Barrett v. Armadillo Holdings, LLC

Opinion

PORSCHE BARRETT, on behalf of NO. 1:22-CV-00882-DJC-DB herself and on behalf of all persons similarly situated,

Plaintiff, ORDER v. ARMADILLO HOLDINGS, LLC, Defendant.

Pending before the Court is Plaintiff’s Motion to Remand (ECF No. 13), arguing

that Defendant has failed to establish the requisite amount in controversy required for

jurisdiction under the Class Action Fairness Act. For the reasons set forth below, the

Court finds that Defendant has failed to carry its burden of establishing the monetary

threshold amount for jurisdiction and accordingly GRANTS the Motion to Remand. I. Background Plaintiff is a former employee of Defendant Armadillo Holdings, LLC, doing Business as Texas Roadhouse. (Compl. (ECF No. 1, Ex. A) ¶¶ 1, 10.) Plaintiff brings claims on behalf of herself and other employees similarly situated alleging that Defendant failed to provide legally required meal and rest breaks; compensate her and other employees for those missed breaks, actual time worked, and off-the-clock work; pay overtime and other wage premiums; reimburse her and other employees

for business expenses; and failed to issue accurate itemized wage statements, among

other violations. (Id. ¶¶ 17, 18–47.) She alleges these violations were systematic and

were carried out as a matter of company policy. (Id. ¶ 17.) Plaintiff brings claims

under the California Unfair Competition Law (“UCL”), California Business & Professions

Code §§ 17200, et seq.; and Cal. Lab. Code §§ 1194, 1197, 1197.1, 510, 1198, 226.7,

512, 226, 203, and 2802.

This action was originally filed in the Superior Court of California, Stanislaus

County on May 4, 2022. (Id. at 1.) Defendant was served on June 15, 2022, and

removed this action on July 5, 2022, claiming that this Court has jurisdiction under the

Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). (Not. Removal (ECF No. 1) at

2.) Plaintiff brings the instant Motion to Remand arguing that Defendant has failed to

substantiate its amount-in-controversy calculations to meet the monetary threshold for

CAFA jurisdiction. (See generally Mot. to Remand. (“Mot.”) (ECF No. 13).) Defendant

opposes the Motion. (Def.’s Opp’n (“Opp’n”) (ECF No. 21).)

On January 26, 2024, the Court, on its own motion, requested supplemental

briefing from the Defendant to address the Court’s concern that the calculations were

not limited to potential class members, and that Plaintiff potentially did not have

standing to pursue waiting time penalties.1 (Order (ECF No. 35).) Defendants filed a

supplemental brief, (ECF No. 36), and Plaintiff filed a Sur-Reply, (ECF No. 37.)

This matter is now fully briefed and hereby submitted upon the record and

briefs of the Parties, without oral argument, pursuant to Local Rule 230(g).

II. Legal Standard

“[A]ny 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, or the

1 Defendant states that Plaintiff resigned her employment during the interim period which resolves the Court’s general concerns about whether Plaintiff has standing to pursue this claim and thus whether the Court may consider Defendants’ calculation of damages arising from this claim. defendants, 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).

A defendant removing a class action filed in state court pursuant to CAFA need

only plausibly allege in the notice of removal that the CAFA prerequisites are satisfied.

Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 87 (2014). If the plaintiff

seeks to remand that action back to state court, however, the defendant bears the

evidentiary burden of establishing federal jurisdiction under CAFA by a

preponderance of the evidence. See id. at 88 (quoting 28 U.S.C. § 1446(c)(2)(B)); see

also Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 978 (9th Cir. 2013). “If at

any time before final judgment it appears that the district court lacks subject matter

jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c); see also Smith v. Mylan,

Inc., 761 F.3d 1042, 1044 (9th Cir. 2014); Bruns v. NCUA, 122 F.3d 1251, 1257 (9th

Cir. 1997). The Supreme Court has advised, however, “that no antiremoval

presumption attends cases invoking CAFA” in part because the statute was enacted

“to facilitate adjudication of certain class actions in federal court,” and because

“CAFA's provisions should be read broadly, with a strong preference that interstate

class actions should be heard in a federal court if properly removed by any

defendant.” Dart Cherokee, 574 U.S. at 89 (citations and quotations omitted); see also

Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015).

III. Discussion

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.

