Asia Thompson v. La Petite Academy, Inc.

• Court: District Court, C.D. California
• Decided: October 6, 2022
• Docket: 2:22-cv-04348
• Status: Unknown

Opinion

Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 1 of 11 Page ID #:204

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 ASIA THOMPSON, an individual and Case No. 2:22-CV-04348-AB (JPRx) on behalf of all others similarly 10 situated,

11 Plaintiff, ORDER DENYING PLAINTIFF’S 12 v. MOTION TO REMAND LA PETITE ACADEMY, INC., a 13 Delaware corporation; LEARNING CARE GROUP (MI), INC., a Michigan 14 corporation; AIMEE WARD, an individual; and DOES 1 through 100, 15 inclusive, Defendants. 16 17 Before the Court is Plaintiff Asia Thompson’s (“Plaintiff”) Motion for Order 18 Remanding Action to State Court (“Motion,” Dkt. No. 10). Defendants La Petite 19 Academy, Inc., Learning Care Group (MI), Inc. (“LCG”), and Aimee Ward 20 (“Defendants”) filed an opposition (Dkt. No. 13) and Plaintiff filed a reply (Dkt. No. 21 14). The Court finds this matter appropriate for resolution without oral argument and 22 therefore VACATES the October 7, 2022 hearing. See Fed. R. Civ. P. 78; C.D. Cal. 23 L.R. 7-15. The Motion is DENIED. 24 I. BACKGROUND 25 Plaintiff initiated this action by filing a Complaint in California Superior Court 26 for the County of Los Angeles on May 11, 2022 against Defendants. (See Not. of 27 Removal Exh. A (“Compl.”).) The Complaint alleges that Plaintiff and the putative 28 1. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 2 of 11 Page ID #:205

1 class members were not paid all wages, provided meal and rest periods, issued 2 accurate wage statements, or paid all wages due upon termination. Compl. ¶¶ 11-18. 3 Plaintiff alleges that these violations “aris[e] out of and [were] caused by Defendants’ 4 common course of conduct in violation of laws and regulations,” and that 5 “Defendants’ policies and/or practices that have resulted in the violation of the Labor 6 Code.” Id. ¶¶ 27, 29. Plaintiff also consistently alleges that the violations occurred 7 only “at times.” See, e.g., id. ¶ 29. 8 Defendants removed the action to this Court on June 24, 2022 on the basis of 9 the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). See Notice of 10 Removal (“NOR,” Dkt. No. 1). On July 25, 2022, Plaintiff filed the present Motion 11 along with Objections to Evidence and the Declaration of Jeffrey C. Bils (“Bils 12 Decl.”). (See Dkt. Nos. 10-1, 10-2.) 13 II. LEGAL STANDARD 14 A. Removal 15 A defendant may remove a civil action filed in state court to federal court when 16 the federal district court has original jurisdiction over the action. 28 U.S.C. § 1441(a). 17 “A suit may be removed to federal court under 28 U.S.C. § 1441(a) only if it could 18 have been brought there originally.” Sullivan v. First Affiliated Sec., Inc., 813 F.2d 19 1368, 1371 (9th Cir. 1987). 20 A removing defendant bears the burden of establishing federal jurisdiction. See 21 Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). To meet 22 this burden as to the amount in controversy, “a defendant’s notice of removal need 23 include only a plausible allegation that the amount in controversy exceeds the 24 jurisdictional threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 25 U.S. 81, 88 (2014) (citing 28 U.S.C. § 1446(c)(2)(B)). 26 Only “when the plaintiff contests, or the court questions, the defendant’s 27 allegation” must the defendant submit evidence to establish the amount in controversy 28 by a preponderance of the evidence. Id. at 89 (citing 28 U.S.C. § 1446(c)(2)(B)); see 2. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 3 of 11 Page ID #:206

