Albert Ibarra v. SMG Holdings Inc.

Opinion

CV 21-6959-RSWL-MAR x ALBERT IBARRA and DUSTIN WALL, ORDER re: MOTION TO REMAND [7, 10] Plaintiff, v. SMG HOLDINGS INC. dba GREEK THEATRE, a Delaware Corporation; UTP PRODUCTIONS, INC., a Utah Corporation; and Does 1 to 100, Defendants. Currently before the Court is the Motion to Remand (the “Motion”) [7, 10] filed by Plaintiffs Albert Ibarra and Dustin Wall (“Plaintiffs”). Having reviewed all papers submitted pertaining to this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the Court DENIES the Motion.

Plaintiffs are residents of Los Angeles,

California. SAC ¶ 3. Defendant SMG is a corporation, incorporated under the laws of Delaware with its principal place of business in Pennsylvania. Notice of Removal (“Removal”) ¶ 12, ECF No. 1. Defendant UTP is also a corporation, incorporated under the laws of Utah with its principal place of business in Utah. Id. ¶ 13. Plaintiffs allege that Defendants “jointly own, manage, and/or operate” Plaintiffs’ place of employment. SAC ¶ 4. Plaintiffs filed their Complaint [1-1] against Defendants, L.A. Arena, and C&C on November 17, 2020, alleging various wage and hour violations, harassment, discrimination, retaliation, unfair business practices, and wrongful termination. Plaintiffs filed a First Amended Complaint [1-2], in which no parties or allegations were changed. Defendant SMG then filed a demurrer [1-3] to Plaintiffs’ FAC, which the Superior Court sustained [1-4] on July 2, 2021, with 30 days’ leave to amend. Plaintiffs then filed a Second Amended Complaint [1-5] on July 26, 2021, which named only Defendant SMG and Defendant UTP as defendants in the Action. Defendant UTP filed its Answer [1-6] to the SAC in state court on August 26, 2021. Defendant SMG requested a statement of damages from each Plaintiff, and Defendant SMG was served with Plaintiffs’ responses [1-10, 1-11] on August 20, 2021. Each Plaintiff asserted $2,490,046.51 in damages.

Defendant SMG then removed [1] the Action to this Court

on August 27, 2021, stating that removal was proper under 28 U.S.C. §§ 1332 and 1441 because it was within 30 days of their receipt of Plaintiffs’ statements of damages, which were the first papers from which it was ascertainable that the amount in controversy exceeded $75,000. Moreover, Defendant SMG asserted that the Action was not removable until L.A. Arena and C&C, which both had principal places of business in California, were no longer defendants in the Action. Removal ¶ 17 n.1. Plaintiffs filed the instant Motion to Remand [7] on September 17, 2021. Defendant SMG filed its Opposition [8] on September 28, 2021, and Plaintiffs replied [9] on October 4, 2021. A. Legal Standard To establish removal jurisdiction over a diversity action, the removing defendant must file a notice of removal in the proper district court demonstrating that (1) the amount in controversy exceeds $75,000, and (2) the suit is between citizens of different states. See 28 U.S.C. § 1332. A corporation is “deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). On the other hand, a limited liability company (“LLC”) is a citizen of every state of which its owners or members are citizens

for purposes of diversity jurisdiction. Johnson v.

Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Typically, a defendant must file the notice of removal within 30 days after service of the complaint. 28 U.S.C. § 1446(b)(1). Where the case is not initially removable, however, a defendant may file a notice of removal within 30 days after receipt of “an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” Id. § 1446(b)(3). A motion for remand is the proper procedure for challenging removal and may be ordered for either lack of subject matter jurisdiction or any procedural defect in removal. See 28 U.S.C. § 1447(c). Courts strictly construe the removal statutes against removal jurisdiction, and jurisdiction must be rejected if there is any doubt as to the right of removal. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). B. Discussion Plaintiffs do not dispute that diversity of citizenship exists between Plaintiffs and Defendants, nor that the amount in controversy is met. See generally Pls.’ Mot. to Remand (“Mot.”), ECF No. 7. Rather, Plaintiffs argue that removal was untimely because the case was removable since the Original Complaint (“OC”) was filed on October 5, 2020, yet Defendant SMG filed its Notice of Removal on August 27,

