1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ALEXANDER VALLEJO, individually Case No.: 3:20-cv-01788-AJB-AHG and on behalf of others similarly situated, 12 Plaintiff, ORDER: 13 v. (1) DENYING PLAINTIFF’S MOTION 14 STERIGENICS U.S., LLC, a Delaware TO REMAND, (Doc. No. 9); AND 15 limited liability company; and DOES 1 through 50, inclusive, (2) GRANTING DEFENDANT’S 16 Defendant. MOTION TO DISMISS AND/OR 17 STRIKE THE COMPLAINT WITH LEAVE TO AMEND, (Doc. No. 4) 18 19 This is a putative wage and hour class action under the California Labor Code. 20 Before the Court are two motions. Plaintiff Alexander Vallejo (“Plaintiff”) seeks for the 21 Court to remand the action to state court, arguing that Defendant Sterigenics U.S., LLC 22 (“Defendant”) failed to satisfy the amount-in-controversy requirement of the Class Action 23 Fairness Act (“CAFA”), 28 U.S.C. §1332(d). Defendant opposed the motion to remand. 24 (Doc. No. 13.) In addition, Defendant filed a motion to dismiss and/or strike the Complaint. 25 (Doc. No. 4.) The motion to dismiss and/or strike is opposed by Plaintiff. (Doc. No. 8.) 26 Because the Court finds the amount-in-controversy requirement is met, the Court DENIES 27 Plaintiff’s motion to remand. As for the motion to dismiss and/or strike, the Court 28 GRANTS Defendant’s motion, but provides for LEAVE TO AMEND. 1 I. BACKGROUND 2 Defendant is in the hazardous waste service industry, providing sterilization 3 solutions. (Doc. No. 1-3 ¶ 16.) Defendant employed Plaintiff as an hourly-paid, non- 4 exempt Machine Operator from approximately January 2012 through January 2018. (See 5 id. ¶ 17.) Plaintiff originally filed the action in San Diego Superior Court, as Case No. 37- 6 2020-00027438-CU-OE-CTL. (Id.) The lawsuit was brought on behalf of “[a]ll current and 7 former non-exempt employees of any of the Defendants within the State of California at 8 any time commencing four (4) years preceding the filing of the complaint up until the time 9 that notice of the certified class action is provided to the class.” (Id. ¶ 12.) Plaintiff asserts 10 eight causes of action against Defendant: (1) failure to pay overtime (Cal. Lab. Code 11 §§ 510, 1198); (2) unpaid meal period premiums (Cal. Lab. Code §§ 226.7, 512, subd. (a)); 12 (3) unpaid rest period premiums (Cal Lab. Code § 226.7); (4) unpaid minimum wage 13 violations (Cal. Lab. Code §§ 1194, 1197, 1197.1); (5) waiting time penalties (Cal. Lab. 14 Code §§ 201–203); (6) itemized wage statement penalties (Cal Lab. Code § 226, subd. (a)); 15 (7) failure to reimburse expenses (Cal. Lab. Code §§ 2800, 2802); and (8) violation of 16 California Business and Professions Code § 17200. (Doc No. 1–3.) On September 11, 17 2020, Defendant timely removed the action. (Doc. No. 1.) Plaintiff filed the instant motion 18 alleging the Complaint fails to meet the minimum amount-in-controversy necessary for 19 jurisdiction under CAFA. Defendant also filed a motion to dismiss and/or strike the 20 Complaint. This order follows. 21 II. PLAINTIFF’S MOTION TO REMAND 22 A. Legal Standard 23 CAFA gives federal courts jurisdiction over certain class actions if the class has at 24 least 100 members, the parties are minimally diverse, and the amount-in-controversy 25 exceeds $5 million. See U.S.C. §1332(d)(2), (5)(B); Standard Fire Ins. Co. v. Knowles, 26 568 U.S. 588, 592 (2013). Plaintiff only challenges the amount-in-controversy element. As 27 such, the Court will only address that issue. 28 1 A class action that meets CAFA standards may be removed to federal court. 28 2 U.S.C. § 1441(a). Unlike the general presumption against removal, “no antiremoval 3 presumption attends cases invoking CAFA.” Dart Cherokee Basin Operating Co., LLC v. 4 Owens, 135 S.Ct. 547, 554 (2014). In fact, Congress intended CAFA jurisdiction to be 5 “interpreted expansively.” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th 6 Cir. 2015). 7 Under CAFA, the burden of establishing removal jurisdiction rests on the removing 8 party. See Washington v. Chimei Innolux Corp., 659 F.3d 842, 847 (9th Cir. 2011) (citing 9 Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006)). A removing 10 defendant need only include a plausible allegation that the amount in controversy exceeds 11 the jurisdictional threshold, and the defendant’s amount in controversy allegation should 12 be accepted if not contested by the plaintiff or questioned by the court. See Dart Basin 13 Operating Co. v. Owens, 135 S.Ct. 547, 554 (2014). If, however, “a defendant’s assertion 14 of the amount in controversy is challenged . . . both sides submit proof and the court 15 decides, by a preponderance of the evidence whether the amount-in-controversy 16 requirement has been satisfied.” Id. (citing 28 U.S.C. § 1446(c)(2)(B)); Rodriguez v. AT & 17 T Mobility Servs. LLC, 728 F.3d 975, 978 (9th Cir. 2013). Under the preponderance of the 18 evidence standard, a defendant must establish “that the potential damage could exceed the 19 jurisdictional amount.” Rea v. Michaels Stores Inc., 742 F.3d 1234, 1239 (9th Cir. 2014) 20 (quoting Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 397 (9th Cir. 2010)). 