Levone Harris v. Km Industrial, Inc.
980 F.3d 694
9th Cir.2020Background
- Harris filed a putative California class action (meal/rest breaks, overtime, wage statements, indemnity, final wages) covering a four‑year "Relevant Time Period."
- Complaint defined a broad Hourly Employee Class (~442 employees) and narrower Meal Period and Rest Period subclasses (eligibility tied to shift length: >5 hrs for meal, ≥3.5 hrs for rest).
- KMI removed under CAFA, asserting the amount in controversy exceeded $5 million, calculating $7,163,325 based on payroll data and assumptions in a Lopez declaration: ~442 putative class members, 39,834 aggregate workweeks, median pay $20/hr.
- KMI assumed all 442 employees were members of both meal and rest subclasses and missed one meal and two rest periods per workweek across all 39,834 workweeks; applied those assumptions to compute class damages plus fees.
- Harris moved to remand, mounting a factual attack that KMI’s assumptions (class overlap and shift length/frequency) were unsupported and inflated the amount in controversy; KMI filed a second declaration but did not provide shift‑length or per‑shift eligibility data.
- District court remanded for lack of proof by a preponderance; Ninth Circuit affirmed, holding KMI failed to support its challenged assumptions and thereby failed to carry the burden to prove CAFA’s $5M threshold.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Harris mounted a facial or factual attack on KMI’s amount‑in‑controversy allegations | Harris contested the truth of KMI’s assumptions (class overlap and shift lengths), i.e., a factual attack | KMI argued Harris only challenged form, not truth, so a lower pleading standard should apply | Court: Harris made a factual attack; once factual, KMI bore burden to prove amount by preponderance |
| Whether KMI met its preponderance burden to show the amount in controversy exceeded $5M | KMI’s calculations were speculative and relied on unreasonable, unsupported assumptions (e.g., every putative member worked qualifying shifts every week) | KMI relied on payroll/workweek aggregates and Lopez’s declarations to show plausible damages exposure | Court: KMI failed—second declaration did not supply evidence that putative members worked shifts long enough to be in the subclasses, so assumptions were unreasonable and unsupported |
| Whether reasonable assumptions drawn from the complaint suffice without extrinsic evidence once attacked | Harris: KMI must supply evidence when assumptions are contested (shift lengths, days worked, leaves) | KMI: can rely on reasonable assumptions and complaint allegations to estimate violation rate | Court: A defendant may rely on reasonable assumptions, but when those assumptions are factually contested the defendant must support them with competent proof; KMI did not do so |
| Whether the district court should have remanded without further factfinding or given KMI another chance to supply evidence | Harris: remand appropriate because KMI had opportunity to supply evidence and failed | KMI (dissent): district court erred; the record and complaint made KMI’s estimates reasonable and any gap was immaterial; at minimum KMI should have been given further opportunity | Court: affirmed remand; parties had opportunity to submit evidence after remand motion and KMI’s supplemental declaration failed to address the contested assumptions, so remand was proper and no further factfinding required |
Key Cases Cited
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (notice of removal under CAFA need only plausibly allege amount in controversy; plaintiff may mount factual attack)
- Ibarra v. Manheim Investments, Inc., 775 F.3d 1193 (9th Cir. 2015) (when plaintiff mounts factual attack, defendant must prove amount in controversy by a preponderance; assumptions need reasonable grounding)
- Salter v. Quality Carriers, Inc., 974 F.3d 959 (9th Cir. 2020) (distinguishes facial vs factual attacks; burden shifts to defendant when factual attack is made)
- Arias v. Residence Inn by Marriott, 936 F.3d 920 (9th Cir. 2019) (defendant may rely on reasonable assumptions grounded in the complaint to estimate damages exposure)
- Greene v. Harley‑Davidson, Inc., 965 F.3d 767 (9th Cir. 2020) (remand orders in CAFA cases reviewed de novo)
- Rea v. Michaels Stores Inc., 742 F.3d 1234 (9th Cir. 2014) (district court should not require over‑precise evidence when none suggests the asserted basis is false)
- United Parcel Service Wage & Hour Cases, 125 Cal. Rptr. 3d 384 (Cal. Ct. App. 2011) (framework for premium payment remedies for missed meal/rest breaks)