1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 NELSON RAMIREZ, Case No. 21-cv-09955-BLF
8 Plaintiff, ORDER DENYING MOTION TO 9 v. REMAND
10 HV GLOBAL MANAGEMENT [Re: ECF No. 13] CORPORATION, et al., 11 Defendants. 12 13 Plaintiff Nelson Ramirez filed this action against Defendants HV Global Management 14 Corporation and HV Global Group, Inc., alleging ten causes of action for violation of the 15 California Labor Code and Business & Professions Code. See ECF No. 1 (Notice of Removal and 16 Complaint). Now before the Court is Ramirez’s motion to remand for lack of subject matter 17 jurisdiction. ECF No. 13 (“Mot.”). Ramirez argues that Defendants have not demonstrated that 18 the amount-in-controversy exceeds $5 million under the jurisdictional requirements of the Class 19 Action Fairness Ac, 28 U.S.C. § 1332(d). Defendants oppose the motion. ECF No. 19 (“Opp.”). 20 The Court found the motion suitable for disposition without oral argument and vacated the May 5, 21 2022 hearing. See ECF No. 31. For the following reasons, the Court DENIES the motion to 22 remand. 23 I. BACKGROUND 24 As alleged in the operative complaint, Defendants employed Ramirez as a non-exempt 25 employee from September 2010 to September 2019 and during that time failed to compensate him 26 for hours he worked and missed meal periods and rest breaks. Compl. ¶ 20. Ramirez seeks to 27 represent a class of all current and former hourly-paid and non-exempt employees who worked for 1 California Labor Code and one claim under California’s Unfair Competition Law. See id. ¶¶ 48– 2 118. Ramirez specifies in his complaint that his individual claim is less than $75,000. Id. ¶ 1. 3 II. LEGAL STANDARD 4 Removal is proper where the federal courts have original jurisdiction over an action 5 brought in state court. 28 U.S.C. § 1441(a). Pursuant to the Class Action Fairness Act of 2005 6 (“CAFA”), federal courts have original jurisdiction over state law actions where (1) the matter in 7 controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs; (2) the 8 number of members of all proposed plaintiff classes in the aggregate is more than 100; and (3) 9 where any member of a class of plaintiffs is a citizen of a State different from any defendant. 28 10 U.S.C. § 1332(d). Typically, courts strictly construe the removal statute against removal 11 jurisdiction. See, e.g., Provicial Gov’t of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 12 (9th Cir. 2009); Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th Cir. 13 2008). However, “‘no antiremoval presumption attends cases invoking CAFA,’ in part because 14 the statute was enacted ‘to facilitate adjudication of certain class actions in federal court.’” 15 Jauregui v. Roadrunner Transp. Servs., Inc., 28 F.4th 989, 992–93 (9th Cir. 2022) (quoting Dart 16 Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014)). 17 In seeking removal under CAFA, the removing party bears the burden of establishing 18 federal jurisdiction. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). 19 The removing party must prove by a preponderance of the evidence that the amount in controversy 20 exceeds the jurisdictional threshold. Dart Cherokee, 574 U.S. at 88 (citing 28 U.S.C. 21 § 1446(c)(2)(B)). The removing party must also establish that the number of class members 22 exceeds 100 and minimal diversity exists between the parties. See Abrego Abrego v. Dow Chem. 23 Co., 443 F.3d 676, 685 (9th Cir. 2006). 24 When a party moves to remand under CAFA, they present either a “facial” attack or a 25 “factual” attack on the removing party’s showing of jurisdictional elements. “A ‘facial’ attack 26 accepts the truth of the [defendant’s] allegations but asserts that they ‘are insufficient on their face 27 to invoke federal jurisdiction.’” Harris v. KM Indus., Inc., 980 F.3d 694, 699 (9th Cir. 2020) 1 attack “contests the truth of the . . . allegations, usually by introducing evidence outside the 2 pleadings.” Id. (citing Salter, 974 F.3d at 964). When the removing party is presented with a 3 facial attack, the Court applies a weaker evidentiary standard; in those cases, a removal “need not 4 contain evidentiary submissions but only plausible allegations of jurisdictional elements.” Salter, 5 974 F.3d at 963 (quoting Arias v. Residence Inn by Marriott, 936 F.3d 920, 922 (9th Cir. 2019)) 6 (internal quotation marks omitted). When faced with a factual attack, the Court applies a stronger 7 evidentiary standard. The removing party “must support her jurisdictional allegations with 8 ‘competent proof’ . . . under the same evidentiary standard that governs in the summary judgment 9 context.” Id. at 963 (citing Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014)); Norse v. City 10 of Santa Cruz, 629 F.3d 966, 973 (9th Cir. 2010) (en banc); Trentacosta v. Frontier Pac. Aircraft 11 Indus., Inc., 813 F.2d 1553, 1559 (9th Cir. 1987); Fed .R. Civ. P. 56(c)). 