Opinion
3:23-cv-01204-BEN-LR
11-17-2023
JOSE VALENZUELA, as an individual and on behalf of all others similarly situated, Plaintiff, v. CALENERGY OPERATING CORPORATION, a Delaware corporation; and DOES 1 through 100, inclusive, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND [ECF NO. 13]
HON. ROGER T. BENITEZ UNITED STATES DISTRICT JUDGE
On April 12, 2023, Plaintiff Jose Valenzuela (“Plaintiff') filed a civil class action complaint in the Imperial County Superior Court against Defendant CalEnergy Operating Corporation (“Defendant”) and one hundred “Doe” Defendants alleging eight state law claims for various wage and hour violations. ECF No. 1. On June 29, 2023, Defendant removed the action to this Court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Id.
Before the Court is Plaintiffs Motion to Remand. ECF No. 13. Defendant filed an opposition to this motion and Plaintiff replied. ECF No. 15, 17. The briefing was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 18. After considering the applicable law and the parties' arguments, the Court GRANTS Plaintiffs Motion to Remand.
I. LEGAL STANDARDS
A defendant in state court may remove a civil action to federal court so long as that case could originally have been filed in federal court. 28 U.S.C. § 1441(1); City of Chi v. Int'l Coll, of Surgeons, 522 U.S. 156, 163 (1997). Removal of a state action may be based on either diversity or federal question jurisdiction. City of Chi, 522 U.S. at 163; Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The removal statutes are strictly construed, and removal jurisdiction is to be rejected in favor of remand if there are doubts as to the right of removal. Nev. v. Bank of Am. Corp., 672 F.3d 661, 667 (9th Cir. 2012).
Relevant here, where a “plaintiffs state court complaint does not specify a particular amount of damages, the removing party bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the threshold at the time of removal.” Canela v. Costco Wholesale Corp., 971 F.3d 845, 849 (9th Cir. 2020) (quoting Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996) (cleaned up)). If the amount in controversy is challenged, the parties “may submit evidence outside of the complaint, including affidavits or declarations, or other ‘summary-judgment-type evidence relevant to the amount in controversy at the time of removal.'” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (citing Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). The amount in controversy includes “damages (compensatory, punitive, or otherwise), the costs of complying with an injunction, and attorneys' fees awarded under fee-shifting statutes or contract.” Fritsch v. Swift Transp. Co. of Arizona, LLC, 899 F.3d 785, 793 (9th Cir. 2018).
III. DISCUSSION
Plaintiff was employed by Defendant as a senior power plant operator between August 16, 2010 and February 7, 2023. ECF No. 1-2, Complaint (“Compl.”) ¶ 9. During his employment, Plaintiff alleges Defendant failed to comply with numerous California labor law requirements surrounding time keeping, meal and rest periods, overtime pay, and accurate wage statements. Id. ¶ 10-20. The Complaint estimates approximately 250 proposed class members. Id. ¶ 23.
In the Motion to Remand, Plaintiff argues Defendant failed to establish the amount in controversy (“AIC”) required for removal. ECF No. 13 (“Mot.”) at 2. Plaintiff notes that Defendant removed the action based on traditional diversity jurisdiction and not the Class Action Fairness Act (“CAFA”). Mot. at 6; ECF No. 1 at 1. This distinction is important. To establish the AIC under CAFA, the potential awards of all class members may be aggregated. See Ibarra, 775 F.3d at 1197 (“the defendant seeking removal bears the burden to show ... that the aggregate amount in controversy exceeds []” the jurisdictional requirement under CAFA) (citation omitted). However, the potential awards of class members may not be aggregated for cases removed on traditional diversity grounds. See Canela, 971 F.3d at 850; see also Gibson v. Chrysler Corp., 261 F.3d 927, 941 (9th Cir. 2001) (only claims of named class plaintiffs may be used to calculate AIC); Snyder v. Harris, 394 U.S. 332, 335 (1969) (long standing “anti-aggregation rule” applies such that two or more plaintiffs' claims cannot be aggregated to satisfy jurisdictional AIC).
Defendant's sole basis for establishing the AIC in the Notice of Removal is Plaintiffs expected attorneys' fees. ECF No. 1 at 6-7. Plaintiff argues this is insufficient for two reasons. First, Plaintiff argues Defendant's estimation of Plaintiff s attorneys' fees is not supported by evidence. Mot. at 8-9. Defendant responds by arguing the Notice of Removal need not contain evidence and is only required to provide a “short, plain statement” of the basis for removal. ECF No. 15 (“Oppo.”) at 5. Notice of Removal aside, the Court notes Defendant did not submit any evidence to support its AIC calculations with its Opposition, despite the opportunity to do so in light of Plaintiff s challenge.
