Dawn Gee v. Signature Retail Services, Inc
5:20-cv-02627
C.D. Cal.Feb 26, 2021Background
- Plaintiff Dawn Gee filed a putative class action in San Bernardino County Superior Court alleging multiple California Labor Code violations and unfair competition; she later amended to add a representative PAGA claim.
- The FAC asserts eight class causes of action and a ninth cause of action under PAGA brought as a representative action (not a class claim).
- Defendant Signature Retail Services, Inc. (SRS) removed under CAFA, asserting the amount in controversy exceeded $5,000,000 by including class damages, PAGA penalties, and attorneys’ fees.
- SRS’s removal calculation totaled $5,964,110.42, which included $1,747,203.12 in PAGA penalties and an attorneys’ fees estimate of $1,192,822.10.
- Gee moved to remand, arguing PAGA penalties from a representative PAGA claim cannot be aggregated to meet CAFA’s $5 million threshold; she also sought attorneys’ fees for the remand motion.
- The district court agreed with Gee, remanded the case to state court, and awarded $5,200 in attorneys’ fees to Gee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PAGA penalties from a representative PAGA claim may be included in CAFA amount-in-controversy | Gee: Representative PAGA penalties cannot be aggregated with class claims to reach $5,000,000 | SRS: PAGA penalties should be included in the CAFA amount-in-controversy calculation | Held: PAGA penalties from a representative PAGA claim are excluded; CAFA threshold not met once PAGA penalties removed |
| Whether SRS met its burden to show amount in controversy by a preponderance | Gee: SRS failed to meet the burden because its total falls below $5M without PAGA penalties | SRS: Its calculations (including PAGA and attorneys’ fees) show amount exceeds $5M | Held: SRS did not meet its burden; its own calculations fall below $5M absent PAGA penalties |
| Applicability of McNulty (inclusion of PAGA for individual diversity analysis) | Gee: McNulty is inapplicable because it addressed individual diversity, not CAFA aggregation | SRS: Relied on McNulty to justify including PAGA-related exposure | Held: McNulty is inapplicable to CAFA aggregation and does not support SRS’s removal theory |
| Award of attorneys’ fees for improper removal | Gee: SRS lacked an objectively reasonable basis to remove; seeks fees under 28 U.S.C. § 1447(c) | SRS: Removal arguments were reasonable | Held: Court found precedent clearly foreclosed including PAGA in CAFA amounts; removal was not objectively reasonable and awarded $5,200 in fees |
Key Cases Cited
- Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006) (describing CAFA federal jurisdiction and minimal diversity requirements)
- Ibarra v. Manheim Invs., Inc., 775 F.3d 1193 (9th Cir. 2015) (defendant bears preponderance burden to show amount in controversy; both sides may submit evidence)
- Yocupicio v. PAE Grp., LLC, 795 F.3d 1057 (9th Cir. 2015) (representative PAGA claims cannot be aggregated with class claims to satisfy CAFA amount-in-controversy)
- Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062 (9th Cir. 2008) (awarding fees on remand requires showing the removing defendant lacked an objectively reasonable basis)
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (describing PAGA and its distribution of penalties between the state and aggrieved employees)