Rough v. Costco Wholesale Corp.

• Court: District Court, E.D. California
• Decided: March 10, 2020
• Docket: 2:19-cv-01340
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 MEGAN ROUGH, individually and on No. 2:19-cv-01340-MCE-DB behalf of all similarly situated current 12 and former employees of Defendants in the State of California; 13 MEMORANDUM AND ORDER Plaintiff, 14 v. 15 COSTCO WHOLESALE 16 CORPORATION, a Delaware Corporation; and DOES 1-50, inclusive, 17 Defendants. 18

19 20 Through this action, Plaintiff Megan Rough (“Plaintiff”) seeks relief from 21 Defendant, Costco Wholesale Corporation (“Defendant”) for violations of the California 22 Labor Code and the Industrial Welfare Commission Wage Orders. Plaintiff, individually 23 and on behalf of all other similarly situated employees, filed a Class Action Complaint in 24 the Superior Court of California, County of Solano, after which Defendant removed 25 Plaintiff’s case to federal court pursuant to the Class Action Fairness Act (“CAFA”), 26 28 U.S.C. § 1332(d). ECF No. 1. Presently before the Court is Plaintiff’s Motion to 27 /// 28 /// 1 Remand, which is fully briefed. ECF No. 5. For the following reasons, that Motion is 2 DENIED.1 3 4 BACKGROUND2 5 6 Plaintiff brings the present action on behalf of herself and all current and former 7 non-exempt, hourly-paid employees who worked for Defendant within California and who 8 worked one or more closing shifts during the period from four years preceding the filing 9 of this Complaint to final judgment. Defendant employed Plaintiff as a front-end 10 associate in its store warehouse located in Woodland, California, from December 2017 11 to January 2018, and in another warehouse located in Vacaville, California, from March 12 2018 to April 2019. 13 Plaintiff alleges that she and other similarly situated employees continued to work 14 after business hours at Defendant’s stores. After the stores’ doors were closed to 15 customers and locked, Defendant required Plaintiff and other similarly situated 16 employees to clock out and then walk to a designated exit location. The employees then 17 had to call and wait for a manager to meet them at the designated exit location. When 18 the manager arrived, he or she would inspect the employees’ bags for store 19 merchandise. After checking the employees’ bags, the manager would radio the stores’ 20 security guards to ensure the parking lot was safe before the exit doors were opened. 21 Accordingly, according to Plaintiff, employees were not relieved of their duties 22 until several minutes after clocking out and were not compensated for the time they were 23 on-duty and required to complete the exit security procedure. Plaintiff defines two 24 classes of similarly situated employees. First, Plaintiff seeks to represent the Closing- 25 Shift Class, which includes all current and former non-exempt employees who worked at

26 1 Because oral argument would not be of material assistance, the Court ordered this matter submitted on the briefs. E.D. Local Rule 230(g). 27

