Christian Melendez v. J and B Investments, Inc., et al, No. 5:2018cv01062 - Document 30 (C.D. Cal. 2018)
Court Description: ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING DEFENDANTS' MOTION TO DISMISS AS MOOT by Judge Andre Birotte Jr.: The Court GRANTS Plaintiff's motion to remand 15 . The matter is remanded to Riverside County Superior Court, Case No. RIC1806564. Because the Court lacks subject matter jurisdiction, the Court DENIES Defendants' motion to dismiss or strike 10 as moot. ( MD JS-6. Case Terminated. ) (gk)
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Christian Melendez v. J and B Investments, Inc., et al Doc. 30 1 JS-6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 CHRISTIAN MELENDEZ, on behalf of others similarly situated, 12 13 14 15 16 17 Plaintiff, v. Case No. 5:18-cv-01062-AB (KSx) ORDER GRANTING PLAINTIFF’S MOTION TO REMAND AND DENYING DEFENDANTS’ MOTION TO DISMISS AS MOOT J&B INVESTMENTS, INC., et al., Defendants. Plaintiff Christian Melendez (“Plaintiff”) filed a Complaint in Riverside County 18 Superior Court on April 5, 2018. Dkt. No. 1-2. The Complaint alleges that 19 Defendants J&B Investments, Inc. (“J&B”) and Gypsum Management and Supply, 20 Inc. (“GMS”) (collectively, “Defendants”) violated various California labor laws. Id. 21 On May 17, 2018, Defendants removed the case to this Court. See Notice of Removal 22 (Dkt. No. 1). Defendants then filed a motion to dismiss or strike the Complaint on 23 May 24, 2018. Dkt. No. 10. Plaintiff has opposed that motion, and Defendants filed a 24 reply. Dkt. Nos. 16, 25. On June 18, 2018, Plaintiff filed a motion to remand. Dkt. 25 No. 15. Defendants opposed the motion, and Plaintiff filed a reply. Dkt. Nos. 19, 26. 26 The Court heard oral arguments regarding the motions on August 3, 2018. For the 27 following reasons, the Court GRANTS Plaintiff’s motion to remand and DENIES 28 Defendants’ motion to dismiss or strike as moot. 1. Dockets.Justia.com 1 I. 2 BACKGROUND J&B is a California corporation with a principal place of business in San Diego, 3 California. Compl., ¶ 7. J&B transports and delivers building materials throughout 4 California from its six regional centers around the state. Compl., ¶ 10. GMS is a 5 national company incorporated in Georgia with a principal place of business in 6 Georgia. Compl., ¶ 6. GMS purchased J&B in March 2015, and J&B became a 7 subsidiary of GMS. Compl., ¶ 11. 8 9 Plaintiff began working for J&B as a truck driver in July 2013. Compl., ¶ 5. According to Plaintiff, Defendants required him to work ten hour shifts without meal 10 or rest breaks. Compl., ¶¶ 15, 16. Defendants kept drivers so busy with deliveries 11 that they could not take breaks and instead had to work through them. Compl., ¶ 16. 12 Plaintiff alleges that, instead of implementing policies to allow employees to take 13 meal and rest breaks, Defendants altered time sheets to show that employees took 14 meal and rest breaks that did not actually occur. Compl., ¶ 19. 15 Based on these allegations, Plaintiff filed his Complaint in Riverside County 16 Superior Court on April 5, 2018. The Complaint asserts six causes of action: failure 17 to provide meal breaks, failure to permit rest breaks, failure to pay minimum wage, 18 failure to provide accurate itemized wage statements, failure to pay compensation due 19 upon separation of employment, and unfair competition under California Business and 20 Professions Code section 17200. Plaintiff brings these claims on behalf of a putative 21 class. Compl., ¶ 1. The Complaint defines the putative class as “[a]ll current or 22 former employees of Defendants who worked as non-exempt Hourly Employees in 23 California from the four years prior to the filing of this Complaint through the date of 24 class certification.” Compl., ¶ 22. “Hourly Employees” refers to “[t]he truck drivers, 25 yard workers, and stockers employed by J&B during the Class Period . . . .” Compl., 26 ¶ 10. 27 28 II. LEGAL STANDARD A defendant may remove a civil action filed in state court to federal court when 2. 1 the federal district court has original jurisdiction over the action. 28 U.S.C. § 1441(a). 