Melton v. Universal Cable Holdings, Inc., No. 3:2019cv07360 - Document 32 (N.D. Cal. 2020)
Court Description: ORDER DENYING 28 STIPULATION TO REMAND. By Judge Alsup. (whalc3S, COURT STAFF) (Filed on 7/2/2020)
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Melton v. Universal Cable Holdings, Inc. Doc. 32 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 10 United States District Court Northern District of California 11 12 13 14 15 KIM MELTON, individually and on behalf of all aggrieved employees, Plaintiff, No. C 19-07360 WHA v. UNIVERSAL CABLE HOLDINGS, INC., dba SUDDENLINK COMMUNICATIONS, ORDER DENYING PARTIES’ STIPULATION TO REMAND Defendant. 16 INTRODUCTION 17 18 In this wage-and-hour PAGA action, the parties jointly stipulate to remand to Humboldt 19 County Superior Court for lack of subject-matter jurisdiction. For the reasons stated below, the 20 parties’ stipulation is DENIED. 21 22 STATEMENT Plaintiff Kim Melton worked for defendant Suddenlink Communications, a cable 23 provider, from November 2016 to September 2018. She worked approximately forty hours per 24 week at Suddenlink’s Eureka warehouse. The complaint alleges that plaintiff and other 25 similarly aggrieved employees suffered several wage and hour violations under Suddenlink’s 26 employ, including failure to compensate all hours worked, missed meal breaks, improper wage 27 statements, and failure to pay compensation upon discharge (Compl. ¶¶ 22–62). 28 Dockets.Justia.com 1 2 the wage and hour violations plaintiff and all other aggrieved employees allegedly suffered. 3 The complaint also sought civil penalties under California’s Private Attorneys General Act, on 4 behalf of the Labor Commissioner and all aggrieved employees. Finally, plaintiff alleges 5 unfair business practices in violation of Section 17200, California’s Unfair Competition Law, 6 and seeks restitution, injunctive relief, and attorney’s fees (Compl. ¶¶ 63–86). 7 United States District Court Northern District of California Plaintiff brought this action in California state court in October 2019, seeking relief for In November 2019, defendant timely removed this action to federal court based on 8 alleged diversity jurisdiction. Plaintiff did not seek remand. Two joint case management 9 statements revealed that the parties then agreed that “the PAGA allegations establish that the 10 amount in controversy exceeds $75,000” and that plaintiff’s attorney’s fees were mounting 11 (Dkt. No. 1 ¶ 6; Dkt. No. 16 ¶¶ 1, 11; Dkt. No. 20 ¶¶ 1, 11). 12 13 14 15 16 17 18 19 20 21 Notably, after the second case management conference in April 2020, the undersigned issued a scheduling order that concluded (Dkt. No. 26): This order specifically does not bless the idea that the immediate parties to this case could settle any part of any claim (including PAGA) in an agreement purporting to bind any non-party, including the labor commissioner and plaintiff’s co-workers. If later the parties wish the Court to bless a settlement, the Court will not prejudice the rights of any non-parties or the commission with respect to PAGA or any other claim without a record demonstrating the compromise of those rights occurs after the parties’ due diligence, evaluating the viability of the claims, the maximum recovery, the adequacy of representation, and other factors referred to in Dkt. No. 24, NOTICE AND ORDER RE PUTATIVE CLASS ACTIONS AND FACTORS TO BE EVALUATED FOR ANY PROPOSED CLASS SETTLEMENT AND PROTOCOL FOR INTERVIEWING PUTATIVE CLASS MEMBERS. 22 Only at this point, after half a year of litigating this action, the parties realized that the amount 23 in controversy did not actually exceed the $75,000 jurisdictional minimum. The parties thus 24 requested remand to state court for lack of subject-matter jurisdiction (Dkt. No. 28 at 1). 25 Suspicious of the timing of these events, and concerned that the parties’ stipulation attempted 26 to avoid the settlement rule, an order followed requesting evidence substantiating the parties’ 27 claim that the amount in controversy did in fact fall below $75,000 (Dkt. No. 29). 28 2 1 In response, the parties submitted (1) a joint brief in support of remand projecting a 2 maximum amount in controversy of $18,105.28; (2) documents from Melton’s personnel file 3 used to calculate the new amount in controversy; and (3) sworn declarations of counsel for 4 both sides (Dkt. No. 31). ANALYSIS 5 6 The parties seek remand to state court for lack of jurisdiction under 28 U.S.C. § 1447(c). 7 Federal diversity jurisdiction is proper if the parties are diverse and the amount in controversy 8 exceeds $75,000, excluding interest and costs. 28 U.S.C. §§ 1332, 1441. Only the amount in 9 controversy is at issue. United States District Court Northern District of California 10 The parties correctly observe that federal courts are courts of limited jurisdiction, and that 11 a district court must remand an action if it lacks jurisdiction over the dispute. See 28 U.S.C. § 12 1447(c). On the other hand, litigants are not entitled to remand in an action properly removed. 