21 A defendant’s notice of removal need only include a plausible allegation that the 22 amount in controversy exceeds the jurisdictional threshold and need not contain evidentiary 23 submissions. Owens, 135 S.Ct. at 554. Where, as here, a complaint does not specify the 24 damages sought, the defendant must prove it is more likely than not the amount in 25 controversy exceeds $5,000,000. Coleman v. Estes Express Lines, Inc. 730 F. Supp. 2d 26 1141, 1148 (2010). A defendant is not obligated to research, state, and prove a plaintiff’s 27 damages, but the defendant must use facts to support its allegation. Korn v. Polo Ralph 28 Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal. 2008). 1 B. Discussion 2 The parties dispute the “amount in controversy” element of CAFA jurisdiction. 3 While Plaintiff asserts that the amount in controversy is less than five million dollars, 4 Defendant contends that the amount in controversy for CAFA jurisdiction is at least 5 $7,731,414.41, broken down as follows: 6 Meal Period & Rest Period Premiums: $2,769,820.69 7 Unpaid Overtime (through Aug. 5, 2020): $2,057,704.79 8 Liquidated Damages: $788,808.56 9 Wage Statement Penalties: $433,500.00 10 Waiting Time Penalties: $278,964.00 11 Unreimbursed Business Expenses: $156,588.00 12 Injunctive Relief: Not included 13 Sub-Total: $6,485,386.04 14 Attorneys’ Fees (25%) $1,246,028.37 15 TOTAL: $7,731,414.41 16 17 (Doc. No. 13 at 25.) 18 1. Plaintiff’s Meal and Rest Break Claims (Second and Third Causes 19 of Action) 20 In order to determine whether Defendant has shown that the Court has CAFA 21 jurisdiction, the Court will need to review the amount in controversy for each of Plaintiff’s 22 claims. The Court first turns to the amount in controversy calculations regarding Plaintiff’s 23 meal and rest break claims. Defendant argues that the amount in controversy of Plaintiff’s 24 meal and rest break claims are approximately $2,769,820.69. (Id.) California Labor Code 25 § 226.7(b) provides that “[a]n employer shall not require an employee to work during a 26 meal or rest or recovery period.” The penalty for violation of section 226.7(b) is “one 27 additional hour of pay at the employee’s regular rate of compensation for each workday 28 that the meal or rest or recovery period is not provided.” Cal. Labor Code § 226.7(c). 1 “Every employer shall authorize and permit all employees after a work period of not more 2 than five (5) hours to take a meal period of not less than thirty (30) minutes.” Cal. Code 3 Regs. tit. 8, § 11140. 4 In the Complaint, Plaintiff demands “one (1) hour of pay at each employee’s regular 5 rate of compensation for each workday that a meal [and rest] period was not provided.” 6 (Doc. No. 1-3 ¶ 11, 18.) Plaintiff alleges, “Defendant routinely failed to provide legally 7 compliant meal periods to Plaintiff and the Class at their regular rate of pay when a meal 8 period was missed, short, late, and/or interrupted.” (Id. ¶ 24.) As for rest breaks, Plaintiff 9 asserts “Defendants have implemented policies and practices which prohibited Plaintiff 10 and the Class from taking timely and duty-free rest periods.” (Id. ¶ 25.) The Complaint 11 details, “Defendants systematically disregarded their own written policies regarding the 12 provision and timing of rest periods for Plaintiff and the Class.” (Id. ¶ 26.) 13 The Complaint does not specify the damage amount sought for these violations. (Id.) 14 In the Notice of Removal, Defendant asserts that the proper amount for these violations is 15 $2,769,820.69. (Id. ¶ 34.) To determine this total, Defendant multiplied: the number of 16 violations per week (five premium1 payments total per week, per employee (5)); the 17 average hourly payrate of class members ($20.41); and the number of workweeks in the 18 statutory period2 (27,141.80). (Id.) Defendant and Plaintiff do not dispute the duration of 19 the statutory period or the average hourly pay rate of the class members. Rather, Plaintiff 20 asserts Defendant’s use of a 50% violation rate i.e., five premium payments total per week, 21 per employee, is unsubstantiated by evidence. Defendant responds Plaintiff’s “allegations 22 alone are sufficient to support a 100% violation rate for meal and rest break claims,” and 23 that application of a 50% violation rate is “not only reasonable, but conservative in light of 24