12 III. DISCUSSION 13 At issue in this motion to remand is whether this Court has removal jurisdiction pursuant to 14 CAFA.1 Plaintiff challenges only Defendants’ showing on CAFA’s $5 million amount-in- 15 controversy requirement. In their notice of removal, Defendants allege that the total amount-in- 16 controversy is $14,964,207.25. NOR ¶ 45. In their opposition brief, Defendants say that even 17 with much lower assumed violation rates, the amount in controversy is still at least $6,138,726.71, 18 “well in excess of CAFA’s $5 million jurisdictional minimum.” Opp. at 10. Plaintiff disputes 19 each category of calculations underlying these alleged amounts-in-controversy. The Court 20 evaluates each in turn, but first confronts the impact of a recent Ninth Circuit decision in this area. 21 A. Jauregui 22 After briefing had concluded, the Ninth Circuit issued a published decision in Jauregui v. 23 Roadrunner Transp. Servs., Inc., 28 F.4th 989 (9th Cir. 2022). The Court requested supplemental 24 briefing from the parties on the impact of Jauregui on this case, including specifically whether 25 Plaintiff should be required to refile his motion to remand to “make[] arguments consistent with 26 1 Plaintiff also disputed that this Court has removal jurisdiction under 28 U.S.C. § 1332(a), as this 27 was one basis Defendants identified for this Court’s jurisdiction in their notice of removal. See 1 Jauregui.” ECF No. 26. While the parties disagree about the impact of Jauregui, they agree that 2 Plaintiff’s motion should not be revised and refiled. See ECF Nos. 29 at 1, 30 at 1. The Court will 3 accordingly evaluate Plaintiff’s motion as-filed with the benefit of additional guidance from 4 Jauregui. 5 In Jauregui, the Ninth Circuit confronted an appeal from a district court’s order remanding 6 a wage-and-hour class action to state court. Defendant Roadrunner Transportation Services had 7 originally removed the case to federal court under CAFA, and plaintiff Jauregui had responded 8 with a motion to remand arguing that the $5 million amount-in-controversy requirement was not 9 met. Jauregui, 28 F.4th at 991. Roadrunner responded with a declaration from its senior payroll 10 lead “who concluded that, based on the company’s payroll data and [Jauregui’s] allegations, the 11 amount in controversy was $14,780,377.06.” Id. The district court granted the motion to remand, 12 finding that Roadrunner did not meet its burden. Id. The district court evaluated the calculations 13 for each of the seven alleged violations, finding the claimed amount-in-controversy substantiated 14 for only two of the claims. Id. at 992. For the remaining five claims, the district court disagreed 15 with assumptions and variables underlying Roadrunner’s calculations, and thus “assigned a $0 16 value” to those claims for amount-in-controversy purposes. Id. The district court thus concluded 17 that the amount-in-controversy was only $2.1 million, below the $5 million CAFA threshold. Id. 18 The Ninth Circuit reversed, finding two problems with the district court’s analysis. First, 19 the Ninth Circuit found that the district court improperly imposed “a presumption against CAFA’s 20 jurisdiction.” Jauregui, 28 F.4th at 993. Because “no antiremoval presumption attends cases 21 invoking CAFA,” Dart Cherokee, 574 U.S. at 89, the district court’s different standard resulted in 22 “an inappropriate demand of certitude from Roadrunner over its assumptions used in calculating 23 the amount in controversy.” Jauregui, 28 F.4th at 993. This caused the district court to 24 improperly reject or discount some of Roadrunner’s assumptions and dismiss its estimates for 25 certain claims. Id. Second, the district court erred by assigning a $0 value to five of the seven 26 claims in the lawsuit simply because it