Bulnes v. Suez WTS Services USA, Inc.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MARTIN BULNES, individually, and on Case No. 22-cv-01154-BAS-AHG behalf of other members of the general 12 public similarly situated, ORDER DENYING PLAINTIFF’S 13 MOTION TO REMAND Plaintiff, PROCEEDINGS TO STATE COURT 14 v. 15 (ECF No. 14) SUEZ WTS SERVICES USA, INC., 16 Defendant. 17 18 19 Defendant Suez WTS Services USA, Inc. removed this case from San Diego County 20 Superior Court on August 5, 2022, asserting federal jurisdiction exists under the Class 21 Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d). (Notice of Removal, ECF 22 No. 1.) Plaintiff filed a motion to remand, arguing Defendant’s Notice of Removal fails to 23 show that CAFA’s amount in controversy requirement has been satisfied. (Mot. to 24 Remand, ECF No. 14.) Defendant filed an Opposition (Opp’n, ECF No. 16) and Plaintiff 25 replies (Reply, ECF No. 18). The Court finds this Motion suitable for determination on 26 the papers submitted and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 27 7.1(d)(1). For the reasons set forth below, the Court DENIES Plaintiff’s Motion to 28 Remand. (Mot.) 1 I. BACKGROUND 2 Defendant Suez WTS Services USA employed Plaintiff Martin Bulnes as a Service 3 Technician, an hourly non-exempt employee, from approximately December 2019 to 4 February 2021. (Compl. ¶ 19, ECF No. 1-3, Couch Decl. ¶ 4, ECF No. 1-6.) Plaintiff 5 alleges that Defendant denied him and other employees the benefits of the California Labor 6 Code and the Industrial Welfare Commission Wage Orders. Plaintiff alleges that 7 Defendant failed to pay meal and rest period premiums, furnish final wages in a timely 8 manner, pay regular and overtime wages, provide accurate and itemized wage statements, 9 keep requisite payroll records, and reimburse employees for business expenses. (Compl. 10 ¶¶ 26–53.) Plaintiff asserts these claims on behalf of “[a]ll current and former hourly-paid 11 or non-exempt employees who worked for [Defendant] within the State of California at 12 any time during the period from four years preceding [August 5, 2022] to final judgment 13 and who reside in California.” (Id. ¶ 14.) Plaintiff proposes three subclasses: (1) all class 14 members who failed to receive overtime, (2) those subject to Defendant’s rounding policy, 15 and (3) those required to stay on Defendant’s premises during rest breaks. (Id.) 16 II. LEGAL STANDARD 17 A case is removable only if it could have been originally filed in federal court. 18 Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 163 (1997) (“Defendants generally may 19 remove ‘any civil action brought in a State court of which the [federal] district courts … 20 have original jurisdiction.’” (quoting 28 U.S.C. § 1441(a))). Whether removal is warranted 21 depends on the pleadings “as of the time the complaint is filed and removal is effected.” 22 Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129, 1131 (9th Cir. 2002). 23 CAFA expressly extends “federal jurisdiction to state-law claims in class actions 24 under relaxed diversity requirements.” Floyd v. Am. Honda Motor Co., 966 F.3d 1027, 25 1036 (9th Cir. 2020) (citing 28 U.S.C. § 1332(a)). While “no antiremoval presumption 26 attends cases invoking CAFA,” Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 27 81, 89–91 (2014), “the burden of establishing removal jurisdiction remains, as before, on 28 the proponent of federal jurisdiction.” Abrego v. Dow Chem., 443 F.3d 676, 685 (9th Cir. 1 2006). CAFA confers federal jurisdiction over class actions involving: (1) minimal 2 diversity; (2) at least 100 putative members; and (3) over $5,000,000 in controversy, 3 inclusive of attorney’s fees but exclusive of costs and interest. 28 U.S.C. § 1332(d)(2), (5). 4 Class members’ claims may be aggregated to reach the amount in controversy requirement. 5 E.g., Biag v. King George – J&J Worldwide Servs. LLC, No. 20-cv-307-BAS-DEB, 2020 6 WL 4201192, at * 3 (S.D. Cal. July 22, 2020). 