 845, 849 (9th Cir. 2020); Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). In making this showing, a removing defendant “must be able to rely ‘on a chain of reasoning that includes assumptions.'” Jauregui v. Roadrunner Transp. Servs., Inc., 28 F.4th 989, 993 (9th Cir. 2022) (quoting LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1201 (9th Cir. 2015)); see also id. (“[A] CAFA defendant's amount in controversy assumptions in support of removal will always be just that: assumptions.”). These assumptions must reflect more than “mere speculation and conjecture, ” Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015), and they “need some reasonable ground underlying them, ” see id. at 1199, but they “need not be proven, ” Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019) (overturning remand order where district court held lack of evidence precluded use of assumed violation rates). “An assumption may be reasonable if it is founded on the allegations of the complaint.” Arias, 936 F.3d at 925.
The core dispute here is whether defendants have sufficiently supported the assumptions undergirding their amount-in-controversy calculation. Defendants calculate the amount in controversy in three steps. First, defendant BioReference's Senior Director of Human Resources Operations and Payroll, Jacqueline DiBartolo, attests to the size of the putative class and class members' average hourly wage, among other relevant metrics. See generally DiBartolo Suppl. Decl., ECF No. 6-1. To generate these numbers, Ms. DiBartolo reviewed personnel files, payroll data, and time records. See id. ¶¶ 7-14. Second, defendants look to key language in plaintiff's complaint and cases analyzing analogous language to determine an appropriate violation rate to use in estimating the amount in controversy. See, e.g., Opp'n at 11 (collecting cases that analyze allegations similar to plaintiff's allegation of a “policy and practice” of denying meal and rest breaks and arguing these cases illuminate appropriate violation rate here). Third, combining Ms. DiBartolo's data and defendants' inferred violation rates, defendants calculate the amount in controversy for each of plaintiff's claims. Plaintiff takes issue with the assumptions defendants draw from Ms. DiBartolo's data and with defendants' assumed violation rates. For several claims, plaintiff provides alternative, allegedly more reasonable violation rates. See, e.g., Mot. Remand at 16-17. The following chart summarizes the parties' positions on each claim:
Claim
Plaintiff's Calculation
Defendants' Lowest Calculation
Defendants' Alternative Calculation
Defendants' Highest Calculation
Unpaid Overtime
$424,433.94 [24, 612 workweeks x .5 hours per week x 1.5 overtime rate of $34.49]
$848,867.88 [24, 612 workweeks x 1 hour per week x 1.5 overtime rate of $34.49]
$1,130,133.83 [32, 767 workweeks x 1 hour per week x 1.5 overtime rate of $34.49]
$1,130,133.83 [no change]
Missed Meal and Rest Breaks
$1,506,626.66 [32, 767 workweeks x 2 missed breaks per week x $22.99 per hour]
$1,506,626.66 [32, 767 workweeks x 2 missed breaks per week x $22.99 per hour]
$3,013,253.32 [32, 767 workweeks x 4 missed breaks per week x $22.99 per hour]
$7,533,133.30 [32, 767 workweeks x 10 missed breaks per week x $22.99 per hour]
Unpaid Minimum Wages
$98,663.40 [8, 154 workweeks x .5 hours per week x $12.10 per hour x 2 for liquidated damages]
$197,326.80 [8, 154 workweeks x 1 hour per week x $12.10 per hour x 2 for liquidated damages]
$792,961.40 [32, 767 workweeks x 1 hour per week x $12.10 per hour x 2 for liquidated damages]
$792,961.40 [no change]
Waiting Time Penalties
NA
$795,637.92 [206 terminated employees x 30-day maximum recovery x 5.6 hours per day x $22.99 per hour]
$994,547.40 [206 terminated employees x 30- day maximum recovery x 7 hours per day x $22.99 per hour]
$994,547.40 [no change]
Wages Not Timely Paid
NA
$427,000.00 [4, 270 pay periods x $100 penalty per period]
$427,000.00 [no change]
$427,000.00 [no change]
Wage Statement Penalties
NA
$414,650.00 [(247 employees x $50 penalty per initial violation) + (4, 023 additional pay periods x $100 penalty per subsequent violation)]
$414,650.00 [no change]
$414,650.00 [no change]
Unreimbursed Business Expenses
NA
$117,205.04 [32, 767 workweeks/52 weeks per year x $186.00 annual expenses]
$117,205.04 [no change]
$117,205.04 [no change]
Total
Incomplete
$5,384,142.88
$8,612,188.74
$14,262,038.71
In determining the appropriate calculation, the court is guided by the Ninth Circuit's recent decision in Jauregui, in which the court explained how to assess assumptions underlying amount-in-controversy calculations:
Where a defendant's assumption is unreasonable on its face without comparison to a better alternative, a district court may be justified in simply rejecting that assumption and concluding that the defendant failed to meet its burden. But often . . . the reason a defendant's assumption is rejected is because a different, better assumption is identified. Where that's the case, the district court should consider the claim under the better assumption-not just zero-out the claim.28 F.4th at 996. Following this directive, the court eliminates assumptions that are self-evidently unreasonable or baseless. Id.; see also Ibarra, 775 F.3d at 1199 (“[Assumptions cannot be pulled from thin air but need some reasonable ground underlying them.”). Where alternative assumptions haves been offered, the court adopts the best reasonable alternative. Jauregui, 28 F.4th at 996. The court sets forth its application of this approach below, by claim.