25 26 1 In California, employees are entitled to one hour of “premium pay” for each day during which a meal period violation occurs and one hour of “premium pay” for each day during which a rest period violation 27 occurs. See Cal. Lab. Code § 226.7(c). 2 The putative class members were collectively employed for a total of approximately 27,141.80 28 workweeks between August 5, 2016 and August 13, 2020. (Doc. No. 1-2 ¶ 8.) 1 Plaintiff’s broad allegations.” (Doc. No. 13 at 10.) Plaintiff disagrees, arguing it would be 2 more reasonable to accept that every putative class member experienced one meal period 3 and one rest period violation every workweek (instead of five as Defendant argues). Using 4 Plaintiff’s numbers, the amount in controversy for unpaid meal period and rest period 5 premiums would be $1,107,928.28. 6 In determining the appropriate violation rate, the Court looks first to the allegations 7 in the Complaint. See Ibarra, 775 F.3d at 1197. A removing defendant “must inevitably 8 rely on some assumptions to support removal; a removing defendant is not required to go 9 so far as to prove plaintiff’s case for him by proving the actual rates of violation.” Feao v. 10 UFP Riverside, LLC, No. CV173080PSGJPRX, 2017 WL 2836207, at *5 (C.D. Cal. June 11 29, 2017) (citations omitted). Here, the Complaint offered no guidance as to the frequency 12 of the alleged violations, only that Defendant had “a policy and practice” of “regular” and 13 “routine” meal and rest period violations. Consequently, in its Notice of Removal, 14 Defendant assumed a 50% violation rate, i.e., five premium payments total per week, per 15 employee, for the duration of the statutory period. Based on the Complaint’s broad 16 allegations that Defendant had “a policy and practice” of meal and rest period violations, a 17 50% violation rate is reasonable and does not significantly depart from rates other courts 18 have found sensible under similar circumstances. See Alvarez v. Office Depot, Inc., No. 19 CV177220PSGAFMX, 2017 WL 5952181, at *3 (C.D. Cal. Nov. 30, 2017) (finding 20 reasonable a 60 percent violation rate for claims relating to missed meal and rest periods 21 when the complaint is indeterminate with respect to violation rates); Feao, 2017 WL 22 2836207, at *5 (similar); Stanley v. Distribution Alternatives, Inc., No. 23 EDCV172173AGKKX, 2017 WL 6209822, at *2 (C.D. Cal. Dec. 7, 2017) (finding 24 appropriate assumed violation rates of “three missed rest breaks, and three missed meal 25 breaks per week” where the complaint offers no guidance as to the frequency of these 26 violations). 27 In sum, Defendant’s calculations as to the potential meal and rest period violations 28 are thus based on actual employee data which shows that there are approximately 233 1 putative class members, and that each putative class member would have been eligible for 2 meal periods and rest periods based on their regular schedule. Accordingly, Defendant’s 3 assumptions are appropriate, and Defendant has proven the meal and rest break premium 4 amounts in Plaintiff’s meal and rest break claims are approximately $2,769,820.69 by a 5 preponderance of the evidence. 6 2. Plaintiff’s Overtime and Minimum Wage Claims (First and 7 Fourth Causes of Action) 8 Defendant argues that the damages at issue with regard to Plaintiff’s overtime and 9 minimum wage claims is around $2,057,704.79. (Doc. No. 13 at 25.) California Labor 10 Code § 1194 provides that “any employee receiving less than the legal minimum wage or 11 the legal overtime compensation applicable to the employee is entitled to recover in a civil 12 action the unpaid balance of the full amount of this minimum wage or overtime 13 compensation, including interest thereon[.]” As to the first claim for relief, Plaintiff 14 contends, “Defendant intentionally and willfully failed to pay overtime wages owed to 15 Plaintiff and the other Class Members.” (Doc. No. 1-3 ¶ 47.) Plaintiff seeks, “unpaid 16 overtime compensation, as well as interests, costs, and attorneys’ fees.” (Doc. No. 1–3 17 ¶ 49.) As to the fourth claim, Plaintiff asserts, “Defendant regularly failed to pay minimum 18 wage to Plaintiff and the other Class Members as required pursuant to California Labor 19 Code sections 1194, 1197, and 1197.1.” (Id. ¶ 72.) 20 Plaintiff contends that the $2,057,704.79 amount for these claims is exorbitant. 