7 III. ANALYSIS 8 At issue is whether Defendant plausibly alleges that CAFA’s amount in controversy 9 requirement is met. The Court first reviews the short and plain statement requirement and 10 Defendant’s amount in controversy assessment. Next, the Court considers Plaintiff’s 11 attacks on Defendant’s assessment, including Defendant’s proposed violation rate and 12 inclusion of attorney’s fees in the amount in controversy. 13 A. “Short and Plain” Statement Under 28 U.S.C. § 1446(a) 14 To remove a case to federal court, the defendant must file a notice of removal 15 “containing a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). 16 The defendant’s notice of removal “need include only a plausible allegation that the amount 17 in controversy exceeds the jurisdictional threshold[.]” Dart Cherokee, 574 U.S. at 89. If 18 the defendant relied on assumptions to approximate the amount in controversy, those 19 assumptions “cannot be pulled from thin air but need some reasonable ground underlying 20 them.” Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1199 (9th Cir. 2015) (“[A] defendant 21 cannot establish removal jurisdiction by mere speculation and conjecture, with 22 unreasonable assumptions.”). When the defendant’s amount in controversy assertion is 23 sufficiently challenged, as Plaintiff argues is the case here, “both sides submit proof and 24 the court decides, by a preponderance of the evidence, whether the amount-in-controversy 25 requirement has been satisfied.” Dart Cherokee, 574 U.S. at 88. 26 To determine the amount in controversy, Defendant makes assumptions based upon 27 Human Resources Manager John Couch’s Declaration and Plaintiff’s Complaint. 28 Defendant assumes two unpaid hours of overtime per week and two meal and rest period 1 violations per week per employee. (Notice ¶¶ 36, 39, 41.) Defendant bases these 2 assumptions on Plaintiff’s complaint, which alleges Defendant engaged in a “pattern and 3 practice of wage abuse against [its] hourly-paid or non-exempt employees within the State 4 of California. This pattern and practice involved, inter alia, failing to pay them for all 5 regular and/or overtime wages earned and for missed meal periods and rest periods in 6 violation of California law.” (Compl. ¶ 27, Notice ¶ 33.) Defendant approximates the 7 amount in controversy using the facts provided in Mr. Couch’s Declaration addressing the 8 standard workday and week, the number of non-exempt employees, and the average 9 minimum wage. (Couch Decl. ¶¶ 5–6, 14.) Defendant’s estimation for only the unpaid 10 overtime and meal and rest period violations claims amounts to $6,280,877.28, with an 11 additional $1,811,420.70 proposed for attorney’s fees. (Notice ¶¶ 36, 39, 41, 56.) 12 Therefore, the Court focuses on these claims when addressing Plaintiff’s arguments below, 13 because if established, these claims would exceed the $5,000,000 threshold. 14 B. Plaintiff’s Challenges to Defendant’s Allegations 15 Plaintiff purports to make a factual attack on Defendant’s amount in controversy 16 assertion by challenging the reasonableness of Defendant’s assumptions. (Reply 3.) For 17 this reason, Plaintiff argues that the amount in controversy is contested, and Defendant 18 must produce “summary-judgment type evidence.” (Reply 2 (citing Rodriguez v. US Bank 19 Nat’l Ass’n, No. 2:16-cv-05590-CAS(RAOx), 2016 WL 5419403, at *4 (C.D. Cal. Sept. 20 26, 2016)).) 21 A factual attack must challenge the “truth of the defendant’s jurisdictional 22 allegations by making a reasoned argument as to why any assumptions on which they are 23 based are not supported by evidence.” Harris v. KM Indus., Inc., 980 F.3d 694, 700 (9th 24 Cir. 2020). Conversely, “a ‘facial’ attack accepts the truth of the [defendant’s] allegations 25 but asserts that they ‘are insufficient on their face to invoke federal jurisdiction.’” Id. at 26 699 (quoting Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014)). The Court applies 27 this distinction below when addressing the merits of Plaintiff’s attacks on Mr. Couch’s 28 1 Declaration, Defendant’s proposed violation rate, and Defendant’s inclusion of attorney’s 2 fees in its amount in controversy. 