Jose Ibarra v. Manheim Investments, Inc.
775 F.3d 1193
9th Cir.2015Background
- Jose Ibarra filed a California putative wage-and-hour class action alleging failure to provide meal and rest breaks and other Labor Code violations, seeking to represent ~1,900 nonexempt employees from 2008–2012.
- Ibarra’s complaint expressly alleged that the aggregate class claims did not exceed CAFA’s $5,000,000 threshold.
- Manheim removed under CAFA, asserting meal and rest break penalties alone exceeded $5 million based on company records of shifts and an assumption of a 100% violation rate.
- The district court remanded twice, finding Manheim’s amount-in-controversy proof inadequate; appeals and intervening Supreme Court/Ninth Circuit decisions changed the applicable burden and standard.
- The Ninth Circuit vacated and remanded, holding that when the amount in controversy is contested, both sides must be allowed to submit evidence and the district court must decide by a preponderance of the evidence whether CAFA’s $5 million threshold is met.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendant met burden to show amount in controversy exceeds $5M | Ibarra argued complaint’s statement that claims do not exceed $5M and Manheim’s unsupported 100% violation-rate assumption are insufficient | Manheim argued records of shifts and wages plausibly show meal/rest break penalties exceed $5M | Remanded: defendant bears burden and must prove by preponderance; both sides may submit evidence because Manheim’s violation-rate assumption lacked evidentiary support |
| Proper standard/procedure for contested CAFA jurisdiction | Plaintiffs: defendant must fail if its evidence is insufficient; plaintiffs need not submit evidence to oppose remand | Manheim: plaintiffs cannot simply offer no evidence and defendants should not have to carry entire burden alone | Court: apply Dart and Rodriguez — initial plausible allegation suffices; once contested, both sides submit proof and district court resolves by preponderance; district court to set fair procedure on remand |
| Reliance on complaint statements limiting damages | Ibarra: his allegation that damages do not exceed $5M should control | Manheim: Standard Fire permits removal despite plaintiff stipulation; defendant may rely on its own estimates | Held: Complaint’s assertion does not preclude removal; defendant must nonetheless prove amount in controversy when challenged |
| Validity of extrapolation method used to calculate damages | Ibarra: extrapolation (100% violation rate) is unreasonable and ungrounded | Manheim: extrapolation from shift counts and average wage is a reasonable method to estimate penalties | Held: Extrapolation must be grounded in real evidence or reasonable assumptions; Manheim’s 100% rate lacked evidentiary foundation, requiring remand for further proof |
Key Cases Cited
- Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013) (plaintiff’s pre-certification stipulation limiting damages does not prevent CAFA removal)
- Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975 (9th Cir. 2013) (defendant must prove amount in controversy by preponderance when contested)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) (plaintiff’s good-faith statement of damages generally controls)
- Abrego Abrego v. Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006) (standard of review for remand orders)
- Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744 (11th Cir. 2010) (defendant may use reasonable extrapolations and evidence to support CAFA jurisdiction)
- Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373 (9th Cir. 1997) (courts may consider affidavits and summary-judgment-type evidence when assessing amount in controversy)