When a plaintiff’s complaint does not quantify damages, a defendant 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). A defendant is only required to show that it is more likely than not that the

plaintiff's maximum recovery could reasonably be over $5 million. Avila v. Rue21, Inc.,

432 F. Supp. 3d 1175, 1185 (E.D. Cal. 2020). This burden is not daunting as “a

removing defendant is not obligated to ‘research, state, and prove the plaintiff's

claims for damages.’” Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1204–05

(E.D. Cal. 2008) (citation omitted). Rather, 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.” (emphasis in original)). These assumptions must

reflect more than “mere speculation and conjecture,” Ibarra, 775 F.3d at 1197, and

“need some reasonable ground underlying them,” id. at 1199, but they “need not be

proven,” Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019).

Assumptions may be reasonable if they are “founded on the allegations of the

complaint.” Id. at 925. Parties may also submit evidence outside the complaint,

including affidavits, declarations, or other summary-judgment type evidence relevant

to the amount-in-controversy. Ibarra, 775 F.3d at 1197.

The plaintiff can contest the amount-in-controversy by making either a “facial”

or “factual” attack on the defendant's jurisdictional allegations. Harris v. KM Indus.,

Inc., 980 F.3d 694, 699 (9th Cir. 2020). “A facial attack accepts the truth of the

[defendant's] allegations but asserts that they are insufficient on their face to invoke

federal jurisdiction.” Id. (citations and quotations omitted). A factual attack, on the

other hand, contests the truth of the allegations themselves. Id. When a plaintiff

mounts a factual attack, they “need only challenge the truth of the defendant’s

jurisdictional allegations by making a reasoned argument as to why any assumptions

on which they are based are not supported by evidence.” Id. at 700. Here, the Complaint does not specify an amount-in-controversy, thus

Defendant has presented their own amount-in-controversy calculation, arguing that

the operative amount is between $11,354,950.45 and $15,250,453.15. (Not.

Removal ¶ 49; Def.’s Supp. Brief (ECF No. 36) at 5.) Plaintiff mounts a factual attack on

Defendant’s calculation disputing whether Defendant has sufficiently supported the

assumptions undergirding their amount-in-controversy calculation. (Mot. at 4; Reply

(ECF No. 23) at 3–4.)

The primary evidence Defendant offers in support of removal are four

declarations: one from Don Estepp, Chief Financial Officer of Armadillo Holdings, LLC

(the “Estepp Declaration” (ECF No. 1, Ex. B)), and three from employees of Ultra

Streak, Inc., which maintains the financial and human resources records for Armadillo

Holdings, LLC (the “Belton Declaration” (ECF No. 21-1); the “O’Bold Declaration” (ECF

No. 21-2) and the “Supp. O’Bold Declaration” (ECF No. 36-1)). Heather Belton, the

Development and Compliance Manager at Ultra Streak, attests to her personal

knowledge of and describes the systems used to collect, maintain and process payroll

and personnel data. (Belton Decl. ¶¶ 3–6.) She collected and reviewed data to

identify the number of terminated non-exempt employees between May 4, 2019 and

April 4, 2022, and described how she calculated the average hourly rate of pay for

those employees. (Id. ¶¶ 7–8.) Similarly, Kevin O’Bold, Vice President of Finance for

Ultra Streak, Inc., attests to his personal knowledge of and describes the systems used

to collect, maintain and process payroll and personnel data. (O’Bold Decl. ¶¶ 3–7.)

He collected payroll data for non-exempt employees from May 4, 2018 to May 4, 2022

into a combined report, determined the number of unique employees, the average

shift length, the average wage, the average weekly hours worked, and the number of

shifts exceeding both 4 and 5 hours. (Id. ¶¶ 8–9.) Mr. O’Bold also collected and

reviewed data concerning wage statements from May 4, 2021 to May 4, 2022,

determined the number of unique non-exempt employees who worked at least one

rest or meal-break eligible shift, and the number of wage statements issued that contained a break eligible shift during the time period. (Id. ¶¶ 10–11; Supp. O’Bold

Decl. ¶ 4–6.) Mr. Estepp also attests to having personal knowledge of Armadillo

Holdings LLC’s human resources records, and reviewing the same data and

determining the same numbers described in the Belton and O’Bold Declarations.

(Estepp Decl. ¶¶ 3–5.)

Based on this data Defendant calculated the amount-in-controversy as follows:

• Meal and rest break violations: Defendant used two potential violation rates,

a violation rate of 40%, i.e., two meal and rest break violations per week, and

a violation rate of 20%, i.e., one meal and one rest break violation per week,

and multiplied the average hourly rate, $14.642 by the number of meal

break eligible shifts, 487,754 (shifts over 5 hours) and the number of rest

break eligible shifts, 576,591 (shifts over 4 hours), and then by the rate of

violation. (Opp’n at 8–9.) Defendant calculated the value of the claims at

the 20% violation rate to be $3,116,402.16, and the value of the claims at

the 40% violation rate to be $6,232,804.32. (Id.)

