Raul Leos v. Federal Express Corporation, No. 2:2014cv02864 - Document 27 (C.D. Cal. 2014)
Court Description: ORDER DENYING MOTION TO REMAND 19 by Judge Otis D. Wright, II: The Court finds that FedEx has established by a preponderance of the evidence that the amount in controversy exceeds $5 million. The Court therefore has CAFA class-action jurisdict ion over Leos's action and thus DENIES his Motion to Remand. (ECF No. 19.) Further, because the Court finds that FedEx has met its evidentiary burden, it declines to stay the proceedings pending the outcome of Dart Cherokee Basin Operating Co. v. Owens, 134 S. Ct. 1788 (2014). (lc). Modified on 6/10/2014 .(lc).
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Raul Leos v. Federal Express Corporation Doc. 27 O 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 11 RAUL LEOS, individually and on behalf 12 Case No. 2:14-cv-02864-ODW(AGRx) of all others similarly situated, 14 ORDER DENYING MOTION TO Plaintiff, 13 REMAND [19] v. 15 FEDERAL EXPRESS CORPORATION; 16 and DOES 1 through 25, inclusive, 17 18 Defendants. I. INTRODUCTION 19 This action was removed from the Los Angeles County Superior Court based 20 on diversity jurisdiction under the Class Action Fairness Act (“CAFA”) , 28 U.S.C. 21 § 1332(d). Plaintiff Raul Leos moves the Court to remand based on the amount in 22 controversy. (ECF No. 19.) Leos is a former employee of Defendant Federal Express 23 Corporation (“FedEx”). Leos is suing FedEx for violations of Los Angeles and 24 California wage-and-hour laws on behalf of himself and a putative class of current and 25 former employees. In the Motion, Leos disputes only CAFA’s $5 million amount-in- 26 controversy requirement, and alternatively requests a stay of proceedings pending the 27 outcome in Dart Cherokee Basin Operating Co. v. Owens, 134 S. Ct. 1788 (2014). 28 The Court finds that FedEx has met its evidentiary burden in establishing that the Dockets.Justia.com 1 amount in controversy exceeds $5 million and accordingly DENIES Leos’s Motion to 2 Remand.1 (ECF No. 19.) Further, because the Court finds that FedEx has provided 3 evidence sufficient to establish amount in controversy, it declines to stay the 4 proceedings. II. 5 FACTUAL BACKGROUND 6 On February 6, 2014, Leos filed the class-action Complaint in Los Angeles 7 County Superior Court, followed by the First Amended Complaint on March 12, 8 2014. Leos alleges that FedEx failed to pay him and other putative class members the 9 appropriate wages under the applicable Los Angeles ordinance and to timely pay 10 wages due upon discharge or resignation, as well as failure to furnish accurate wage- 11 and-hour statements. (ECF No. 1, Ex. B (“FAC”).) Leos raises only state-law claims. 12 Leos defines the putative class members as, 13 [Leos] and all similarly situated individuals who work or have worked 14 for Defendant in California at the Los Angeles World Airports 15 (“LAWA”) as a Material Handler, or any similar positions whose duties 16 include the handling, sorting, and loading of cargo and baggage, at any 17 time during the four years preceding the filing of the action and 18 continuing while the action is pending, who were denied the benefits and 19 protections required under the Living Wage Ordinance set forth in the 20 Los Angeles Administrative Code, and various provisions of the 21 California Labor Code and other statutes and regulations applicable to 22 California employees. 23 (FAC ¶ 1.) 24 FedEx removed this action on April 14, 2014, on the basis of diversity 25 jurisdiction under CAFA. (ECF No. 1. (“Notice of Removal”).) On May 19, 2014, 26 Leos filed the present Motion to Remand, alleging that FedEx’s Removal was based 27 28 1 After carefully considering the papers filed in support of and in opposition to the Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. 2 1 on speculation and self-serving assumptions. (ECF No. 19.) FedEx timely opposed. 2 (ECF No. 24 (“Opp’n”).) FedEx supports its Opposition with declarations from John 3 T. Lopinsky, a FedEx Payroll Advisor; Todd J Fuglseth, a FedEx Human Resources 4 Advisor; Venytra C. Harris, a FedEx Human Resources Business Analyst in the 5 Human Resources Department; and Dane Worley, a Senior Manager in the Los 6 Angeles Regional HUB. Leos’s Motion is now before the Court for decision. III. 7 LEGAL STANDARD 8 Federal courts are courts of limited jurisdiction, having subject-matter 9 jurisdiction only over matters authorized by the Constitution and Congress. See, e.g., 10 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit filed in 11 state court may be removed to federal court if the federal court would have had 12 original jurisdiction over the suit. 28 U.S.C. § 1441(a). A removed action must be 13 remanded to state court if the federal court lacks subject-matter jurisdiction. 