Pineda v. Sun Valley Packing, L.P.

• Court: District Court, E.D. California
• Decided: December 3, 2021
• Docket: 1:21-cv-01265
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 LETICIA PINEDA, on behalf of herself, No. 1:21-cv-01265-DAD-EPG all others similarly situated, and the State 12 of California, 13 Plaintiff, ORDER GRANTING PLAINTIFF’S MOTION TO REMAND AND REMANDING THIS 14 v. ACTION TO THE FRESNO COUNTY SUPERIOR COURT 15 SUN VALLEY PACKING, L.P., et al., (Doc. No. 9) 16 Defendants.

18 19 This matter is before the court on plaintiff’s motion to remand this action to the Fresno 20 County Superior Court. (Doc. No. 9.) Pursuant to General Order No. 617 addressing the public 21 health emergency posed by the COVID-19 pandemic, plaintiff’s motion was taken under 22 submission on the papers. (Doc. No. 12.) For the reasons explained below, the court will grant 23 plaintiff’s motion to remand. 24 BACKGROUND 25 Plaintiff Leticia Pineda filed this representative action in Fresno County Superior Court 26 against her employer defendant Sun Valley Packing, L.P., and defendant Valle Del Sol Jones, 27 LLC, on behalf of herself, other similarly aggrieved employees, and the State of California, 28 alleging a single claim for civil penalties under the California’s Private Attorneys General Act 1 (“PAGA”), California Labor Code §§ 2698, et seq. (Doc. No. 1-1.) Plaintiff’s PAGA claim is 2 based upon her allegations that defendants violated California Labor Code § 432.5 by “unlawfully 3 requiring plaintiff and others to sign arbitration agreements, as a condition of their employment, 4 which contained a purported waiver of the aggrieved employees’ right to bring any claim related 5 to their employment on a representative basis that is unenforceable as a matter of settled 6 California law in California.” (Id. at ¶¶ 1, 23–28.) 7 On August 19, 2021, defendants timely removed this action to this federal court, 8 purportedly based on two distinct jurisdictional grounds. (Doc. No. 1.) First, defendants assert 9 that removal was proper because this court has subject matter jurisdiction pursuant to the Class 10 Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). (Id. at 2–7.) Second, defendants assert that 11 removal to this court was also proper pursuant to the Convention on Recognition and 12 Enforcement of Foreign Arbitral Awards (“New York Convention”), 9 U.S.C. §§ 201, et seq., 13 because plaintiff is a Mexican national, not a U.S. citizen, and was employed by defendants as a 14 seasonal worker at their packing plant in Reedley, California. (Id. at 7–8; Doc. No. 1-1 at ¶ 9.) 15 On September 7, 2021, plaintiff filed the pending motion to remand arguing that CAFA 16 jurisdiction does not apply here because this case is a PAGA-only action, not a class action, and 17 that the New York Convention, which is limited to foreign commerce, does not apply to the 18 arbitration provision in the parties’ employment agreement for work performed exclusively in 19 California and subject to enforcement exclusively in California. (Doc. Nos. 9; 9-1 at 9–13.) On 20 September 21, 2021, defendants filed an opposition to the pending motion, and on September 27, 21 2021, plaintiff filed her reply thereto. (Doc. Nos. 19, 20.) 22 LEGAL STANDARD 23 “If at any time before final judgment it appears that the district court lacks subject matter 24 jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c); see also Smith v. Mylan, Inc., 761 25 F.3d 1042, 1044 (9th Cir. 2014); Bruns v. NCUA, 122 F.3d 1251, 1257 (9th Cir. 1997). “The 26 removal statute is strictly construed against removal jurisdiction, and the burden of establishing 27 federal jurisdiction falls to the party invoking the statute.” California ex rel. Lockyer v. Dynegy, 28 Inc., 375 F.3d 831, 838 (9th Cir. 2004) (citation omitted); see also Provincial Gov’t of 1 Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009) (“The defendant bears the 2 burden of establishing that removal is proper.”). As such, a federal court must reject jurisdiction 3 and remand the case to state court if there is any doubt as to the right of removal. Matheson v. 4 Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003); see also Valdez v. Allstate 5 Ins. Co., 372 F.3d 1115, 1118 (9th Cir. 2004). The defendant seeking removal of an action from 6 state court bears the burden of establishing grounds for federal jurisdiction by a preponderance of 7 the evidence. