Louis v. Healthsource Global Staffing, Inc.

Opinion

1 2 3 6 7 PATRICIA LOUIS, et al., Case No. 22-cv-02436-JD

8 Plaintiffs, ORDER RE REMAND v. 9

INC., 11 Defendant.

12 13 Named plaintiffs Patricia Louis and Morgan Murray, on behalf of a putative class of 14 “strikebreakers” hired to work on short-term assignments during labor disputes, have sued 15 Healthsource Global Staffing, Inc. for a variety of wage and hour claims under California law. 16 Plaintiffs filed this action in the Alameda County Superior Court in December 2021, Dkt. No. 1-2, 17 Ex. A, and filed an amended complaint on March 15, 2022, Dkt. No. 1-2, Ex. I (FAC). On April 18 19, 2022, Healthsource removed the case to federal court under the Class Action Fairness Act of 19 2005 (CAFA), 28 U.S.C. § 1332(d). Dkt. No. 1. Plaintiffs filed a motion to remand on the 20 grounds that Healthsource has not plausibly established the $5 million amount in controversy 21 required for CAFA jurisdiction and that removal was not timely. Dkt. No. 20-1. The parties’ 22 familiarity with the record is assumed, and a remand is denied. 24 The Court has detailed the standards of CAFA removal in other cases, and incorporates 25 those discussions here. See Anderson v. Starbucks Corp., 556 F. Supp. 3d 1132, 1135-37 (N.D. 26 Cal. 2020); Moore v. Dnata Inflight Catering LLC, Case No. 20-cv-08028-JD, 2021 WL 3033577 27 (N.D. Cal. July 19, 2021); Duran v. Allegis Glob. Sols., Inc., No. 20-cv-09025-JD, 2021 WL 1 3281073 (N.D. Cal. Aug. 2, 2021). Specific portions of the standards are stated in the ensuing 2 discussion as pertinent, but the overall standards presented in those cases apply here. 4 Plaintiffs’ lead argument is that Healthsource “was legally required to provide evidence in 5 support of its estimated amount in controversy at that time of removal.” See Dkt. No. 20-1 at 4-6 6 (emphasis in original). The law says otherwise. “A defendant’s notice of removal ‘need include 7 only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold,’ 8 and does not need evidentiary submissions.” Anderson, 556 F. Supp. 3d. at 1136 (quoting Sharpe 9 v. Puritan’s Pride, Inc., No. 16-cv-06717-JD, 2017 WL 475662, at *2 (N.D. Cal. Feb. 6, 2017)). 10 Healthsource bore the burden of establishing the amount in controversy by a preponderance of the 11 evidence only after plaintiffs factually attacked its estimates. See id.; Dkt. No. 20-1 at 6-8. 12 Healthsource has met this evidentiary burden because it has established that the claim 13 under California Labor Code Section 203 alone puts more than $18 million in controversy. See 14 Dkt. No. 21 at 9-11. Section 203 imposes a waiting time penalty equal to one day of pay for each 15 day wages are late, up to a maximum of 30 days for an employer’s failure to pay all wages owed 16 to the employee immediately upon the employee’s separation. See Cal. Lab. Code §§ 201-03; see 17 also Collins v. Hilton Mgmt., LLC, No. 21-cv-02523-JD, 2021 WL 2981977, at *3 (N.D. Cal. July 18 15, 2021). 19 To estimate its potentially liability for this claim, Healthsource determined that there are 20 3,608 putative class members, and that they worked 2,260 separate assignments during the 21 applicable recovery period. Dkt. No. 21-1 ¶¶ 7, 12. It also determined that putative class 22 members during the class period earned an average of $1,120 per day. Id. ¶ 10. Assuming a 25% 23 violation rate, it estimated approximately $18,984,000 in waiting time penalties. Dkt. No. 1 ¶ 32 24 (“$1,120 per day x 30 days x 2,260 total assignments worked x 25%”); Dkt. No. 21 at 10-11. 25 Healthsource’s estimates regarding the number of separate assignments and the average daily pay 26 are grounded in its business records and supported by a declaration filed by the individual 27 responsible for primary oversight and management of Healthsource. See Dkt. No. 21-1 ¶¶ 1, 10, 1 Plaintiffs do not dispute these numbers, and nothing in the record indicates that they are 2 unreliable. Healthsource’s assumption that it could be liable for the maximum thirty-day penalty 3 for each Section 203 violation was not an inflationary tactic. To be sure, assuming a 100% 4 liability or violation rate is not necessarily warranted in every case. See Moore, 2021 WL 5 3033577, at *2 (allegations that “some class members suffered some violations at some time 6 during the class period,” and “the occasional reference to a ‘common course of conduct’ and 7 ‘intentionally’ adopted wage and hour policies,” were “hardly grounds to infer a 100% violation 8 rate for any of the claims”). But the FAC alleges that Healthsource “failed to pay all wages due to 9 Plaintiffs and other members of the Class who separated from Defendant, by failing to pay for, 10 among other things, for all hours worked and all wages earned, including overtime and double- 11 time pay and non-discretionary bonuses.” FAC ¶ 75 (emphasis added). Plaintiffs themselves 12 posit a uniform pattern and practice of violations by Healthsource, and so the maximum penalty 13 assumption used to determine the amount in controversy is reasonable. See Anderson, 556 F. 14 Supp. 3d at 1137-38 (allegations that “all” class members “expected and required” to be reachable 15 by phone “at any time” were grounds to infer a 100% violation rate); see also Arias v. Residence 16 Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019) (“the amount in controversy reflects the 17 maximum recovery the plaintiff could reasonably recover”) (emphasis in original). 18 Even so, Healthsource ultimately used a much lower assumption of a 25% violation rate to 19 estimate the amount in controversy, and demonstrated that the statutory threshold would still be 20 met even assuming a 10% violation rate. Dkt. No. 21 at 11 n.8; see Collins, 2021 WL 2981977, at 21 *2 (25% violation rate was reasonable where complaint alleged that violations occurred 22 “systematically” and on a “uniform” basis). Healthsource did not rig the estimate, as plaintiffs 23 suggest. 