Case Information
*1 Present: The Honorable PERCY ANDERSON, UNITED STATES DISTRICT JUDGE T. Jackson Not Reported N/A Deputy Clerk Court Reporter Tape No. Attorneys Present for Plaintiff: Attorneys Present for Defendants: None None IN CHAMBERS – COURT ORDER
Proceedings:
The Court has received a (1) Motion to Dismiss and/or Strike the Complaint filed by defendants, (Dkt. 11), and (2) Motion to Remand filed by plaintiff, (Dkt. 14). The parties have filed their respective Opposition and Reply briefs. (Dkts. 13, 16, 17, 21.) Defendants have also filed a Notice of Newly Decided Authority, (Dkt. 22), to which Plaintiff has filed an Objection, (Dkt. 23). Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds that this matter is appropriate for decision without oral argument.
I. Background
This is a wage and hour class action brought by plaintiff Delvin Hines (“Plaintiff”) on behalf of a class of individuals employed by defendants Constellis Integrated Risk Management Services, Centerra Services International, Inc., Centerra Group LLC, and Michael Chandless (collectively “Defendants”). Defendants removed the action to this Court on July 29, 2020, pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332. On August 5, 2020, the Court ordered Defendants to show cause in writing why this case should not be remanded for lack of subject matter jurisdiction because Defendants have failed to show, by a preponderance of the evidence, that the amount in controversy requirement for CAFA jurisdiction has been met. (Dkt. 10.) Defendants have filed a Response, (Dkt. 12), as well as a Motion to Dismiss and/or Strike the Complaint. Plaintiff has also filed a Motion to Remand on the basis that Defendants have not satisfied the CAFA amount in controversy.
II. Legal Standard
A. Motion to Remand
Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over
matters authorized by Congress and the Constitution. Kokkonen v. Guardian Life Ins. Co., 511 U.S.
375, 377 (1994). A suit filed in state court may be removed to federal court if the federal court would
have had original jurisdiction over the suit. 28 U.S.C. § 1441(a). A removed action must be remanded
to state court if the federal court lacks subject matter jurisdiction. Id. § 1447(c). “The burden of
establishing federal jurisdiction is on the party seeking removal.” Prize Frize, Inc. v. Matrix (U.S.) Inc.,
B. Motion to Dismiss
For purposes of a Motion to Dismiss brought pursuant to Federal Rule of Civil Procedure
12(b)(6), plaintiffs in federal court are generally required to give only “a short and plain statement of the
claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The purpose of Rule 8(a)(2)
is to “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell
Atlantic Corp. v. Twombly,
In Twombly, however, the Supreme Court rejected the notion that “a wholly conclusory
statement of a claim would survive a motion to dismiss whenever the pleadings left open the possibility
that a plaintiff might later establish some set of undisclosed facts to support recovery.” Twombly, 550
U.S. at 561 (internal quotation omitted). Instead, the Court adopted a “plausibility standard,” in which
the complaint must “raise a reasonable expectation that discovery will reveal evidence of [the alleged
infraction].” Id. at 556. For a complaint to meet this standard, the “[f]actual allegations must be enough
to raise a right to relief above the speculative level.” Id. at 555 (citing 5 C. Wright & A. Miller, Federal
Practice and Procedure §1216, pp. 235–36 (3d ed. 2004) (“[T]he pleading must contain something more
. . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”)
(alteration in original)); Daniel v. County of Santa Barbara,
III. Analysis
The Court finds that Defendants have satisfied their burden of establishing by a preponderance of the evidence that the CAFA amount-in-controversy is met. The Court therefore denies the Motion to Remand. In addition, for the reasons discussed below, the Court dismisses the complaint with leave to amend.
A. Motion to Remand
In the Notice of Removal, Defendants argue that the amount in controversy for Plaintiff’s claims
exceeds $5,000,000. (See Removal at 23 (calculating amount in controversy to be $5,870,069.59).)
Because Defendants did not include any declaration or other evidence in support of its calculations, the
Notice of Removal appeared to be deficient in light of its unsupported assumptions regarding the rate at
which the alleged statutory violations occurred. For example, Defendants assumed a 100% violation rate
for some damages calculations, but did not present sufficient evidence to establish that this constitutes a
reasonable inference. (See, e.g., id. at ¶28 (assuming all putative class members experienced overtime
violations for every day worked); ¶33 (assuming minimum wage violation for all putative class members
for every day worked); ¶37 (assuming all putative class members experienced a meal period violation
during every workweek).) The Court warned Defendants that although they “may draw reasonable
inferences from the complaint and from the evidence submitted in connection with the removal of the
complaint . . . [Defendants are] not permitted to pull violation rates out of thin air.” Sanchez v.