21 Defendant’s estimation is calculated as 27,141.80 workweeks x $30.62 (1.5 x $20.41 22 hourly rate) x 2.5 hours of off-the-clock work per workweek. At issue between the parties 23 is the assumption that each employee worked at least 2.5 hours of unpaid overtime per 24 week. Plaintiff advocates that it would be more reasonable to accept that putative class 25 members experienced one hour of unpaid overtime work for every workweek. (Doc. No. 9 26 at 23.) Defendants respond that 2.5 hours of unpaid overtime is appropriate because 27 Plaintiff’s allegations reflect three different theories of liability: (1) unpaid overtime based 28 on off-the-clock work; (2) unpaid overtime based on employees working through thirty 1 minute meal periods while clocked out; and (3) unpaid overtime based on unlawful 2 rounding. (Doc. No. 13 at 17.) 3 Looking towards the language of the Complaint, Plaintiff alleges that Defendant 4 “regularly” failed to pay all overtime compensation and at least a minimum wage owed to 5 Plaintiff and the class when they worked in excess of eight hours in a single work day 6 and/or forty hours in a single work week. (Doc. No. 1-3 ¶ 31, 33.) But Defendant has not 7 established, by a preponderance of the evidence, that the metric of 2.5 hours of unpaid 8 overtime is a reasonable assumption. Defendant argues that it is not obligated to 9 “extensively comb through its business records at this early stage to try and prove 10 Plaintiff’s case for him.” (Doc. No. 13 at 13.) While this is true, Defendant must 11 nevertheless base their calculations on reasonable assumptions. Defendant’s reliance on 12 the term “regularly” and Plaintiff’s multiple theories of liability points to no more in 13 support of its contention. Without further support, the Court is in agreement with Plaintiff, 14 and other courts, that one hour of unpaid overtime per week is a more proper assumption 15 based on the Complaint’s reference to the “regular” violation of overtime and minimum 16 wage laws. See, e.g., Smith v. Brinker Int’l, Inc., 2010 WL 1838726, at *4 (N.D. Cal. May 17 5, 2010) (“Defendants have failed to provide any evidence relating to either plaintiff’s 18 actual earnings or number of hours worked, asking the court to assume that each plaintiff 19 worked an additional 2.5 hours each day in order to reach the amount-in-controversy 20 threshold”); Blevins v. Republic Refrigeration, Inc., No. CV 15-04019 MMM (MRWx), 21 2015 WL 10709682 (C.D. Cal. Sep. 28, 2015) (one hour of unpaid overtime per week 22 “reasonable” based on plaintiffs’ allegations that defendant “regularly” miscalculated 23 overtime); see also Garza v. Brinderson Constructors, Inc., No. 15-CV-02661-RMW, 24 2016 WL 1298390, at *3 (N.D. Cal. Apr. 4, 2016) (defendant’s “assumption of one 25 violation per week is reasonable based on the allegations of the SAC” that defendant 26 regularly failed to provide rest breaks and had a “pattern and practice” of failing to provide 27 those breaks). As such, $831,081.92 (27,141.80 workweeks x $30.62 [1.5 x $20.41] x 1 28 hour [of off-the-clock work per workweek]) is a more appropriate amount in controversy. 1 Moreover, because Plaintiff additionally seeks liquidated damages on the minimum 2 wage claim, this amount should also factor into the amount in controversy analysis. See 3 Cal. Labor Code § 1194.2(a) (“[A]n employee shall be entitled to recover liquidated 4 damages in an amount equal to the wages unlawfully unpaid and interest thereon.”); 5 Graham v. IFCO Systems N.A., Inc., 2017 WL 1243498, at *8 (C.D. Cal. Mar. 3, 2017) 6 (considering liquidated damages part of the amount in controversy). At the very minimum, 7 the Court calculates liquidated damages as $315,523.43 (calculated as 27,141.80 8 workweeks x 1 hour per week of unpaid wages x $11.6253). 9 3. Wage Statement Penalties 10 Plaintiff seeks recovery based on Defendant’s alleged failure to provide accurate 11 itemized wage statements. (Doc. No. 1-3 ¶¶ 82–87. Defendant estimates that the amount 12 in controversy for non-compliant wage statements is $433,500.00 as “there were 13 approximately 170 Putative Class Members employed during the twenty-six (26) pay 14 periods between August 5, 2019 and August 5, 2020.” (Doc. No. 1-3 ¶ 38.) Plaintiff 15 concedes that the claims for non-compliant wage statements are barred by the one-year 16 statute of limitations, and agrees to withdraw these claims as Plaintiff “never was entitled 17 to recover that amount” thus “the suit cannot involve the necessary amount” for removal. 18 (Doc. No. 9 at 31.) 19 But Plaintiff is incorrect because “[t]he amount of controversy is tested at the time 20 of removal, not as increased or decreased due to later events.” Killion v. AutoZone Stores 21 Inc., 2011 WL 590292 (C.D. Cal. Feb. 8, 2011) (disregarding later statute of limitation 22 arguments for amount in controversy purposes); Ellison v. Autozone, Inc., 2012 WL 23 5177478 (9th Cir. 2012) (“Where, as here, jurisdiction was proper at the time of removal, 24 subsequent dismissal or transfer of class claims does not defeat the court’s CAFA 25