2021. Id. at 5:4-16. Defendant SMG argues that the

Motion should be denied both because removal was timely and for procedural defects under Rule 11 of the Federal Rules of Civil Procedure and Local Rule 7-3. See generally Def.’s Opp’n to Mot. to Remand (“Opp’n”), ECF No. 8. 1. Rule 11 Defendant SMG argues that Plaintiffs’ Motion must be stricken because the Notice of Motion is not signed. Opp’n 4:15-25. Rule 11(a) of the Federal Rules of Civil Procedure requires all papers filed with the Court to “be signed by at least one attorney of record in the attorney’s name.” Further, courts “must strike an unsigned paper unless the omission is promptly corrected after being called to the attorney’s or party’s attention.” Fed. R. Civ. P. 11(a). Here, Plaintiffs’ original Notice of Motion, filed on September 17, 2021, was not signed by their attorney. See Mot. 2:20. However, on October 4, 2021, Plaintiffs filed a Corrected Motion that included a signed Notice of Motion. See Pls.’ Corrected Mot. to Remand 2:18-19, ECF No. 10. Because the Rule 11 violation was promptly corrected through the Corrected Motion, the Court declines to strike Plaintiffs’ Motion. See Townsend v. Akami Techs., Inc., No. CV 08–05534 MMM (SSx), 2008 WL 11338205, at *1 (C.D. Cal. Oct. 24, 2008) (declining to strike plaintiff’s complaint for being improperly signed because plaintiff’s filing of a properly signed

opposition to the motion to strike operated as “an

adoption and certification of the allegations and claims in the complaint pursuant to Rule 11”). 2. Local Rule 7-3 Defendant SMG additionally argues that Plaintiffs’ Motion should be denied for failure to comply with Local Rule 7-3. Opp’n 5:18-6:4. Local Rule 7-3 provides, in relevant part, that “counsel contemplating the filing of any motion shall first contact opposing counsel to discuss thoroughly, preferably in person, the substance of the contemplated motion and any potential resolution. The conference shall take place at least seven (7) days prior to the filing of the motion.” L.R. 7-3. “Failure to comply with the Local Rules does not automatically require the denial of a party’s motion, however, particularly where the non-moving party has suffered no apparent prejudice as a result of the failure to comply.” CarMax Auto Superstores Cal. LLC v. Hernandez, 94 F. Supp. 3d 1078, 1088 (C.D. Cal. 2015). Plaintiffs argue that they complied with Local Rule 7-3 because on September 8, 2021, their counsel “emailed counsel for Defendant[,] Rosely George[,] and notified her that Plaintiffs intended to . . . file a motion to remand this action.” Pls.’ Reply in Supp. of Mot. (“Reply”) 3:4-6, ECF No. 9. However, Rosely George appears to be counsel only for Defendant UTP and not for Defendant SMG. See Notice of Removal Ex. 6 (“Defendant UTP Answer”), ECF No. 1-6. Because Plaintiffs made no

effort to contact counsel for Defendant SMG, they are in

violation of Local Rule 7-3. Nevertheless, Defendant SMG does not seem to have been prejudiced by the violation because it was fully able to respond to Plaintiffs’ motion. See generally Opp’n. Moreover, it is unlikely that further meet and confer efforts between Plaintiffs and Defendant SMG will help to resolve this Motion because the parties dispute a single issue: whether removal was timely. Thus, the Court elects to consider the merits of the Motion. See CarMax Auto Superstores Cal. LLC, 94 F. Supp. 3d at 1088 (electing to consider the merits of motion despite a violation of Local Rule 7-3); De Walshe v. Togo's Eateries, Inc., 567 F. Supp. 2d 1198, 1205 (C.D. Cal. 2008) (same). 3. Timeliness of Removal Plaintiffs argue that Defendant SMG’s removal was untimely because this Action was always removable, as Plaintiffs reside in California and all Defendants were foreign entities. Mot. 8:5-12. Defendant SMG counters that the case was not initially removable because L.A. Arena and C&C are LLCs with principal places of business in California. Opp’n 8:1-10. Moreover, Defendant SMG argues its removal was timely because it was within 30 days of its receipt of Plaintiffs’ statements of damages, which were the first papers upon which it was ascertainable that the amount in controversy requirement for removal was satisfied. Id. at 8:22-9:1. The federal removal statute “provides two thirty-