2 “A suit may be removed to federal court under 28 U.S.C. § 1441(a) only if it could 3 have been brought there originally.” Sullivan v. First Affiliated Sec., Inc., 813 F.2d 4 1368, 1371 (9th Cir. 1987). 5 Pursuant to the Class Action Fairness Act (“CAFA”), federal district courts 6 have original jurisdiction over certain class actions. 28 U.S.C. § 1332(d)(2). In order 7 to remove a case under CAFA, the defendant must establish that (1) the parties are 8 minimally diverse, (2) the proposed class has more than 100 members, and (3) the 9 total amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d); Serrano v. 180 10 11 Connect, Inc., 478 F.3d 1018, 1020–21 (9th Cir. 2007). III. DISCUSSION 12 Plaintiff argues that this action should be remanded to Riverside County 13 Superior Court for two reasons. First, he claims Defendants failed to satisfy CAFA’s 14 jurisdictional requirements. Second, he contends that, even if Defendants did 15 establish the CAFA requirements, the local controversy exception deprives the Court 16 of jurisdiction. 17 A. CAFA Requirements 18 As noted above, CAFA jurisdiction requires minimal diversity, a class of over 19 100 members, and an aggregate amount in controversy over $5 million. Serrano, 478 20 F.3d at 1020–21. The parties do not dispute that minimal diversity exists between 21 them. Thus, the Court must determine whether Defendants have satisfied the 22 numerosity and amount in controversy requirements. 23 1. Numerosity 24 Defendants have established that Plaintiff’s proposed class exceeds 100 25 members. Plaintiff seeks to represent a class of “[a]ll current or former employees of 26 Defendants who worked as non-exempt Hourly Employees in California from the four 27 years prior to the filing of this Complaint through the date of class certification.” 28 Compl., ¶ 22. The Complaint specifically states that “during the Class Period, 3. 1 Defendants employed several hundred Hourly Employees throughout California.” 2 Compl., ¶ 12. Thus, the allegations of the Complaint itself satisfy CAFA’s 3 numerosity requirement. 2. Amount in Controversy 4 5 Defendants have not, however, established that the amount in controversy 6 exceeds $5 million. In assessing the amount in controversy, courts first look to the 7 allegations in the complaint. Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th 8 Cir. 2015). Courts can accept a plaintiff’s good faith allegation of the amount in 9 controversy. Id. But if the defendant believes that the plaintiff’s requested damages 10 understate the amount in controversy, it “bears the burden to show by a preponderance 11 of the evidence that the aggregate amount in controversy exceeds $5 million . . . .” Id. 12 The defendant then must “submit summary-judgment-type evidence relevant to the 13 amount in controversy at the time of removal.” Singer v. State Farm Mut. Auto. Ins. 14 Co., 116 F.3d 373, 377 (9th Cir. 1997) (quotations omitted). “[A] defendant cannot 15 establish removal jurisdiction by mere speculation and conjecture.” Ibarra, 775 F.3d 16 at 1197. 17 Here, the Complaint states that “[t]he aggregate amount in controversy for the 18 putative class is not expected to meet or exceed $5,000,000.” Compl., ¶ 4. 19 Defendants, however, dispute Plaintiff’s characterization of the amount in 20 controversy. In support of their argument that CAFA jurisdiction applies, they 21 submitted a declaration that they claim demonstrates that the amount in controversy 22 does exceed $5 million. See Decl. Dale Hansen (Dkt. No. 1-7). According to 23 Defendants, the declaration shows that Plaintiff’s allegations place $6,166,588.15 in 24 controversy. Defendants break down their calculation as follows: 25 26 27 Claim Amount in Controversy Unpaid Meal Period Premiums 28 4. $1,662,867.90 1 Unpaid Rest Break Premiums $1,680,844.06 Minimum Wage Damages $912,420 Minimum Wage Penalties $812,450 Inaccurate Wage Statements $326,850 6 Waiting Time Penalties $620,751.60 7 Attorneys’ Fees $150,404.59 8 Total $6,166,588.15 2 3 4 5 9 10 11 Notice of Removal, at pp. 16, 22. Plaintiff takes issue with multiple aspects of these calculations, but the most 12 critical deficiency Plaintiff identifies is Defendants’ inclusion of all non-exempt, 13 hourly employees in determining the amount in controversy. Plaintiff seeks to 14 represent a class of “[a]ll current or former employees of Defendants who worked as 15 non-exempt Hourly Employees in California . . . .” Compl., ¶ 22. The Complaint 16 further defines “Hourly Employees” as “truck drivers, yard workers, and stockers . . . 