Charlotte Barzi v. Equinox Holdings, Inc.

• Court: District Court, C.D. California
• Decided: September 9, 2024
• Docket: 2:24-cv-04117
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 CHARLOTTE BARZI, on behalf of Case No. 2:24-cv-04117-SPG-E 11 herself and others similarly situated, ORDER DENYING PLAINTIFF’S 12 Plaintiff, MOTION TO REMAND 13 [ECF NOS. 11, 13] v. 14 EQUINOX HOLDINGS, INC.; and 15 DOES 1 to 100, inclusive, 16 Defendants. 17 18 19 Before the Court is Plaintiff Charlotte Barzi’s (“Plaintiff”) Motion to Remand the 20 Action to State Court and Request for Attorneys’ Fees in the Amount of $7,500.00. (ECF 21 No. 13-1 (“Motion”)). Having considered the parties’ submissions, the relevant law, and 22 the record in this case, the Court finds this matter suitable for resolution without a hearing. 23 See Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. For the reasons set forth below, the Court 24 DENIES Plaintiff’s Motion. 25 I. BACKGROUND 26 On April 5, 2024, Plaintiff initiated this wage and hour class action against 27 Defendant Equinox Holdings, Inc. (“Defendant”) in Los Angeles County Superior Court. 28 (ECF No. 1-3 (“Complaint”)). Plaintiff effectuated service on April 17, 2024, and on 1 May 17, 2024, Defendant removed the action to this Court. (ECF No. 1 (“Notice of 2 Removal”)). On June 14, 2024, Plaintiff filed the instant Motion, seeking to remand this 3 action to state court. (Mot.). Pursuant to the parties’ stipulations to continue the hearing 4 date for the Motion, see (ECF Nos. 15, 22), Defendant timely opposed, (ECF No. 24 5 (“Opposition”)), and Plaintiff timely replied, (ECF No. 26 (“Reply”)). 6 II. LEGAL STANDARD 7 A civil action brought in state court may be removed by a defendant to federal district 8 court if, at the time of removal, the case is one over which the district court has original 9 jurisdiction. 28 U.S.C. § 1441(a). The Class Action Fairness Act (“CAFA”) confers 10 original jurisdiction to the district courts over any class action in which any member of a 11 class of plaintiffs is a citizen of a state different from any defendant, the amount in 12 controversy exceeds $5,000,000, and the number of members of all proposed plaintiff 13 classes is at least 100. 28 U.S.C. § 1332(d). “Congress enacted [CAFA] to facilitate 14 adjudication of certain class actions in federal court.” Dart Cherokee Basin Operating Co. 15 v. Owens (“Dart Cherokee”), 574 U.S. 81, 89 (2014). “Through CAFA, Congress 16 broadened federal diversity jurisdiction over class actions by, among other things, 17 replacing the typical requirement of complete diversity with one of only minimal 18 diversity.” Mondragon v. Cap. One Auto Fin., 736 F.3d 880, 882 (9th Cir. 2013) (). 19 To remove a case from a state court to a federal court, a defendant must file a notice 20 of removal “containing a short and plain statement of the grounds for removal.” 28 U.S.C. 21 § 1446(a). The removing defendant bears the burden of establishing federal jurisdiction. 22 Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). The Supreme Court 23 has advised that “no antiremoval presumption attends cases invoking CAFA.” Dart 24 Cherokee, 574 U.S. at 89. Indeed, “CAFA’s ‘provisions should be read broadly, with a 25 strong preference that interstate class actions should be heard in a federal court if properly 26 removed by any defendant.’” Id. (quoting S. Rep. No. 109–14, p. 43 (2005)). See also 27 Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015) (“Congress intended 28 CAFA to be interpreted expansively.”). “A defendant’s amount in controversy allegation 1 is normally accepted when invoking CAFA jurisdiction, unless it is ‘contested by the 2 plaintiff or questioned by the court.’” Jauregui v. Roadrunner Transp. Servs., Inc., 28 3 F.4th 989, 992 (9th Cir. 2022) (quoting Dart Cherokee, 574 U.S. at 87). 