WaveDivision Holdings, LLC,
Defendants have now presented new evidence to demonstrate that the CAFA amount in controversy is met. Defendants have submitted a declaration from the Senior Director of North American Operations for Constellis, LLC to support the damages calculations. The declaration presents the following information in support of the damages calculations: (1) number of the non-exempt, hourly-paid CSI and CGI employees who were employed during the relevant time period; (2) number of non-exempt, hourly-paid CSI and CGI employees who left their employment during the relevant time period; (3) recorded hours worked per workday by each non-exempt, hourly paid CSI and CGI employee during the relevant time period; (4) total number of recorded hours worked per workday by all such CSI *4 and CGI employees during the relevant time period; (5) number of days each non-exempt, hourly-paid CSI and CGI employee worked, based on their dates of employment, and the total number of workdays for all such employees during the relevant time period; (6) average (mean) hourly rate of pay in effect for each of the current and formerly employed non-exempt, hourly-paid CSI and CGI employees during the relevant time period; and (7) number of wage statements that were issued to such CSI and CGI employees who were employed during the relevant time period.
In addition, while the Notice of Removal only presented damages calculations for putative class members who worked for Constellis Integrated Risk Management Services, Defendants have now presented additional damages calculations for putative class members who worked for Centerra Group LLC. This has increased the estimated amount in controversy to $8,623,035.26. Based on the evidence and case law presented in Defendants’ Response to the Order to Show Cause and Opposition to the Motion to Remand, the Court finds that Defendants have demonstrated by a preponderance of the evidence that the CAFA amount in controversy has been met. Therefore, the Court hereby denies the Motion to Remand and discharges its Order to Show Cause. 1/
B. Motion to Dismiss As a preliminary matter, the Court addresses Defendants’ Request for Judicial Notice filed in support of the Motion to Dismiss. (Dkt. 11 at 17.) Defendants ask the Court to take judicial notice of the following documents: (1) Private Patrol Operator License No. 17965 for Centerra Services International, Inc.; (2) Private Patrol Operator Branch, Registration No. PPB6296, License No. PPO17965; (3) Security Guard Licensing Details for Plaintiff; (4) Collective-Bargaining Agreement (“CBA”) in effect October 1, 2013 to September 30, 2016; (5) CBA in effect October 1, 2016 to September 30, 2019; and (6) CBA in effect October 1, 2019 to September 30, 2022.
The Court finds that these exhibits “can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2); see also Hall v. Live Nation
Worldwide, Inc.,
*5 these documents. Because the Court did not rely on any of the remaining exhibits in reaching this decision, the request for judicial notice as to those exhibits is denied as moot.
i. Overtime Claim Plaintiff cannot pursue an overtime claim under California Labor Code § 510 if he is subject to a CBA that satisfies the overtime exemption set forth in § 514 (“Section 514”). Section 510 “do[es] not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.” Cal. Lab. Code § 514. Defendants have presented evidence that these requirements are satisfied. (See Ex. D at 8, 18, 20, 22, 23, 26, 29, 32; Ex. E at 8, 18, 20, 22, 23, 26, 29, 32; Ex. F at 6, 14, 16, 17, 18, 21, 22, 25.) Plus, the CBAs that were applicable to Plaintiff’s employment during the putative class period reflect that the lowest applicable hourly wage paid during that period was $24.44, which is more than 30% above the highest statutory minimum wage in California ($12.00 per hour) within the last four years. (See Ex. D at 26.) Plaintiff does not contest this evidence.
Plaintiff argues that his overtime claim is based on “Defendants’ failure to accurately track
Plaintiff’s hours worked as well as a detrimental rounding policy,” and “none of the CBAs Defendants
attach explain how employee work hours are tracked, recorded, paid for, and further make no mention of
any rounding policy.” (Dkt. 13 at 14-15.) Plaintiff believes that “[t]hese failures alone preclude
Defendants from invoking section 514’s overtime exemption.” (Id.) But Plaintiff does not cite any case
law in support of this position. And numerous courts have held that Section 514 exempts overtime
claims when an employee is subject to a valid CBA. See, e.g., Cathcart v. Sara Lee Corp., 2011 WL
5981849, *7 (N.D. Cal. Nov. 30, 2011); Kilbourne v. Coca-Cola Co.,
ii. Minimum Wage Claim
The Complaint states that “Defendants failed to, on occasions, pay Plaintiff and Class Members
minimum wages for all minute worked as a result of including but not limited to Defendants failing to
accurately track and/or pay for all minutes actually worked, including by without limitation, rounding
minutes on employee time entries o the detriment of Plaintiff and similarly situated employees.”
