Cushman v. Physical Rehabilitation Network, LLC

Opinion

l FILED

4 wn 18 2024 | 5 CLERK. U.S. DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 6 BY = __ fey DEPUTY 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 |} ANTHONY CUSHMAN, individually Case No.: 3:23-cv-01798-BEN-DDL and on behalf of others similarly situated; CLASS ACTION and MARITZA HERNANDEZ, 12 || individually and on behalf of other ORDER GRANTING PLAINTIFFS’ 13 similarly situated, MOTION TO REMAND 14 Plaintiffs, 15 || 16 PHYSICAL REHABILITATION NETWORK, LLC, a Delaware limited 17 || liability company; HEALTHCARE EMPLOYEE SERVICES, LLC, a California limited liability company; and EGE It, 2 19 || DOES 1 through 50, inclusive, 20 Defendants. 21 0? On July 21, 2023, Plaintiffs Anthony Cushman and Maritza Hernandez 3 (“Plaintiffs”) filed a putative class action complaint in San Diego County Superior Court 4 against Defendants Physical Rehabilitation Network, LLC and Healthcare Employee 5 Services, LLC (“Defendants”) alleging nine state law claims for various wage and hour 6 violations. ECF No. 1-3. On September 28, 2023, Defendant removed the action to this Court pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1453(b). 28

i Before the Court is Plaintiffs’ Motion to Remand. ECF No. 3. Defendants filed an 2 opposition to this motion. ECF No. 4. Plaintiffs submitted a reply. ECF No. 5. The 3 || briefing was submitted on the papers without oral argument pursuant to Civil Local Rule 4 ||7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 6. The Court 5 || further ordered the parties to submit additional briefing. ECF No. 11. Both parties 6 || provided a response to this Order. ECF Nos. 12-14. After considering the applicable law 7 |{and the parties’ arguments, the Court GRANTS Plaintiffs’ Motion to Remand. 8 I. BACKGROUND 9 Plaintiff Anthony Cushman was employed by Defendants as a Patient Account 10 || Representative between June 2016 and February 11, 2021. ECF No. 1-3, Complaint { 11 Plaintiff Maritza Hernandez was also employed by Defendants as a Patient Account 12 || Representative between 2014 and January 2023. Id. 4 20. Plaintiffs allege Defendants 13 engaged in an ongoing and systematic scheme of wage abuse against their hourly-paid or 14 |/non-exempt employees, violating California labor law requirements surrounding time 15 ||keeping, meal and rest periods, overtime pay, and accurate wage statements. Jd. J 24-43. 16 || The Complaint does not estimate the number of potential class members, but defines the 17 class as “[a]ll current and former non-exempt employees of any of the Defendants within 18 || the State of California at any time commencing four (4) years preceding the filing of 19 || Plaintiffs’ complaint...” Jd. 14. The Complaint does not state an amount in 20 || controversy. 21 II. LEGAL STANDARDS 22 A defendant in state court may remove a civil action to federal court so long as that 23 could originally have been filed in federal court. 28 U.S.C. § 1441(1); City of Chi v. 24 || Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997). Removal of a state action may be 25 ||based on either diversity or federal question jurisdiction. City of Chi, 522 U.S. at 163; 26 || Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Generally, removal statutes are 27 |\strictly construed, and removal jurisdiction is to be rejected in favor of remand if there 28