disagreed with some of the assumptions underlying the 27 calculations. Id. at 994. “[I]f a defendant provided no evidence or clearly inadequate evidence 1 claim a $0 value.” Id. Instead, the district court assigned a $0 value to a claim where the court 2 “identified other assumptions that it concluded were better.” Id. “[A]t most,” the court should 3 have “reduce[d] the claim to the amount resulting from the alternative assumption.” Id. A district 4 court may be justified in zeroing out a claim “[w]here a defendant’s assumption is unreasonable 5 on its face without comparison to a better alternative.” Id. at 996. Otherwise, where an alternative 6 assumption is available and reasonable, “the district court should consider the claim under the 7 better assumption.” Id. 8 Jauregui informs the Court’s analysis of several threshold issues raised by the parties. 9 First, and contrary to Plaintiff’s argument otherwise, there is no presumption against removal in a 10 CAFA case. Jauregui, 28 F.4th at 993; contra Mot. at 2. Second, and again contrary to Plaintiff’s 11 argument otherwise, a declaration submitted by a company employee attesting to a review of 12 business records can constitute competent evidence supporting amount-in-controversy 13 calculations. Jauregui, 28 F.4th at 992; see also Brown v. Janus of Santa Cruz, 2021 WL 14 3413349, at *3 (N.D. Cal. Aug. 5, 2021) (citing cases); contra Mot. at 4–5. And third, if the Court 15 disagrees with an assumption that underlies Defendants’ calculations on a claim, the Court will 16 “consider the claim under [a] better assumption” if a better assumption can be identified. 17 Jauregui, 28 F.4th at 996. Indeed, Defendants provide alternative assumptions themselves in their 18 opposition to the motion to remand that the Court will consider in analyzing the amount-in- 19 controversy. 20 B. Amount-in-Controversy 21 With those principles in mind, the Court examines Defendants’ evidence and assumptions 22 for each category of amount-in-controversy. The Court first notes that Plaintiff mounts a factual 23 attack in its motion to remand because Plaintiff has “challenge[d] the truth of [Defendants’] 24 jurisdictional allegations by making a reasoned argument as to why any assumptions on which 25 they are based are not supported by evidence.” Harris, 980 F.3d at 700 (citing Salter, 974 F.3d at 26 964). Defendants thus have the burden to support their “jurisdictional allegations with competent 27 proof” and establish that this case meets CAFA’s jurisdictional minimum “by a preponderance of 1 Indeed, Defendants appear to have treated the attack as factual, given that Mr. Scholz 2 supplemented his initial declaration with an additional declaration “supporting some of 3 [Defendants’] assumptions” made in their notice of removal. Id. at 701 (noting submission of 4 supplemental declaration). Thus, Defendants’ calculations and assumptions are supported by two 5 declarations from Ted Scholz, the Vice President of Human Resources, who says that he analyzed 6 reports prepared by his Human Resources team from Defendants’ employment records to derive 7 the relevant data. ECF No. 19-1 (“Scholz Supp. Decl.”) ¶¶ 1–2; see also ECF No. 1-2 (“Scholz 8 Decl.”) ¶ 5 (reviewed “employment and payroll records maintained by Defendants”). 9 i. Overtime and Regular Wages 10 Plaintiff’s first and fourth claims are for unpaid overtime and minimum wages under Cal. 11 Lab. Code §§ 510, 1194, 1197, 1197.1, and 1198. Compl. ¶¶ 48–56, 77–82. In their notice of 12 removal, Defendants allege that $4,773,227.40 is in controversy from overtime and unpaid wages. 13 NOR ¶ 31. This figure assumes a 100% violation rate—that is, that for each shift worked, every 14 worker went unpaid for a single hour of overtime or regular wages. Id. In its motion to remand, 15 Plaintiff objects to a 100% violation rate on several grounds. Mot. at 5–6. In their opposition, 16 Defendants back off a 100% violation rate and assume a far more conservative 25% violation rate 17 for overtime and a 25% violation rate for regular wages. Opp. at 5–6. The Court first considers 18 the appropriate violation rate and then delves into Plaintiff’s other objections. 