day windows during which a case may be removed — during

the first thirty days after the defendant receives the initial pleading or during the first thirty days after the defendant receives a paper ‘from which it may first be ascertained that the case is one which is or has become removable’ if ‘the case stated by the initial pleading is not removable.’” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 692 (9th Cir. 2005) (citing 28 U.S.C. § 1446(b)). The first thirty-day period applies only if the face of the initial pleading affirmatively reveals the grounds for removal. Id. at 695. Otherwise, the removal clock only begins to run once the defendant has actual notice of a case’s removability. Id. at 697. Here, the removal clock did not begin to run upon Plaintiffs’ filing of the OC because the OC did not affirmatively reveal the grounds for removal. While Plaintiffs sought compensatory damages, statutory penalties, attorneys’ fees, and punitive damages in the OC, the OC fails to provide information that is necessary for calculating actual damages. For example, Plaintiffs stated that they “are entitled to one and one half (1 1/2) times and/or double their regular rate of pay for overtime work” and to compensation for “all hours worked, but not paid,” for the “four (4) years preceding the filing of this Complaint.” Original Compl. (“OC”) ¶ 46, 54. However, Plaintiffs did not allege what their rate of pay was, nor how many

violations occurred during those four years. Without

this information, Defendant SMG had no means of determining the amount of actual damages from the OC and “had no further duty to estimate or investigate whether the case was removable.” Sheppard v. Staffmark Inv., LLC, No. 20-cv-05443-BLF, 2020 WL 5593232, at *3 (N.D. Cal. Sept. 18, 2020) (finding that plaintiff’s complaint did not facially allege an amount in controversy because it provided “no specification of how many times the listed Labor Code violation may have occurred”). Moreover, Plaintiffs asserted claims under California’s Fair Employment Practices Act for harassment and discrimination, as well as claims for retaliation and wrongful termination, but they failed to state the dollar amount they are seeking to recover for these claims. Nor do Plaintiffs seek damages for emotional pain and suffering. See OC 40:4-16; cf. Rodriguez v. Boeing Co., No. CV 14–04265–RSWL (AGRx), 2014 WL 3818108, at *5 (C.D. Cal. Aug. 1, 2014) (finding that the complaint sufficiently triggered the first 30- day period because plaintiff alleged a specific rate of pay and was a long-term employee seeking lost income, damages for emotional pain and suffering, punitive damages, and attorneys’ fees, and it was “facially apparent that the back-pay damages alone would come close to the jurisdictional minimum”). Indeed, the only dollar amount asserted by Plaintiffs in the OC is a $10,000 civil penalty, OC ¶ 99, which is clearly

insufficient to satisfy the amount in controversy.

Without more certainty as to actual damages, Defendant SMG was not required to assume that the case was removable simply because Plaintiffs sought punitive damages and attorneys’ fees in the OC. See Duran v. DHL Express (USA), Inc., No. CV 15-09965-BRO (Ex), 2016 WL 742864, at *4 (C.D. Cal. Feb. 24, 2016) (stating that unsubstantiated allegations seeking punitive damages and attorneys’ fees do not affirmatively reveal that a case is removable). Plaintiffs further argue that Defendant SMG’s support for removal “was based solely on the contents of the Complaint itself.” Mot. 8:7-9. The Court disagrees. Defendant SMG relied solely on Plaintiffs’ statements of damages in determining that the amount in controversy requirement was satisfied. Removal ¶ 14-16. It was only upon receipt of these statements, on August 20, 2021, that Defendant SMG had actual notice that the amount in controversy exceeded $75,000. Because Defendant SMG removed only seven days thereafter, removal was timely and the Court therefore DENIES the Motion.1 1 Plaintiffs’ argument for untimeliness seems to be based entirely on the notion that the OC “clearly stated on [its] face that the instant action was proper for removal[,] as all Defendants were foreign entities.” Mot. 8:6-7. Plaintiffs offer no further information as to the citizenship of either L.A. Arena or C&C, the parties who were dropped from the Action when Plaintiffs filed their SAC on July 26, 2021. In their Based on the foregoing, the Court DENIES

Plaintiffs’ Motion. DATED: October 22, 2021 ______/_s_/ _R_o_n_a_ld_ S__.W__. _Le_w_________ HONORABLE RONALD S.W. LEW Senior U.S. District Judge initially removable because both L.A. Arena and C&C are LLCs with principal places of business in California. Opp’n 7:1-10. Neither party applies the proper standard for determining the citizenship of an LLC, which is considered a citizen of every state of which its owners or members are citizens for purposes of diversity jurisdiction. Johnson, 437 F.3d at 899. In any event, the citizenship of these entities does not affect the timeliness of removal because, as explained above, it was not ascertainable that this Action was removable until Defendant SMG received the