1 Ibarra, 775 F.3d at 1195; Harris v. KM Industrial, Inc., 980 F.3d 694, 699 (9th Cir. 2 2020) (“When a plaintiff mounts a factual attack, the burden is on the defendant to 3 show, by a preponderance of the evidence, that the amount in controversy exceeds the 4 $5 million jurisdictional threshold.”). The Court should “treat the removal petition as 5 if it had been amended to include the relevant information contained in the later-filed 6 affidavits.” Willingham v. Morgan, 395 U.S. 402, 407 n.3 (1969); see also Cohn v. 7 Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (“The district court did not err in 8 construing Petsmart’s opposition as an amendment to its notice of removal.”). The 9 plaintiff may submit evidence to the contrary. Ibarra, 775 F.3d at 1198 (citing Dart 10 Cherokee, 574 U.S. at 89). “The parties may submit evidence outside the complaint, 11 including affidavits or declarations, or other ‘summary-judgment-type evidence 12 relevant to the amount in controversy at the time of removal.’” Id. at 1197 (quoting 13 Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). Once 14 “both sides submit proof . . . the court then decides where the preponderance lies.” 15 Ibarra, 775 F.3d at 1198. “Under this system, a defendant cannot establish removal 16 jurisdiction by mere speculation and conjecture, with unreasonable assumptions.” Id. 17 at 1197. 18 B. Jurisdiction under Class Action Fairness Act (CAFA) 19 The Class Action Fairness Act (“CAFA”) gives federal courts jurisdiction over 20 specified class actions if (1) the parties are minimally diverse, (2) the putative class 21 has more than 100 members, and (3) and the aggregated amount in controversy 22 exceeds $5 million. 28 U.S.C § 1332(d)(2). “[N]o antiremoval presumption attends 23 cases invoking CAFA.” Bridewell-Sledge v. Blue Cross of Cal., 798 F.3d 923, 929 24 (9th Cir. 2015). In fact, “Congress passed CAFA with the ‘overall intent . . . to 25 strongly favor the exercise of federal diversity jurisdiction over class actions with 26 interstate ramifications.’” Brinkley v. Monterey Fin. Servs., Inc., 873 F.3d 1118, 1121 27 (9th Cir. 2017) (quoting S. Rep. No. 109 14, 35 (2005)). 28 3. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 4 of 11 Page ID #:207

1 III. DISCUSSION 2 Plaintiff argues that the Court lacks subject matter jurisdiction because 3 Defendants cannot demonstrate that the amount in controversy exceeds $5 million as 4 required by CAFA. In assessing the amount in controversy, courts first look to the 5 allegations in the complaint. Ibarra, 775 F.3d at 1197. Courts can accept a plaintiff’s 6 good faith allegation of the amount in controversy. Id. But if the “plaintiff’s complaint 7 does not state the amount in controversy, the defendant’s notice of removal may do 8 so.” 28 U.S.C. § 1446(c)(2)(A); Dart Cherokee, 574 U.S. at 84. 9 Here, the Complaint does not allege an amount in controversy. See Compl. In 10 their Notice of Removal, Defendants allege that based on the violations alleged by 11 Plaintiff, the amount in controversy is estimated to be $7,272,433.77. See NOR at 5-6. 12 Because Plaintiff contests the amount in controversy, Defendants must provide 13 evidence to support their calculations. To satisfy that requirement, Defendants filed 14 declarations from Andrew Cook, labor economist and consultant (Cook Decl., Dkt. 15 No. 13-1); Monica Howard, senior counsel of Childtime Childcare, Inc., a subsidiary 16 of Defendant LCG (Howard Decl., Dkt. No. 13-2); and David Szwarcsztejn, counsel 17 to Defendants. (Szwarcsztejn Decl., Dkt. No. 13-3.) Based on the evidence discussed 18 in those declarations, Defendants submit figures regarding the damages estimated for 19 certain of Plaintiff’s claims. Defendants did not calculate damages for all of Plaintiff’s 20 claims because they contend that the below claims alone exceed CAFA’s amount in 21 controversy requirement: 22 Claim Amount in Controversy 23 Unpaid Meal Premiums $1,472,660.26 24 Waiting Time Penalties $3,997,572.50 Wage Statement Penalties $1,802,200.00 25 Total $7,272,433.77 26 NOR at 6. The Court notes that Plaintiff does not provide any evidence to rebut 27 Defendants’ showing. 28 4. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 5 of 11 Page ID #:208