24 Plaintiffs say that the FAC is “completely silent as to how many putative class members 25 have also separated” from Healthsource. Dkt. No. 20-1 at 6-7. But as Healthsource stated, with 26 no meaningful opposition by plaintiffs, the FAC is plausibly read as alleging that each separate 27 assignment worked constituted a potential waiting time penalties claim. Although the FAC 1 from Defendant as a result of being discharged or having voluntarily resigned their employment,” 2 Healthsource’s business records indicate that neither Louis nor Murray has separated from 3 Healthsource via discharge, resignation, or otherwise. FAC ¶¶ 12, 14, 74; Dkt. No. 21-1 ¶ 14. It 4 was consequently reasonable for Healthsource to construe plaintiffs’ theory of recovery as “a 5 claim that each assignment worked represents a separate employment, requiring the payment of 6 final wages.” Dkt. No. 21 at 10; see also Smith v. Super. Ct., 137 P.3d 218, 220 (Cal. 2006) 7 (“discharged” employees under Cal. Lab. Code § 201 include employees released after 8 “completion of a specific job assignment or time duration for which the employee was hired”). 9 There is no doubt that Healthsource has plausibly established that it is reasonably possible that the 10 amount in controversy exceeds $5 million on this claim alone, and plaintiffs have not shown 11 otherwise. 12 In light of this record, plaintiffs’ other objections to Healthsource’s estimates need not be 13 considered because they do not materially change the demonstration of the amount in controversy. 14 Plaintiffs were not entirely forthright in raising some of these criticisms. Several were presented 15 for the first time in a reply brief, on the apparent belief that plaintiffs were entitled to do so. Dkt. 16 No. 20-1 at 1 n.1; see also Dkt. No. 22 at 6-9, 11-12 (reply brief). That is not the case. Paragraph 17 15 of the Court’s Standing Order for Civil Cases expressly bars raising new arguments in a reply, 18 to avoid sandbagging and other inequitable conduct. See In re Capacitors Antitrust Litig., No. 14- 19 cv-03264-JD, 2017 WL 897340, at *1 (N.D. Cal. Mar. 7, 2017); see also Zamani v. Carnes, 491 20 F.3d 990, 997 (9th Cir. 2007) (the Court “need not consider arguments raised for the first time in a 21 reply brief”). In any event, the Court has independently reviewed the late objections, and they do 22 not alter the conclusion that the statutory amount in controversy has been demonstrated. 24 Plaintiffs’ suggestion that removal was untimely under 28 U.S.C. § 1446(b) is not well 25 taken. Dkt. No. 20-1 at 8-10. Sections 1446(b)(1) and (b)(3) of the removal statute require “that a 26 notice of removal be filed within thirty days of receipt from the plaintiff of an initial pleading or 27 other document from which it is ascertainable that the case is removable.” Roth v. CHA 1 “operate as limitations on the right to removal rather than as authorizations to remove,” and only 2 apply to “a defendant who is put on notice of removability by a plaintiff.” Id. at 1123, 1125. 3 Otherwise, “[a] CAFA case may be removed at any time.” Id. at 1126. 4 “[N]otice of removability under § 1446(b) is determined through examination of the four 5 corners of the applicable pleadings, not through subjective knowledge or a duty to make further 6 inquiry.” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005). Under the Ninth 7 Circuit’s “bright-line approach,” the thirty-day clocks start when removability is “revealed 8 affirmatively in the initial pleading” or made “unequivocally clear and certain” by another paper. 9 Id. at 695, 697; Dietrich v. Boeing Co., 14 F.4th 1089, 1091 (9th Cir. 2021). Consequently, “even 10 if a defendant could have discovered grounds for removability through investigation, it does not 11 lose the right to remove because it did not conduct such an investigation and then file a notice of 12 removal within thirty days of receiving the indeterminate document.” Kenny v. Wal-Mart Stores, 13 Inc., 881 F.3d 786, 791 (9th Cir. 2018) (quoting Roth, 720 F.3d at 1125); see also Fowler v. 14 Penske Logistics, LLC, No. 3:17-cv-05397-JD, 2018 WL 2079987, at *1 (N.D. Cal. May 4, 2018) 15 (thirty-day removal periods not triggered when “defendant would have had to review its records in 16 order to calculate potential damages” because “[c]ircuit precedent makes clear that such reviews 17 are not required by the removal statute”) (internal quotations omitted); Anderson, 556 F. Supp. 3d 18 at 1135, 1137 (removal was timely where defendant filed notice of removal eight months after the 19 complaint was filed but “within thirty days of ascertaining that the action is removable under 20 CAFA”). 21 Neither the initial complaint nor the FAC affirmatively disclosed the potential size of the 22 putative class or the amount in controversy, and plaintiffs do not point to any other pleading or 23 document that would have triggered the question of removal. Healthsource could not have made 24 those calculations without reviewing its own business records to establish the likely number of 25 putative class members, the number of assignments worked, and the average daily pay. The thirty- 26 day limits in Section 1446(b) are consequently inapplicable, and it was proper for Healthsource to 27 remove “at any time.” Roth, 720 F.3d at 1126. 2 Removal was timely and provident under the removal statute. Consequently, a remand is 3 denied. 5 Dated: October 3, 2022 6 7 JAME NATO 8 Unitedf tates District Judge 9 10 11 12

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