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 8 ANALYSIS 9 A. Motion to Remand 10 1. Removal Pursuant to CAFA 11 In the pending motion, plaintiff argues that removal of this action based on CAFA was 12 improper and urges the court to remand this PAGA-only action because the court lacks subject 13 matter jurisdiction. (Doc. No. 9-1 at 8–9.) In their opposition to the pending motion, defendants 14 do not meaningfully address plaintiff’s argument in this regard. Instead, defendants contend that 15 removal is proper because plaintiff has a related pending class action lawsuit asserting various 16 wage and hour claims against defendant Sun Valley Packing, L.P., and plaintiff could have (and 17 according to defendants, should have) sought leave to amend her complaint in that pending class 18 action to include her PAGA claim, rather than filing the PAGA-only action in state court. (Doc. 19 No. 19 at 22–23.) Defendants’ argument appears to be that because the court would have had 20 jurisdiction over plaintiff’s PAGA claim if she had added the PAGA claim in her pending wage 21 and hour class action, this court must also have jurisdiction over plaintiff’s PAGA-only action. 22 (Id.) Defendants are mistaken. The issue here is not whether the court would exercise 23 supplemental jurisdiction over a PAGA claim where a plaintiff initiates a single action bringing 24 both class claims and a PAGA claim or where a plaintiff seeks to amend her class action 25 complaint to add a PAGA claim. Plaintiff decided not to amend her pending class action 26 complaint to add a PAGA claim. Rather, she filed this PAGA-only action in state court, and the 27 only relevant question posed by the pending motion to remand is whether this federal court lacks 28 subject matter jurisdiction over this action such that remand is required. 1 It is well established in the Ninth Circuit that “a PAGA claim cannot be brought as a 2 ‘class action’ under CAFA.” Canela v. Costco Wholesale Corp., 971 F.3d 845, 856 (9th Cir. 3 2020); Echevarria v. Aerotek, Inc., 814 F. App’x 321, 322 (9th Cir. 2020)1 (noting that “a PAGA 4 claim cannot give rise to CAFA jurisdiction”). “PAGA is not sufficiently similar to Rule 23 to 5 establish the original jurisdiction of a federal court under CAFA.” Baumann v. Chase Inv. Servs. 6 Corp., 747 F.3d 1117, 1124 (9th Cir. 2014) (holding “that the district court could not exercise 7 jurisdiction over [] removed PAGA action under CAFA”). 8 Moreover, even if a plaintiff has a separate class action pending before the federal court, a 9 defendant seeking to remove a PAGA-only action cannot invoke supplemental jurisdiction as a 10 basis for removal. See Ogaz v. Honeywell Int’l, Inc., No. 21-cv-740-JFW-KK, 2021 WL 11 2822400, at *3 (C.D. Cal. July 7, 2021) (noting that “supplemental jurisdiction is not the same as 12 original jurisdiction and, therefore, cannot confer a right to removal” over a PAGA action); 13 Guzman v. Peri & Sons Farms of California, LLC, No. 1:21-cv-00348-NONE-SKO, 2021 WL 14 3286063, at *3 (E.D. Cal. Aug. 2, 2021) (declining to consolidate CAFA and PAGA cases 15 because there was no basis for the court’s exercise of jurisdiction over the plaintiff’s PAGA 16 action); cf., Bank of New York Mellon v. Palmer, No. 1:17-cv-00707-DAD-SKO, 2017 WL 17 2791662, at *2 (E.D. Cal. June 28, 2017) (“Even where the court has jurisdiction over a related 18 action, that does not provide a basis for supplemental jurisdiction over this action presenting a 19 purely state law claim.”). Indeed, federal courts in California routinely allow PAGA and CAFA 20 cases to proceed on their separate state and federal tracks, regardless of similarities between the 21 two cases. See, e.g., Coffin v. Magellan HRSC, Inc., No. 3:19-cv-2047-BAS-NLS, 2020 WL 22 773255, at *3 (S.D. Cal. Feb. 18, 2020) (“It is unclear to the Court exactly why [plaintiff] filed 23 two separate complaints . . ., but [plaintiff] does not dispute that Coffin I is properly in this Court, 24 therefore, she does not appear to be attempting to stay out of federal court (or avoid CAFA) 25 entirely.”) 26 ///// 27 1 Citation to this unpublished Ninth Circuit opinion is appropriate pursuant to Ninth Circuit Rule 28 36-3(b). 