Dell v. Servicemaster Global Holdings, Inc.

Northern District of California, cand-4:2015-cv-03326

Order by Hon. Saundra Brown Armstrong granting {{15}} Motion to Remand.

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1 2 3 UNITED STATES DISTRICT COURT 4 FOR THE NORTHERN DISTRICT OF CALIFORNIA 5 OAKLAND DIVISION 6 DANIEL DELL, individually and on behalf Case No: C 15-3326 SBA 7 of all others similarly situated, and as a proxy of the State of California on behalf of ORDER GRANTING PLAINTIFF'S 8 aggrieved employees, MOTION TO REMAND 9 Plaintiff, Dkt. 15 10 vs. 11 SERVICEMASTER GLOBAL HOLDINGS, INC., 12 Defendant. 13 14 This is a putative wage and hour class action initially filed in state court by Plaintiff 15 Daniel Dell ("Plaintiff") against his former employer, Defendant ServiceMaster Global 16 Holdings, Inc. ("Defendant"). On behalf of himself and similarly situated employees, 17 Plaintiff alleges claims for, inter alia, violations of the California Labor Code, as well as a 18 claim under the California Labor Code Private Attorneys General Act of 2004 ("PAGA"), 19 Cal. Labor Code § 2698. Defendant removed the action under the federal diversity statute, 20 28 U.S.C. § 1332(a), and the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). 21 The parties are presently before the Court on Plaintiff's Motion to Remand. Dkt. 15. 22 Having read and considered the papers filed in connection with this matter and being fully 23 informed, the Court hereby GRANTS the motion for the reasons set forth below and 24 remands the action to state court.1 25 26 27 1. The Court, in its discretion, finds this matter suitable for resolution without oral 28 argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b). 1 I. BACKGROUND 2 Plaintiff was previously employed by Defendant as a Termite Inspector 3 ("Inspector"). Compl. ¶ 1, Dkt. 1-2. According to Plaintiff, Defendants failed to pay him 4 and other Inspectors the specified commissions for their work. Id. ¶ 3. Plaintiff further 5 claims, inter alia, that Defendant failed to pay them on time or maintain accurate records of 6 their commission sales. 7 On April 29, 2015, Plaintiff filed the instant action in Alameda County Superior 8 Court, alleging nine causes of action for: (1) breach of contract; (2) breach of the covenant 9 of good faith and fair dealing; (3) unjust enrichment; (4) failure to pay for all hours worked 10 in violation of California Labor Code §§ 201, 202, 204, 221-223; (5) failure to keep 11 accurate records in violation of Labor Code §§ 1174 & 1174.5; (6) failure to furnish 12 accurate wage statements in violation of Labor Code § 226; (7) waiting time penalties 13 under Labor Code §§ 201-203; (8) unfair competition and unlawful business practices in 14 violation of California Business and Professions Code § 17200; and (9) statutory penalties 15 under PAGA. As relief, Plaintiff seeks recovery of unpaid compensation, damages, 16 statutory penalties, interest, attorneys' fees and costs. 17 Plaintiff brings the first eight causes of action as "class claims" on behalf of himself 18 and "all other similarly situated individuals who have worked as Inspectors for Defendant 19 in California" and who were paid in accordance with Defendant's commission-based 20 compensation plans. Id. ¶ 6. As for the ninth cause of action, Plaintiff asserts such claim 21 as "a proxy for the State of California for other aggrieved employees for penalties under the 22 PAGA." Id. ¶ 8. PAGA allows an "aggrieved employee" to file suit "on behalf of himself 23 or herself and other current or former employees" when the Labor and Workforce 24 Development Agency declines to investigate or issue a citation for an alleged Labor Code 25 violation. Cal. Lab. Code § 2699(a); Urbino v. Orkin Services of Cal., Inc., 726 F.3d 1118, 26 1121 (9th Cir. 2013). Unlike a class claim, a PAGA representative claim is brought on 27 behalf of the state, not class members. See Baumann v. Chase Investment Servs. Corp., 28 -2- 1 747 F.3d 1117, 1124 (9th Cir. 2014) ("A PAGA action is at heart a civil enforcement action 2 filed on behalf of and for the benefit of the state, not a claim for class relief.").2 3 On July 17, 2015, Defendant removed the action to this Court. Defendant first 4 alleges that there is complete diversity between Plaintiff and Defendant, and that the 5 amount in controversy exceeds $75,000. Not. of Removal. at 4, 9, Dkt. 1. Defendant 6 values Plaintiff's individual claims at $17,710 and projects his future attorneys' fees to be 7 $75,000, for a total of $92,710 as the amount in controversy. Id. at 9. Alternatively, 8 Defendant alleges that federal jurisdiction is present under CAFA in that the class contains 9 more than 100 members and the amount in controversy exceeds $5 million. Id. at 10-11. 10 Defendant claims that the amount in controversy is $6,408,187.50, which is based on 11 $5,126,550 as the value of the class claims, plus $1,281,637.50 in projected attorneys' fees 12 as to the class claims.3 Id. at 16. 