28 14 U.S.C. § 1447(c). 15 Subject-matter jurisdiction exists in civil cases involving a federal question or 16 diversity of citizenship. 28 U.S.C. §§ 1331, 1332. Under CAFA, federal district 17 courts have original jurisdiction to a hear a class action if the proposed class has 18 (1) more than 100 members, (2) the parties are minimally diverse, and (3) the amount 19 in controversy in the aggregate exceeds the sum or value of $5 million. 28 U.S.C. 20 § 1332(d)(2), (d)(5)(B); see also Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 21 1348–49 (2013). In removal cases, the removing party bears the burden of proving 22 subject-matter jurisdiction under CAFA by a preponderance of the evidence. 23 Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 977 (9th Cir. 2013). 24 IV. DISCUSSION 25 Neither party disputes the first two requirements of CAFA jurisdiction—the 26 purported class has more than 100 members and there is minimal diversity. The 27 parties only dispute whether FedEx has met its burden on removal of establishing that 28 the amount in controversy exceeds $5 million. Specifically, Leos alleges that FedEx 3 1 has not provided sufficient evidence in support of the amount in controversy, and that 2 FedEx erred when using the 100-percent violation rule in its calculation of the amount 3 in controversy. 4 A. Sufficiency of Evidence for CAFA Amount-In-Controversy 5 Leos moves to remand the case on the grounds that FedEx has not provided 6 sufficient evidence to establish that the amount in controversy exceeds $5 million. In 7 determining the amount in controversy for subject-matter jurisdiction, federal district 8 courts look to the complaint. Singer v. State Farm Mut. Auto. Ins. Co. 116 F.3d 373, 9 376 (9th Cir. 1997) (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326 (5th 10 Cir.1995)). If the amount in controversy is not facially apparent in the complaint, the 11 Court may consider the removal petition and any “summary-judgment-type evidence 12 relevant to the amount in controversy at the time of removal,” similar to a review 13 under Federal Rule of Civil Procedure 56. Id.; accord Korn v. Polo Ralph Lauren 14 Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal. 2008). 15 evidence includes “materials in the record, including . . . affidavits and 16 declarations[.]” Fed. R. Civ. P. 56(c)(1). Further, the removing party is not required 17 to provide extensive business records in order to establish the amount in controversy. 18 Muniz v. Pilot Travel Ctrs. LLC No. CIV.S-07-0325 FCB EFB, 2007 WL 1302504, at 19 *5 (C.D. Cal. May 1, 2007). Summary-judgment-type 20 Leos makes seven claims for violations of California and Los Angeles wage- 21 and-hour laws. Leos does not specify the amount in controversy in the Amended 22 Complaint. (See generally FAC) Because the amount in controversy is not specified, 23 FedEx has the burden of establishing by a preponderance of the evidence that the 24 amount in controversy exceeds $5 million. Rodriguez, 728 F.3d at 977. Leos argues 25 that FedEx has not met its burden in that it has failed to provide actual evidence of the 26 amount in controversy and instead has relied on speculation and self-serving 27 assumptions. In the Notice of Removal, FedEx initially asserted that the amount in 28 controversy for Leos’s first and second causes of action and applicable attorney fees is 4 1 $6.5 million. (Not. of Removal ¶ 25.) FedEx has since adjusted the figure to 2 $7,035,783.96, which includes figures for Leos’s third and fourth causes of action as 3 well. (Opp’n 11-12.) 4 Leos contends that the figures asserted by FedEx in the Notice of Removal are 5 speculative and based on self-serving assumptions rather than on evidence. The 6 Notice of Removal used a calculation method that assumes a 40-hour work week for 7 52 weeks per year with no absences. 8 assumptions used in the Notice of Removal are not based on any supporting 9 declaration. (See generally id.) Further, the class is assumed to be 100 members, 10 which is used “for purposes of calculation” (id. at 7 n.4.), and again was not supported 11 by any declaration of any FedEx employee competent to make such statement. (Not. of Removal 7 n.3.) Further, the 12 However, the Court is permitted to look at “summary-judgment-type evidence” 13 in determining amount in controversy for purposes of removal under CAFA, Singer v. 14 State Farm Mut. Auto. Ins. Co. 116 F.3d 373, 376 (9th Cir. 1997) (citing Allen v. R & 15 H Oil & Gas Co., 63 F.3d 1326 (5th Cir.1995)), and therefore may look to FedEx’s 16 Opposition for such evidence. FedEx provides a much more comprehensive analysis 17 in establishing the amount in controversy in the Opposition, and accordingly, the 18 Court finds that FedEx has met its burden of establishing by preponderance of the 19 evidence that the amount in controversy exceeds $5 million. 