26 27 3 The Court draws this amount from Defendant’s Notice of Removal, which estimated the weighted average of California minimum wage rate between 2016 and 2020 for companies with more than 25 28 employees. (Doc. No. 1 at 11 n.5.) 1 jurisdiction over remaining individual claims.”). Thus, Plaintiff may not unilaterally decide 2 to dismiss the claim at this stage in the hopes of reducing the amount in controversy. 3 Because Plaintiff does not otherwise dispute the reasonableness of the amount in damages 4 for the wage statement claims, the Court finds that Defendant’s estimate of $433,500.00 5 proper for the instant motion.4 6 4. Plaintiff’s Waiting Time Penalties Claim 7 Plaintiff contends that Defendant “intentionally and willfully failed to pay Plaintiff 8 and other Class Members who are no longer employed by Defendants all of their wages, 9 earned and unpaid, including but not limited to minimum wages, straight time wages, and 10 overtime wages, within seventy-two (72) hours of their leaving Defendants’ employ.” 11 (Doc. No. 1-3 ¶ 77.) An employer’s failure to timely pay wages owed pursuant to California 12 Labor Code §§ 201 or 202 results in a penalty of the employee’s wages for every day that 13 it is late, up to a maximum of thirty days’ wages. See Cal. Labor Code § 203. 14 Defendant approximates that the amount in controversy for waiting time penalties 15 for failure to timely pay final wages should be calculated at a 100% violation rate for a 16 total of $278,964.00 (63 former employees that were terminated within the class period x 17 $18.45 average hourly rate x 8 hours/day x 30 days of waiting time). Plaintiff takes issue 18 with the 100% violation rate, arguing Defendant’s calculation is entirely speculative. (Doc. 19 No. 9 at 26.) However, as discussed above, the Court has concluded that Defendant 20 adequately supports violations of the California Labor Code for at least one hour of unpaid 21 overtime per five-day work period, as well as at least five unpaid rest and one unpaid meal 22 break. These reasonably assumed violations would support the waiting time penalties in 23 the amount Defendant calculates. 24
25 26 4 The California Labor Code provides for recovery of “the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee 27 for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000).” Cal. Lab. Code § 226(e). Defendant calculates $433,500.00 in damages by (170 employees x 28 $50) + (170 employees x 25 pay periods x $100). 1 Other district courts have likewise concluded that allegations of the willful failure to 2 timely pay final wages (based on alleged overtime and meal and rest break violations) were 3 sufficient to support estimations of waiting time penalties at a 100% rate. See, e.g., Ford v. 4 CEC Entm’t, Inc., No. CV 14-01420 RS, 2014 WL 3377990 (N.D. Cal. July 10, 2014) 5 (“Assuming a 100% violation rate is thus reasonably grounded in the complaint. . . . 6 Because no averment in the complaint supports an inference that these sums were ever 7 paid, Ford cannot now claim class members may be awarded less than the statutory 8 maximum.”). Plaintiff does not offer any alternative calculation for waiting time penalties. 9 While the burden of proof rests with Defendant, “if [the] defendant’s asserted amount in 10 controversy is challenged, ‘both sides submit proof and the court decides, by a 11 preponderance of the evidence, whether the amount-in-controversy requirement has been 12 satisfied.’” Ibarra, 775 F.3d at 1197. Plaintiff has not rebutted Defendant’s evidence nor 13 has Plaintiff provided any evidence to suggest that the payments were ever provided. Thus, 14 Defendant’s estimate of $278,964.00 in waiting time penalties is proper. 