17 .” Compl., ¶ 10. But, despite the Complaint’s specific definition of “Hourly 18 Employees,” Defendants did not limit their calculations to employees who worked as 19 truck drivers, yard workers, or stockers. Instead, they included all hourly, non-exempt 20 employees in their calculations. See Hansen Decl., ¶ 13 (“Defendants pulled 21 personnel data from the software for all of its hourly, non-exempt employees . . . .”). 22 Defendants’ use of all hourly, non-exempt employees––rather than only those 23 who worked as truck drivers, stockers, or yard workers––prevents the Court from 24 adopting their calculations. By including employees who are not putative class 25 members, Defendants calculated the amount in controversy using a broader class 26 definition than the one Plaintiff asserts. In so doing, Defendants likely inflated the 27 amount in controversy. See Miller v. A-1 Express Delivery Servs., Inc., No. 16-cv- 28 06251-WHO, 2017 WL 462406, at *5 (N.D. Cal. Feb. 3, 2017) (remanding a case due 5. 1 to the defendant’s failure to establish the amount in controversy where the defendant 2 “based its amount in controversy calculations on an incorrect class definition”). And 3 because Defendants have not provided any evidence about what portion of their 4 hourly employees worked as truck drivers, yard workers, or stockers, the Court has no 5 way to discern the extent to which Defendants overstated the amount in controversy. 6 Thus, “[t]he uncertainty regarding the number of putative class members affects the 7 entirety of the amount in controversy calculations.” Id. 8 Defendants argue that they can use all hourly employees to establish CAFA 9 jurisdiction because “Plaintiff did not use actual position titles” in defining his class. 10 Opp’n, at p. 5. Essentially, Defendants contend that Plaintiff’s class definition is so 11 vague that they cannot narrow their calculations to proposed class members. But the 12 Complaint specifies what “truck drivers, yard workers, and stockers” do. It explains 13 that “yard workers load the building materials purchased by the client into J&B’s 14 trucks” and that “[t]ruck drivers, along with the stockers, then transport the building 15 materials to the client’s facility/residence, where the truck drivers and stockers unload 16 and deliver the building materials to the client.” Compl., ¶ 10. Defendants have 17 provided no evidence that they attempted to limit their calculations to employees with 18 those job duties. If Defendants really could not have excluded any hourly employees 19 from the class based on the class definition, then they should have provided evidence 20 to that effect. Instead, the sole piece of evidence on which Defendants’ notice of 21 removal relies, Dale Hansen’s declaration, does not even mention truck drivers, yard 22 workers, or stockers. The only evidence in front of the Court therefore reveals no 23 effort by Defendants to adhere to the Complaint’s class definition. 24 In a footnote, Defendants also argue that their use of all hourly employees is 25 reliable because truck drivers, stockers, and yard workers perform “the core 26 functions” of their business. Opp’n, at p. 6 n.4. Defendants again present no evidence 27 in support of this proposition, but even if it were true, Defendants’ calculations still 28 likely overestimate the amount in controversy. Even if employees in Plaintiff’s 6. 