3 1. Mr. Couch’s Declaration 4 The Court starts with Plaintiff’s attacks on Mr. Couch’s Declaration and Defendant’s 5 methods for approximating the amount in controversy. Plaintiff argues that Mr. Couch’s 6 Declaration is incompetent evidence because of its conclusory nature and lack of a “single 7 business record, spreadsheet, or other supporting document.” (Mot. 6.) Further, Plaintiff 8 questions Mr. Couch’s personal knowledge and methods used to collect the employee 9 information in the Declaration. (Mot. 7.) Plaintiff specifically argues that Defendant has 10 no reasonable basis for assuming the class members’ shifts were eight hours or “of 11 sufficient length to mandate the provision of meal and rest periods.” (Mot. 19.) Plaintiff 12 similarly posits that Defendant has no reasonable basis to assume how many employees 13 were full-time or part-time, or their average shift length. (Mot. 13.) 14 Defendant counters that Plaintiff mounts an unfounded facial attack and fails to 15 challenge the facts underlying Defendant’s assertions. (Opp’n 12.) Defendant posits that 16 Plaintiff fails to challenge the factual basis of Defendant’s calculations with any competing 17 evidence, such as the “number of putative class members, pay rates, and workweek and 18 hours worked calculations.” (Id.) 19 Both Plaintiff and Defendant cite to the informative Ninth Circuit cases Harris v. 20 KM Industrial, Inc. and Salter v. Quality Carriers, Inc. In Harris, the plaintiff attacked the 21 truth of the defendant’s factual allegations. 980 F.3d at 702. The court considered the 22 plaintiff’s claims, including denied meal and rest breaks, on behalf of two subclasses: a 23 “Meal Period Sub-Class” and “Rest Period Sub-Class.” Id. at 697. The defendant provided 24 two human resources declarations; both failed to address if the hourly employee class 25 members worked shifts long enough to qualify for meal and rest periods. Id. at 700–01. 26 The court concluded that the defendant’s assumption that all hourly employees were also 27 members of both sub-classes was unsupported by the declarations. Id. at 702. The 28 plaintiffs therefore lodged a factual attack on the lack of substance underlying the 1 defendant’s assumptions, and the defendant failed to submit any further evidence, making 2 remand appropriate. Id. 3 The present case is distinguishable from Harris because the depth of information 4 included in Mr. Couch’s Declaration provides reasonable grounds for Defendant’s 5 assumptions. Plaintiff’s argument that Defendant has no basis for assuming class members 6 worked eight hours shifts, were full time, or worked sufficient length to receive meal and 7 rest periods is not well taken because Mr. Couch expressly stated these facts. (Couch Decl. 8 ¶ 14, Mot. 13, 19.) Here, unlike in Harris, Defendant’s Declaration establishes, “[d]uring 9 the relevant period, the standard workday for SUEZ WTS’ California non-exempt 10 employees is and has been (8) hours, and the standard workweek for SUEZ WTS’ 11 California non-exempt employees is and has been five (5) days.” (Couch Decl. ¶ 14.) 12 Given these facts, the Court does not face the same issue with sub-classes as in Harris. 13 Additionally, Plaintiff fails to provide evidence that Defendant’s employees did not work 14 full time. Hence, Defendant made a “plausible assumption,” as required by Dart, that the 15 class members worked an average of full time, considering Mr. Couch’s Declaration. See 16 Dart Cherokee, 574 U.S. at 89. 