1 Accordingly, the court concludes that removal of this PAGA-only action based on CAFA 2 jurisdiction is improper. Because CAFA does not apply to this PAGA representative action, 3 CAFA cannot serve as the jurisdictional basis for removal of this case. 4 2. Removal Pursuant to New York Convention 5 In their notice of removal, defendants alleged that this court has jurisdiction over this 6 action under the New York Convention, which according to defendants, “provides that a 7 defendant may remove from state court into federal court a case (1) ‘implicating’ or ‘relating’ to 8 an arbitration agreement, (2) involving at least one non-U.S. citizen.” (Doc. No. 1 at 7–8) (citing 9 9 U.S.C. §§ 203, 205). Defendants point to three arbitration agreements that plaintiff signed in 10 connection with her employment and that defendants contend are implicated and related to this 11 pending PAGA action. (Id. at 8.) Defendants also point to plaintiff’s IRS Form I-9 showing that 12 she is a Mexican citizen, not a U.S. citizen. (Id.) Based on these arbitration agreements and the 13 fact that plaintiff is not a U.S. citizen, defendants contend that removal of this action was proper 14 under the New York Convention. (Id.) 15 In the pending motion to remand, plaintiff argues that the New York Convention does not 16 apply to plaintiff’s arbitration agreements and cannot provide the basis for removal of plaintiff’s 17 PAGA-only action. (Doc. No. 9-1 at 9.) Plaintiff emphasizes that defendants’ notice of removal 18 omits key statutory language in quoting the New York Convention’s provisions and misrepresent 19 its requirements, which limit a federal court’s jurisdiction to an arbitration “under the 20 Convention.” (Id.) (quoting 9 U.S.C. § 205).2 Plaintiff contends that when viewed in light of the 21 Ninth Circuit’s explanation as to the scope of the New York Convention and its interpretation of 22 ///// 23 2 Section 205 provides as follows: 24 Where the subject matter of an action or proceeding pending in a 25 State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any 26 time before the trial thereof, remove such action or proceeding to the district court of the United States for the district and division 27 embracing the place where the action or proceeding is pending. 28 9 U.S.C. § 205 (emphasis added). 1 what falls “under the Convention” as that phrase is used in the statute,3 it is clear that the 2 Convention does not apply to the arbitration agreements at issue in this case. (Id. at 9–10) (citing 3 Ministry of Def. of Islamic Republic of Iran v. Gould Inc., 887 F.2d 1357, 1362 (9th Cir. 1989)). 4 As the Ninth Circuit has explained: 5 In New York in 1958, the United Nations facilitated the creation of an international agreement providing for enforcement of foreign 6 arbitral awards. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, T.I.A.S. No. 6997, 7 330 U.N.T.S. 38 (“the New York Convention” or “the Convention”). Party–States to the Convention agree to “recognize 8 arbitral awards as binding and enforce them in accordance with [their own] rules of procedure.” New York Convention, Art. III. 9 The United States became a party to the Convention in 1970, and Congress soon after enacted legislation implementing the 10 provisions of the Convention into domestic law, codified as Chapter II of the Federal Arbitration Act, 9 U.S.C. sections 201–208. 11 As part of this legislation, Congress vested federal district courts 12 with original jurisdiction over any action or proceeding “falling under the Convention,” as such an action is “deemed to arise under 13 the laws and treaties of the United States.” 9 U.S.C. § 203. The starting point for our interpretation is a supplementary statutory 14 provision which provides that an “arbitral award arising out of a legal relationship, whether contractual or not, which is considered 15 as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention.” 9 16 U.S.C. § 202 (emphasis supplied). The provision goes on to except from the definition of “falls under” certain awards made pursuant to 17 a domestic legal relationship which have no foreign nexus. Id. 18 Under the plain meaning of the statute then, three basic requirements exist for jurisdiction to be conferred upon the district 19 court: the award (1) must arise out of a legal relationship (2) which is commercial in nature and (3) which is not entirely domestic in 20 scope. 