(Compl. ¶43.) Essentially, “Plaintiff has alleged that Defendants did not pay him all of the wages due to
him without providing details as to one specific workweek when this occurred. Plaintiff’s allegations
are overly general and therefore preclude the Court from making a plausible inference that Defendants
engaged in the alleged conduct during at least one workweek.” Guerrero v. Halliburton Energy Servs.,
*6
Inc.,
In addition, the Complaint does not apparently allege factual details with respect to the manner in
which Plaintiff was paid (e.g., hourly, piece-rate). Compare De Dios v. Gerard Roof Products, LLC,
iii.
Rest Break Claim
Plaintiff’s rest break claim fails for the same reason as the minimum wage claim. The Complaint
states that, “Plaintiff and other Class Members were, on occasion, not provided with requisite 2 rest
periods as contemplated under the law.” (Compl. ¶56.) “[T]he Ninth Circuit requires a plaintiff to
allege actual dates of occurrences of any purported break violations, or at least allege one workweek
with missed meal or rest breaks.” Parsittie v. Schneider Logistics, Inc.,
iv. Meal Period Claim Defendants argue that Plaintiff is exempt from the meal break requirements of the California Labor Code because he is a security officer and a union-represented employee subject to a valid CBA, and therefore satisfies the requirements of California Labor Code §§ 512(e) and (f)(3). The meal break requirements set forth in Section 512(a) and (b) “do not apply to an employee specified in subdivision (f) if both of the following conditions are satisfied: (1) The employee is covered by a valid collective bargaining agreement. (2) The valid collective bargaining agreement expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for meal periods for those employees, final and binding arbitration of disputes concerning application of its meal period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than 30 *7 percent more than the state minimum wage rate.” Cal. Lab. Code § 512(e). And Section 512(e) “applies to each of the following employees: . . . (3) An employee employed in the security services industry as a security officer who is registered pursuant to Chapter 11.5 (commencing with Section 7580) of Division 3 of the Business and Professions Code, and who is employed by a private patrol operator registered pursuant to that chapter.” Cal. Lab. Code § 512(f)(3).
Defendants have presented evidence that Plaintiff is subject to a valid CBA that meets the conditions identified in Section 512(e). In addition, the CBAs expressly provide for meal periods for its employees. (See Ex. D at 23; Ex. E at 23; Ex. F at 18-19.) And the CBAs expressly provide for final and binding arbitration of all CBA-related disputes, including the application of the CBA’s meal and rest period provisions. (See Ex. D at 9; Ex. E at 9; Ex. F at 7.) Defendants have also provided evidence that Plaintiff is employed as a security officer as defined under Section 512(f)(3), which Plaintiff does not apparently dispute. (See Exs. A-C.)
Plaintiff counters that the CBAs are not valid because they waive the employee’s right to a meal period, as well as fail to state in writing that an employee is able to revoke the on-duty meal period agreement at any time. The Court is unpersuaded by this position. The CBAs explicitly provide that “[e]mployees agree to an on the job paid meal period each shift.” See Ex. D at 23-24; Ex. E at 23-24; Ex. F at 18-19.) The Court finds Araquistain v. Pac. Gas & Elec. Co. is instructive. See 229 Cal. App. 4th 227 (2014). The appellate court addressed “whether a contract that provides that employees who work shifts of eight consecutive hours ‘shall be permitted to eat their meals during work hours and shall not be allowed additional time therefore at Company expense’ falls within the exception provided in section 512, subdivision (e).’” Id. at 230. The court determined this CBA provision did “expressly provide[] for meal periods” and the CBA therefore met the requirements of Section 512(e)’s exemption. Id. The court reasoned that when “employees ‘represented by a labor union, have sought and received alternative wage protections through the collective bargaining process,’ they are free to bargain over the terms of their meal period, including whether the meal period will be of a specified length and whether employees will be relieved of all duty during that time.” Id. at 239 (citation omitted).