• Wage statement penalties: Defendant assumed a violation rate of 100% for

the wage statement violations. (Id. at 12.) Defendant determined that 1,847

non-exempt employees worked at least one break eligible shift, and that

Defendant issued 21,544 total wage statements which included at least one

break eligible shift during the relevant one-year period. (Def.’s Supp. Brief

at 2.) It then calculated a $50 penalty for each initial wage statement

violation for each of the 1,847 employees, and a $100 penalty for each of

the remaining wage statements assuming each represented a subsequent

violation. (Id. at 2.) In total, the Defendant calculated the value of this claim

to be $2,062,050.00. (Id.)

////

2 An employee who does not receive a meal or rest period to which she is entitled shall be paid one hour of pay at her regular rate of compensation as premium pay. See Cal. Lab. Code § 226.7(b). • Waiting time penalties: Defendant assumed a violation rate of 100% for the

waiting time penalties. (Opp’n at 14.) Defendant determined that 1,485

individuals terminated their employment with Defendant during the relevant

time period, that the average hourly wage of these employees was $14.48,

and that the employees worked an average of 6.05 hours per shift. (Id. at

14–15.) Defendant multiplied the average rate of pay by the average shift

length, then multiplied that number by 30 days (the maximum days for the

penalty to apply), and then multiplied by 1,485, the number of former non-

exempt employees, to reach a valuation of $3,902,758.20. (Id.)

• Attorneys’ fees: Defendant set attorneys’ fees3 at 25% of the damages

calculated above, using either the 40% or 20% violation rate for the meal

and rest period violations. (Id. at 18; Def.’s Supp. Brief at 5.) Using a 40%

break violation rate, the total of the damages above would be equal to

$12,197,612.5, making attorneys’ fees equal to $3,049,403.13. Using the

20% break violation rate, the total of the damages above would be equal to

$9,081,210.36, making attorneys’ fees equal to $2,270,302.59. (Def.’s

Supp. Brief at 5.)

In total, Defendant estimated the amount-in-controversy to be

$15,247,015.65 using the 40% violation rate for the meal and rest break violations,

or $11,351,512.95 using the 20% violation rate for the meal and rest break

violations. (Id.)

Plaintiff challenges this amount by arguing that the violation rates utilized by

Defendant to make these calculations are unsupported and unreasonable.4

3 Attorney’s fees may be included when calculating the amount in controversy supporting CAFA jurisdiction. See Galt v. Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998) (“We hold that where an underlying statute authorizes an award of attorneys' fees, either with mandatory or discretionary language, such fees may be included in the amount in controversy.”). 4 While Plaintiff initially challenged the sufficiency of the Estepp Declaration relied on in Defendant’s Notice of Removal, Plaintiff acknowledges in her Reply that the Belton and O’Bold Declarations provide sufficient information about the source of the data and methodology, stating that “Plaintiff’s Motion does not challenge the ‘truth’ of the data in Defendant’s declarations per se, but rather the violation a. Reasonableness of Defendant’s Calculations

Plaintiff alleges that Defendant unreasonably, and without support from the

Complaint, assumes both a meal and rest break violation occurred either once (20%)

or twice (40%) per week for each class member given that Plaintiff uses language

limiting the frequency of the violations throughout the Complaint. Plaintiff similarly

alleges the 100% violation rate for wage statement penalties and waiting time

penalties is unsupported by the Complaint. Finally, Plaintiff alleges Defendant has

presented no justification for assuming attorneys’ fees amount to 25% of the damages

award.

Generally, “the facts alleged in the complaint . . . are to be taken as true for

purposes of calculating the amount in controversy.” Campbell v. Vitran Exp., Inc., 471

Fed. App'x. 646, 648 (9th Cir. 2012); see also Kenneth Rothschild Trust v. Morgan

Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D. Cal. 2002) (“In measuring the

amount in controversy, a court must ‘assume that the allegations of the complaint are

true and assume that a jury will return a verdict for the plaintiff on all claims made in

the complaint.’”) The Defendant may make certain assumptions underlying a

damages calculation, but the "assumptions cannot be pulled from thin air [and] need

some reasonable ground underlying them." Ibarra, 775 F.3d at 1199. To assess

assumptions underlying amount-in-controversy calculations, Jauregui dictates that:

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 has analyzed Defendant’s

rates as being unsupported by such declarations, or any competent evidence currently put forth by Defendant.” (Reply at 9.) assumptions to determine if any are unreasonable or baseless. Id. Where Plaintiff has

presented no alternatives, the Court cannot consider any.

i. Defendant’s 20% Meal and Rest Break Rate is Reasonable

The Court concludes Defendant’s calculation for the Meal and Rest Break claim

is reasonable given a 20% violation rate. “[W]hen the plaintiff claims a ‘pattern and

practice’ of violations” “courts in the Ninth Circuit have frequently held a violation rate

between 20% and 60% to be reasonable” as applied to meal breaks, and “a 10% to

30% violation rate to be reasonable” when applied to rest breaks. Sanchez v. Abbott

Lab’ys, No. 2:20-cv-01436-TLN-AC, 2021 WL 2679057, at *5 (E.D. Cal. June 30, 2021)

(collecting cases). Plaintiff here alleges the kind of pattern and practice which would

ordinarily support an assumption that violations occurred multiple times per week:

Plaintiff alleges that Defendant “intentionally, knowingly and systematically failed to

provide legally compliant meal and rest periods” in accordance with Defendant’s

“strict corporate policy and practice.” (Compl. ¶¶17–18.) See, e.g., Johnson v. Bamia

2 LLC, No. 2:22-CV-00548-KJM-AC, 2022 WL 2901579, at *3 (E.D. Cal. July 22, 2022)

(defendants’ assumption that class members missed two meal breaks and two rest

breaks per week was reasonable given that plaintiff alleged putative class members

were “regularly denied” legally compliant breaks and were “often” or “routinely”

unable to take compliant breaks due to defendants’ “uniform policies/practices”).

These, allegations, standing alone, would support Defendant’s 40% violation rate.

However, Plaintiff also occasionally uses limiting language, alleging that Plaintiff

experienced the meal and rest break violations only “[f]rom-time-to time.” While the

limitation of “from time-to-time” does not fully undermine Defendant’s assumptions

where the complaint otherwise alleges a pattern and practice,5 courts have found a

violation rate of no more than 20%, or once per week, is appropriate where there are

5 This case is unlike, for example, Rodriguez v. Circle K Stores Inc., where the court found a violation rate of even once per week unreasonable in light of the plaintiff’s “from time-to-time” allegation. No. ED CV- 19-0469-FMO-SP, 2019 WL 3026747, at *3 (C.D. Cal. July 11, 2019). There, the complaint did not contain the same pattern and practice allegations present in this case. both pattern and practice allegations and this type of limiting language. See, e.g.,

Cabrera v. South Valley Almond Co., LLC, No. 1:21-CV-00748-AWI-JLT, 2021 WL

5937585, at *8 (E.D. Cal. Dec. 16, 2021) (“[A]ssumptions 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 [when

a] Complaint alleges that the Labor Code violations at issue [ ] are due to ‘policies

and/or practices’ on the part of [d]efendants.”); Ramirez v. Cornerstone Bldg. Brands,

No. 2:21-CV-01017-MCE-JDP, 2022 WL 1556664, at *1 (E.D. Cal. May 17, 2022) (20%

violation rate was reasonable where complaint contained allegations of violations

occurring “often” or “from time to time” as well as violations resulting from “company-

wide policies and procedures”); Nunes v. Home Depot U.S.A., Inc., No. 2:19-CV-

01207-JAM-DB, 2019 WL 4316903, at *2 (E.D. Cal. Sept. 12, 2019) (applying 20%

violation rate where there were allegations of a uniform policy and practice, and

allegations that the violations occurred from time to time); Serrieh v. Jill Acquisition

LLC, No. 2:23-CV-00292-DAD-AC, 2023 WL 8796717, at *3 (E.D. Cal. Dec. 20, 2023)

(24% violation rate reasonable based on similar allegations). Here, because Plaintiff

tempers the policy and practice allegations by asserting that the violations occurred

only from time to time, the Court follows suit in finding that Defendant’s 20% violation

rate is a reasonable assumption based on the allegations contained within the

complaint.

Based on the 20% violation rate, the Court finds the value of the meal and rest

break claims to be $3,116,402.16.

ii. Defendant’s Wage Statement Penalty Rate is Unreasonable

Plaintiff’s wage statement claims assert that Defendant failed to provide

accurate wage statements because the statements did not reflect the actual amount of

time worked or wages earned due to the foregoing meal and rest break violations.