1 A. Evidentiary Objections 2 Plaintiff filed evidentiary objections to Defendants’ evidence, in particular to 3 the Cook Declaration. (Dkt. No. 10-2.) Plaintiff objects that parts of the Cook 4 Declaration violate the best evidence rule, fail to authenticate, and are hearsay. 5 In evaluating the existence of diversity jurisdiction on a motion to remand, 6 courts “consider . . . summary-judgment-type evidence relevant to the amount in 7 controversy at the time of removal.” Fritsch, 899 F.3d at 793. “An affidavit or 8 declaration used to support or oppose a motion [for summary judgment] must . . . set 9 out facts that would be [but not necessarily are] admissible in evidence . . . .” Fed. R. 10 Civ. P. 56(c)(4). At summary judgment a district court may consider hearsay evidence 11 submitted in an inadmissible form, so long as the underlying evidence could be 12 provided in an admissible form at trial. See JL Beverage Co., LLC v. Jim Beam 13 Brands Co., 828 F.3d 1098, 1110 (9th Cir. 2016). 14 Plaintiff objects to certain parts of the Cook Declaration based on Federal Rules 15 of Evidence (FRE) 1002, the best evidence rule. Plaintiff contends that the actual 16 contents of the payroll database or certain of the Excel sheets referred to should be 17 provided rather than simply referred to in a declaration in order to prove the amount of 18 Plaintiff’s wages and other figures relied upon. However, under FRE 1002, “payment 19 may be proved without producing the written receipt which was given. Earnings may 20 be proved without producing books of account in which they are entered.” Fed. R. 21 Evid. 1002 Advisory Committee’s Note. Further, Plaintiff has had an opportunity to 22 claim that the figures reported are incorrect, but has not done so. Accordingly, this 23 objection is overruled. 24 The objections based on lack of foundation, inadmissible opinion of lay 25 witness, hearsay and speculation are overruled. Howard, as a Senior Counsel 26 employed by a subsidiary of Defendant LCG, and a person with access to the 27 company’s records and familiar with the data bases and computer systems that 28 Defendant LPA uses to maintain its human resources, timekeeping, and payroll 5. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 6 of 11 Page ID #:209

1 records, stated that she gave accurate copies of these reports to Cook to analyze. 2 Howard Decl. ¶¶ 1-6. 3 More significantly, and as to Plaintiff’s remaining evidentiary objections, 4 Plaintiff does not argue that Defendants’ declarations and evidence would not be 5 admissible under any circumstances at a trial, and the material does not present any 6 insurmountable evidentiary obstacles. Accordingly, the Court may consider this 7 evidence. Plaintiff’s evidentiary objections are OVERRULED. 8 B. Waiting Time Penalties Estimate is Reasonable 9 Plaintiff asserts that Defendants improperly rely on a 100 percent violation rate 10 in estimating the waiting time penalties. Mot. at 10. Plaintiff points out that the 11 Complaint expressly states only that Defendants “at times” failed to pay overtime 12 wages or provide all wages earned prior to termination or resignation, making use of a 13 100 percent violation rate in the calculation incorrect and unreasonable. See, e.g., 14 Compl. ¶¶ 11, 63-64. 15 A removing defendant is entitled to make “reasonable assumptions” about 16 violation rates to estimate the amount in controversy. Arias v. Residence Inn by 17 Marriott, 936 F.3d 920, 922 (9th Cir. 2019). Plaintiff uses this language to argue that 18 Defendants unreasonably assumed that the violation rate regarding the waiting time 19 penalties was 100 percent. 20 Cal. Labor Code § 203 provides that employers who fail to timely pay all 21 earned wages upon termination are subject to a fine equal to the employee’s normal 22 wages for each day the wages are late, up to a maximum of 30 days. To make their 23 calculation of almost $4 million in waiting time penalties, Defendants assume that 24 each of the terminated putative class members did not receive “at least one” fully 25 compliant meal break during the tenure of their employment and were not paid the 26 meal premium pay in lieu thereof. Defendants calculate: $15.56 (average base hourly 27 rate) x 7.06 (average work day) x 30 (maximum days of penalty pay) x 1,213 (number 28 of putative class members terminated during three-year period) = $3,997,572.50 in 6. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 7 of 11 Page ID #:210