1 doubts as to the right of removal. Nev. v. Bank of Am. Corp., 672 F.3d 661, 667 (9th 2 2012). a For cases removed under CAFA, there is no presumption against removal. Dart 4 || Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014). CAFA vests 5 original jurisdiction in federal courts for class actions where the purported class is more 6 ||than 100 members, there is minimal diversity, and the amount in controversy exceeds 7 $5,000,000. Bush v. Cheaptickets, Inc., 425 F.3d 683, 684 (9th Cir. 2005). Unlike the 8 ||complete diversity of citizenship required by 28 U.S.C. § 1332(a), CAFA requires only 9 ||“minimal diversity.” Bush, 425 F.3d at 684. This occurs when “any member of a class 10 || of plaintiffs is a citizen of a State different from any defendant.” Ehrman v. Cox 11 || Comme’n, Inc., 932 F.3d 1223, 1226 (9th Cir. 2019) (quoting 28 U.S.C. § 12 || 1332(d)(2)(A)). The burden to prove the basis of removal remains with the party 13 || invoking the court’s jurisdiction. Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 14 || 684 (9th Cir. 2006). 15 II. DISCUSSION 16 Plaintiffs make two arguments in their motion to remand. ECF No. 3, Motion to 17 Remand (“Mot.”). First, they argue that Defendant’s removal is untimely. Mot. at 8-11. 18 || Second, Plaintiffs argue Defendants have failed to properly establish the amount in 19 ||controversy exceeds $5,000,000. Mot. at 12-21. 20 A. Timeliness 21 CAFA provides two timelines for removal: (1) during the first 30 days after the 22 || defendant receives the initial pleading; or (2) during the first 30 days after the defendant 23 ||receives an amended pleading, motion, order, or other paper from which it may be first 24 || ascertained that the case is one which is or has become removable. Reyes v. Dollar Tree 25 || Stores, Inc., 781 F.3d 1185, 1189 (9th Cir. 2015) (citing 28 U.S.C. § 1446(b)(1) and 26 (b)(3) (internal quotations removed)). 27 “The first time period under § 1446(b)(1) is triggered if the case stated by the 28 initial pleading is removable on its face and the second time period under § 1446(b)(3) is

| || triggered if the initial pleading does not indicate that the case is removable...” Chi-Fu 2 || Hsueh v. Bankers Life and Casualty Co., 421 F.Supp.3d 937, 941 (S.D. Cal. 2019) (citing 3 || Carvalho vy. Equifax Info. Serves., LLC, 629 F.3d 876, 885 (9th Cir. 2010) (internal 4 || quotations removed)). “[T]he ground for removal must be revealed affirmatively in the 5 ||initial pleading in order for the first thirty-day clock under § 1446(b) to begin.” Harris v. 6 || Bankers Life and Casualty Co., 425 F.3d 689, 695 (9th Cir. 2005). A Plaintiffs argue Defendants’ Notice of Removal is procedurally defective because 8 ||Defendants failed to remove the action within 30 days of receipt of the complaint. Mot. 9 9. Defendants argue their removal was timely because the Complaint does not clearly 10 on its face grounds for removal. ECF No. 4, “Oppo.” at 9-10. Defendants assert the 11 ||complaint alleged all parties were California citizens and did not state an amount in 12 |/controversy, and the question of removability required investigation. Oppo. at 9. 13 || Defendants argue because the complaint did not “state grounds for removability on its 14 || face”, receipt of the complaint did not trigger the first 30-day time period. /d. 15 Plaintiffs’ motion argues the complaint “unequivocally pled...that Defendants are 16 of state limited liability companies.” Mot. at 9. Defendants allege “the Complaint 17 || (inaccurately) alleged the parties were all California citizens[.]” Oppo. at 9. Neither 18 ||characterization is completely accurate. The Complaint alleges that one Defendant, 19 || Healthcare Employee Services LLC, is a California limited liability company and one 20 ||Defendant, Physical Rehabilitation Network LLC, is a Delaware limited liability 21 ||company. Compl. {J 8-9. 22 Additionally, Defendants argue the complaint does not estimate the number of 23 || putative class members or state any amount in controversy. The Ninth Circuit has 24 repeatedly held, in different contexts, that defendants do not have a duty to investigate 25 within the first thirty-day window that which the complaint does not allege. See Harris, 26 F.3d at 695, Roth v. CHA Hollywood Medical Center, L.P., 720 F.3d 1121, 1123-24 27 Cir. 2013) (defendant could remove case outside of both thirty-day windows if it 28 ||discovers on its own investigation that case is removable). Here, Defendants were