17 In Salter, the plaintiff mounted a facial attack on the defendant’s allegations. Salter 18 v. Quality Carriers, 974 F.3d 959, 964 (9th Cir. 2020). The plaintiff asserted similar labor 19 code claims that hinged on the defendant allegedly misclassifying employees as 20 independent contractors. Id. at 961. The defendant provided a declaration from its Chief 21 Information Officer detailing the number of contractors it employed. Id. at 962. The 22 plaintiff did not dispute the truth of the defendant’s assumptions, such as the number of 23 members in the class, but alleged that defendant failed to support its assumptions with 24 competent proof and only offered conclusory statements. Id. at 964. Since the plaintiff 25 failed to mount a factual attack, defendant had no further responsibility to submit proof, 26 and remand was not justified. Id. at 965. 27 The present case shares similarities with Salter because Plaintiff challenges the 28 “form, not the substance,” of Defendant’s showing and supporting Declaration. Id. at 961. 1 Plaintiff repeatedly argues that Mr. Couch’s Declaration is not competent evidence and 2 Defendant’s failure to provide “underlying records” is “particularly inexcusable” since 3 Defendant is an employer. (Mot. 5, 7.) Plaintiff’s argument is unfounded. Defendant has 4 no responsibility to provide evidentiary submissions or “underlying records,” as Plaintiff 5 contends. (Mot. 5.) In Dart Cherokee, the Supreme Court clarified that a notice of removal 6 “need not contain evidentiary submissions,” and must only set forth plausible allegations 7 of the amount in controversy. 574 U.S. at 84. 8 Thus, the Court finds that Plaintiff mounts an unpersuasive facial attack on Mr. 9 Couch’s Declaration, because Plaintiff challenges the form rather than the substance of the 10 facts expressed. See Salter, 974 F.3d at 961. 11 2. Defendant’s Proposed Violation Rate 12 Next, the Court considers Plaintiff’s attack on the proposed violation rate Defendant 13 uses to calculate the amount in controversy. Plaintiff characterizes Defendant’s proposed 14 40% violation rate for unpaid overtime and meal and rest premiums as “unreasonable” and 15 “speculative,” without offering any concrete evidence to the contrary. (Mot. 11–12, 14.) 16 At times, Plaintiff argues Defendant assumes a “100% violation rate” of two meal and rest 17 premium violations and two hours of unpaid overtime per week, which Plaintiff believes 18 is unsupported by the Complaint.1 (Mot. 9–14.) 19 Plaintiff offers only a facial attack, because he fails to make a “a reasoned argument 20 as to why any assumptions on which [Defendant’s jurisdictional allegations] are based are 21 not supported by evidence.” See Harris, 980 F.3d at 700–01; Salter, 974 F.3d at 965; see 22 also Mills v. Rescare Workforce Servs., No. 2:20-cv-10860-FLA (JPRx), 2022 WL 23 843461, at *7 (C.D. Cal. Mar. 22, 2022) (holding plaintiff’s attack on defendant’s adopted 24

25 1 In Defendant’s Notice of Removal, Defendant argues that when plaintiffs allege any statutory 26 violations, the court “should assume that the violation rate is 100% unless the plaintiff specifically alleges otherwise.” (Notice ¶ 28.) In its Opposition to Plaintiff’s Motion to Remand, Defendant clarifies its 27 calculations use only a 40% violation rate for unpaid overtime and meal and rest period premium violations. (Opp’n 13–17.) 28 1 violation rates to be facial because of plaintiff’s failure to introduce evidence or reasonable 2 arguments to the contrary). 