1 waiting time penalties. NOR at 4. 2 As an initial matter, Plaintiff does not challenge Defendants’ evidence or 3 methodology of calculating the number of putative class members or their hourly 4 wages. Plaintiff bases her argument that Defendants would have “at times” incurred 5 waiting time penalties based on the “at times” failure to pay overtime wages. Mot. at 6 10. However, Defendants base their calculation of waiting time penalties on Plaintiff’s 7 allegations of failure to provide meal periods. NOR at 4-5. Defendants assume, based 8 on the allegations, that each of the putative class members is entitled to the maximum 9 waiting time penalty based on having missed one fully compliant meal break during 10 the tenure of their employment. NOR at 4. The missing meal period as the underlying 11 violation is a conservative estimate based on the allegations in the Complaint, but 12 there need only be one violation that results in the failure to pay an employee upon 13 termination or resignation in order to incur the waiting time penalties. 14 Further, while Plaintiff does allege that the failure to pay wages owed upon 15 termination or resignation occurred “at times,” Plaintiff also alleges that this failure 16 was an “intentional[]. . . polic[y].” Compl. ¶ 64. Plaintiff alleges that Defendants 17 “intentionally adopted policies or practices incompatible with the requirements of 18 Labor Code sections 201 and 202 resulting in the failure, at times, to pay all wages 19 earned period to termination or resignation.” Id. (emphasis added). In other words, 20 Plaintiff alleges both that the failure to pay owed wages on termination or resignation 21 resulted from an “intentional[] polic[y] or practice[]” and also that these failures 22 occurred only “at times.” Plaintiff then attempts to use the phrase “at times” to 23 distinguish this case from numerous cases where courts found that it was reasonable to 24 assume a 100 percent violation rate based on a pattern or practice. Mot. at 10-11; see, 25 e.g., Marquez v. Southwire Co., LLC, No. 21-cv-252-JGB (SPx), 2021 WL 2042727, 26 at *6 (C.D. Cal. May 21, 2021) (“If Defendant had a ‘pattern and practice’ of refusing 27 to grant meal and rest breaks or pay class members for all hours worked, then it is 28 likely that all or nearly all class members experienced wage statement and delay 7. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 8 of 11 Page ID #:211

1 violations.”). Plaintiff cannot have it both ways. The Court finds Defendants’ 2 assumption that each putative class member would be owed waiting time penalties 3 was reasonable. 4 Plaintiff also argues that Defendants improperly assumed and provided no 5 evidence to in support of their assumption that each class member would be owed the 6 maximum statutory penalty. Mot. at 10; see Garibay v. Archstone Communities LLC, 7 539 F. App’x 763, 764 (9th Cir. 2013) (“Archstone assumes that each employee 8 would be entitled to the maximum statutory penalty, but provides no evidence 9 supporting that assertion.”). “[A]llegations of unpaid wages are implicit allegations of 10 maximum damages for waiting time penalties.” Ramos v. Schenker, Inc., No. 18-cv- 11 01551-JLS (KKx), 2018 WL 5779978, at *2 (C.D. Cal. Nov. 1, 2018). In other words, 12 Plaintiff alleges that Defendants have failed to pay the wages required upon 13 termination or resignation, not that they failed to do so within 3 to 30 days or some 14 other amount of time less than the statutory maximum. The maximum statutory 15 penalty therefore is not “assumed” at all; rather, such damages are evident from the 16 face of the Complaint. 17 Accordingly, Defendants have properly supported their calculation of damages 18 based on waiting time penalties. 19 C. Wage Statement Estimate is Reasonable 20 Plaintiff argues that Defendants’ estimate of the damages flowing from 21 penalties owed based on inaccurate wage statements is “exaggerated” because it 22 assumes that every wage statement for every putative class member would have 23 contained an inaccuracy. Mot. at 12. 24 Defendants calculated their figure for damages as follows: 1,086 (number of 25 putative class members) x $50] + [(18,565 (wage statements issued during one-year 26 limitations period) – 1,086 (number of 1-year putative class members)) x $100] = 27 $1,802,200. NOR at 5. Defendants’ calculations are based on records of employees 28 and wage statements that Plaintiff does not contest. Plaintiff only takes issue with 8. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 9 of 11 Page ID #:212

1 Defendants’ assumption that each wage statement would have contained an 2 inaccuracy. 3 “[D]istrict courts have held that it is particularly reasonable to assume that each 4 putative class member suffered at least one violation during any given pay period, 5 resulting in an inaccurate wage statement, where, as here, plaintiff also alleges that 6 defendant had a policy or practice of failing to pay minimum wages and overtime 7 wages, and failing to provide meal periods.” Mariscal v. Arizona Tile, LLC, No. 02- 8 cv-071-JLS (KESx), 2021 WL 1400892, at *4 (C.D. Cal. Apr. 14, 2021) (citing 9 Altamirano v. Shaw Industries, Inc., 2013 WL 2950600, *11 (N.D. Cal. June 14, 10 2013)). Ignoring her own allegations of intentional policies, Plaintiff relies on the “at 11 times” language peppered throughout the Complaint, including alongside allegations 12 of intentional policies of violations. Plaintiff argues that this language means that any 13 assumption made by Defendants regarding the violation rate of any of the claimed 14 offenses was unreasonable. But with regards to the wage statement violations, this 15 argument is particularly untenable because Plaintiff also consistently alleges policies 16 that resulted in the several kinds of violations underlying Plaintiff’s claims. It is 17 therefore not unreasonable to assume that at least one of these violations resulted in an 18 inaccurate wage statement each pay period. 19 The Court wonders what violation rate would be reasonable for Defendants to 20 assume given Plaintiff’s allegations that Defendants had intentional policies that only 21 resulted in violations “at times.” Accepting Plaintiff’s argument regarding its “at 22 times” language could defeat any assumption by Defendants regarding any violation 23 rate. This is contrary to Ninth Circuit law that Defendants may rely on reasonable 24 assumptions in calculating damages for purposes of removal. Given the allegations 25 about the existence of policies resulting in the underlying violations, it was reasonable 26 to assume that each wage statement contained at least one inaccuracy, making 27 Defendants’ assumption in their calculation reasonable. 28 9. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 10 of 11 Page ID #:213