1 |/required to investigate all three elements of jurisdiction under CAFA. Although, noted 2 || below, parties dispute the applicable test for determining the Defendants’ citizenship, for 3 || the purpose of Plaintiffs timeliness argument, the Court finds under Harris and Roth, 4 || Defendants’ Notice of Removal was not untimely. 5 B. Proof of Court’s Jurisdiction 6 In the Notice of Removal, Defendants indicate that Defendant Physical 7 ||Rehabilitation Network LLC is a limited liability corporation organized under the laws of 8 || the state of Delaware, not California. ECF No. 1, Notice of Removal (“NOR”) § 22. The 9 || Notice of Removal states the citizenship of a limited liability company for the purposes 10 || of diversity jurisdiction is determined by the citizenship of its members. NOR § 20. The 11 |} NOR lists a series of member limited liability companies for both Defendants, ultimately 12 || arriving at PRN Intermediate Holdco, Inc., a Delaware corporation with its principal 13 ||place of business in Texas. NOR ff 22-24. Accordingly, the Notice of Removal 14 || indicates both Defendants would be considered citizens of Delaware and Texas. □□□ § 25. 15 However, Plaintiffs argue for the purposes of CAFA, a limited liability corporation 16 |/1s treated as an unincorporated association and accordingly “deemed to be a citizen of the 17 ||State where it has its principal place of business and the State under whose laws it is 18 || organized.” ECF No. 5, “Reply” at 2 (citing 28 U.S.C. § 1332(d)(10)). Plaintiff cites to 19 persuasive authority from the Fourth and Seventh Circuits interpreting this clause. Reply 20 2-3 (citing Ferrell v. Express Check Advance of SC LLC, 591 F.3d 698, 699-700 (4th 21 || Cir. 2010) and City of E. St. Louis, Illinois v. Netflix, Inc., 83 F.4th 1066, 1071 (7th Cir. 22 ||2023)).! 23 24 |} Zo 06 Cc ity of E. St. Louis, Illinois v. Netflix cites to the Ninth Circuit opinion in Abrego as similarly deciding this issue. /d. at 1071 (citing Abrego Abrego v. Dow Chemical Co., 27 F.3d 676, 684 (9th Cir. 2006)). However, while Abrego notes departure from the traditional diversity rule codified in § 1332(d)(10), it does not address whether a limited liability company falls under this provision. See Abrego, 443 F.3d at 684-85. Abrego

1 Whether a limited liability company falls under this exception has not been 2 ||squarely addressed by the Ninth Circuit. However, several district courts in this circuit, 3 |/including this Court, have cited to Ferre// and found a limited liability company would 4 || fall under § 1332(d)(10). Ramirez v. Carefusion Resources, LLC, No. 18-cv-2852-BEN- 5 ||MSB, 2019 WL 2897902 at *2-3 (S.D. Cal. Jul. 5, 2019); see also Marroquin v. Wells 6 || Fargo, LLC, No. 11-cv-163-L-BLM, 2011 WL 476540 at *2 (S.D. Cal. Feb. 3, 2011); 7 || Jack v. Ring, LLC, 553 F.Supp.3d 711, 714-16 (N.D. Cal. Aug. 10, 2021). Additionally, 8 Jack, at least one judge agreed that a limited partnership should be considered an 9 unincorporated association under CAFA. /d. at 715 (citing Davis v. HSBC Bank Nevada, 10 || N.A., 557 F.3d 1026, 1032 & n.13 (9th Cir. 2009) (Kleinfeld, J., concurring) (applying § 11 |} 1332(d)(10)). Given the above, the Court ordered both parties to brief the issue of Defendants’ 13 || principal place of business. ECF No. 11. Unfortunately, neither party directly responded 14 the Court’s order. Instead, Defendants reprised their argument that citizenship of a 15 || limited liability company is determined by the citizenship of its members. ECF No. 12 at 16 ||4. Defendants did not acknowledge Davis, Ramirez, or § 1332(d)(10) in their additional 17 brief. Plaintiffs also did not address the issue of Defendants’ principal place of business, 18 || choosing to reprise arguments from their motion that the Defendants’ removal was 19 untimely. ECF No. 14 at 2-4. However, it is the Defendants in this case, not Plaintiffs, 20 || who carry the burden to demonstrate this Court’s jurisdiction. Abrego, at 686 (CAFA 21 ||“does not alter the longstanding rule that the party seeking federal jurisdiction on remova 22 || bears the burden of establishing that jurisdiction.”). 23 IV. CONCLUSION 24 Given no evidence was presented regarding the location of Defendants’ principal 25 || place of business, the Court finds the Defendants have not properly carried their burden 26

ng || 8 primarily concerned with the question of whether CAFA shifted the burden of proof on removal. /d.

1 demonstrate this Court’s jurisdiction under CAFA. For the foregoing reasons, the 2 ||Court GRANTS Plaintiffs’ Motion to Remand and ORDERS this case REMANDED 3 || back to San Diego County Superior Court. 4 5 IT IS SO ORDERED. 6 Dated: June 18, 2024 7 GER T. BEMTEZ 3 United States District

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