A. Meal & Rest Breaks
Defendants initially determined that missed meal and rest breaks put $3,013,253.32 in controversy. See Not. Removal at 17-19. Defendants reached this figure by assuming class members missed an average of two required meal breaks and two required rest breaks per workweek. See id. at 19. In support of this assumption, defendants point to language in plaintiff's complaint alleging defendants “implemented policies and practices” of denying class members their meal and rest breaks. See id. at 17-18 (citing Compl. ¶ 26). Plaintiff argues this assumption is unreasonable, highlighting the absence of any evidence or explicit, specific allegations related to the frequency with which meal and rest breaks were missed. See Mot. Remand at 14-17; Reply at 8-10. Plaintiff contends it would be “more reasonable” to assume one meal break and one rest break missed per workweek. See Mot. Remand at 16; Davis Decl. ¶ 7, ECF No. 5-1. In their opposition, defendants offer three violation rates but maintain that their original assumption is better than plaintiff's proposed alternative. See Opp'n at 10-11.
In defendants' notice of removal, defendants originally determined these claims put $3,020,058.36 in controversy. But, as defendant later explains, “The data previously analyzed inadvertently contained an exempt employee, two employees who were hired but never performed any work, and one employee who commenced a lengthy leave of absence before the class period commenced and whose employment terminated during the class period before returning to work.” Opp'n at 10 n.2 (citing DiBartolo Decl. ¶¶ 5-7). Defendants' modified calculation is $3,013,253.32.
As an initial matter, the court finds defendants' original assumption-that class members missed two meal breaks and two rest breaks per week-is not facially unreasonable. Courts routinely approve higher violation rates based on allegations of “policies and practices” denying meal and rest breaks to class members. See, e.g., Bryant v. NCR Corp., 284 F.Supp.3d 1147, 1151 (S.D. Cal. 2018) (finding it reasonable to assume putative class members missed three meal periods and three rest periods per workweek where the complaint “offered no guidance as to the frequency of the alleged violations, only that Defendant had ‘a policy and practice' of meal and rest period violations”); Sanchez v. Abbott Labs., No. 20-cv-01436, 2021 WL 2679057, at *4-5 (E.D. Cal. June 30, 2021) (finding it reasonable to assume putative class members missed three meal periods and two rest periods per week based on the complaint's allegation of a “pattern and practice” of denying such breaks); Oda v. Gucci Am., Inc., No. 14-cv-07469, 2015 WL 93335, at *4-5 (C.D. Cal. Jan. 7, 2015) (finding it reasonable to assume putative class members missed 2.5 meal periods and 2.5 rest periods per week based on the complaint's allegations that class members “sometimes” did not receive all meal periods and defendant-employer “maintained a policy or practice” of not compensating employees for missed breaks). The court thus considers whether plaintiff has proposed a better alternative.
Plaintiff does not propose a better alternative. Plaintiff proposes the court assume class members missed only one meal break and one rest break per week, but the cases she cites do not lend sufficient support to her position. First, several of plaintiff's cases do not analyze language similar to the “policy and practice” language at issue here. See Mot. Remand at 14-15 (citing Armstrong v. Ruan Transp. Corp., No. 16-cv-1143, 2016 WL 6267931, at *3 (C.D. Cal. Oct. 25, 2016); Ray v. Nordstrom, Inc., No. 11-cv-7277, 2011 WL 6148668, at *3 (C.D. Cal. Dec. 9, 2011); Ruby v. State Farm Gen. Ins. Co., No. 10-cv-2252, 2010 WL 3069333, at *4-5 (N.D. Cal. Aug. 4, 2010)). Because these cases do not analyze the relevant language in plaintiff's complaint, or analogous language, they do not demonstrate plaintiff's assumption is superior to defendants'.