19 The violation rate inquiry is fact-specific; the Ninth Circuit allows a 100% violation rate to 20 be assumed in some cases, see LaCross v. Knight Transportation, Inc., 775 F.3d 1200, 1202 (9th 21 Cir. 2015), but has found the assumption unwarranted in other cases, see Ibarra, 775 F.3d at 22 1199–1200. A party removing pursuant to CAFA may assume a 100% violation rate when that 23 assumption is “supported directly by, or reasonably inferred from, the allegations in the 24 complaint.” Cortez v. United Nat. Foods, Inc., 2019 WL 955001, at *5 (N.D. Cal. Feb. 27, 2019) 25 (quoting Ford v. CEC Entm't, Inc., 2014 WL 3377990, at *3 (N.D. Cal. July 10, 2014)) (internal 26 quotation marks omitted). This rule of thumb is refined by the Ninth Circuit's finding in Ibarra 27 that “a ‘pattern and practice’ of doing something does not necessarily mean always doing 1 A defendant must show that a reasonable reading of the complaint could place an hour of 2 unpaid overtime or wages at issue per shift by all class members in controversy. Cortez, 2019 WL 3 955001, at *5. In this case, Defendants’ assumption of a 100% violation rate is not “reasonable.” 4 While Plaintiff states in some places in the Compliant that Defendants engaged in a “pattern and 5 practice of wage abuse,” Compl. ¶¶ 25–26, engaging in a “pattern or practice” does not mean that 6 a violation occurred in 100% of all shifts. See Ibarra, 775 F.3d at 1198-99 (finding that a 7 “‘pattern and practice’ of doing something does not necessarily mean always doing something”). 8 Indeed, district courts in the Ninth Circuit regularly find that a “uniform policy” does not imply a 9 100% violation rate. See, e.g., Brown, 2021 WL 3413349, at *5 (citing cases). District courts in 10 this circuit have found violation rates ranging from 20% to 60% more appropriate. See Alvarez v. 11 Off. Depot, Inc., 2017 WL 5952181, at *3 (C.D. Cal. Nov. 30, 2017) (60% violation rate); Brown, 12 2021 WL 3413349, at *6–7 (25% violation rate); Trigueros v. Stanford Fed. Credit Union, 2021 13 WL 2649241, at *4 (N.D. Cal. Jun. 28, 2021) (20% violation rate). Because the Court rejects the 14 100% violation rate from Defendants’ notice of removal, it must look for a reasonable “alternative 15 assumption” as a basis for recalculation. Jauregui, 28 F.4th at 994. Defendants provide a 16 reasonable alternative assumption: the 25% violation rate, which is at the low end of the violation 17 rates that courts in this circuit have found acceptable. The Court will assume a 25% violation rate 18 for both overtime wages and regular wages. 19 Plaintiff objects to the foundation of Defendants’ other datapoints underlying this 20 calculation. Plaintiff first complains that Defendants did not provide “one single supporting 21 business record, spreadsheet, or other document” supporting the number of employees, the number 22 of workweeks, the $18.96 average hourly rate, the 5 shifts per week and 8 hours per shift, and the 23 number of separated employees in the relevant time period. Mot. at 4. The Court finds that 24 requiring Defendants to provide underlying documentation supporting these assumptions asks too 25 much at this stage of the case. The Court is satisfied that Mr. Scholz is qualified to render these 26 opinions as the Vice President of Human Resources. Scholz Decl. ¶ 1. He sufficiently describes 27 his methods for obtaining each of the pieces of data described above that comprise Defendants’ 1 databases. The Court will not modify these reasonable assumptions. Jauregui, 28 F.4th at 992. 2 Plaintiff also objects to Defendants’ inclusion of part-time workers in their calculation of 3 the number of relevant workweeks, and that those part-time workers would not be subject to 4 overtime penalties. Mot. at 5.2 Defendants’ respond that only 6.2% of the workweeks were 5 worked by part-time employees, and that part-time employees can still be entitled to overtime. 6 Opp. at 5 (citing Scholz Supp. Decl. ¶¶ 3–4). The Court finds that no adjustment to the calculation 7 is warranted simply because some part-time employees are included in the number of workweeks. 8 Any slight overinclusiveness resulting from inclusion of workweeks worked by part-time 9 employees is offset by an assumed violation rate on the lower end of the range courts in this 10 circuit have found acceptable. 11 Accordingly, the Court finds that Defendants’ revised calculations for the amount-in- 12 controversy for overtime and regular wages are based on reasonable assumptions. The 13 calculations are reproduced below. 