Urbino v. Orkin Services of California, Inc., No. 11-56944 (9th Cir. 2013)
Annotate this CasePlaintiff filed a representative Private Attorneys General Act of 2004 (PAGA), Cal. Lab. Code 2699, action against defendants alleging that they illegally deprived him and other nonexempt employees of meal periods, overtime and vacation wages, and accurate itemized wage statements. At issue on appeal was whether the penalties recoverable on behalf of all aggrieved employees could be considered in their totality to clear the federal diversity jurisdiction amount in controversy requirement under 28 U.S.C. 1332(a). The court concluded that the recoveries at issue could not be aggregated to meet the amount in controversy requirement. To the extent plaintiff could assert anything but his individual interest, the court was unpersuaded that such a suit, the primary benefit of which would inure to the state, satisfied the requirements of federal diversity jurisdiction. The state, as the real party in interest, was not a "citizen" for diversity purposes. Accordingly, the federal courts lacked subject matter jurisdiction over this quintessential California dispute. Therefore, the court vacated and remanded, directing the district court to return the matter to state court for resolution.
Court Description: Diversity Jurisdiction. The panel held that the federal courts lacked subject mater jurisdiction over this California dispute, vacated the district court’s order denying plaintiff’s motion to remand, and directed the district court to return the matter to state court for resolution. Under California’s Private Attorneys General Act of 2004 (“PAGA”), if the state agency declines to investigate labor code violations, an aggrieved employee may commence an action against the employer. Plaintiff filed a representative PAGA action, and defendants removed the matter to federal court on the basis of diversity, based on evidence that the aggregated claims of the individual employees could result in liability in excess of the minimum jurisdictional requirements under 28 U.S.C. § 1332(a)(1). The panel held that the recoveries at issue cannot be aggregated to meet the amount in controversy requirement, and therefore there was no federal diversity jurisdiction. Judge Thomas dissented because he would conclude that claims under PAGA can be aggregated in determining whether diversity jurisdiction exists, and therefore the district court properly exercised diversity jurisdiction.
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