21 3 Section 202 provides as follows: 22 An arbitration agreement or arbitral award arising out of a legal 23 relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement 24 described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is 25 entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves 26 property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more 27 foreign states. 28 9 U.S.C. § 202. 1 Ministry of Def. of Islamic Republic of Iran, 887 F.2d at 1362. The Ninth Circuit further noted 2 that Article I of the Convention provides that it “shall apply to the recognition and enforcement of 3 arbitral awards made in the territory of a State other than the State where the recognition and 4 enforcement of such awards are sought, and arising out of differences between persons, whether 5 physical or legal . . . [and those awards] not considered as domestic awards in the State where 6 their recognition and enforcement are sought.” Id. (quoting Convention Done at New York June 7 10, 1958, T.I.A.S. No. 6997 (Dec. 29, 1970)). The Ninth Circuit also noted that “[t]he United 8 States imposes an additional related condition on the award: it must be ‘made in the territory of 9 another Contracting State.’” Id. (citing 21 U.S.T. 2566). 10 Given this interpretation and explanation by the Ninth Circuit, plaintiff argues that her 11 arbitration agreements with defendants do not fall under the Convention because they are not 12 commercial in nature (they do not involve international, foreign, or interstate commerce) and they 13 are entirely domestic in scope (they are arbitration agreements in employment contracts for work 14 performed exclusively in California and subject to enforcement exclusively in California). (Doc. 15 No. 9-1 at 9–13.) The court agrees and finds the district court decisions cited by plaintiff in 16 support of her argument to be particularly on point and persuasive in this regard. In this regard, 17 plaintiff cites to a recent district court decision in a similar case, in which the defendant removed 18 a state law employment case based on the New York Convention because the parties had an 19 employment arbitration agreement and the employee plaintiff was a Honduran citizen. Id. (citing 20 Padilla Ayala v. Teledyne Def. Elecs., No. 2:21-cv-01322-AB-MRW, 2021 WL 1312578, at *3 21 (C.D. Cal. Apr. 8, 2021) (rejecting the defendant’s argument that “due to plaintiff’s non-U.S. 22 citizenship, the Agreement is not entirely domestic in scope and thus automatically falls under the 23 Convention”). In granting the plaintiff’s motion to remand, the court in Padilla Ayala relied on 24 the Ninth Circuit’s decision in Ministry of Def. of Islamic Republic of Iran and concluded that the 25 defendant’s “interpretation . . . oversimplifies the text and contravenes congressional purpose and 26 intent” as outlined by the Ninth Circuit. Padilla Ayala, 2021 WL 1312578, at *5. Further, the 27 district court in Padilla Ayala emphasized that “the parties seek arbitration to be both performed 28 and enforced in California,” and thus, their arbitration agreement “maintains a sufficiently 1 domestic nature and falls short of the level of international commerce Congress contemplated 2 when it agreed to the Convention.” (Id.) Similarly, here, defendants seek only to enforce the 3 arbitration agreements in California and to be performed in California. (See Doc. No. 5.) 4 In opposing the pending motion, defendants criticize plaintiff’s reliance on Padilla Ayala 5 because that district court decision is not binding on this court, yet they rely primarily on out-of- 6 circuit cases themselves, and in particular district court cases from the Southern District of 7 Florida that are not factually or legally similar to the present case. (Doc. No. 19 at 13–20.) That 8 is, defendants somewhat bizarrely rely only on a few cases involving seamen and crewmen on 9 vessels operating in international waters and the issue of whether the seafarer’s exemption to the 10 Convention applied such that the seamen had a statutory right to have their claims heard in 11 federal court. (Doc. No. 19 at 12–20.) Defendants’ discussion of these cases does not serve to 12 advance their argument or dissuade this court from finding the decision in Padilla Ayala to be 13 persuasive. In