432 F.Supp.3d 1175
E.D. Cal.2020Background
- Plaintiff Maria Avila filed a putative California wage-and-hour class and PAGA action in Tulare County alleging unpaid overtime, meal/rest breaks, minimum wage, wage statement and recordkeeping violations, waiting-time penalties, and UCL claims.
- Defendant Rue21 removed under CAFA to federal court asserting more-than-$5 million aggregate amount in controversy and diversity.
- Plaintiff moved to remand, arguing removal was untimely and that Defendant failed to prove by a preponderance that the CAFA $5 million threshold was met.
- Defendant relied on a corporate declaration by Edgar Emmerling (operations/finance) estimating class size (2,660), average wages, numbers of offending shifts/hours, and computed maximum damages totaling ~$7.99 million (excluding attorneys’ fees).
- The district court evaluated: (1) whether the 30-day removal window was triggered by the FAC; (2) whether Defendant met its evidentiary burden on the amount in controversy; and (3) whether attorneys’ fees could be included without evidentiary proof.
- The court held removal timely but concluded Defendant failed to meet its burden to show more than $5 million in controversy because it could not prove attorneys’ fees (or otherwise justify some assumptions) by a preponderance; the case was remanded to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of removal | FAC and service triggered 30‑day clock; removal was late | 30‑day clock never triggered because FAC did not affirmatively show CAFA jurisdiction | Not triggered: FAC did not on its face show >$5M; removal was timely |
| Amount-in-controversy (aggregate CAFA threshold) | Defendant failed to prove by preponderance that aggregate damages exceed $5M | Notice plausibly alleged amounts; Emmerling decl and reasonable extrapolations suffice | Defendant made plausible allegations, but when tested, Defendant did not meet preponderance for total >$5M given required adjustments |
| Sufficiency of corporate declaration (Emmerling) | Declaration lacks corroborating payroll records and foundation; inadequate | Declaration from knowledgeable finance officer is admissible and may support reasonable extrapolations | Declaration may be sufficient in principle, but some of Defendant’s assumptions had to be adjusted or reduced based on the record |
| Inclusion/amount of attorneys’ fees in controversy | Cannot be assumed without evidentiary proof; Defendant must prove by preponderance | Use 25% percentage-of-recovery benchmark to estimate attorneys’ fees | Court refused to include attorneys’ fees absent evidentiary proof; without fees the amount in controversy < $5M, so remand required |
Key Cases Cited
- Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241 (9th Cir.) (motion to remand is proper vehicle to challenge removal)
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (Sup. Ct.) (notice of removal need only contain plausible allegation of amount in controversy)
- Guglielmino v. McKee Foods Corp., 506 F.3d 696 (9th Cir.) (plaintiff is master of complaint re: federal jurisdiction)
- Washington v. Chimei Innolux Corp., 659 F.3d 842 (9th Cir.) (burden of establishing removal jurisdiction rests with defendant)
- Ibarra v. Manheim Investments, Inc., 775 F.3d 1193 (9th Cir.) (when amount in controversy is challenged, parties submit proof and court decides by preponderance)
- Harris v. Bankers Life & Cas. Co., 425 F.3d 689 (9th Cir.) (30‑day removal period runs only if initial pleading affirmatively reveals federal jurisdiction)
- Kuxhausen v. BMW Fin. Servs. N.A. LLC, 707 F.3d 1136 (9th Cir.) (defendant must apply reasonable intelligence; may multiply complaint figures but cannot be required to supply omitted info)
- Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121 (9th Cir.) (plaintiff may provide document to trigger 30‑day clock; otherwise investigation by defendant does not start the clock)
- Rea v. Michaels Stores Inc., 742 F.3d 1234 (9th Cir.) (initial complaint that does not affirmatively reveal CAFA jurisdiction does not trigger 30‑day clock)
- Arias v. Residence Inn by Marriott, 936 F.3d 920 (9th Cir.) (amount in controversy is estimate of maximum recovery; defendant’s plausible allegations accepted unless contested; fees must be proved by preponderance)
- Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395 (9th Cir.) (defendant’s declaration can suffice to meet amount‑in‑controversy burden where plaintiff offers no contrary evidence)
- Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744 (11th Cir.) (permissible use of reasonable deductions and extrapolations to calculate amount in controversy)