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Southern District of California Denies Remand in Case Asserting CAFA Jurisdiction

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In Johnson v. U.S. Vision, Inc., No. 10-CV-0690 BEN (CAB), 2010 WL 3154847 (S.D. Cal. Aug. 9, 2010) the Southern District of California faced a remand motion in a wage and hour case that had been removed pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. §§ 1332, 1441, 1453.

Judge Roger T. Benitez denied the motion to remand. Defendant presented a calculation of damages, supporting its calcualtions with declaration from, among other people, the Assistant Controller, Operations, for U.S. Vision, Inc., responsible for enforcing Defendants’ payroll policies and procedures. The declaration set forth Plaintiff’s most recent hourly rate of pay, as well as the specific number of optical managers and optechs employed during the Class Period, average hourly rates of pay for managers and optechs, number of employees who separated their employment with Defendants, and number of possible wage statements for each employee per year.

Plaintiff argued that Defendants miscalculated the amount in controversy because:

Defendants erroneously assumed “each class member was damaged to the same extent that Plaintiff Johnson was, and that every putative class member, among other things, worked off the clock and incurred a break violation every single day of the entire class period.” Mot. 6. Plaintiff emphasizes that Defendants have access to more specific figures to calculate the amount in controversy and that “each [class] member can be identified using information contained in Defendants’ payroll, scheduling and personnel records.” Compl. ¶ 39.

But the Court held that absent a “persuasive argument that Defendants are required to prove actual damages in order to remove this action, however, the Court must consider the amount put in controversy by the Complaint, not the ultimate or provable amount of damages.” (citing Rippee v. Boston Market Corp., 408 F. Supp. 2d 982, 986 (S.D. Cal. 2005).) The Court found that, having based their calculations on allegations provided in the Complaint, Defendants proved with a legal certainty that CAFA’s jurisdictional threshold is satisfied.

Despite Plaintiff’s attempt to provide supplemental information in the motion to remand, Defendants were entitled to, and did, use the factual allegations in the Complaint to calculate the amount in controversy. See Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992) (holding that defendant must use specific factual allegations or provisions in the complaint to support its argument of proper removal). The Court finds that Defendants provided detailed and competent evidence supporting their calculations and showing, to a legal certainty, that the jurisdictional threshold under CAFA is met. To the extent subsequent events show that jurisdiction would not be proper, the Court can address remand at that time. 28 U.S.C. § 1447(c).

By CHARLES H. JUNG

Second District Court of Appeal Holds That “in the vast majority of wage and hour disputes, class suitability should not be determined on demurrer.”

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This next case highlights the difficulty of successfully eliminating a wage and hour class action in California at the demurrer stage. After 3 bites at the apple, the trial judge in Gutierrez v. California Commerce Club, Inc., 2010 WL 2991875 (Cal. Ct. App. 2d Dist. August 02, 2010) (not reported) sustained without leave to amend the defendant California Commerce Club, Inc.’s (“Club”) demurrer to plaintiff’s third amended complaint on the ground the plaintiffs had failed to show the existence of a class, and dismissed the action as to all representative claims. In a 3-0 opinion, Justice Jeffrey J. Johnson, writing for the Second District Court of Appeal, reversed the trial court’s order.

Putative class representatives Sergio Gutierrez and Hector Salazar filed the operative third amended class action complaint against the Club, alleging, among other things, that they and other similarly situated members of the putative class were injured by the Club’s unlawful policy and practice of denying meal and rest breaks to certain hourly, non-union employees.

The Court of Appeal held that “In this action, as in the vast majority of wage and hour disputes, class suitability should not be determined on demurrer.”

Plaintiffs alleged that, pursuant to a Club policy or practice, they and similarly situated hourly, non-union employees have been denied meal and rest breaks to which they are legally entitled, or compensation therefor. The Court reasoned that “[o]n these allegations, it is clear that the Club liability, if any, to the class as a whole, can be determined by reviewing a single or set of facts common to all.” Id. *6. The Court wrote:

We return again to and rely upon the well-established principle, that “only in mass tort actions (or other actions equally unsuited to class action treatment) [should] class suitability … be determined at the pleading stage. In other cases, particularly those involving wage and hour claims, [such as the instant action,] class suitability should not be determined by demurrer.” ( Prince, supra, 118 Cal.App.4th at p. 1325, italics added; see also Tarkington, supra, 172 Cal.App.4th at p. 1512.). Id.

We will reverse the order dismissing the action following the sustaining without leave to amend of the demurrer to the TAC based on the trial court’s finding that the pleading failed “to allege facts sufficient to show the existence of a class.” It was premature for the trial court to make determinations pertaining to class suitability on demurrer. The allegations of the operative complaint are sufficient to move the action beyond the pleading stage.

Id. *6.

The appeal was taken from an order of Judge Aurelio Munoz of the Superior Court of Los Angeles County. (Judge Munoz is a retired judge of the L.A. Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.). Matthew J. Matern and Thomas S. Campbell appeared for Plaintiffs and Appellants. Anna Segobia Master and Jennifer Rappoport appeared for Defendant and Respondent.

By CHARLES H. JUNG

California Employment Lawyer

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Southern District of California Denies Remand in Case Asserting CAFA Jurisdiction

Second District Court of Appeal Holds That “in the vast majority of wage and hour disputes, class suitability should not be determined on demurrer.”