1 D. Meal Period Damages Estimates are not Exaggerated 2 Plaintiff argues that Defendant’s calculations of damages for meal periods are 3 “based on the wrong variables” because Defendants use the average hourly rate for all 4 putative class members, rather than only for class members that worked shifts that 5 lasted more than five hours. Mot. at 14. Plaintiff asserts that this “improperly inflates” 6 the estimated amount in controversy because such class members “may have had a 7 lower average rate of pay when compared to the average rate of pay for all putative 8 class members.” Id. While Defendants based their estimated amount in controversy on 9 evidence, Plaintiff’s argument against the calculation is purely speculative. Thus, 10 Plaintiff has not offered a viable alternative that supports her argument, while 11 Defendants have shown by a preponderance that their estimate is reasonable. Even if 12 Defendants did use “the wrong variables,” Plaintiff does not argue, and it would seem 13 exceedingly unlikely, that the difference in the damage estimates would be 14 appreciable. 15 Plaintiff further argues that Defendants reached their damages figure “by 16 assuming, without any factual basis, a 20% violation rate for Plaintiff’s meal period 17 claim,” which “does not track the Complaint, as Plaintiff alleges only that Defendant 18 at times failed to provide Plaintiff with compliant meal periods or compensation in 19 lieu thereof.” Mot. at 14 (citing Compl. ¶ 48) (emphasis in original). 20 Plaintiff’s Complaint offers no guidance as to the frequency of the alleged 21 violations, relying instead on allegations that Defendants “at times” failed to provide 22 meal periods or compensation for missed meal periods to assert that Defendants’ 23 assumed 20% rate is unreasonable. See Compl. ¶¶ 48-49. For the reasons discussed 24 above, the Court rejects this argument. “[A] removing defendant is not obligated to 25 research, state, and prove the plaintiff’s claims for damages,” and requiring 26 Defendants to accurately interpret the meaning of “at times” would require them to 27 effectively do so. Mortley v. Express Pipe & Supply Co., No. 17-cv-1938-JLS (JDEx), 28 2018 WL 708115, at *2 (C.D. Cal. Feb. 5, 2018) (citing Korn v. Polo Ralph Lauren 10. Case 2:22-cv-04348-AB-JPR Document 18 Filed 10/06/22 Page 11of11 Page ID#:214

1 | Corp., 536 F. Supp. 2d 1199, 1204-05 (E.D. Cal. 2008)). The assumed violation rate 2 | of 20% is reasonable, particularly in light of Plaintiffs failure to offer any alternative 3 | limiting principle or rebuttal evidence. See Mariscal, LLC, 2021 WL 1400892, at *3 4 | (holding same regarding defendants’ assumed violation rate of 25%); Stanley v. 5 | Distribution Alternatives, Inc., No. 17-cv-2173-AG (KKx), 2017 WL 6209822, at *2 6 | (C.D. Cal. Dec. 7, 2017) (accepting defendant’s assumptions regarding meal period 7 | violation rates and observing that plaintiff provided no allegations concerning 8 || frequency of the alleged violations and no competing evidence that would suggest 9 | lower violate rates). 10 In sum, Defendants have demonstrated by a preponderance of the evidence that 11 | the amount in controversy exceeds $5 million. 12 | IV. CONCLUSION 13 For the reasons stated above, the Court DENIES Plaintiff's motion to remand. 14 15 IT IS SO ORDERED. 16 dy 17 || Dated: October 06, 2022 18 HONORABLE ANDRE BIROTTE JR. 9 UNITED STATES DISTRICT COURT JUDGE

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