1 putative class comprise the core of Defendants’ operations, Defendants still might 2 employ various other hourly, non-exempt employees. Without any indication of how 3 many of those employees exist, the Court would have to rely on “speculation and 4 conjecture” to adopt Defendants’ calculations. Ibarra, 775 F.3d at 1197. It cannot do 5 so. 6 Essentially all of Defendants’ amount in controversy calculations depend on the 7 number of employees included in the putative class. See Notice of Removal, at ¶¶ 36, 8 41, 44, 48, 51, 54. The Court therefore cannot rely on any of those calculations, and 9 Defendants have failed to carry their burden of establishing that the amount in 10 controversy exceeds $5 million. Accordingly, CAFA does not provide the Court with 11 subject matter jurisdiction over this case. 12 B. Local Controversy Exception 13 Plaintiff argues that the Court also lacks jurisdiction under CAFA’s “local 14 controversy” exception. Even if a putative class action meets the CAFA requirements, 15 a district court must decline to exercise jurisdiction over certain local controversies. 16 28 U.S.C. § 1332(d)(4); Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1013 17 (9th Cir. 2011). The local controversy exception precludes federal jurisdiction 18 19 20 21 22 23 24 25 26 27 28 (A)(i) over a class action in which-(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed; (II) at least 1 defendant is a defendant-(aa) from whom significant relief is sought by members of the plaintiff class; (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally 7. 1 2 3 4 5 6 7 filed; and (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and (ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons[.] 8 28 U.S.C. § 1332(d)(4)(A). The local controversy exception is “narrow,” and the 9 plaintiff has the burden of establishing that it applies. Benko v. Quality Loan Serv. 10 Corp., 789 F.3d 1111, 1116 (9th Cir. 2015). However, the plaintiff’s burden is not 11 necessarily an evidentiary one. In determining whether the class seeks significant 12 relief from a local defendant or whether a local defendant’s conduct forms a 13 significant basis for the class’s claims, “the district court is to look to the complaint 14 rather than to extrinsic evidence.” Coleman, 631 F.3d at 1016. 15 The parties do not dispute that more than two-thirds of putative class members 16 are California citizens, that the principal alleged injuries occurred in California, and 17 that Defendants have not been sued based on similar factual allegations in the past 18 three years. Defendants also do not dispute that J&B is a citizen of California. The 19 parties’ disagreement centers on whether Plaintiff can satisfy subsection (A)(i)(II) by 20 establishing (1) that the class seeks significant relief from J&B and (2) that J&B’s 21 conduct forms a significant basis for the class’s claims. 22 23 1. Significant Relief In determining whether a plaintiff seeks significant relief from a local 24 defendant, courts look to the remedies the plaintiff requests. Benko, 789 F.3d at 1119. 25 In so doing, they compare the allegations against the local defendant to those against 26 other defendants. Id. at 1118. A plaintiff need not seek all or even most of its total 27 relief from the local defendant to satisfy the significant relief requirement. See id. at 28 8. 1 1119 (holding that the plaintiff sought significant relief from a local defendant that 2 “was allegedly responsible for between 15–20% of the wrongs alleged by the entire 3 class”). Where a class seeks both damages and injunctive relief from a local 4 defendant, courts are particularly likely to find the significant relief requirement 5 satisfied. See Coleman, 631 F.3d at 1020 (holding that a complaint sought sufficient 6 relief from a local defendant where it sought injunctive relief against that defendant); 7 Tarrow v. R.J. Reynolds Tobacco Co., No. SACV 17–01568 CJC (KESx), 2017 WL 8 5135547, at *4 (C.D. Cal. Nov. 3, 2017) (“A complaint that seeks injunctive relief 9 against individual defendants also weighs in favor of finding that plaintiffs have 10 11 sufficiently alleged they seek ‘significant relief’ from a local defendant.”). Here, Plaintiff seeks significant relief from J&B, the California corporation. 