13 “We have no more right to decline the exercise of jurisdiction which is given, than to usurp 14 that which is not given.” Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 404 (1821). 15 1. 16 For purposes of determining diversity jurisdiction, “the sum demanded in good faith in DEFENDANT PROPERLY REMOVED. 17 the initial pleading shall be deemed to be the amount in controversy.” 28 U.S.C. § 1446(c)(2) 18 (emphasis added). When an action is originally filed in state court and subsequently removed, 19 “[t]here is a strong presumption that the plaintiff has not claimed a large amount in order to 20 confer jurisdiction on a federal court.” This order assumes plaintiff’s claims for recovery were 21 made in good faith. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 290 (1938). 22 When a complaint fails to state the dollar amount of relief sought, such that it is “unclear 23 or ambiguous from the face of a state-court complaint whether the requisite amount in 24 controversy is pled,” our court of appeals applies a “preponderance of the evidence” standard. 25 “Under this burden, the defendant must provide evidence establishing that it is ‘more likely 26 than not’ that the amount in controversy exceeds” the jurisdictional minimum. Sanchez v. 27 Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996); see 28 U.S.C. § 1446(c)(2)(B). 28 3 1 2 itemized plaintiff’s claims, assigning an estimated potential recovery for each. Defendant 3 calculated just over $40,000 in compensatory damages and penalties. With the addition of 4 plaintiff’s request for attorney’s fees, defendant asserted the total amount in controversy would 5 easily exceed $75,000. 6 United States District Court Northern District of California Defendant satisfied its burden upon removal. In its notice of removal, defendant In support, defendant cited several PAGA actions where attorney’s fees alone far 7 surpassed the jurisdictional threshold (Ntc. of Removal ¶ 15). Other judges in this district have 8 accepted similar fees estimates in single-plaintiff actions. In a 2010 decision, Judge Illston 9 found that “at a rate of $400/hour, attorney’s fees would reach $40,000 after just 100 billable 10 hours, and attorneys handling wage-and-hour cases typically spend far more than 100 hours on 11 the case.” Lippold v. Godiva Chocolatier, Inc., No. C 10–00421 SI, 2010 WL 1526441 at *4 12 (N.D. Cal. Apr. 15, 2010) (Judge Susan Illston). Defendant’s initial calculation was reasonable 13 and indeed shows that the amount in controversy “more likely than not” exceeds $75,000. 14 Thus, defendant sustained its burden of proof in its removal notice, and federal 15 jurisdiction attached. Because the amount in controversy is determined at the moment of 16 removal, the Court need not evaluate subsequent developments, and the analysis need go no 17 further. “[E]vents occurring subsequent to removal which reduce the amount recoverable, 18 whether beyond the plaintiff’s control or the result of his volition, do not oust the district 19 court’s jurisdiction once it has attached.” St. Paul Mercury, 303 U.S. at 293. Nonetheless, this 20 order responds to the arguments raised in the parties’ stipulation and supplemental filings. 21 22 2. THE STIPULATION AND SUBSEQUENT FILINGS DO NOT OUST JURISDICTION. 23 In their stipulation, the parties recalculated the amount in controversy, now agreeing that 24 “[e]ven with attorney fees, the amount in controversy would never exceed $75,000” (Dkt. No. 25 28 at 2). The parties’ new calculation is unpersuasive for several reasons. 26 27 28 4 1 2 3 United States District Court Northern District of California 4 A. The New Calculation Ignores Claims from the Original Complaint Without Explanation. The stipulation attempts to reduce plaintiff’s recoverable amount by abandoning claims alleged in the initial complaint. This is improper. The complaint alleges six causes of action: (1) failure to compensate all hours worked; 5 (2) missed meal breaks; (3) failure to provide proper wage statements; (4) failure to pay 6 compensation upon discharge; (5) PAGA claims; and (6) unfair business practices (Compl. 7 ¶¶ 22–86). Without explanation, the new amount in controversy calculation includes only (1) 8 missed meal and rest break violations; (2) reduced PAGA penalties; and (3) attorney’s fees 9 based on the reduced PAGA penalties, rather than the fees of the entire suit. The parties left 10 out relief for improper wage statements, failure to pay compensation upon discharge, and the 11 UCL claims (Dkt. No. 31 at 2–3). 12 Although defendant may not amend its notice of removal now, it is worth noting that 13 even its original calculation remains potentially under-inclusive, because it fails to account for 14 any recovery under plaintiff’s UCL claims (Compl. ¶¶ 74–86). The UCL cause of action 15 sought, in part, injunctive relief, which would be factored into the amount in controversy as 16 “the pecuniary result to either party which the judgment would directly produce.” In re Ford 17 Motor Co./Citibank (South Dakota), N.A., 264 F.3d 952, 958 (9th Cir. 2001). This order does 18 not attempt to estimate such pecuniary results, but assumes they would be only additive. 