14 Overtime: 33,567 workweeks× 1.25 hours ×$18.96×1.5 overtime hrly. rate = $1,193.306.85 1 workweek 1 hour 15 Regular Wages: 33,567 workweeks× 1.25 hours ×$18.96= $795,537.90 16 1 workweek 1 hour 17 ii. Liquidated Damages 18 Defendants also provide calculations for the amount-in-controversy for Plaintiff’s claim for 19 liquidated damages “in the amount of their unpaid minimum wage pursuant to Labor Code section 20 1194.2.” NOR ¶ 32 (citing Compl. ¶ 82). As Defendants say, courts have approved use of the 21 average minimum wage during the relevant putative class period to estimate liquidated damages. 22 See Rodriguez v. URS Midwest, Inc., 2021 WL 289354, at *1 (C.D. Cal. Jan. 27, 2021). That 23 average minimum wage was $12.47. Plaintiff does not object to this average minimum wage; 24 indeed, his objections to the liquidated damages calculations rest solely on objections to the 25 number of workweeks that the Court has already resolved. Accordingly, the Court finds that 26 Defendants’ revised calculations of the amount-in-controversy for liquidated damages in their 27 1 opposition brief—which are based on the same 25% violation rate approved above—are 2 reasonable. 3 Liquidated Damages: 33,567 workweeks× 1.25 hours ×$12.47= $523,225.61 1 workweek 1 hour 4 iii. Meal and Rest Break Violations 5 Plaintiff also alleges that Defendants did not provide members of the putative class with 6 required meal and rest breaks in violation of Cal. Lab. Code §§ 226.7. Compl. ¶¶ 57–76. In their 7 notice of removal, Defendants allege that $3,818,581.92 is in controversy for meal and rest break 8 violations (equally split between meal breaks and rest breaks). NOR ¶¶ 35, 37. Defendants 9 assume a 60% violation rate in their notice of removal—i.e., three noncompliant meal periods and 10 three noncompliant rest periods per workweek per employee, paid out at the statutorily-required 11 one hour of pay per violation. Id. ¶¶ 34, 36. Plaintiff makes the same objections to these 12 calculations as he does to the wage calculations: that Defendants do not provide underlying 13 documents and that the violation rate assumed is too high. Mot. at 6–7. In opposition, Defendants 14 defend their assumption of a 60% violation rate, but again offer an alternative assumption of a 15 25% violation rate (1.25 meal period and 1.25 rest break violations per week per employee). Opp. 16 at 7–8. 17 The Court finds that Defendants’ alternative assumption—a 25% violation rate—is 18 reasonable. This Court has previously found a 50% violation rate for meal and rest break 19 violations reasonable in a case with similar allegations of a “pattern or practice” of meal and rest 20 break violations. See Brown, 2021 WL 3413349, at *5. Other courts have agreed and found a 21 range of 25% to 60% to be reasonable. See Bryant v. NCR Corp., 284 F. Supp. 3d 1147, 1151 22 (S.D. Cal. 2018) (60% violation rate for meal periods and 30% violation rate for rest periods); 23 Alvarez, 2017 WL 5952181, at *3 (60% rate for both claims). The Complaint offers little 24 guidance for Defendants to make assumptions about Plaintiff’s allegations, using only the vague 25 “pattern or practice” language. Defendants’ assumptions underlying the violation rate—which is 26 again at the low end of what courts have found reasonable—are justified. Accordingly, the Court 27 accepts their calculations: 1 Meal Periods: 33,567 workweeks×1.25 violations× $18.96 = $795,537.90 1 workweek 1 violation 2 Rest Periods: 33,567 workweeks×1.25 violations× $18.96 = $795,537.90 3 1 workweek 1 violation 4 iv. Waiting Time Penalties 5 Plaintiff next makes a claim for waiting time penalties under Cal. Lab. Code §§ 201–203. 6 Compl. ¶¶ 83–88. In their notice of removal, Defendants claim that $400,435.20 is in controversy 7 over Plaintiff’s claim for waiting time penalties. NOR ¶ 39. In this claim, Plaintiff seeks penalties 8 under California Labor Code sections 201–203 for Defendants’ alleged failure to pay all wages 9 owed to terminated employees at the time of separation. Cal. Lab. Code § 203. The penalty is up 10 to 30 days’ wages. Id. Defendants assume that all 88 of the separated hourly employees during 11 the statute of limitations period would be entitled to 30 days’ pay of 8 hours per day—a 100% 12 violation rate. NOR ¶ 39. Plaintiff says that a 100% violation rate is unreasonable because 13 Defendants provide no evidence supporting that assumption. Mot. at 7. 