15 5. Plaintiff’s Unreimbursed Business Expenses Claim 16 Plaintiff argues that Defendant’s calculation of $156,588.00 in unreimbursed 17 business expenses is arbitrary and speculative. (Doc. No. 9 at 27.) Plaintiff’s claim for 18 unreimbursed business expenses alleges that, “[t]hroughout the time period . . . Defendants 19 failed to reimburse Plaintiff and the Class for all necessary business-related expenses, 20 including but not limited to the us[e] of their personal cell phones and vehicles for work- 21 related duties.” (Doc. No. 1-3 ¶ 38.) The contention that Defendant’s calculations are 22 unsupported is wrong. Notwithstanding the Complaint’s inclusion of other unreimbursed 23 business expenses, Defendant made assumptions based on only the allegation of 24 unreimbursed cell phone bills. Defendant assumed that each employee incurred cell phone 25 expenses of $25 per month, or $300 per year. Based on the total putative class size of 233 26 employees and the total workweeks of 27,141.80, Defendant calculated the amount-in- 27 controversy to be about $156,588 for unreimbursed business expenses. This amount is not 28 1 unreasonable and is supported by a preponderance of the evidence given that the Complaint 2 alleges other expenses owed. 3 6. Attorney’s Fees 4 “[A] court must include future attorneys’ fees recoverable by statute or contract 5 when assessing whether the amount-in-controversy requirement is met. The defendant 6 retains the burden, however, of proving the amount of future attorneys’ fees by a 7 preponderance of the evidence.” Fritsch v. Swift Transportation Co. of Arizona, LLC, 899 8 F.3d 785, 788, 794 (9th Cir. 2018). Plaintiff seeks reasonable attorneys’ fees pursuant to 9 his first (overtime), second (meal periods), fourth (minimum wages), seventh (business 10 expenses), and eight (unfair competition) claims for relief. Here, Defendant asks the Court 11 to use the percentage-of-recovery method to calculate the attorneys’ fees in controversy at 12 the rate of 25%. This amounts to $1,246,028.37. Defendant applies attorneys’ fees only to 13 the following causes of action: (1) meal and rest periods; (2) overtime; and (3) business 14 expenses. 15 Here, Defendant does not submit evidence to justify the proposed 25% rate for 16 attorneys’ fees in controversy. Rather, it argues that the 25% rate constitutes a reasonable 17 assumption of attorneys’ fees based on Ninth Circuit precedent as a matter of law. 18 However, the Ninth Circuit has rejected calculation of attorneys’ fees in controversy for 19 purposes of CAFA at a 25% rate as a matter of law, and held instead that “the defendant 20 must prove the amount of attorneys’ fees at stake by a preponderance of the evidence,” 21 noting that courts “may not relieve the defendant of its evidentiary burden by adopting a 22 per se rule for one element of the amount at stake in the underlying litigation.” Fritsch, 899 23 F.3d at 796 (emphasis added). Although Defendant provides very little to support a 25% 24 fee calculation, the Court can rely on its “own knowledge of customary rates and [its] 25 experience concerning reasonable and proper fees.” Id. at 795 (quoting Ingram v. 26 Oroudjian, 647 F.3d 925, 928 (9th Cir. 2011)). In the Court’s experience, Plaintiff brings 27 a typical California wage and hour case in which courts in this Circuit would likely apply 28 1 the 25% benchmark rate. See Cortez v. United Nat. Foods, Inc., No. 18-CV-04603-BLF, 2 2019 WL 955001, at *7 (N.D. Cal. Feb. 27, 2019) (citing several other wage and hour cases 3 using the 25% benchmark). Accordingly, the Court will apply a 25% benchmark to 4 Plaintiff’s (1) meal and rest periods; (2) overtime; and (3) business expenses claims. The 5 calculation will be 25% of the potentially recoverable amount of $3,757,490.61 6 ($2,769,820.69 (meal and rest claims) + $831,081.92 (unpaid overtime claims) + 7 $156,588.00 (business expenses claim)). Thus, the Court will use the amount of 8 $939,372.65 as attorneys’ fees. 9 7. Conclusion 10 Based on all the reasons provided above, the Court calculates the amount in 11 controversy as follows: 12 13 Meal Period & Rest Period Premiums: $2,769,820.69 14 Unpaid Overtime (through Aug. 5, 2020): $831,081.92 15 Liquidated Damages: $315,523.43 16 Wage Statement Penalties: $433,500.00 17 Waiting Time Penalties: $278,964.00 18 Unreimbursed Business Expenses: $156,588.00 19 Injunctive Relief: Not included 20 Sub-Total: $4,785,478.04 21 Attorneys’ Fees (25%) $939,372.65
22 TOTAL: $5,724,850.69 23 24 25 26