Essentially, if an employee missed a meal or rest break, their corresponding wage

statement would be incorrect. Because this claim is derivative of the rest and meal break claims, Defendant assumes that for every pay period where an employee had

worked at least one rest- or meal-break eligible shift a violation would have occurred,

and the corresponding wage statement would therefore be inaccurate. (Def.’s Supp.

Brief at 2 & n. 2.) In other words, Defendant assumes that 100% of the wage

statements issued to employees who worked at least one break eligible shift were

inaccurate. (Id.)

Defendant’s assumption is flawed is because it assumes that every break

eligible shift resulted in violation, and therefore every wage statement in which an

employee worked even one break eligible shift resulted in an inaccurate wage

statement. (Id.; Supp. O’Bold Decl. at ¶¶ 4–6.) However, as discussed above, only a

20%, or one in five, violation rate is reasonable based on Plaintiff’s allegations. If an

employee worked only one rest or meal break eligible shift during the pay period,

there is only a 20% chance that the wage statement was inaccurate. An employee

would need to have worked at least five rest or meal break eligible shifts during a pay

period in order to assume that that the employee suffered at least one violation

during that pay period, and therefore to assume the wage statement was inaccurate.

If Defendant had applied a 100% violation rate to only those wage statement in which

employees worked at least five break eligible shifts, the assumption would be

reasonable. Likewise, if Defendant applied a 20% violation rate to wage statements

where the employee worked one break eligible shift, that too would be reasonable.

But instead, Defendant applied a 100% violation rate where employees had worked

only one break eligible shift.

In Nunes v. Home Depot U.S.A., for example, the court found that a 100% wage

statement violation rate was reasonable based on the assumption that at least one rest

break violation occurred per week. 2019 WL 4316903 at *3. However, the defendant

in that case provided facts to show that, on average, each class member was entitled

to at least eight rest breaks and four meal breaks per week, “based on the actual

length of shifts recorded by each class member.” Def.’s Opp’n to Mot. to Remand 2:19-cv-01207-JAM-DB (E.D. Cal. Sept. 12, 2019), ECF No. 5, at 6–7. Therefore, it was

reasonable to assume that during every pay period every class member would have

suffered at least one violation, and therefore every pay statement issued would have

been inaccurate. In contrast, in Garibay v. Archstone Communities LLC, the Central

District of California, in a decision affirmed by the Ninth Circuit, found that Defendants

had not provided enough evidence to reasonably assume that “every single member

of the class will be able to recover penalties under § 226 for every single pay period,”

where it provided only evidence of “the number of employees [and] the number of

pay periods.” No. CV-12-10640-PA-VBK, 2013 WL 12157241, at *3 (C.D. Cal. Feb. 4,

2013), aff'd, 539 F. App'x 763 (9th Cir. 2013). Similar to Garibay, Defendant here has

not provided evidence to support an assumption that at least one violation occurred

during every pay period for which the wage statements were issued.

In Harris v. KM Industries, Inc., the Ninth Circuit found that where the defendant

“rel[ied] on the factually unsupported and unreasonable assumption that the . . . Class

members worked shifts long enough to entitle them to meal and rest periods,” the

defendant “failed to carry the burden of proving the statutory amount in controversy

by a preponderance of the evidence.” 980 F.3d 694, 702 (9th Cir. 2020). The Ninth

Circuit in Jauregui later stated that a district court would be “justified in simply

rejecting that assumption” and assigning a $0 value to the claim where a defendant’s

assumption was unreasonable, and there was no alternative to assess. 28 F.4th at 996.

While the value of the claim is likely more than $0, no alternative has been presented,

and the Court is mindful of the Ninth Circuit’s instruction to not “offer[] entirely new or

different assumptions,” particularly where there are no facts on which to base this

assumption. Id. Although the Court provided Defendant with the opportunity to

submit additional briefing, Defendant failed to provide sufficient evidence to support

its assumptions, or provide alternate assumptions. The Court therefore assigns a $0

value to these claims.

//// iii. Defendant’s Waiting Time Penalty Calculation is

Unreasonable

Defendants’ waiting time penalty calculation is unreasonable for similar reasons

as the above. Defendant determined that 1,485 individuals had their employment

end during the relevant time period and applied a 100% violation rate based on an

assumption that every one of these employees was not paid their full wages for the

maximum of 30 days because of an underlying meal or rest break violation. (Opp’n at

14–15.) However, Defendant does not provide any evidence that each one of these

terminated employees worked break eligible shifts during their employment — which

could have resulted in underpayment of wages — or that they were not paid full wages

at the end of their employment for any other reason. (Id. at 15.) The fact that the

employees worked on average 6.05 hours per shift does not mean that each

employee worked break eligible shifts.