14 This Court has previously found reasonable a 100% assumed violation rate for waiting 15 time penalties where the complaint at issue contained no guidance on the extent of the violations 16 the plaintiff was alleging. See Trigueros v. Stanford Fed. Credit Union, 2021 WL 2649241, at *5– 17 6 (N.D. Cal. June 28, 2021) (citing Kastler v. Oh My Green, Inc., 2019 WL 5536198, at *6 (N.D. 18 Cal. Oct. 25, 2019)); accord Ford v. CEC Ent., Inc., 2014 WL 337790, at *3 (N.D. Cal. Jul. 10, 19 2014) (100% violation rate); Coleman v. Estes Express Lines Inc., 730 F. Supp. 2d 1141, 1149 20 (C.D. Cal. 2010) (allowing 100% violation rate assumption where complaint did not “allege a 21 more precise calculation”). Some other courts have rejected an assumption of a 100% violation 22 rate. Beck v. Saint-Gobain Containers, Inc., 2016 WL 4769716, at *11 (C.D. Cal. Sep. 12, 2016).3 23 Given the weight of the case law, the Court would be in good company in finding a 100% 24 violation rate to be reasonable and supported by a preponderance of the evidence. The Court 25
26 3 Plaintiff cites to two Ninth Circuit cases—one of which has been largely overruled, Lowdermilk v. U.S. Bank National Ass’n, 479 F.3d 994 (9th Cir. 2007), overruling recognized in Franz v. 27 Beiersdorf, Inc., 745 F. App’x 47, 48 (9th Cir. 2018); and the other of which is an unpublished and 1 notes, however, that Defendants provide little justification for assuming a 100% violation rate. 2 The Court finds it highly unlikely that each of the 88 hourly employees who separated from 3 employment from Defendants during the relevant period was entitled to 8 hours of pay for 30 days 4 in penalties. While the Court will not zero out the claim, Jauregui, 28 F.4th at 992, the Court will 5 instead assume a 25% violation rate, as Defendants urge for other claims. This results in an 6 amount-in-controversy of $100,108.80 for this claim: 7 Waiting Time Penalties: 88 separated emps.×8 hours×$18.96× 30 days ×0.25= $100,108.80 1 day 1 hour 8 v. Wage Statements 9 Plaintiff further seeks statutory penalties for failure to provide accurate wage statements in 10 violation of Cal. Lab. Code § 226. Compl. ¶¶ 95–101. The statute proscribes damages of the 11 greater of (1) actual damages or (2) $50 for the initial pay period and $100 for each subsequent 12 pay period in which a violation occurs, up to an aggregate penalty of $4,000. Cal. Lab. Code 13 § 226(e). Defendants assume that “this claim applies to each putative class member . . . given the 14 broad allegations in the Complaint” for each of Plaintiff’s other claims, resulting in an amount-in- 15 controversy of $407,400 for this claim. NOR ¶ 41; Opp. at 9. Plaintiff argues against a 100% 16 violation rate, saying that the allegations of the Complaint do not suggest that every single wage 17 statement of every employee was deficient. Mot. at 7–8. 18 The Court agrees with Plaintiff that assuming a 100% violation rate is not appropriate. As 19 with Defendants’ calculation of waiting time penalties, they provide little justification for 20 assuming a 100% violation rate. While it is true that Plaintiff’s allegations of Labor Code 21 violations are extensive, that does not justify assuming the every wage statement of every single 22 employee during the relevant time period was inaccurate. The Court, however, declines again to 23 zero-out this claim because Plaintiff’s Complaint does allege extensive violations of the Labor 24 Code that would result in inaccurate wage statements for at least a significant portion of 25 employees. The Court will use the same 25% violation rate assumption that Defendants have 26 urged for other claims. This results in an amount-in-controversy for this claim of $101,850 for the 27 186 employees and 4,167 pay periods at issue: 1 Wage Statements: ((186 initial violations×$50)+(3,981 sub. violations×$100))× 2 0.25= $101,850 3 4 vi. Business Expense Reimbursements 5 Plaintiff seeks reimbursement of expenses incurred by putative class members that were 6 “business-related.” Compl. ¶¶ 107–111. Defendants assume that each of the 260 employees in 7 the putative class incurred $100 in business expenses, resulting in an amount-in-controversy of 8 $26,000 for this claim. NOR ¶ 42. Plaintiff urges the Court to zero-out this claim because 9 Defendants have offered no facts or evidence supporting the $100 per employee figure, Mot. at 8, 10 while Defendants defend their estimate as “reasonable,” Opp. at 9. 