Second, several of plaintiff's cases hold that evidence is required to support an assumed violation rate and that a defendant cannot extrapolate violation rates from language in a complaint. See Mot. Remand at 14-15 (citing Armstrong, 2016 WL 6267931, at *3; Weston v. Helmerich & Payne Int'lDrilling Co., No. 13-cv-1092, 2013 WL 5274283, at *6 (E.D. Cal. Sep. 16, 2013); Ray, 2011 WL 6148668, at *3)). But these decisions have not survived Arias, in which the Ninth Circuit explicitly declined to require that a removing defendant provide evidence of its assumed violation rate. 936 F.3d at 927 (“The district court characterized [defendant's] assumed violation rates as being ‘speculation and conjecture,' apparently because [defendant] did not provide evidence proving the assumptions correct. . . . But assumptions made part of the defendant's chain of reasoning need not be proven; they instead must only have ‘some reasonable ground underlying them.'” (quoting Ibarra, 775 F.3d at 1199)); see also Hender v. Am. Directions Workforce LLC, No. 19-cv-01951-KJM-DMC, 2020 WL 5959908, at *6 (E.D. Cal. Oct. 8, 2020), recons. denied, No. 19-cv-01951-KJM-DMC, 2021 WL 2577030 (E.D. Cal. June 23, 2021) (“If the court were to be persuaded by Armstrong and require defendants provide information regarding complaints related to meal and rest break periods, it would run afoul of the Ninth Circuit's ruling in Arias.”). Because plaintiff's showing is less compelling than defendants', the court accepts defendant's original assumption that putative class members missed two meal breaks and two rest breaks per week.
Using this estimate, defendants calculate that plaintiff's claims for missed meal and rest breaks put $3,013,253.32 in controversy. See Opp'n at 20. Defendants arrive at this figure by multiplying three numbers together: 32, 767 workweeks completed by class members, 4 missed breaks per week, and the average hourly wage of $22.99 as the penalty for each missed break. See id. at 12; see also Cal. Lab. Code § 226.7(c) (employer shall pay one hour's pay for each missed meal period or rest break). The court adopts this estimate.
B. Overtime & Minimum Wage
For its most conservative estimate of unpaid overtime wages and unpaid minimum wages, defendants assume all class members worked one unpaid hour per week. See Not. Removal at 16-17, 19-20. For class members who worked at least forty hours per week, defendants treat this unpaid hour as an overtime violation, see id. at 16-17; for class members who worked less than forty hours per week, defendants treat this unpaid hour as a minimum wage violation, see id. at 19-20. In support, defendant points to language in the complaint alleging “class wide treatment, ” a “policy and practice, ” and a “regular[]” failure to pay minimum wage. See id. at 12 (citing Compl. ¶¶ 16, 22, 73). Plaintiff argues these assumptions are unreasonable, highlighting the absence of evidence or explicit allegations regarding frequency. See Mot. Remand at 17-19. As to both claims, plaintiff proposes reducing the assumed violation rate from one hour per week to thirty minutes per week. See id. at 19; Davis Decl. ¶ 8.
Defendants also characterize the complaint as alleging “all putative class members were subject to overtime violations.” Opp'n at 6 (citing Compl. ¶ 47) (emphasis in original). But the cited paragraph merely alleges that class members “regularly worked in excess of eight (8) hours in a day, and/or in excess of forty (40) hours in a week.” This allegation does not speak to the frequency with which defendants failed to pay overtime wages.
Initially, plaintiff also argued that defendants inappropriately drew unacceptably broad generalizations about scheduling based only on a recent workweek. See Mot. Remand at 17-19. Ms. DiBartolo's supplemental declaration appears to moot this issue, see DiBartolo Suppl. Decl. ¶¶ 8, 11, and plaintiff did not renew this argument in her reply.
Here as well, the court adopts both of defendants' assumptions. As an initial matter, the court finds neither is unreasonable on its face, and courts routinely accept such assumptions in analogous contexts. See, e.g., Jauregui, 28 F.4th at 995 (adopting defendant's assumption of one hour of unpaid work per week, where trial court had noted plaintiff's complaint alleged a “pattern and practice” of wage violations); Cabrera v. S. Valley Almond Co., LLC, No. 21-cv-00748, 2021 WL 5937585, at *8 (E.D. Cal. Dec. 16, 2021) (finding removing defendants' “assumptions of one hour of unpaid overtime per week and one hour of unpaid minimum wages per week are consistent with allegations that violations occurred ‘at times' and ‘on occasion,' particularly since the Complaint alleges that the Labor Code violations at issue in this case are due to ‘policies and/or practices' on the part of Defendants”). Plaintiff has not pointed to any evidence or case law supporting her proposed alternative. Instead, plaintiff relies on the bare allegations of the complaint and “Plaintiff's pre-litigation investigation, ” about which she provides no further information. See Mot. Remand at 19; Davis Decl. ¶ 8. Because defendants' original assumption ///// is more reasonable than plaintiff's proposed alternative, the court adopts defendants' assumption that all class members were unpaid for one hour of work per week.