12 Plaintiff’s class allegations include conduct beginning in April 2014, four years before 13 Plaintiff filed his Complaint. Compl., ¶ 22. GMS did not acquire J&B until March 14 2015. Compl., ¶ 11. Thus, J&B was solely responsible for the alleged labor 15 violations that occurred during the first 11 months of the relevant period. Moreover, 16 the Complaint asserts that J&B, along with GMS, continued to employ Plaintiff after 17 the acquisition. Compl., ¶ 12. Plaintiff seeks multiple forms of damages from J&B, 18 including unpaid wages and waiting time penalties. Plaintiff also pursues injunctive 19 and declaratory relief claims against both Defendants. Because the Complaint 20 requests damages, declaratory relief, and injunctive relief from J&B, Plaintiff seeks 21 significant relief from a local defendant. 22 Defendants argue that Plaintiff has failed to show that he seeks significant relief 23 from J&B because the Complaint “asserts a theory of joint and several liability . . . 24 [which] cannot serve as a basis for applying the local controversy exception.” Opp’n, 25 at p. 24. But cases in the Ninth Circuit have rejected this very argument. In the Ninth 26 Circuit, a plaintiff does not need to “specify the division of damages between 27 defendants” to satisfy the significant relief requirement. Allen v. Boeing Co., 821 F.3d 28 1111, 1119 (9th Cir. 2016). Rather, a plaintiff who pursues relief equally from a local 9. 1 defendant and an out-of-state defendant seeks significant relief from the local 2 defendant. See id.; Coleman, 631 F.3d at 1013, 1020 (holding that the plaintiff 3 satisfied the significant relief element where he sought damages equally from a local 4 defendant and a non-local defendant); Tarrow, 2017 WL 5135547, at *4 (holding that 5 the plaintiff sought significant relief from the local defendants where his complaint 6 requested “both monetary damages and injunctive relief from all five Defendants joint 7 and severally”). Plaintiff’s pursuit of relief from both Defendants therefore does not 8 preclude him from establishing that he seeks significant relief from J&B. 9 Defendants also contend that “Plaintiff is barred from seeking relief from J&B 10 with respect to at least half of his claims [because] J&B sold 100% of its assets in 11 March 2015, leaving J&B with no further operations.” Opp’n, at p. 24. The 12 Complaint, however, provides no basis for Defendants’ argument. While the 13 Complaint does state that J&B became a subsidiary of GMS in March 2015, it does 14 not allege that J&B ceased operations at the time of that purchase. Compl., ¶ 11. To 15 the contrary, the Complaint frames its allegations against J&B in the present tense. 16 See Compl., ¶ 7 (“[J&B] transacts millions of dollars per year of business in 17 California”); ¶ 10 (“J&B transports and delivers building materials, . . . has at least six 18 (6) regional centers in California . . ., [and] employs various non-exempt hourly 19 employees.”). Defendants essentially assert a factual argument that J&B has ceased 20 operating, but, because that argument contradicts the Complaint, it must be 21 disregarded at this stage.1 The Court therefore finds that Plaintiff’s putative class 22 seeks significant relief from J&B, a local defendant. 23 /// 24 25 26 27 28 Defendants’ factual argument that J&B no longer has operations underscores why the Ninth Circuit in Coleman decided that courts must look only to the complaint in assessing the significant relief prong. While Defendants claim J&B no longer operates, Plaintiff asserts his own evidence that J&B is, in fact, operational. See Decl. Jordan Esensten, ¶ 4, Ex. 4 (Dkt. No. 15-2). Weighing the parties’ competing evidence would force the Court to engage in a “mini-trial” about the local controversy exception––something it is not required to do. Coleman, 631 F.3d at 1017. 1 10. 