13 Plaintiff now moves to remand the action on the grounds that Defendant has failed to 14 carry its burden of proving that the amount in controversy necessary for removal has been 15 satisfied. Defendant timely filed an opposition to the motion.4 The matter is fully briefed 16 and is ripe for adjudication. 17 II. LEGAL STANDARD 18 A motion for remand is the proper procedure for challenging a removal. Remand 19 may be ordered either for lack of subject matter jurisdiction or for any defect in the removal 20 21 2 Under PAGA, a representative plaintiff may seek penalties in the sum of one hundred dollars ($100) per aggrieved employee, per pay period, for an initial Labor Code 22 violation, and two hundred dollars ($200) for each subsequent violation per aggrieved employee, per pay period. Cal. Lab. Code § 2699(f)(2). If an employee successfully 23 recovers an award of civil penalties, PAGA mandates that 75 percent of the recovery be paid to the Labor and Workforce Development Agency, leaving the remaining 25 percent 24 as recovery for the employee. Id. § 2699(i); see Urbino, 726 F.3d at 1121. 25 3 Defendant presumes that Plaintiff's attorneys' fees will be based on 25% of the damage award (i.e., $5,526,550 x 25% = $1,281,637.50). Not. of Removal at 15-16. 26 4 Without leave of Court, Defendant filed a nineteen-page opposition brief, which 27 exceeds the fifteen-page limit set forth in the Court's Standing Orders. Although the Court is within its authority to disregard Defendant's non-compliant opposition, it will consider 28 the arguments set forth therein to expedite resolution of the instant motion. -3- 1 procedure. See 28 U.S.C. § 1447(c). "[R]emoval statutes are strictly construed against 2 removal." Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th 3 Cir. 2008). "The presumption against removal means that the defendant always has the 4 burden of establishing that removal is proper." Moore-Thomas v. Alaska Airlines, Inc., 5 553 F.3d 1241, 1244 (9th Cir. 2009). Any doubts regarding the propriety of the removal 6 favor remanding the case. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 7 III. DISCUSSION 8 A. FEDERAL DIVERSITY STATUTE 9 The diversity jurisdiction statute confers jurisdiction in cases where the parties are 10 citizens of different states and the amount in controversy exceeds the sum of $75,000. 11 28 U.S.C. ' 1332(a). The amount in controversy is determined by the amount of damages 12 or the value of the property that is the subject matter of the action. Hunt v. Washington 13 State Apple Advertising Comm'n, 432 U.S. 433 (1977). The defendant bears the burden of 14 proving by a preponderance of the evidence that the amount in controversy meets the 15 jurisdictional threshold. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004). 16 Like the removal statute, the diversity jurisdiction statute is strictly construed and any 17 doubts are resolved against finding jurisdiction. Luther v. Countrywide Home Loans 18 Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 2008). 19 In its Notice of Removal, Defendant estimates that the total amount in controversy 20 as to Plaintiff's individual claims is $92,710. See Not. of Removal at 9. Of that amount, 21 $75,000 is attributable to future attorneys' fees. Although the Ninth Circuit has not yet 22 reached the issue, the majority of district courts within this Circuit—including this Court— 23 have concluded that attorneys' fees that are "anticipated but unaccrued at the time of 24 removal are not properly in controversy for jurisdictional purposes." Reames v. AB Car 25 Rental Servs., Inc., 899 F. Supp. 2d 1012, 1019 (D. Or. 2012); accord Jimenez v. Menzies 26 Aviation, Inc., No. C 10-3477 SBA, 2013 WL 1411228, *2 (N.D. Cal., Apr. 8, 2013). As 27 such, Defendant's inclusion of $75,000 in future attorney's fees for purposes of calculating 28 the amount in controversy is improper. Because the amount in controversy as to Plaintiff's -4- 1 individual claims has not been shown to exceed $75,000, the Court finds that Defendant has 2 failed to carry its burden of demonstrating the presence of diversity jurisdiction under 28 3 U.S.C. § 1332(a). 4 B. CAFA 5 CAFA provides that district courts have original jurisdiction over any class action in 6 which (1) the amount in controversy exceeds $5 million; (2) any plaintiff class member is a 7 citizen of a state different from any defendant; and (3) the number of plaintiffs in the 8 putative class is at least 100. 28 U.S.C. § 1332(d). A "defendant in a jurisdictional dispute 9 has the burden to put forward evidence showing that the amount in controversy exceeds $5 10 million, to satisfy other requirements of CAFA, and to persuade the court that the estimate 11 of damages in controversy is a reasonable one." Ibarra v. Manheim Invs., Inc., 775 F.3d 12 1193, 1197 (9th Cir. 2015). The defendant must make this showing based on a 13 preponderance of the evidence. Rodriguez v. AT&T Mobility Servs., LLC, 728 F.3d 975, 14 981 (9th Cir. 2013). The amount in controversy is determined by the class claims. 