Second, Plaintiff argues Defendant's calculations are legally unsound because attorneys' fees must be apportioned across the entire class for the purpose of calculating the AIC in class actions. Mot. at 10-11 (citing Gibson, 261 F.3d at 941-43). Defendant does not substantively respond to this point. Instead, Defendant argues first that Gibson is factually distinct from the case at hand and second, that attorneys' fees may be calculated “based on the amount of billable hours needed to prosecute an action[,]” which would make Defendant's calculation reasonable. Oppo at 14. However, Defendant does not adequately explain how the factual distinctions between Gibson and the present case invalidate the Ninth Circuit's holding that attorneys' fees must be apportioned across the class to calculate the AIC. Nor does Defendant point to any authority which contradicts or distinguishes Gibson's holding. Of the three cases cited by Defendant, Sanchez v. Russell Sigler, Inc., appears closest to the point based on Defendant's description of the court's holding. No. CV 15-01350-AB, 2015 WL 12765359 at *2-4 (C.D. Cal. Apr. 28, 2015). However, Sanchez involved a case removed under CAFA. Given CAFA allows for aggregation of plaintiffs' claims (which would include attorneys' fees) to meet the AIC, the court's holding in Sanchez is inapposite here. The lack of alternative authority to Gibson is fatal to Defendant's second argument, because even fees “based on the amount of billable hours needed to prosecute an action” would still need to be apportioned among the class. See also Arceo v. Ardent Mills, LLC, No. 23-cv-Ol 146-AB-E, 2023 WL 5096332 at *4 (C.D. Cal. Aug. 8, 2023) (“This is not a CAFA case;
Additionally, at least one district court found that the attorney fee provision in the Song Beverly Warranty Act is analogous to the relevant California Labor Code sections for wage and hour lawsuits. See Guerrero v. Nwestco, LLC, No. 22-cv-01620-WBS-JDP, 2022 WL 16961124 at *3-4 (E.D. Cal. Nov. 16, 2022).
Defendant also cites Swans v. Fieldworks, LLC, No. 22-cv-07250-SPG-MRW, 2023 WL 196918 at *2-3 (C.D. Cal. Jan. 17, 2023); and Bockrath v. Apt. Inv. & Mgmt. Co., No. CV-20-04179-CJC-PJW, 2020 WL 3469265 at *2-3 (C.D. Cal. Jun. 25, 2020). However, the question of allocating attorneys' fees was not addressed in either case. Moreover, the court in Bockrath was skeptical of the defendant's estimate of attorneys' fees which extended through trial, stating, “Defendant's approach would give this Court diversity jurisdiction over any case removed . . . where the parties are completely diverse.” Id.
Defendant removed based on traditional diversity .... Accordingly, the Court will divide the $55,000 estimated attorneys' fee by [the number of estimated class members], and attribute that amount [] to Plaintiff for purposes of calculating the amount in controversy.”). Accordingly, Defendant's estimation of $75,000 of attorneys' fees, when correctly divided among the class of 250 individuals, would only amount to $300 assigned to Plaintiff. By itself, this certainly fails to establish the jurisdictional threshold.
Defendant attempts to salvage its removal by providing a calculation of the potential awards across all claims. Oppo, at 9-16. However, Defendant impermissibly aggregates the potential awards of the entire class to reach the AIC instead of calculating Plaintiff's individual award. Id.-, Reply at 7-8. As noted above, when a case is removed on traditional diversity grounds, the potential awards of multiple plaintiffs may not be aggregated to establish the AIC. Gibson, 261 F.3d at 941; see also Urbino v. Orkin Servs. of California, Inc., 726 F.3d 1118, 1122 (9th Cir. 2013). Even assuming Defendant's calculations are accurate, when correctly apportioned among class members Plaintiff's share of the total award across all claims (including attorneys' fees) would only amount to roughly $54,300. See Oppo, at 9-16.
In sum, for this wage and hour case, Plaintiff has not claimed damages in any particular amount. He has not said that his damages are less than the jurisdictional amount of $75,000, only that Defendant's speculation as to the likely size of an attorney fee award is an insufficient basis for diversity jurisdiction on removal. Because the burden to prove removal jurisdiction is on the Defendant, and that burden has not been carried, the case will be remanded. However, should Plaintiff assert on remand that he has been damaged in an amount in excess of $75,000, sanctions under F.R.C.P. 11 may be entertained by this Court. Kloberdanz v. Martin, 1999 U.S. App. LEXIS 38084, *4-5 (9th Cir. 1999) (citing Willy v. Coastal Corp., 503 U.S. 131, 137-38 (1992)) (“A district court has the power to award sanctions sua sponte pursuant to Rule 11 and its inherent powers. It also has the power to impose sanctions after it has determined that it has no subject matter jurisdiction.”).
The Court finds Defendant has not met its burden to prove the amount in controversy required to establish this Court's jurisdiction. Accordingly, the Court GRANTS Plaintiffs Motion to Remand. 28 U.S.C. § 1447(c).
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs Motion and REMANDS Plaintiffs claims to the Superior Court of California, for the County of Imperial.
IT IS SO ORDERED.