2. Significant Basis 1 2 In determining whether a local defendant’s conduct forms a significant basis for 3 the class’s claims, courts again compare the allegations against the local defendant to 4 those against non-local defendants. Benko, 789 F.3d at 1118. Joint allegations against 5 a local and non-local defendant can establish that the local defendant’s conduct 6 formed a significant basis of the class’s claims. See Coleman, 631 F.3d at 1013, 1020 7 (affirming the trial court’s remand order under the local controversy exception where 8 the complaint referred to a California corporation and its Virginia parent corporation 9 as “Defendants” throughout). This is particularly true where some allegations in the 10 complaint specify conduct committed by the local defendant in particular. See Allen, 11 821 F.3d at 1121 (holding that a local defendant’s conduct formed a significant basis 12 for the class’s claims where it independently failed to investigate and remediate 13 pollution); Tarrow, 2017 WL 5135549, at *4 (finding the significant basis prong 14 satisfied where the complaint alleged that the local defendants “created the policies 15 and practices that gave rise to the alleged violations of the California Labor Code . . 16 .”). 17 In Coleman, the plaintiff began working as a delivery driver for a California 18 corporation called G.I. Trucking in 2004. 631 F.3d at 1012. In 2005, a Virginia 19 corporation, Estes Express, purchased G.I. Trucking and changed its name to Estes 20 West. Id. Plaintiff sued both Estes West and Estes Express for wage and hour 21 violations on behalf of a class. Id. The complaint stated that “each and all of the acts 22 and omissions alleged herein [were] performed by, or [are] attributable to” Estes 23 Express and Estes West. Id. at 1013. The rest of the complaint referred to Estes West 24 and Estes Express as “Defendants” and did not separate the actions alleged against 25 each defendant. Id. After the defendants removed to federal court, the plaintiff 26 moved to remand the case based on the local controversy exception. Id. The district 27 court granted the motion, and the Ninth Circuit affirmed. Id. at 1021. The court held 28 that the allegations against Estes West, the local defendant, formed a significant basis 11. 1 of the plaintiff’s claims. Id. at 1020. That the plaintiff’s complaint asserted the same 2 claims against Estes Express did not render the allegations against Estes West 3 insignificant. Id. 4 Like in Coleman, Plaintiff has asserted wage and hour claims against his 5 California employer, along with its non-California parent corporation. And, also like 6 in Coleman, Plaintiff refers to J&B and GMS together as “Defendants” throughout 7 most of his Complaint. Plaintiff alleges that J&B, as one of the two Defendants, 8 committed essentially all of the wage and hour violations about which he complains. 9 J&B’s conduct therefore forms a significant basis of the putative class’s claims. 10 Defendants fault Plaintiff for referring to Defendants collectively in the 11 Complaint and argue that Plaintiff cannot satisfy the significant basis requirement 12 without leveling specific allegations at J&B. But the collective allegations Defendants 13 call unsatisfactory are the same as those the Ninth Circuit found sufficient in 14 Coleman. And, in any case, the Complaint does allege conduct specific to J&B. As 15 explained above, Plaintiff’s allegations address conduct as early as April 2014. For 16 the period between April 2014 and GMS’s acquisition of J&B in March 2015, 17 Plaintiff’s only employer mentioned in the Complaint was J&B. Thus, taking 18 Plaintiff’s allegations as true, J&B initiated the conduct about which Plaintiff 19 complains. Plaintiff therefore has satisfied the local controversy exception’s 20 significant basis requirement. 21 Because Plaintiff has satisfied the significant relief and significant basis 22 requirements, Plaintiff has met his burden of establishing that the local controversy 23 exception applies. The Court must remand this case. 24 /// 25 /// 26 /// 27 /// 28 /// 12. 1 2 IV. CONCLUSION For the foregoing reasons, the Court GRANTS Plaintiff’s motion to remand. 3 The matter is remanded to Riverside County Superior Court. Because the Court lacks 4 subject matter jurisdiction, the Court DENIES Defendants’ motion to dismiss or 5 strike as moot. 6 7 8 9 10 11 IT IS SO ORDERED. Dated: August 07, 2018 _______________________________________ HONORABLE ANDRÉ BIROTTE JR. UNITED STATES DISTRICT COURT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13.
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