Similarly, the parties here have entered into a CBA that “expressly made alternate arrangements
to allow covered employees time to eat their meals.” Id. at 238. The case law Plaintiff relies on in his
Opposition is distinguishable from this action. See Valles v. Ivy Hill Corp.,
v. Wage Statements Claim
The Complaint states that “Plaintiff is informed and believes, and based thereon alleges, that at
all relevant times, Defendants, on occasion, due to the failure to pay due wages for the reasons described
*8
herein, also, on those occasions, failed to issue wage statements that accurately set out amounts due . . .
gross wages earned; total hours worked; net wages earned; and all applicable hourly rates in effect
during the pay period and the corresponding number of hours worked at each hourly rate.” (Compl.
¶63.) As a result, Defendants “failed to furnish employees with an accurate calculation of net and gross
wages earned, and net and gross wages paid.” (Id.) “The Complaint fails to allege a single factual
exemplar of any inaccurate wage statement. These allegations are too conclusory to put Defendants on
notice of any wrongdoing, and fail to state a claim as a matter of law.” Soratorio v. Tesoro Ref, & Mktg.
Co., LLC,
vi. Waiting Time Penalty
Defendants argues that the waiting time penalty claim is “flawed because [Plaintiff’s] Complaint
explicitly alleges that he is currently employed by one or more Defendants in this action.” (Dkt. 11 at
40; Compl. ¶10 (“Defendants employed Plaintiff as a non-exempt employee . . . from approximately
March of 17, 2002 through the present.”).) “[W]aiting time penalties are only available when an
employee is discharged or quits a position.” Porch v. Masterfoods, USA, Inc.,
vii. Unfair Competition
The Complaint alleges that “[t]he unlawful conduct of Defendants alleged herein constitutes
unfair competition within the meaning of Business and Professions Code section 17200.” (Compl. ¶78.)
California’s Unfair Competition Law (“UCL”) creates a cause of action for business practices that are
(1) unlawful, (2) unfair, or (3) fraudulent. See Cal. Bus. & Prof. Code § 17200. Each “prong” of the
UCL provides a “separate and distinct theory of liability.” Lozano v. AT&T Wireless Servs., Inc., 504
F.3d 718, 731 (9th Cir. 2007). “To be ‘unlawful’ under the UCL, the [alleged business practice] must
*9
violate another ‘borrowed’ law.” Davis v. HSBC Bank Nevada, N.A.,
viii.
Joint Employer Allegations
The Complaint states that “Plaintiff is informed and believes and based thereon alleges that the
Defendants collectively acted in all respects pertinent to this action as joint employers.” (Compl. ¶16.)
Plaintiff also alleges in a conclusory manner “that each defendant acted in all respects pertinent to this
action, as the agent of the other defendant(s), carried out a joint scheme, business plan or policy in all
respects pertinent hereto, and the acts of each defendant are legally attributable to the other defendants.”
(Id.) “Plaintiff’s joint employer allegations are insufficient because they are legal conclusions, not
factual allegations.” Hibbs-Rines v. Seagate Techs., LLC,
*10
x.
Request to Strike Attorneys’ Fees Request
The Complaint states that “Plaintiff and the other Class Members are entitled to recover the full
amount of their unpaid additional pay for missed meal periods, . . . plus interest and penalties thereon,
attorneys’ fees, and costs, under Labor Code sections 226 and 226.7, Code of Civil Procedure sections
1021.5 and 1032, and Civil Code section 3287.” (Compl. ¶52.) Defendant argues that Plaintiff’s request
for attorneys’ fees in this paragraph should be stricken because under Kirby v. Immoos Fire Protection,
Inc.,
Moreover, “[m]oving to strike Plaintiff’s claim for attorney’s fees based upon his § 226.7 claim
is inappropriate because ‘Rule 12(f) does not authorize district courts to strike claims for damages on the
ground that such claims are precluded as a matter of law.’” Ortega v. Watkins & Shepard Trucking, Inc.,
Conclusion
The Motion to Remand is denied, and the Court’s Order to Show Cause is discharged. For all the foregoing reasons, the Complaint is dismissed with leave to amend. Plaintiff may file an amended complaint, if any, no later than fourteen (14) days from the date this order is entered. Failure to file an amended complaint by the specified deadline may result, without further warning, in dismissal of this action. Finally, the Scheduling Conference previously set for September 28, 2020 is hereby vacated.
IT IS SO ORDERED.