27 5 The Court notes, however, that notwithstanding the Court’s determination today, nothing in this order is 28 to be construed as a guarantee that Plaintiff will be able to recover attorneys’ fees at a 25% rate. 1 As demonstrated, Defendant has proved, by a preponderance of the evidence, that 2 the amount in controversy exceeds 5 million dollars. Therefore, Plaintiff’s motion to 3 remand is DENIED. 4 III. DEFENDANT’S MOTION TO DISMISS 5 Having found that the Court has CAFA jurisdiction over this instant action, the Court 6 will turn to Defendant’s motion to dismiss and/or strike the Complaint. 7 A. Legal Standard 8 A motion to dismiss should be granted only where a plaintiff’s complaint lacks a 9 “cognizable legal theory” or sufficient facts to support a cognizable legal theory. Shroyer 10 v. New Cingular Wireless Services, Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). Allegations 11 in the complaint are only entitled to the presumption of truth if they contain “sufficient 12 allegations of underlying facts to give fair notice and to enable the opposing party to defend 13 itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Detailed factual 14 allegations are not required, but factual allegations “must be enough to raise a right to relief 15 above the speculative level.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). 16 “A plaintiff’s obligation to prove the ‘grounds’ of his ‘entitle[ment] to relief’ 17 requires more than labels and conclusions, and a formulaic recitation of the elements of a 18 cause of action will not do.” Twombly, 550 U.S. at 555. “[W]here the well-pleaded facts 19 do not permit the court to infer more than the mere possibility of misconduct, the complaint 20 has alleged—but it has not show[n]—that the pleader is entitled to relief.” Ashcroft v. Iqbal, 21 556 U.S. 662, 679 (2009) (internal quotation marks omitted). Establishing a complaint’s 22 plausibility is a “context-specific” endeavor that requires courts to “draw on . . . judicial 23 experience and common sense.” Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 24 F.3d 990, 996 (9th Cir. 2014). 25 B. Discussion 26 1. Sufficiency of the Complaint 27 Defendants request dismissal of Plaintiff’s entire Complaint based on the failure to 28 1 allege sufficient facts under Rule 12(b)(6). Defendant contends that besides the dates of 2 Plaintiff’s employment, his position title, and the fact that he was an hourly-paid, non- 3 exempt employee, no factual support exists in the Complaint. (See Doc. No.1-3 ¶¶ 17–18.) 4 In reply, Plaintiff argues that it has provided adequate factual support by pointing to the 5 very allegations Defendant contends to be threadbare. 6 Plaintiff fails to meet the minimum pleading requirements for each of the claims he 7 asserts. In each claim, Plaintiff follows the same pattern of stating various obligations 8 California law imposes upon employers, and providing a legal conclusion that Defendant 9 violated those laws. As one example relevant to Plaintiff’s overtime claim, Plaintiff starts 10 by stating, “California Labor Code section 510 codifies the right to overtime compensation 11 at one-and-one-half times the regular hourly rate for hours worked in excess of eight (8) 12 hours in a day or forty (40) hours in a week or for the first eight (8) hours worked on the 13 seventh day of work. . . .” (Doc. No. 1-3 ¶ 45.) Then, Plaintiff alleges “[d]uring the relevant 14 time period, Plaintiff and the other Class Members regularly worked in excess of eight (8) 15 hours in a day, and/or in excess of forty (40) hours in a week.” (Id. ¶ 46.) That claim is 16 followed by the allegation that, “[d]uring the relevant time period, Defendants intentionally 17 and willfully failed to pay overtime wages owed to Plaintiff and the other Class Members.” 18 (Id. ¶ 47.) Then finally, Plaintiff concludes “Defendants’ failure to pay Plaintiff and the 19 other Class Members the unpaid balance of overtime compensation, as required by 20 California laws, violates the provisions of California Labor Code sections 510 and 1198, 21 and is therefore unlawful.” (Id. ¶ 48.) 22 “Although plaintiffs in these types of cases cannot be expected to allege ‘with 23 mathematical precision,’ the amount of overtime compensation owed by the employer, they 24 should be able to allege facts demonstrating there was at least one workweek in which they 25 worked in excess of forty hours and were not paid overtime wages.” Landers v. Quality 26 Commc’ns, Inc., 771 F.3d 638, 646 (9th Cir. 2014), as amended (Jan. 26, 2015). In the 27 employment class action context, courts have also repeatedly rejected similar allegations 28 that simply “recite[] the statutory language setting forth the elements of the claim, and then 1 slavishly repeat[] the statutory language as to the purported factual allegations.” Deleon v. 2 Time Warner Cable LLC, No. CV 09-2438 AG RNBX, 2009 WL 9426145, at *3 (C.D. 3 Cal. July 17, 2009); Weigele v. FedEx Ground Package Sys., No. 06–CV–1330 JLS (POR), 4 2010 WL 4723673 (S.D. Cal. Nov. 15, 2010) (dismissing complaint alleging that 5 “Defendant required the Plaintiffs to work overtime without lawful compensation” and that 6 “Defendant required Plaintiffs to work . . . without being given a 30–minute meal period 7 for shifts of at least five hours and second 30–minute meal periods for shifts of at least ten 8 hours . . . .”); Anderson v. Blockbuster Inc., No. 2:10–cv–00158–MCE–GGH, 2010 WL 9 1797249 (E.D. Cal. May 4, 2010) (dismissing complaint alleging that “Plaintiff and class 10 members consistently worked in excess of eight hours in a day, in excess of 12 hours in a 11 day and/or in excess of 40 hours in a week.”). 