19 Even when, as here, “the plaintiff after removal, by stipulation, by affidavit, or by 20 amendment of his pleadings, reduces the claim below the requisite amount, this does not 21 deprive the district court of jurisdiction.” St. Paul Mercury, 303 U.S. at 292. If the courts 22 allowed such a practice, defendants’ right of removal would be “subject to the plaintiff’s 23 caprice.” Id. at 294. The parties may not simply ignore claims raised in the original complaint 24 for the purpose of lowering the amount in controversy to escape federal jurisdiction. 25 26 27 28 B. The Supplemental Filing Appears to Understate the Number of Shifts Plaintiff Worked. The complaint alleges that plaintiff’s employ ran from November 2016 to September 2018 and that plaintiff worked five days per week. This represents 95 weeks of employment. 5 1 Taken together, these allegations suggest plaintiff worked roughly 475 shifts. The parties’ 2 supplemental filing, however, settles on just 314 shifts, based on a spreadsheet reflecting 3 entries between December 2016 and December 2017, nine months before plaintiff’s last shift. 4 Given that the meal and rest break violation awards are a direct function of the total number of 5 shifts worked, this discrepancy cannot be ignored (Compl. ¶¶ 9–10; Dkt. No. 20 ¶ 11; Dkt. No. 6 31 at 2, Exh. A). 7 8 United States District Court Northern District of California 9 C. The Parties Attempt to Use a Novel and Unconventional Method for Calculating Attorney’s Fees. The parties do not dispute that attorney’s fees are appropriately factored into the amount 10 in controversy when an underlying statute authorizes fee shifting, as PAGA does here. See 11 Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). The parties’ new estimate 12 of plaintiff’s attorney’s fees does give pause, though. The revised calculation estimates fees of 13 roughly $7,500 based on PAGA’s fee-shifting provision. The parties state that “[p]laintiff 14 would be entitled to attorney[’s] fees under PAGA, however with a recovery of just $1,650, the 15 attorney[’s] fees would most likely be between $5,000 to $10,000 to prove the PAGA 16 penalties.” Plaintiff bases this new estimate on the general proposition that “the attorney[’s] 17 fees must be reasonable” (Dkt. No. 31 at 3). 18 While $7,500 may indeed be reasonable, that is not the relevant inquiry when calculating 19 the amount in controversy. The amount in controversy is an estimate of the total amount “that 20 will be put at issue in the course of litigation.” Lewis v. Verizon Commc’ns., Inc., 627 F.3d, 21 395, 400 (9th Cir. 2010) (internal citations omitted). Thus we are concerned not with that 22 amount of attorney’s fees a court order might deem reasonable but rather that amount that 23 plaintiff will eventually seek. It is not enough that plaintiff’s counsel’s estimates that $7,500 24 might be reasonable. Only a declaration stating that plaintiff will seek no more than a given 25 amount would be relevant to the amount in controversy. No such declaration has been filed. 26 To the contrary, plaintiff asserted that her fees totaled $15,000 in January and $17,500 in April, 27 according to the parties’ joint case management statements. Thus, it appears far more than 28 6 1 $7,500 in fees will be “at issue” in the course of this litigation (Dkt. No. 16 ¶ 11; Dkt. No. 20 ¶ 2 11). See ibid.; Galt, 142 F.3d at 1156. United States District Court Northern District of California 3 Finally, plaintiff’s new calculation seems to throw out reliance on the lodestar method 4 (hours times a reasonable rate) that generally guides fee shifting. But the Supreme Court has 5 “established a ‘strong presumption’ that the lodestar represents the ‘reasonable’ fee.” City of 6 Burlington v. Dague, 505 U.S. 557, 562 (1992). The joint case management statements, too, as 7 discussed, suggest that plaintiff has been calculating fees using the lodestar method (see, e.g., 8 Dkt. No. 20 ¶ 11, noting with regard to the amount in controversy, that “the current amount of 9 attorney fees is about $17,500”). Of course, the lodestar’s place as the preferred method does 10 not make it the only method, but the parties offer no rationale for why it should not be used 11 here, especially in light of the April case management statement. 12 CONCLUSION 13 The parties may not retool their initial pleadings to evade jurisdiction that properly 14 vested. For the reasons stated above, the parties’ joint stipulation to remand motion is DENIED. 15 16 IT IS SO ORDERED. 17 18 Dated: July 2, 2020. 19 20 WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 7
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