In Lowdermilk v. U.S. Bank National Ass’n, the Ninth Circuit found the

defendants calculations to be unreasonable where the defendant simply calculated

the number of employees who had left the defendant’s employment during the

period and the average wage and number of hours worked. 479 F.3d 994, 1001 (9th

Cir. 2007), overruled on other grounds as recognized by Rodriguez v. AT & T Mobility

Servs. LLC, 728 F.3d 975, 981 (9th Cir. 2013). The defendant did not identify which

employees could have suffered the harm claimed and therefore would have been

potential class members, and there was not sufficient evidence to assume that every

terminated employee did not receive full wages upon termination. Id.; see also Avila

v. Rue21, Inc., 432 F. Supp. 3d 1175, 1189 (E.D. Cal. 2020) (finding calculations are

unreasonable where the defendant’s calculation assumed that all former employees

had not been paid timely final wages). Defendants’ failure to determine which of the

terminated individuals are eligible class members similarly makes the Defendants’

calculation unreasonable here.

As with the above, the Court assigns a $0 value to these claims. iv. Defendant’s Attorneys’ Fees Rate is Reasonable as Applied

to the Other Reasonable Calculations

Attorneys’ fees may also be included in the amount-in-controversy

determination where the underlying statutes authorize an award of attorneys’ fees.

Galt v. Scandinavia, 142 F.3d 1150, 1155–56 (9th Cir. 1998); see also Fritsch v. Swift

Transp. Co. of Ariz., 899 F.3d 785, 794 (9th Cir. 2018). However, “attorneys’ fees

shifting provisions in California Labor Code §§ 218.5 and 1194 do not apply to legal

work relating to meal and rest period claims.” Fritsch, 899 F.3d at 796 (citing Kirby v.

Immoos Fire Prot., Inc., 53 Cal. 4th 1244, 1255 (2012)). Because the meal and rest

break violations are the only claims for which Defendant has met its burden of

establishing the amount in controversy, it is not appropriate for the Court to assess the

value of attorneys’ fees on the labor code violations. However, as Defendant notes,

Plaintiff also brings a derivative UCL claim and would be entitled to attorneys’ fees on

that claim.

The benchmark for class action attorneys’ fees in the Ninth Circuit is 25%, with

20–30% within the usual range. See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047

(9th Cir. 2002). Defendant also provided a settlement assigning 33% attorneys’ fees

to Plaintiff’s counsel in a similar class action which also alleged meal and rest break

violations. (Not. Removal, Ex. M.) While Plaintiff argues that the lodestar method is

the appropriate method for calculating attorney fees, the Ninth Circuit has determined

that District Courts may either rely on the lodestar or a percentage, and that the

“lodestar method is merely a cross-check on the reasonableness of a percentage

figure.” Id. at 1050 n.5. In fact, the lodestar method may inflate the amount in

controversy because it “creates incentives for counsel to expend more hours than may

be necessary on litigating a case.” Id. Accordingly, the 25% attorney fee rate is

reasonable.

Based on the value of the meal and rest break violations as determined above,

$3,116,402.16, a 25% attorneys’ fees would be equal to $779,100.54. In sum, Defendant has provided by a preponderance of the evidence that Plaintiff's claims are worth $3,895,502.70.° It may well be that Defendant could provide more reasonable estimates of the claims to which this Court has been forced to assign a value of $0 but they have not done so, despite being given an opportunity to respond to the Court's concerns. (See Order (ECF No. 35); Def.’s Supp. Brief). Defendant has failed to meet its burden of establishing the $5 million amount in controversy required for jurisdiction under CAFA. Accordingly, Plaintiff's Motion to Remand is GRANTED. In accordance with the above, IT |S HEREBY ORDERED Plaintiff's Motion to Remand (ECF No. 13) is GRANTED. The Clerk of Court is directed to close this case and remand it to the Superior Court of California, Stanislaus County. Dated: _March 15, 2024 “Dane A Hon. Daniel alabretta UNITED STATES DISTRICT JUDGE DJC2 - Barrett22cv00882.MTR 6 Although Plaintiff has asserted other violations than those discussed, neither party provided calculations regarding the value of those claims for the Court to consider. 15