20 In his Reply to FedEx’s Opposition, Leos contends that the Declarations of 21 Todd J. Fuglseth, Venytra C. Harris, Dane Worley, and John T. Lopinsky are 22 inconsistent and again are based on self-serving assumptions. (Reply 1–4.) 23 First, Leos argues that the number of putative class members ascertained by 24 Harris is inconsistent with the number of putative class members used by Lopinsky. 25 (Reply 2.) Harris declares that “2086 employees held the position of Handler (DOT 26 and Non-DOT), Freight Handler or Material Handler” from January 19, 2010, until 27 February 7, 2014. (Harris Decl. ¶ 4.) In calculating the average hourly rate of the 28 putative class members, Lopinsky used a “list of 2052 current and former employees 5 1 of FedEx” that he understood made up the putative class. (Lopinsky Decl. ¶ 4.) 2 Additionally, Leos argues that Fuglseth also used a purported list of putative class 3 members to determine how many had opted out of healthcare2 but did not indicate the 4 source or number of total putative class members he used. (Reply 2–3.) 5 Although the Court recognizes that there are inconsistencies in the number of 6 putative class members used in the calculations by FedEx employees, the 7 inconsistencies are not fatal. 8 employees, which the Court does not see as significant. In calculating the amount in 9 controversy, FedEx used the number of employees who had declined healthcare—205 10 employees—rather than either 2086 or 2052. At roughly ten percent of the putative 11 class, 205 employees is a significantly smaller subset than the putative class as a 12 whole. Fuglseth determined that 205 employees out of either 2086 (9.8 percent) or 13 2052 (10 percent) had declined healthcare, and the Court does not find this difference 14 significant. The difference in putative class members is 34 15 Leos would like the Court to find that all of the numbers are unreliable, but the 16 Declarations of Fuglseth, Harris, and Lopinsky are declarations of a Human Resources 17 Analyst, a Human Resources Business Analyst, and a Payroll Advisor, respectively. 18 All of the declarants have personal knowledge of the facts in their declarations, and all 19 of the declarants have routine familiarity with retrieving and analyzing the data in 20 their declarations. The Court finds their declarations persuasive. 21 Next, Leos attacks Los Angeles Regional HUB Senior Manager Dane Worley’s 22 declaration that “he oversees ‘a work group . . . made up of handlers’” as vague, 23 2 24 25 26 27 28 The Los Angeles Living Wage Ordinance requires employees to be paid according to whether they have opted into our out of healthcare programs provided by the employer. City of L.A., Current and Prior Living Wage Rates for Airport Employees (2013), availalble at http://www.lawa.org/ uploadedFiles/LAWA/pdf/Current_and_Prior_Living_Wage_Rates_2013.pdf. Because Leos opted out of healthcare, FedEx used the subset of those who opted out of healthcare in calculating the amount in controversy in order to provide a “conservative, good faith calculation of damages.” (Opp’n 9.) At 205 employees, this subset meets the $5 million amount-in-controversy requirement—so the class as a whole would certainly exceed the requirement with more than 2000 members. 6 1 because Worley does not indicate the size of the group, nor does he indicate whether 2 all class members worked the average of 20 hours per week. Leos’ argument is 3 without merit. Worley’s declaration actually states the he is a “Senior Manager over a 4 work group at the Los Angeles Regional HUB primarily made up of handlers, and [he 5 is] familiar with their scheduled work hours.” (Worley Decl. ¶ 2.) The Court reads 6 this statement to mean that Worley oversees handlers in the Los Angeles Regional 7 HUB and some other workers, which would necessarily include handlers who are 8 putative class members. This is not a matter of FedEx being vague, but of Leos’s 9 misguided logic. Further, Worley also indicates that the handlers in his group—not 10 the entire group—work an average of 20 hours per week. (Worley Decl. ¶ 3.) The 11 Court finds that Worley’s declaration is sufficiently specific and informative. 