3 This Court, like others, finds that Defendant’s 40% violation rate is a plausible 4 assumption given Plaintiff’s “pattern and practice” allegations. (Compl. ¶ 27.) District 5 courts have found violation rates of 25% to 60% to be reasonably assumed as a matter of 6 law based on “pattern and practice” or “policy and practice allegation[s].” Avila v. Rue 21, 7 Inc., 432 F. Supp. 3d 1175, 1189 (E.D. Cal. 2020); Olson v. Becton, Dickinson & Co., No. 8 19-CV-865-MMA-BGS, 2019 WL 4673329, at *4 (S.D. Cal. Sept. 25, 2019) (finding 25% 9 violation rate to be appropriate based on plaintiff’s “pattern and practice” allegations); 10 Elizarraz v. United Rentals, Inc., No. 2:18-CV-09533-ODW (JC), 2019 WL 1553664, at 11 *3–4 (C.D. Cal. Apr. 9, 2019) (using 50% violation rate for meal period claim and 30% 12 violation rate for rest period claim); Bryant v. NCR Corp., 284 F. Supp. 3d 1147, 1151 13 (S.D. Cal. 2018) (using 60% violation rate for the meal period claim and 30% violation 14 rate for rest period claim); Alvarez v. Off. Depot, Inc., No. CV 17–7220 PSG (AFMx), 2017 15 WL 5952181, at *3 (C.D. Cal. Nov. 30, 2017) (using 60% violation rate). 16 In short, Plaintiff mounts only a facial attack on Defendant’s proposed violation rate, 17 because he fails to attack the rate’s factual underpinnings. Defendant’s proposed violation 18 rate is plausible, making Plaintiff’s attack unsuccessful. 19 3. Defendant’s Inclusion of Attorney’s Fees 20 Finally, the Court considers Defendant’s inclusion of attorney’s fees in its amount 21 in controversy assessment. Defendant argues it is entitled to include the putative class 22 members’ attorney’s fees in its amount in controversy. (Notice ¶¶ 50–60.) Defendant cites 23 Fritsch, where the Ninth Circuit held a “court must include future attorneys’ fees 24 recoverable by statute or contract when assessing whether the amount-in-controversy 25 requirement is met.” 899 F.3d 785, 794 (9th Cir. 2018). Defendant argues that in the class 26 action context, 25% of the total amount in controversy is an appropriate benchmark for 27 attorney’s fees, citing to district court decisions such as Wheatley v. MasterBrand Cabinets. 28 No. EDCV 18-2127 JGB (SPx), 2019 WL 688209, at *5 (C.D. Cal. Feb. 19, 2019) (Notice 1 ¶ 54). Defendant submits that attorney’s fees would add $1,811,420.70 to its approximated 2 amount in controversy for unpaid overtime, meal period, and rest period claims. (Notice ¶ 3 ¶ 49, 55.) Plaintiff contends that Defendant’s calculations are unsubstantiated, and cites 4 Galt G/S v. JSS Scandinavia, which held that attorney’s fees can only be counted towards 5 the amount in controversy if “an underlying statute authorizes an award of attorneys’ fees, 6 either with mandatory or discretionary language.” 142 F.3d 1150, 1156 (9th Cir. 1998). 7 This Court agrees with Plaintiff with respect to Defendant’s burden of proof, 8 considering Fristch. 899 F.3d at 794; see also, e.g., Akana v. Estee Lauder, No. LA CV19- 9 00806 JAK (PLAx), 2019 WL 2225231, at *8 (C.D. Cal. May 23, 2019) (refusing to hold 10 that 25% of total recovery was reasonable estimate of plaintiff’s potential attorney’s fees 11 in wage and hour class action where defendant did not provide other evidence). Defendant 12 fails to provide any statutes that authorize including attorney’s fees, so the Court finds 13 Defendant does not meet its burden. 14 Hence, Plaintiff mounts a successful facial attack on Defendant’s inclusion of 15 attorney’s fees in its amount in controversy assessment. 16 * * * 17 Overall, the Court rejects Plaintiff’s challenges to Defendant’s reliance on Mr. 18 Couch’s Declaration and Defendant’s proposed violation rate, but agrees that Defendant 19 did not meet its burden to include attorney’s fees in its assessment. However, even without 20 attorney’s fees, Defendant’s amount in controversy calculation still surpasses the 21 $5,000,000 required by CAFA. Because Defendant has met its burden of establishing 22 federal subject matter jurisdiction over this putative class action pursuant to CAFA, 23 Plaintiff’s Motion to Remand is denied. 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 1 |}IV. CONCLUSION 2 For the reasons set forth above, the Court finds that it has subject matter jurisdiction 3 || over this action pursuant to CAFA. Accordingly, the Court DENIES Plaintiff's Motion to 4 ||Remand (ECF No. 14). 5 IT IS SO ORDERED. 6 A , 7 || DATED: February 23, 2023 Ypilag (Lyohaa 6 g United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ~10-2