addition, the cases relied upon by defendant provide no authority for defendants’ 14 broad unsupported assertion that “[f]ederal courts will have jurisdiction under 9 U.S.C. § 205 15 over just about any suit in which defendant contends that [an] arbitration clause falling under [the 16 Convention] provides defense.” (Id. at 15.) Such a contention, as defendants make in this case, is 17 insufficient. Defendants must actually satisfy their burden of showing that removal is proper 18 because the arbitration agreement at issue does indeed fall under the Convention. See California 19 ex rel. Lockyer, 375 F.3d at 838. Here, the court finds that defendants have not met that burden. 20 The court finds that the removal of this action pursuant to the Convention on Recognition 21 and Enforcement of Foreign Arbitral Awards (“New York Convention”), 9 U.S.C. §§ 201, et seq., 22 was not proper. The New York Convention does not apply to the parties’ arbitration agreements 23 at issue here, which are entirely domestic in scope and thus do not “fall under the Convention.” 24 Accordingly, having found that the court lacks subject matter jurisdiction over this action 25 based on either CAFA or the New York Convention, the court will grant plaintiff’s motion to 26 remand this case to the Fresno County Superior Court. 27 ///// 28 ///// 1 B. Request for Attorneys’ Fees 2 Plaintiff also seeks attorneys’ fees in this matter for the total amount of $11,357.50. (Doc. 3 Nos. 9-1 at 17–21; 20 at 13–14.) “An order remanding the case may require payment of just costs 4 and any actual expenses, including attorney fees, incurred as a result of removal.” 28 U.S.C. 5 § 1447(c). “Absent unusual circumstances, courts may award attorney’s fees under § 1447(c) 6 only where the removing party lacked an objectively reasonable basis for seeking removal. 7 Conversely, when an objectively reasonable basis exists, fees should be denied.” Martin v. 8 Franklin Capital Corp., 546 U.S. 132, 141 (2005). 9 Here, the court concludes that defendants’ basis for removal was objectively 10 unreasonable. As for defendants’ CAFA jurisdiction arguments, the law compelling the remand 11 of this action to state court is well established. In addition, given the Ninth Circuit’s articulation 12 of the applicable requirements for removal under the New York Convention—in particular the 13 foreign nexus requirement, which is clearly lacking in this case—the court concludes that 14 defendants’ removal of this action on that basis was unreasonable. Plaintiff’s request for 15 attorneys’ fees will therefore be granted. However, the court will not award the full amount 16 requested by plaintiff because that amount includes fees related to time spent responding to 17 defendant’s motion to dismiss, motion to compel arbitration, and motion to consolidate cases. 18 (See Doc. No. 20 at 14.) Plaintiff’s requested award of $11,357.50 includes $6,022.50 in fees 19 related to the motion to remand and $5,335.00 in fees related to plaintiff’s reply brief in support 20 of her motion to remand and to plaintiff’s response to defendants’ three other pending motions. 21 Because plaintiff’s counsel’s declaration does not specify how much of the $5,335.00 in fees 22 were incurred in preparing plaintiff’s reply brief specifically, the court will award plaintiff only 23 $6,022.50 in attorneys’ fees for being required to file her motion to remand this action. See Plute 24 v. Roadway Package Sys., Inc., 141 F. Supp. 2d 1005, 1012 (N.D. Cal. 2001) (“A district court 25 has broad discretion under [28 U.S.C. § 1447(c)].”); see also Ebert v. Herwick, 675 Fed. App’x. 26 863 (10th Cir. 2017) (finding that the district court did not abuse its discretion in awarding a sum 27 likely even less than the actual expenses and costs incurred). 28 ///// 1 CONCLUSION 2 For the reasons set forth above, 3 1. Plaintiff's motion to remand this action (Doc. No. 9) is granted; 4 2. Plaintiff's request for attorneys’ fees (Doc. No. 9) is granted in the amount of 5 $6,022.50; 6 3. This action is remanded to the Fresno County Superior Court, pursuant to 28 7 U.S.C. § 1447(c), for lack of subject matter jurisdiction; and 8 4. The Clerk of the Court is directed to close this case. 9 | IT IS SO ORDERED. si am '0 Dated: _ December 3, 2021 Ll A 5 of 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10