Patel v. Nike Retail Services, Inc.
58 F. Supp. 3d 1032
N.D. Cal.2014Background
- Patel filed state-law claims against Nike Retail Services, Inc. alleging unfair competition, unpaid overtime, wage-statement violations, late wage payments, and PAGA claims.
- Nike removed the action to federal court based on diversity jurisdiction; Nike is an Oregon citizen and Patel a California citizen.
- The central issue is whether the amount in controversy exceeds $75,000, triggering federal jurisdiction under 28 U.S.C. § 1332(a).
- Plaintiff seeks unspecified damages on multiple California Labor Code claims; defendant provides a dollar estimate for overtime and wage-statement-related amounts.
- Under 28 U.S.C. § 1446(c)(2) as amended in 2011, removal may be based on a preponderance of the evidence that the amount in controversy exceeds the jurisdictional minimum.
- The court ultimately remanded, finding Nike failed to prove by a preponderance that at least $75,000 was in controversy, including the portion attributable to Patel’s claims and potential attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amount in controversy exceeds $75,000. | Patel contends total potential penalties and damages do not meet $75k. | Nike asserts the combined penalties and wages exceed $75k. | Not met; court remanded. |
| What standard of proof governs amount in controversy post-2011 amendment. | Lowdermilk “legal certainty” standard applies when damages are pled; general rule insufficient proof. | Preponderance of the evidence suffices under § 1446(c)(2). | Preponderance standard applies. |
| How to compute overtime-related amount in controversy. | Overtime damages are not clearly defined by plaintiff; amount contested. | Well-founded estimates based on schedule show at least a certain amount in controversy. | Court adopts defendant’s reasonable estimate (about $5,767.69 to $5,769.69 for 1 hour/week) as in controversy. |
| How to treat ‘subsequent’ PAGA penalties for purposes of amount in controversy. | Plaintiff argues penalties after initial period may be counted at enhanced rate. | Use initial rate for purposes of removal; 75% LWDA portion is not attributable to Patel alone. | Use initial rate for purposes of removal; exclude 75% enhancement from Patel’s portion. |
| Whether PAGA penalties and related attorney’s fees can be aggregated to meet the threshold. | Fees attributable to Patel’s claims should be counted toward the amount in controversy. | Fees must be allocated pro rata to all aggrieved employees; Patel’s share may be too small. | Attorney’s fees allocated pro rata; Patel’s share insufficient to reach $75,000. |
Key Cases Cited
- Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007) (preponderance standard governs amount in controversy after CAFA-era decisions)
- Rodriguez v. AT & T Mobility Servs. LLC, 728 F.3d 975 (9th Cir. 2013) (post-CAFA context; clarifies burden of proof for removal)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) (establishes traditional skepticism toward removal when doubts arise)
- Gaus v. Miles, 980 F.2d 564 (9th Cir. 1992) (resolve ambiguities in favor of remand)
- Urbino v. Orkin Servs. of California, Inc., 726 F.3d 1118 (9th Cir. 2013) (tensions about aggregating PAGA penalties and state interests affecting amount in controversy)
- Garibay v. Archstone Communities LLC, 539 F. App’x 763 (9th Cir. 2013) (addressed allocation of attorney’s fees in PAGA-like contexts)