12 In light of these deficiencies, the Court dismisses the Complaint WITH LEAVE 13 TO AMEND. 14 2. Plaintiff’s Sixth Claim for Relief is Time-Barred 15 Defendant argues Plaintiff’s sixth cause of action improperly seeks time-barred 16 statutory penalties. (Doc. No. 4 at 19.) Claims seeking statutory penalties have a one-year 17 statute of limitations. See Cal. Code Civ. Proc. § 340(a). Here, Plaintiff is requesting “the 18 greater of [his] actual damages . . . or an aggregate penalty not exceeding four thousand 19 dollars” pursuant to Section 226(e). (Doc. No. 1-3 ¶ 86.) Plaintiff does not dispute the 20 untimeliness of his claim, and in fact concedes that his claim is time-barred in his motion 21 to remand. (Doc. No. 9 at 9 n.1 (“Upon further review of the Complaint and applicable 22 statute of limitations, Plaintiff agrees to dismiss his sixth cause of action (violation of Labor 23 Code § 226(a)), without prejudice, as this claim is subject to the one (1) year statute of 24 limitation, and Plaintiff has alleged his employment with Defendant ended more than one 25 year before the Complaint was filed, in 2018.”). 26 As such, the Court will dismiss Plaintiff’s sixth claim for failure to provide accurate 27 wage statements pursuant to Labor Code Section 226(a) WITHOUT LEAVE TO 28 AMEND. 1 3. Plaintiff’s Fourth and Seventh Claims for Relief 2 In his fourth cause of action, Plaintiff alleges that Defendant failed to pay minimum 3 wages to Plaintiff and putative class members and demands statutory wage penalties 4 pursuant to Labor Code Section 1197.1. (Doc. No. 1-3 ¶¶ 72–73.) In his seventh cause of 5 action, Plaintiff seeks penalties under Labor Code Section 2802 for unreimbursed business 6 expenses. (Id. ¶¶ 13(k), 86, 89.) Claims seeking statutory penalties have a one-year statute 7 of limitations. See Cal. Code Civ. Proc. § 340(a). As California Labor Code Sections 8 1197.1 and 2802 provide for statutory penalties, and as Plaintiff failed to bring his claims 9 within the one-year statute of limitations, he is barred from seeking statutory penalties 10 pursuant to Sections 1197.1 and 2802. These requests for penalties are STRICKEN from 11 the Complaint. 12 4. Plaintiff’s Claims for Injunctive Relief 13 Lastly, Defendant asks the Court to either dismiss or strike Plaintiff’s injunctive 14 relief request pursuant to California Labor Code Section 226(g) (relating to accurate and 15 itemized wage statements) and California Business and Professions Code Section 17200, 16 et seq. (the “UCL”). (Doc. No. 4 at 22.) Defendant argues that as a former employee of 17 Defendant’s, Plaintiff lacks standing to sue for injunctive relief. Defendant is correct. 18 The Supreme Court has held that “plaintiffs no longer employed by [a defendant] 19 lack standing to seek injunctive or declaratory relief against its employment practices.” 20 Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011); Milligan v. Am. Airlines, Inc., 327 21 F. App'x 694, 696 (9th Cir. 2009) (“[Plaintiff] does not have standing to seek injunctive 22 relief under Section 226(g).”). Similarly, the Ninth Circuit has held in cases specifically 23 arising under the UCL that injunctive relief is precluded as a matter of law for plaintiffs no 24 longer employed by defendant companies. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 25 986 (9th Cir. 2011). Accordingly, Plaintiff’s claim for injunctive relief under Labor Code 26 Section 226(g) and the UCL is DISMISSED WITHOUT LEAVE TO AMEND. 27 IV. CONCLUSION 28 For all the reasons stated herein, the Court DENIES Plaintiff’s motion to remand 1 || the action. (Doc. No. 9.) Defendant’s motion to dismiss and/or strike is GRANTED. (Doc. 2 ||No. 4.) However, the Court GRANTS Plaintiff leave to file an Amended Complaint 3 ||consistent with this order. If he so chooses, Plaintiff must file any Amended Complaint 4 || within fourteen (14) days of this order. 5 6 IT IS SO ORDERED. 7 ||Dated: June 29, 2021
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