Oscar Bryant v. Midwest Construction Services, Inc.
5:21-cv-01588
C.D. Cal.Sep 30, 2021Background
- Defendant Midwest Construction Services removed a California wage-and-hour class action to federal court under CAFA, claiming diversity jurisdiction based on an alleged aggregate amount-in-controversy exceeding $5,000,000.
- The Court issued an order to show cause questioning whether Defendant met its burden to establish the $5 million CAFA threshold.
- Defendant submitted payroll data (approx. 832 putative class members, 487,587.90 total hours, average hourly rate $27.36) and performed calculations for multiple claims using several assumptions about violation rates and hours.
- Defendant’s calculations attributed damages to unpaid overtime, meal/rest period penalties, minimum-wage shortfalls, unreimbursed business expenses, and attorneys’ fees (using a 25% multiplier).
- The Court found Defendant’s critical assumptions (e.g., three overtime hours/week, 65%–100% meal/rest violation rates, 15 minutes/day minimum-wage loss, $100/month per employee unreimbursed expenses, and a 25% fee multiplier) were speculative and unsupported by complaint allegations or extrinsic evidence.
- Because Defendant failed to show by a preponderance of the evidence that the amount in controversy exceeded $5,000,000, the Court remanded the case to San Bernardino County Superior Court for lack of subject-matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA amount-in-controversy ($5M) is met | Sali-Suleyman contests federal jurisdiction; complaint alleges wage-and-hour violations but does not plead aggregate damages | Midwest contends payroll data + conservative assumptions about violation rates and hours show > $5M | Defendant failed to meet preponderance standard; amount-in-controversy not established; remand ordered |
| Proper basis for overtime damage estimate | Complaint alleges unpaid overtime but no specific hours per employee/week | Defendant assumes at least 3 overtime hours per putative class member per workweek to compute damages | Assumption of 3 hours/week is unsupported and speculative; cannot form basis for CAFA calculation |
| Meal/rest, minimum-wage, and unreimbursed expense violation rates/amounts | Complaint alleges a ‘‘policy and practice’’ of violations but gives no concrete violation rates or per-employee amounts | Defendant assumes high violation rates (65%–100%), 15 minutes/day unpaid minimum-wage time, and $100/month unreimbursed expenses per employee | Court rejects those assumptions as not grounded in evidence; pattern-or-practice allegations insufficient to justify assumed rates/amounts |
| Inclusion of attorneys’ fees to meet jurisdictional threshold | Plaintiff disputes fee estimates tied to speculative damages base | Defendant applies a 25% contingency/fee benchmark to swell the amount-in-controversy | Court: fee estimate depends on an unsupported damages base; cannot rely on conjectural fee calculation to meet CAFA threshold |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) (federal courts have limited jurisdiction and removal must be justified by statute)
- Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261 (9th Cir. 1999) (burden of establishing federal jurisdiction is on the removing party and removal statutes are strictly construed)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (any doubt about removability requires rejection of federal jurisdiction)
- Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006) (burden of proof for removal jurisdiction remains with proponent under CAFA)
- Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785 (9th Cir. 2018) (notice of removal need only plausibly allege amount in controversy, but evidentiary showing is required if challenged)
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (removal notice need not contain evidentiary submissions; plausibility standard applies)
- Ibarra v. Manheim Invs., Inc., 775 F.3d 1193 (9th Cir. 2015) (defendant must show by a preponderance of the evidence the amount in controversy when challenged; assumptions must be grounded in reasonable evidence)
- Kroske v. U.S. Bank Corp., 432 F.3d 976 (9th Cir. 2005) (courts may consider complaint, removal petition, and summary-judgment-type evidence on amount in controversy)
- LaCross v. Knight Transp., Inc., 775 F.3d 1200 (9th Cir. 2015) (reasonable assumptions for removal must be grounded in actual data, not mere conjecture)