4 Where a plaintiff seeks remand of a removed action, the plaintiff may make either a 5 “facial” or “factual” challenge to the defendant’s jurisdictional allegations in the notice of 6 removal. Harris v. KM Indus., Inc. (“KM Indus.”), 980 F.3d 694, 699 (9th Cir. 2020). “A 7 facial attack accepts the truth of the defendant’s allegations but asserts that they are 8 insufficient on their face to invoke federal jurisdiction.” Id. (internal quotation marks, 9 alteration, and citation omitted). “A factual attack contests the truth of the allegations 10 themselves.” Id. (internal quotation marks, alteration, and citation omitted). A defendant 11 facing a “factual” challenge to its jurisdictional allegations bears the burden of providing 12 “competent proof” that shows, by a preponderance of the evidence, that the jurisdictional 13 requirements are satisfied. Id. at 699, 701. “[T]he removing party must be able to rely on 14 a chain of reasoning that includes assumptions to satisfy its burden to prove by a 15 preponderance of the evidence that the amount in controversy exceeds $5 million, as long 16 as the reasoning and underlying assumptions are reasonable.” Jauregui, 28 F.4th at 993 17 (internal quotation marks and citation omitted). Although a plaintiff may present evidence 18 in support of a factual attack, the plaintiff “need only challenge the truth of the defendant’s 19 jurisdictional allegations by making a reasoned argument as to why any assumptions on 20 which they are based are not supported by evidence.” KM Indus., 980 F.3d at 700. 21 III. DISCUSSION 22 Here, Plaintiff does not dispute that Defendant has met its burden to establish 23 diversity between the parties1 and challenges only Defendant’s showing as to the amount 24 in controversy. (Mot. at 12–17). Specifically, Plaintiff contends that Defendant’s 25 1 Plaintiff erroneously states that Defendant must establish “complete diversity.” (Mot. 26 at 11). Under CAFA, however, a removing defendant need establish only minimal 27 diversity. See 28 U.S.C. § 1332(d). The Court concludes that Defendant, which is a citizen 28 of New York and Delaware for purposes of determining diversity jurisdiction, (Notice of Removal ¶ 14), has done so here. 1 calculations of the amount in controversy are based on “unreasonable” assumptions “not 2 supported by any evidence, the allegations in the Complaint, or workplace realities.” (Id. 3 at 13). To successfully defeat her Motion, Plaintiff contends, Defendant must “produce[] 4 ‘summary judgment-type evidence’” in support of its claimed amount in controversy. (Id. 5 at 16 (quoting Tompkins v. Basic Rsch. LL, No. CIV. S-08-244 LKK/DAD, 2008 WL 6 1808316, at *3 (E.D. Cal. Apr. 22, 2008)). Finally, Plaintiff asks the Court to exercise its 7 discretion to award her attorneys’ fees in the amount of $7,500 as a form of reimbursement 8 for “unnecessary litigation costs.” (Id. at 17–18). 9 Defendant opposes on all grounds. First, Defendant asserts that it need not submit 10 any evidence in support of its Notice of Removal. (Opp. at 6). As Defendant notes, 11 however, despite criticizing the lack of any accompanying evidence, Plaintiff does not 12 actually argue that such evidence must be presented at the time of removal. (Id.). Second, 13 Defendant contends that its amount in controversy calculations are sound and rest on 14 allegations contained in Plaintiff’s Complaint. (Id. at 6–7). Third, Defendant argues that 15 Plaintiff’s challenge is merely facial, and not factual, and that Defendant need not set forth 16 any evidence in support of jurisdiction. (Id. at 12–14). In the event the Court disagrees, 17 however, Defendant advances a declaration from Roger Esnard, (ECF No. 24-1 (“Esnard 18 Declaration”)), who is employed by Defendant as Director, People Systems, in support of 19 its amount in controversy calculations, (Opp. at 7–8). Finally, although Defendant 20 contends that remand is not warranted, it also argues that attorney’s fees would be 21 inappropriate even if the Court grants Plaintiff’s Motion because “Defendant had an 22 objectively reasonable basis for contending that CAFA’s amount in controversy 23 requirement is met.” (Id. at 22). 