15 Yocupicio v. PAE Grp., LLC, 795 F.3d 1057, 1060 (9th Cir. 2015). PAGA claims cannot 16 be aggregated with class claims to satisfy the jurisdictional amount required under CAFA. 17 Id.; Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117, 1122 (9th Cir. 2014) (same). 18 The parties do not dispute that the second and third requirements of CAFA are met; 19 the sole point of contention is whether the amount in controversy exceeds $5 million. 20 According to Defendant, the amount in controversy is $6,408,187.50. The flaw in this 21 argument is that Defendant inappropriately relies on PAGA penalties to reach CAFA's $5 22 million threshold. Among other claims, Plaintiff alleges violations of Labor Code § 204 for 23 failing to timely pay employees for hours worked, and violations of Labor Code §§ 221 24 through 223 for improperly withholding and deducting wages. Compl. ¶¶ 69-70. 25 Defendant alleges that the remedy for a violation of Labor Code § 204 is determined by 26 reference to § 210(a)(2), which, in this case, results in a penalty of $917,700. Not. of 27 Removal at 6. Similarly, Defendant avers that the penalties for violations of Labor Code 28 §§ 221 through 223 are determined by reference to § 225.5, which results in a separate -5- 1 penalty of $917,700. Id. at 14. However, both penalties are attributable to Plaintiff's 2 representative claim under PAGA, see Cal. Lab. Code §§ 210(b), 225.5, and therefore 3 cannot be included in Defendant's CAFA calculation of the amount in controversy, see 4 Yocupicio, 795 F.3d at 1060. Removing both penalties from Defendant's CAFA 5 calculation leaves only $4,572,787.50 in controversy (i.e., $6,408,187.50 – ($917,700.00 + 6 $917,700.00) = $4,572,787.50). 7 Defendant does not dispute Plaintiff's assertion that the Notice of Removal includes 8 penalties available under PAGA as part of the overall amount alleged in controversy, and, 9 that under Yocupicio, it is generally inappropriate to do so. Rather, Defendant argues that 10 Yocupio is inapposite on the grounds that Plaintiff allegedly is bringing his PAGA claim on 11 a class basis and that the class claims incorporate PAGA penalties. This contention lacks 12 merit. In Paragraph 36 of the Complaint, Plaintiff clearly states that "[he] brings the PAGA 13 Cause of Act as a law enforcement action, not as a class action." Compl. ¶ 36 (emphasis 14 added). The Ninth Circuit has held that this type of disclaimer is "fatal" to any claim that a 15 PAGA representative claim could be deemed a class claim. Yocupicio, 795 F.3d at 1060 16 n.7 ("the fact that Yocupicio expressly did not seek class status for [the PAGA] claim is 17 'fatal to CAFA jurisdiction' over it."). Defendant's contention also mischaracterizes the 18 pleadings. The paragraphs of the Complaint cited by Defendant merely state that Plaintiff, 19 on behalf of the class, seeks the recovery of damages and "penalties." Opp'n at 7-8 (citing 20 Compl. ¶¶ 74, 79, 80, 88, 89).5 However, the Labor Code sections that form the basis of 21 Plaintiff's class claims already include non-PAGA statutory penalties as a remedy. See 22 Cal. Lab. Code §§ 210, 225.5, 1174.5. As such, the mere reference in the Complaint to 23 24 25 26 5 By way of example, Paragraph 74, which is part of the Fourth Cause of Action for 27 Failure to Keep Accurate Payroll Records, alleges that Plaintiff, on behalf of himself and the class, "seeks all unpaid compensation, damages, penalties, interest and attorneys' fees 28 and costs, recoverable under applicable law set forth below." Compl. ¶ 74. -6- 1 "penalties" does not, as Defendant insists, necessarily establish that Plaintiff is seeking 2 PAGA penalties on a class basis.6 3 The Court concludes that Defendant has failed to carry its burden of demonstrating 4 by a preponderance of the evidence that at least $5 million is in controversy. Jurisdiction 5 under CAFA, therefore, has not been established. 6 IV. CONCLUSION 7 For the reasons set forth above, 8 IT IS HEREBY ORDERED THAT, pursuant to 28 U.S.C. § 1447(c), Plaintiff's 9 Motion to Remand is GRANTED. The instant action is REMANDED to the Alameda 10 County Superior Court. The Clerk shall mail a certified copy of this Order to the clerk of 11 that court. The Clerk shall close the file and terminate all pending matters. 12 IT IS SO ORDERED. 13 Dated: 11/5/15 ______________________________ SAUNDRA BROWN ARMSTRONG 14 Senior United States District Judge 15 16 17 18 19 20 21 22 23 24 25 6 Plaintiff also challenges Defendant's inclusion of $122,500 in penalties under Labor Code § 1174.5 for failure to maintain payroll records, as required by § 1170. Not. of 26 Removal at 14. The parties disagree whether the $500 penalty under § 1174.5 may be imposed only once against an employer or may be recoverable by each class member. 27 Neither party cites any decisional authority directly on point. The Court need not reach this issue, however. Even if the $122,500 amount is legitimately part of the amount in 28 controversy, the CAFA $5 million minimum has not been satisfied. -7-