Based on these assumptions, defendants calculate that plaintiff's overtime claim puts $848,867.88 in controversy by multiplying three numbers together: the number of workweeks completed by employees working at least forty hours per week (24, 612), one unpaid hour per week, and 150 percent of class members' average hourly wage ($34.49). See Opp'n at 9; see also Cal. Lab. Code § 510(a) (overtime is compensated at 1.5 times an employee's regular rate of pay). Defendants value plaintiff's minimum wage claim at $197,326.80 by multiplying three numbers together: the number of workweeks completed by employees working less than forty hours per week (8, 154), one unpaid hour per week, and the average minimum wage during the limitations period ($12.10), see Opp'n at 12; defendants then double the result because double damages are available for minimum wage violations, see id.; see also Cal. Lab. Code § 1194.2 (authorizing double damages for minimum wage violations); Jauregui, 28 F.4th at 995 n.7 (including liquidated damages in amount-in-controversy calculation for minimum wage claim under CAFA). The court adopts both estimates.
C. Waiting Time & Wage Statement Penalties
In connection with plaintiff's claims for waiting time and wage statement penalties, defendants assume no terminated employee was paid in full by the thirty-first day after termination, see Not. Removal at 20-21; Opp'n at 14-15, 20, and all pay stubs issued during the limitations period contained at least one error, see Not. Removal 21-23; Opp'n at 15-17, 20. Plaintiff does not propose an alternative violation rate for either claim. The court's analysis is thus limited to whether defendants' proposed assumptions are reasonable.
Defendants' proposed assumptions are reasonable. Both waiting time and wage statement penalties can be derivative of other Labor Code violations. See Cabrera, 2021 WL 5937585, at *10; Nunes v. Home Depot U.S.A., Inc., No. 19-cv-01207, 2019 WL 4316903, at *3 (E.D. Cal. Sept. 12, 2019). The assumed frequency with which class members did unpaid work and were denied breaks therefore logically supports defendants' assumptions here. See, e.g., Cabrera, 2021 WL 5937585, at *10 (because the court assumed “one overtime violation, one minimum wage violation, one meal break violation and one rest period violation per week for each putative class member[, i]t follows that each of the bi-weekly wage statements Defendants issued to putative class members during the period in question contained an error of some sort”); Nunes, 2019 WL 4316903, at *3 (“Given the allegations, it is reasonable to assume the terminated class members suffered at least one violation (e.g., one missed meal or rest break) and were therefore not paid all wages owed upon termination.”); see also Jauregui, 28 F.4th at 994 (rejecting district court's unwillingness to assume “that the vast majority (if not all)” terminated class members were entitled to 30 days of waiting time penalties in an analogous case). Because these two assumptions are reasonable and plaintiff offers no alternatives for comparison, the court adopts both.
In reliance on these assumptions, defendants generate their more conservative estimate for waiting time penalties-$795,637.92-by multiplying together four numbers: the number of class members terminated during the limitations period (206), 30 days of penalties for each terminated class member, the average number of hours worked per day by these employees (5.6), and the average hourly wage for all class members ($22.99). See Opp'n at 14-15; see also Cal. Lab. Code § 203(a) (authorizing recovery of up to thirty days' pay for failure to timely pay final wages); DiBartolo Suppl. Decl. ¶ 13 (putative class members terminated during the limitations period averaged 5.6 hours of work per day). Defendants value plaintiff's claim for wage statement penalties at $414,650 by adding two figures. First, defendants calculate the penalties associated with class members receiving their first noncompliant wage statement: 247 class members worked during the limitations period, each received at least one wage statement, and their first noncompliant wage statement occasioned a penalty of $50. Second, defendants calculate the penalties associated with all subsequent wage statements: the remaining 4, 023 pay periods worked during the limitations period each occasioned a penalty of $100. The resulting equation looks like this: (247 pay periods) x ($50) + (4, 270 - 247 pay periods) x ($50) = $414,650.00. See Opp'n at 17; see also Cal. Lab. Code 226(e)(1) (entitling employees to recover $50 for the first pay period in which they receive a noncompliant wage statement and $100 for each subsequent pay period in which they receive a noncompliant wage statement). The court adopts both figures.
The following chart reviews and totals the minimum amount in controversy of the claims the court adopts, as discussed above:
Claim
Amount in Controversy
Meal and Rest Breaks
$3,013,253.32
Overtime
$848,867.88
Minimum Wage
$197,326.80
Wage Statements
$414,650.00
Final Wages
$795,637.92
Total
$5,269,735.92
Without needing to reach plaintiff's remaining claims for attorneys' fees, unreimbursed business expenses, and failure to timely pay wages during employment, the court finds defendant has shown it is more likely than not that more than $5 million dollars is in controversy here.
III. CONCLUSION
Plaintiff's motion to remand is denied.
This order resolves ECF No. 5.
IT IS SO ORDERED.