24 A. Type of Jurisdictional Challenge 25 As an initial matter, the parties dispute whether Plaintiff mounts a facial or factual 26 challenge to the jurisdictional allegations in Defendant’s notice of removal. (Opp. at 12 27 (contending “Plaintiff makes only a ‘facial’ challenge to the Notice of Removal’s 28 allegations” and does not “introduc[e] evidence outside the pleadings” (quoting Salter v. 1 Quality Carriers, Inc., 974 F.3d 959, 964 (9th Cir. 2020)); Reply at 2 (contending 2 Defendant must “proffer . . . evidence” in order to support its claim of damages in excess 3 of $5 million)). 4 The Court agrees that, by refusing to accept the truth of Defendant’s jurisdictional 5 allegations, Plaintiff mounts a factual attack on Defendant’s claimed CAFA jurisdiction. 6 See Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014) (“A ‘facial’ attack accepts the 7 truth of the plaintiff’s allegations but asserts that they are insufficient on their face to invoke 8 federal jurisdiction.” (internal quotation marks and citation omitted)). The fact that 9 Plaintiff herself has not “introduc[ed] evidence outside the pleadings” to challenge 10 Defendant’s claimed damages, see (Opp. at 12 (quoting Salter, 974 F.3d at 964)), does not 11 render Plaintiff’s challenge merely facial. Instead, a “challenge [to] the truth of the 12 defendant’s jurisdictional allegations” in the form of “a reasoned argument as to why any 13 assumptions on which they are based are not supported by evidence” constitutes a factual 14 attack; the Ninth Circuit does not require a plaintiff to introduce evidence outside the 15 pleadings. KM Indus., 980 F.3d at 700. Here, although Plaintiff does not introduce 16 extrinsic evidence of her own, she expressly questions the reasonableness of certain 17 assumptions Defendant made when calculating the damages at issue in this action.2 (Mot. 18 at 12–16). Based on the facts of this case, Plaintiff’s challenge constitutes a factual attack. 19 The Court will therefore apply the higher evidentiary standard requiring the Defendant to 20 submit “competent proof” that shows, by a preponderance of the evidence, that the 21 jurisdictional requirements are satisfied. KM Indus., 980 F.3d at 701. 22 B. Whether Defendant Met its Amount in Controversy Burden 23 To determine whether Defendant has met its burden to establish an amount in 24 controversy in excess of $5 million, the Court considers the Complaint, Defendant’s 25 allegations in its Notice of Removal, and “summary-judgment-type evidence relevant to 26

27 2 Defendant contends that Plaintiff’s argument “is not reasoned.” (Opp. at 12). The Court 28 disagrees—Plaintiff articulates specific objections to Defendant’s calculations rather than simply asserting, in conclusory fashion, that the calculations are incorrect. 1 the amount in controversy at the time of removal.” Fritsch v. Swift Transp. Co. of Ariz., 2 LLC, 899 F.3d 785, 793 (9th Cir. 2018) (citation omitted). The “amount in controversy is 3 simply an estimate of the total amount in dispute, not a prospective assessment of 4 defendant’s liability.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 5 2019) (citation omitted). 6 Here, Defendant’s Notice of Removal asserts that the amount in controversy exceeds 7 $5 million based on calculations of damages as well as attorneys’ fees. (Notice of Removal 8 ¶¶ 23–26). Defendant identifies at least 4,007 former employees that belong to the putative 9 class. (Id. ¶ 24). “[B]ased on Plaintiff’s allegations and an initial review of shift data,” 10 Defendant then assumes that these individuals “worked shifts on average of approximately 11 five hours per day worked.” (Id.). Defendant contends that a 100% violation rate is 12 appropriate for purposes of calculating damages and arrives at the estimated amount of 13 $9,773,073 by multiplying 4,007 (100% of the employees in the putative class), by $16.26 14 (“the approximate average of each such former employee’s final hourly rate of pay”), times 15 five hours (those individuals’ average shift length), times 30 days (the maximum days of 16 penalty pay allowed under California Labor Code § 203). (Id. ¶¶ 23–24). Defendant then, 17 by applying the Ninth Circuit 25% “benchmark” rate, uses this figure to calculate 18 attorneys’ fees in the amount of $2,443,268. (Id. ¶¶ 25–26). 