2 The following recitation of facts is taken, sometimes verbatim, from Plaintiff’s Class Action 28 Complaint. ECF No. 1-2. 1 Defendant’s warehouse stores and who worked one or more closing shifts at any time 2 from four years prior to the filing of the Complaint to the present. Second, Plaintiff seeks 3 to represent a subclass of employees entitled the Waiting Time Penalties Subclass, 4 which includes all members of the Closing Shift Class whose employment with 5 Defendant ended at any time from three years prior to filing the Complaint to the present. 6 The Complaint alleges the following claims under state law: (1) Failure to Pay Minimum 7 and Regular Wages; (2) Failure to Pay All Overtime Wages; (3) Failure to Provide 8 Accurate Wage Statements; (4) Failure to Timely Pay All Wages Due Upon Separation 9 of Employment; and (5) Violation of California Business and Professions Code §§ 17200 10 et seq. 11 12 STANDARD 13 14 When a case “of which the district courts of the United States have original 15 jurisdiction” is initially brought in state court, the defendant may remove it to federal court 16 “embracing the place where such action is pending.” 28 U.S.C. § 1441(a). There are 17 two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 18 28 U.S.C. § 1331, and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court 19 has federal question jurisdiction in “all civil actions arising under the Constitution, laws, 20 or treaties of the United States.” Id. § 1331. A district court has diversity jurisdiction 21 “where the matter in controversy exceeds the sum or value of $75,000, . . . and is 22 between citizens of different states, or citizens of a State and citizens or subjects of a 23 foreign state . . . .” Id. § 1332(a)(1)-(2). 24 A defendant may remove any civil action from state court to federal district court if 25 the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). “The 26 party invoking the removal statute bears the burden of establishing federal jurisdiction.” 27 Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citing Williams v. 28 Caterpillar Tractor Co., 786 F.2d 928, 940 (9th Cir. 1986)). Courts “strictly construe the 1 removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 2 (9th Cir. 1992) (internal citations omitted). “[I]f there is any doubt as to the right of 3 removal in the first instance,” the motion for remand must be granted. Id. Therefore, “[i]f 4 at any time before final judgment it appears that the district court lacks subject matter 5 jurisdiction, the case shall be remanded” to state court. 28 U.S.C. § 1447(c). 6 If the district court determines that removal was improper, then the court may also 7 award the plaintiff costs and attorney fees accrued in response to the defendant’s 8 removal. 28 U.S.C. § 1447(c). The court has broad discretion to award costs and fees 9 whenever it finds that removal was wrong as a matter of law. Balcorta v. Twentieth- 10 Century Fox Film Corp., 208 F.3d 1102, 1106 n.6 (9th Cir. 2000). 11 12 ANALYSIS 13 14 CAFA gives federal district courts original jurisdiction in any civil action where: 15 (1) “the matter in controversy exceeds the sum or value of $5,000,000, exclusive of 16 interest and costs,” (2) the action is pleaded as a class action involving more than 100 17 putative class members, and (3) “any member of a class of plaintiffs is a citizen of a 18 State different from any defendant.” 28 U.S.C. § 1332(d). CAFA also provides that “the 19 claims of the individual class members shall be aggregated to determine whether the 20 matter in controversy exceeds the sum or value of $5,000,000.” Id. § 1332(d)(6). 21 The only question for this Court to resolve as to the instant Motion is whether the 22 amount in controversy in this action exceeds $5,000,000. “A defendant’s notice of 23 removal need include only a plausible allegation that the amount in controversy exceeds 24 the jurisdictional threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 25 574 U.S. 81, 89 (2014). When a plaintiff challenges the amount in controversy under 26 CAFA, the Ninth Circuit requires the defendant opposing remand to demonstrate, by a 27 preponderance of the evidence, that the amount in controversy will likely exceed 28 $5,000,000. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). 1 Where damages are not stated in the complaint and plaintiff contests defendant’s 2 assertion of the amount in controversy, the defendant must submit competent, summary 3 judgment-type evidence relevant to the amount in controversy at the time of removal in 4 order to carry its burden. Id. Although a defendant may rely on good faith calculations 5 to satisfy its burden, those calculations must not be based on unreasonable or 6 speculative assumptions. Ellis v. Pac. Bell Tel. Co., No. SACV 10-01141, 2011 WL 7 499390, at *2 (C.D. Cal. Feb. 10, 2011); Ibarra, 775 F.3d at 1197 (“[A] damages 8 assessment may require a chain of reasoning that includes assumptions. When that is 9 so those assumptions cannot be pulled from thin air but need some reasonable ground 10 underlying them.”). 11 In its notice of removal, Defendant asserts that the amount in controversy 12 exceeds $5,000,000 on Plaintiff’s waiting time penalties under California Labor Code 13 § 203 alone. Notice of Removal, ECF No. 1, at 6. In support of its amount in 14 controversy calculation, Defendant offers the Declaration of Sarah A. Rajski, Defendant’s 15 Director of Personnel. Rajski Decl., ECF No. 7-1. The Rajski Declaration states that the 16 Waiting Time Penalties Subclass comprises of 32,808 employees who worked on 17 average over four hours a day at a minimum of $10 per hour. See id. ¶ 7. 18 Under California Labor Code § 203, employees are entitled to continuing wages 19 for up to thirty days as a penalty for an employer’s failure to provide final pay within a 20 certain time following conclusion of employment. Cal. Labor Code § 203. Defendant 21 calculates that the waiting time penalties place $39,369,600 into controversy by 22 assuming thirty days of four-hour pay ($1,200) for each member of the Waiting Time 23 Penalties Subclass (32,808 x $1,200). Def.s’ Opp. Mot. Remand, ECF No. 7, at 11. If 24 true, then Plaintiff’s other claims and potential ability to recover attorneys’ fees would not 25 need to be calculated for purposes of this Motion. 26 Plaintiff contends that Defendant failed to meet its burden to demonstrate the 27 requisite jurisdictional amount because Defendant’s evidence fails to identify the number 28 of class members entitled to waiting time penalties. Pl.’s Reply, ECF No. 8, at 2. 1 However, the Rajski Declaration states that there are 32,808 employees that fall within 2 this subclass. Rajski Decl., ECF No. 7-1, ¶ 7. Defendant further relies on the Complaint, 3 which defines the Waiting Time Penalties Subclass as all members of the Closing Shift 4 Class whose employment with Defendant ended at any time during the three years 5 preceding the filing of the Complaint on May 28, 2019. Compl., ECF No. 1-1, at 10; 6 Def.s’ Opp. Mot. Remand, ECF No. 7, at 5. 7 Additionally, Defendant assumed a 100 percent violation rate because the 8 Complaint alleges that Defendant did not pay the Waiting Time Penalty Subclass 9 members wages for the off-the-clock closing procedures and Defendant has no practice 10 of paying terminated employees after termination of employment. The Ninth Circuit has 11 held that an unsupported assumption of a 100 percent violation rate is unreasonable. 12 Ibarra, 775 F.3d at 1199. However, based on Plaintiff’s Complaint and the Rajski 13 Declaration, the Court finds Defendant provided enough evidence to support its 14 calculation for waiting time penalties. Because the Complaint alleges that none of the 15 Waiting Time Penalty Subclass members were paid wages for remaining on-duty after 16 hours and that Defendant does not have a practice of paying terminated employees 17 following their termination, a 100 percent violation rate can be reasonably inferred. 18 Finally, Defendant provided waiting time penalty calculations that were more 19 conservative than the figures from the Rajski Declaration, which showed an average 20 hourly rate of $12 and an average working day of 6 hours. Def.s’ Opp. Mot. Remand, 21 ECF No. 7, at 11. As stated earlier, Defendant’s conservative calculations totaled 22 $39,369,600, but if the more accurate figures from the Declaration were applied, the 23 amount in controversy would rise to $70,865,280. The Court finds that Defendant has 24 /// 25 /// 26 /// 27 /// 28 /// 1 | established to a legal certainty that the amount of waiting time penalties alone well 2 | exceeds $5,000,000, and thus the Court has jurisdiction pursuant to CAFA. 3 4 CONCLUSION 5 6 For the reasons set forth above, Plaintiff's Motion to Remand, ECF No. 5, is 7 | DENIED. 8 IT |S SO ORDERED. 9 | Dated: March 10, 2020

41 MORRISON C. ENGLAND, J UNITED STATES DISTRI 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28