11 The Court finds that, unlike for the other calculations, Defendants have provided no facts 12 or evidence supporting their estimate of $100 per employee in business expenses. For each of its 13 other calculations, Defendants identified at least some factual basis for making an estimation or 14 reduced their violation rate to account for a significant proportion of non-violations. Here, 15 however, Defendants have done neither. As Plaintiff argues, Defendants no doubt have access to 16 records of reimbursed business expenses that could have provided at least some factual basis for 17 assumptions about (1) how many employees incurred business expenses at all and (2) how much 18 each of those employees should be assumed to have spent. Even a statement in Mr. Scholz’s 19 declration attesting to a review of relevant records and some data points underlying this estimate 20 may have been sufficient, but Defendants provide neither. The Court will elect to zero-out this 21 claim, as contemplated in Jauregui. See 28 F.4th at 994 (“Of course, if a defendant provided no 22 evidence or clearly inadequate evidence supporting its valuation for a claim, then it might be 23 appropriate for a district court to assign that claim a $0 value.”).4 24 vii. Attorneys’ Fees 25 Defendants include attorneys’ fees of 25% of the amount-in-controversy for the underlying 26
27 4 Additionally, given the Court’s approval or modification of other amount-in-controversy 1 claims as part of their calculations, amounting to $2,356,411.13 in their notice of removal. NOR 2 ¶ 44. Based on Defendants’ reduced amount-in-controversy estimates in their opposition to 3 remand, the attorneys’ fees come to $1,227.745.34. Opp. at 9–10. Plaintiff urges the Court to 4 entirely decline to include attorneys’ fees in the amount-in-controversy because Defendants’ fees 5 calculation is “based on flawed calculations” for the other claims. See Mot. at 8–9; Reply at 5. 6 The Court will not zero-out Defendants’ attorneys’ fees calculations for the amount-in- 7 controversy. While Jauregui does not specifically address attorneys’ fees, the Ninth Circuit has 8 been clear that attorneys’ fees are appropriately included in amount-in-controversy calculations 9 under CAFA, and the Court thus applies Jauregui’s admonition against zeroing out claims to this 10 instance. Fritsch v. Swift Transp. Co. of Ariz., 899 F.3d 785, 794 (9th Cir. 2018); contra Mot at 9 11 (citing pre-Jauregui case law that zeroed out attorneys’ fees calculations for amount-in- 12 controversy). The Court also agrees with Defendants’ estimate of a 25% attorneys’ fee recovery. 13 A 25% fee recovery is the “benchmark” level for reasonable attorneys’ fees in class action cases. 14 See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998). While Plaintiff is correct that 15 there is no per se rule that 25% is the appropriate amount of fees, see Mot. at 9 (citing Arias v. 16 Residence Inn, 936 F.3d 920, 928 (9th Cir. 2019)), and any eventual attorneys’ fees award would 17 be subject to the Court’s discretion, the Court finds that the “benchmark” fees recovery is the 18 appropriate estimate in this case.5 19 With the Court’s revisions to the amounts-in-controversy for the above claims, the 20 attorneys’ fees calculation is as follows: 21 Fees: ($1,193,306.85+$795,537.90+$523,225.61+$795,537.90+$795,537.90+ 22 $100,108.80+$101,850)×0.25= $1,076,276.24 23 * * * 24 Adding together the conservative amounts-in-controversy calculated above produces a 25 total amount-in-controversy of $5,381,381.20. Because this amount is greater than CAFA’s $5 26 5 Arias does not suggest that district courts should not use a 25% attorneys’ fees award in amount- 27 in-controversy calculations. The court in Arias merely stated that, on remand with instructions to 1 million jurisdictional minimum, this Court possesses subject matter jurisdiction over this case. 2 || IV. ORDER 3 For the foregoing reasons, IT IS HEREBY ORDERED that Ramirez’s motion to remand is 4 DENIED. 5 6 Dated: April 25, 2022 tn) em fd fama) BETH LABSON FREEMAN 8 United States District Judge 9 10 11 a 12
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