19 Plaintiff argues these calculations are “removed from workplace realities” and based 20 on “improper assumptions” regarding both the number of employees at issue and the 21 violation rate. (Mot. at 13). Specifically, Plaintiff contends that Defendant improperly 22 assumes one of the four following scenarios in applying a 100% violation rate: 23 1. All 4,007 former employees worked meal break eligible shifts thirty 24 days per month for the full three-year period predating Plaintiff’s 25 initiation of this lawsuit; 26 2. All 4,007 former employees worked eight hour shifts and were told to 27 continue working but to clock out after eight hours to avoid triggering 28 overtime pay; 1 3. All 4,007 former employees “earned additional remuneration and 2 worked overtime during the same pay period”; or 3 4. All 4,007 former employees “earned commissions or other types of 4 regular rate eligible additional remuneration during the same pay period 5 that they were paid a meal and/or rest break premium wage.” 6 (Id.). Plaintiff contends that Defendant artificially inflated the number of individuals in the 7 putative class by including all hourly, non-exempt employees without excluding 8 employees who did not work shifts long enough to entitle them to meal breaks and rest 9 periods, as well as employees who were not required to clock out and continue working. 10 (Id. at 13–14). Finally, even if the total number of employees, their average pay rates, and 11 their average shift lengths are accurately represented—a matter Plaintiff disputes— 12 Plaintiff argues that Defendant’s 100% violation rate lacks support. (Id. at 9, 14–15). 13 In opposition, Defendant argues that its calculations are sound. In support of its 14 100% violation rate, Defendant argues that Plaintiff advances ten theories of liability as to 15 all hourly, non-exempt employees, without limiting the putative class only to those 16 employees who worked overtime-eligible shifts. (Opp. at 6–7). Defendant also 17 emphasizes Plaintiff’s allegations that, as a result of Defendant’s purported violations, 18 employees in the putative class were never properly paid final wages. (Id. at 17 (quoting 19 Compl. ¶¶ 45, 108)). Given Plaintiff’s allegations, Defendant argues that it may reasonably 20 assume that all members of the putative class experienced at least one violation of a failure 21 to pay wages and thus are each entitled to some amount of damages, including statutory 22 waiting time penalties. (Id. at 7, 16–17). 23 Defendant also submits evidentiary support for its calculations. Mr. Esnard, 24 Defendant’s Director, People Systems, attests that, based on his review of Defendant’s 25 personnel data, “at least 3,996 non-exempt employees . . . were employed at one of 26 [Defendant’s] California locations who have employment termination dates between April 27 5, 2021, and April 5, 2024, and that the average final hourly rate of pay at the time of 28 termination for those individuals was $16.13.” (Esnard Decl. ¶ 4). Mr. Esnard also attests 1 that these employees worked approximately five hours per shift. (Id. ¶ 5). With these 2 revised figures, Defendant’s revised estimated amount in controversy is $9,668,322 in 3 waiting time penalties, with an additional $2,417,050.50 in attorney’s fees. (Opp. at 8). 4 The Court concludes that Defendant has met its burden to support its claimed 5 damages. Defendant has provided evidentiary support for the number of employees in the 6 putative class, their average hourly rate of pay at the time of their termination, and their 7 average shift length. (Esnard Decl. ¶¶ 4–5). Plaintiff does not dispute Defendant’s 8 application of the 30-day maximum penalty pay multiplier, which is sought by the 9 Complaint, (Compl. ¶ 109), and therefore properly applied based on Plaintiff’s pleadings. 