12 Lastly, Leos argues that Harris and Worley do not support their use of 13 “handlers” (Worley Decl. ¶ 2-3.), and “Handler (DOT and Non-DOT), Freight 14 Handler and Material Handler” (Harris Decl. ¶ 4.), with any evidence or proof that the 15 employees are members of the purported class. However, Leos indicates that the class 16 is comprised by “[a]ll individuals employed by, or formerly employed by, Defendant 17 at the Los Angeles World Airports in the State of California as a Material Handler (or 18 any similar positions whose duties include the handling, sorting, and loading of cargo 19 and baggage) . . . .” (FAC ¶ 24 (emphasis added).) Because the Amended Complaint 20 explicitly mentions Material Handlers, it is clear that Material Handlers are putative 21 class members. Additionally, because the Amended Complaint refers to any other 22 employees whose tasks include “handling, sorting, and loading of cargo and baggage,” 23 the Court can confidently infer that “handlers” handle and that “Freight Handlers” 24 handle things like cargo. The Court is not quite as mystified by the inclusion of other 25 employees that meet the requirements in Leos’s own Amended Complaint as Leos 26 himself seems to be. 27 Additionally, the Court finds that FedEx bases its Opposition on sufficient 28 evidence to support the conclusion that it has established the amount in controversy by 7 1 a preponderance of the evidence. The number of hours worked per week is based on 2 consultation with Worley, who is Senior Manager of the Los Angeles Regional HUB. 3 The average pay rate of $14.13 per hour was determined by Lopinsky, who is a 4 Payroll Advisor and was higher by $0.46 than the amount paid to Leos himself—a 5 figure which would seem to defeat the argument that the average pay rate used is self- 6 serving. Further, as discussed above, the number of employees used in calculations 7 includes only members of the putative class who opted out of healthcare, and is one- 8 tenth that of the putative class members. This figure is based on consultation with 9 Fuglseth, who is a Human Resources Advisor working in FedEx’s Benefits 10 Department. Accordingly, the Court finds that the evidence provided in the Response 11 is based on sufficient factual data and supported by declarations of employees with 12 personal knowledge. 13 B. 100-Percent Violation Rule 14 In determining the amount in controversy, the Court “must assume that the 15 allegations of the complaint are true and that a jury will return a verdict for the 16 plaintiff on all claims made in this complaint.” Roth v. Comerica Bank, 799 F. Supp. 17 2d 1107, 1117 (C.D. Cal. 2010) (citations omitted) (quoting Kenneth Rothschild Trust 18 v. Morgan Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D. Cal. 2002)). With 19 respect to statutory penalties, a plaintiff may not “avoid satisfaction of the amount in 20 controversy by arguing that the class plaintiffs may be awarded less than the statutory 21 maximum.” Korn, 536 F. Supp. 2d at 1206 n.4. Similarly, courts have assumed a 22 100-percent violation rate where the complaint does not allege facts specific enough to 23 “‘narrow the scope of the putative class or the damages sought.’” Coleman v. Estes 24 Express Lines, Inc., 730 F. Supp. 2d 1141, 1150 (C.D. Cal. 2010) (quoting Muniz, 25 2007 WL 1302504, at *4). 26 However, parties may not rely on the assumption that the 100-percent violation 27 rule applies without supporting the assumption with evidence. Garibay v. Archstone 28 Cmtys. LLC, 539 Fed. App’x 763 (9th Cir. 2013). Additionally, courts have “rejected 8 1 the unsupported use of 100% maximum violation rates.” See Emmons v. Quest 2 Diagnostics Clinical Labs, Inc., No. 1:13–cv–0474 AWI–BAM, 2014 WL 584393, at 3 *5 (E.D. Cal. Feb. 12, 2014) (citing Weston v. Helmerich & Payne Int’l Drilling Co., 4 No. 1:13–cv–01092–LJO–JLT, 2013 WL 5274283, at *5–6 (E.D. Cal. Sept. 16, 5 2013). 6 In contrast, courts have allowed the assumption of a 100-percent violation rate 7 where the plaintiff alleges in the complaint that each member of the class has been 8 harmed. Coleman, 730 F. Supp. 2d at 1149. Similarly, courts have determined that in 9 calculating amount in controversy, the average wage of the class members is an 10 appropriate rubric for assessing wages as well as penalties based on wage-and-hour 11 violations. Id. at 1150 (quoting Helm v. Alderwoods Grp., Inc., No. C 08-01184 SI, 12 2008 WL 2002511, at *4 n.3 (N.D. Cal. May 7, 2008)). 13 Leos’s third claim in the Amended Complaint is for violation of California 14 Labor Code section 226. Leos claims that “Class Members are entitled to all available 15 statutory penalties . . . provided in California Labor Code section 226(e).” (FAC ¶ 16 52.) California Labor Code section 226(e) provides that provision of inadequate 17 wage-and-hour statements entitles each affected employee to up to a $4000 statutory 18 maximum penalty. Leos urges the Court to apply Garibay, in which the Ninth Circuit 19 remanded a case because the evidence supporting the amount in controversy in the 20 Notice of Removal was based on assumptions. 