10 See Thompson v. La Petite Acad., Inc., No. 2:22-cv-04348-AB (JPRx), 2022 WL 5241838, 11 at *4 (C.D. Cal. Oct. 6, 2022) (finding “assumption that each class member would be owed 12 the maximum statutory penalty” proper where “such damages are evident from the face of 13 the Complaint”). Nor does Plaintiff dispute Defendant’s application of the 25% benchmark 14 rate for attorney’s fees. Instead, Plaintiff’s sole objection is to Defendant’s application of 15 a 100% violation rate. But Plaintiff’s characterization of the underlying assumptions 16 required to support a 100% violation rate is overstated. 17 Importantly, Defendant does not, as Plaintiff asserts, need to assume that all 18 members of the putative class worked five-hour shifts “30 days per month for the full three- 19 year period,” (Mot. at 13), in order to reasonably apply a 100% violation rate. Here, one 20 of the many unlawful practices Plaintiff alleges is Defendant’s purported failure to provide 21 its employees with “an uninterrupted duty-free rest period of a net ten (10) minutes for 22 every four (4) hours worked.” (Compl. ¶ 33). Additionally, Plaintiff alleges Defendant 23 failed to provide its employees with a meal period of no less than thirty minutes for each 24 five-hour period of work. (Id. ¶¶ 15, 20, 27). As a result of these and other violations, 25 Plaintiff contends that Defendant failed to provide accurate wage statements or to timely 26 pay unpaid wages when putative class members left its employ. (Id. ¶¶ 42–45). “[E]ach 27 current and former employee need only suffer one of the alleged violations at any time 28 during employment to bring a claim for failure to timely page wages upon termination.” 1 Wilcox v. Harbor UCLA Med. Ctr. Guild, Inc., No. 2:23-cv-02802-MCS-JC, 2023 WL 2 5246264, at *4 (C.D. Cal. Aug. 14, 2023) (emphasis added). See also Cal. Lab. Code 3 § 203(a); Noriesta v. Konica Minolta Bus. Sols. U.S.A., Inc., No. ED CV 19-0839-DOC 4 (SPx), 2019 WL 7987117, at *6 (C.D. Cal. June 21, 2019) (“Defendant need only have 5 caused a single violation per pay period for all wage statements to be inaccurate, and need 6 only have caused and failed to remedy a single violation per employee for waiting time 7 penalties to apply.”); Demaria v. Big Lots Stores - PNS, LLC, No. 2:23-cv-00296-DJC- 8 CKD, 2023 WL 6390151, at *7 (E.D. Cal. Sept. 29, 2023) (holding that “the recovery of 9 waiting time penalties does not hinge on the number of violations committed”). 10 “[A]ssumptions made part of the defendant’s chain of reasoning need not be proven; 11 they instead must only have some reasonable ground underlying them.” Arias, 936 F.3d 12 at 927 (internal quotation marks and citation omitted). Where Defendant’s personnel 13 record indicates that, on average, employees worked five-hour shifts, an assumption that 14 each employee in the putative class was improperly deprived of either a mandated rest or 15 meal period at least once during their employment with Defendant is reasonable. Such an 16 assumption also reasonably supports the conclusion that employees received inaccurate 17 pay statements at least once and that their final wages were not timely paid upon their 18 termination. See, e.g., Noriesta, 2019 WL 7987117, at *6 (“If Defendant had a ‘pattern 19 and practice’ of refusing to grant meal and rest breaks or pay class members for all hours 20 worked, then it is likely that all or nearly all class members experienced wage statement 21 and delay violations.”). 22 Plaintiff points out, correctly, that a “‘pattern and practice’ of doing something does 23 not necessarily mean always doing something.” (Mot. at 14 (quoting Ibarra, 775 F.3d at 24 1198–99). But here, to support a 100% violation rate, Defendant need only persuade the 25 Court that it is more likely than not that each member of the putative class has a claim for 26 at least one theory of liability raised in the Complaint. Defendant has met that burden. 27 28 1 CONCLUSION 2 For the foregoing reasons, the Court DENIES Plaintiff's Motion.° 3 IT IS SO ORDERED. 4 5 ||DATED: September 9, 2024 -—_—- 6 ~ HON. SHERILYN PEACE GARNETT 7 UNITED STATES DISTRICT JUDGE 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

suse the Court denies Plaintiffs request to remand this case to state court, it also enies as moot her request for attorney’s fees incurred in conjunction with preparing this 28 ||Motion. (Mot. at 17-18).