21 In Garibay, the removing party attempted to base removal on the assumption 22 that every putative class member would be entitled to recover damages for inadequate 23 wage-and-hour statements for every single pay period but did not support these 24 assumptions with specific facts. The Ninth Circuit found the removing party could 25 not calculate the amount in controversy by using the 100-percent violation rule, 26 because the removing party had not provided any evidence that each putative class 27 member had been so harmed, and that assumptions were inadequate to support the use 28 of the 100-percent violation rule. 9 1 But here, the gravamen of Leos’s claims is that FedEx willfully deprived its 2 employees of adequate wages under Los Angeles’s Living Wage Ordinance (“LWO”). 3 In Garibay, the employer may have provided inaccurate wage-and-hour statements, 4 but the court concluded that it was not necessarily the case that each and every pay 5 statement was inadequate. In contrast, Leos alleges that FedEx did not “[pay] in full 6 for all hours worked, including overtime, among other things. [FedEx] applied this 7 illegal wage device uniformly to all Class Members . . . . All who were subject to this 8 unlawful compensation scheme suffered damages.” (FAC ¶ 27 (emphasis added).) 9 Leos goes further, alleging that all class members were not provided with 10 adequate wage-and-hour statements “since the amount paid by [FedEx] did not 11 correspond to the amounts required by the LWO.” (FAC ¶ 28.) Where all members 12 were damaged due to inadequate compensation, and therefore all were given 13 inadequate wage-and-hour statements, it follows that all are subject to calculation in 14 assessing statutory penalties under California Labor Code section 226(e). The Court’s 15 analysis is consistent with Garibay, in that the removing party in Garibay relied on 16 the assumption of a 100-percent violation rate to calculate statutory damages, where 17 here, FedEx has relied on the specific and explicit allegation in the Complaint that 18 each and every class member received inadequate wage-and-hour statements. As the 19 Court in Roth explained, the court “must assume that the allegations of the complaint 20 are true and that a jury will return a verdict for the plaintiff on all claims made in this 21 complaint.” 22 F.Supp.2d at 1001). 799 F. Supp. 2d at 1117 (quoting Kenneth Rothschild Trust, 199 23 The same line of analysis applies for the alleged statutory penalties under 24 California Labor Code sections 201–03. In the Amended Complaint, Leos alleges that 25 FedEx “failed to pay accrued wages and other compensation due immediately to each 26 Class Member who was terminated and failed to pay accrued wages within 72 hours to 27 each Class Member who ended his or her employment.” (FAC ¶ 54.) Leos may not 28 allege that all class members who were terminated or ended their employment are 10 1 harmed and then claim foul when FedEx uses all such class members in assessing 2 statutory damages. 3 employment during the applicable time to be 729 employees. (Opp’n 12; Harris Decl. 4 ¶ 4.) FedEx then used this number to assess statutory damages under California Labor 5 Code section 203 by multiplying the number of employees terminated by the average 6 wage rate, the average hours per day over 30 days—as the section provides. FedEx 7 used an appropriate method of discerning the number of employees terminated, and 8 according to the Amended Complaint, “each Class Member who was terminated and . 9 . . each Class Member who ended his or her employment” was affected by FedEx’s 10 alleged misdeeds. The Court finds that FedEx’s calculations were not based on 11 assumptions like the ones in Garibay; rather they were based on concrete numbers 12 provided by a Human Resources Analyst and on Leos’s own specific allegation that 13 all class members were so affected. 14 V. FedEx ascertained the number of employees who had left CONCLUSION 15 The Court finds that FedEx has established by a preponderance of the evidence 16 that the amount in controversy exceeds $5 million. The Court therefore has CAFA 17 class-action jurisdiction over Leos’s action and thus DENIES his Motion to Remand. 18 (ECF No. 19.) Further, because the Court finds that FedEx has met its evidentiary 19 burden, it declines to stay the proceedings pending the outcome of Dart Cherokee 20 Basin Operating Co. v. Owens, 134 S. Ct. 1788 (2014). 21 IT IS SO ORDERED. 22 23 June 10, 2014 24 25 26 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 27 28 11
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