CHRISTIE COMBS v. INSOMNIA COOKIES LLC (2024)

ORDER DENYING MOTION TO REMAND

The parties are before the Court on Plaintiff Christie Combs' motion to remand. ECF No. 17. The Court finds the motion suitable for resolution without oral argument. Fed. R. Civ. P. 78(b); Civil L.R. 7-1(b). Having read and considered the papers filed in this matter, the motion to remand is DENIED.

I. BACKGROUND

Defendant Insomnia Cookies, LLC (“Defendant”) employed Plaintiff Christie Combs (“Plaintiff”) from September 18, 2018, to June 20, 2022, as a non-exempt, hourly employee. See Notice of Removal (“Not.”), Ex. A (“Compl.”) ¶ 5, ECF No. 1. On March 14, 2024, Plaintiff filed this putative class action in Santa Clara County Superior Court asserting wage and hour claims on behalf of herself and the putative class members. Id. ¶ 8. Defendant removed the case to federal court on April 18, 2024.

II. LEGAL STANDARD

A defendant may remove a civil action brought in state court if the complaint contains a federal claim over which the federal courts have original jurisdiction. 28 U.S.C. § 1441(a). Under the Class Action Fairness Act (“CAFA”), federal courts have original jurisdiction over state law class actions where the amount in controversy exceeds $5,000,000, exclusive of interest and costs; the number of members of all proposed plaintiff classes in the aggregate is more than 100; and any member of a class of plaintiffs is a citizen of a State different from any defendant. 28 U.S.C. § 1332(d).

“In determining the amount in controversy, courts first look to the complaint.” Ibarra v. Manheim Invs., Inc., F.3d 1193, 1197 (9th Cir. 2015). Where damages are unstated in a complaint, “the defendant seeking removal bears the burden to show by a preponderance of the evidence that the aggregate amount in controversy exceeds $5 million when federal jurisdiction is challenged.” Id. “The parties may submit evidence outside the complaint, including affidavits or declarations, or other ‘summary-judgment-type evidence relevant to the amount in controversy at the time of removal.’ ” Id. (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). “Under this system, a defendant cannot establish removal jurisdiction by mere speculation and conjecture, with unreasonable assumptions.” Id.

III. DISCUSSION

Plaintiff argues that Defendant fails to prove the amount in controversy necessary to establish federal jurisdiction under CAFA. Plaintiff alleges that the amount in controversy is less than $5,000,000, but does not specify the amount of damages sought. Compl. ¶ 11. Defendant's notice of removal contends the amount in controversy exceeds $5,000,000 based on Plaintiff's potential recovery of damages and penalties related to meal and rest period premium claims and waiting time penalties, and related attorneys' fees. Not. ¶¶ 26-38.

A. Meal and Rest Period Premiums

Under California Labor Code section 226.7, an employer must pay one additional hour of pay when it fails to provide a meal or rest period. Chavez v. Pratt (Robert Mann Packaging), LLC, No. 19-CV-00719-NC, 2019 WL 1501576, at *3 (N.D. Cal. Apr. 5, 2019). On Plaintiff's meal and rest period premium violations, Defendant calculates an amount in controversy of $2,596,608. Opp'n Br. at 5-6, ECF No. 18. Plaintiff argues this estimate is too speculative. The Court disagrees.

Plaintiff alleges that Defendant had a “company policy, practice, and procedure” of “intentionally, knowingly and systematically fail[ing] to provide legally compliant meal and rest periods[.]” Compl. ¶ 18. Plaintiff alleges that she worked 191 workweeks and is typical of the proposed class. Id. ¶¶ 5, 27. Defendant submits evidence that it employed 1,288 current and former non-exempt employees during the class period. Martinez Decl. ¶ 8, ECF No. 1-1. Defendant conservatively estimates that if the 1,288 putative class members worked 63 weeks (one-third the length of time of Plaintiff) at $16.00 per hour, and that each experienced one missed meal period and one missed rest period per workweek (a 20% violation rate), the total amount in controversy would be $2,596,608. See Chavez, 2019 WL 1501576, at *3 (“Courts in this Circuit, including in this District, have frequently upheld at least a 20% violation rate for purposes of CAFA amount in controversy calculations where the plaintiff does not specify the frequency of the alleged missed meal or rest periods.”). This estimate is plausible and supported by evidence.

B. Waiting Time Penalties

Labor Code section 203 requires an employer to pay daily wages for up to 30 days if it fails to pay all wages due within 72 hours of termination or resignation. Cal. Lab. Code § 203). The penalty under section 203 accrues daily until the wages are paid. Id. For waiting time penalties under section 203, Defendant calculates an amount in controversy of $2,923,200. Opp'n Br. at 4-5. Plaintiff argues the estimate is unsupported by evidence and improperly based on a 100% violation rate, whereas the complaint alleges that Defendant committed violations “from time to time” as to “many” class members, not all class members all the time. Reply Br. at 1-2, ECF No. 19.

Defendant directs the Court's attention to Plaintiff's allegations in paragraphs 108 and 110 of the complaint, which state that Defendant “has not tendered payment of wages, to [terminated] employees who missed meal and rest breaks, as required by law,” and wherein Plaintiff “demands up to thirty days of pay as penalty for not paying all wages due at time of termination for all employees who terminated employment during the CLASS PERIOD[.]” Compl. ¶¶ 108, 110. Defendant submits evidence that there are 1,015 former or terminated California employees who may be entitled to waiting time penalties. Martinez Decl. ¶ 8. It also submits evidence that the average shift length for its California non-exempt employees was six hours. Chase Decl. ¶ 4, ECF No. 18-1. Based on this evidence and the above allegations, Defendant estimates potential waiting time penalties as follows: 1,015 putative class members x $16.00 per hour x 6 hours per day x 30 days = $2,923,200. Defendant's estimate is plausible and supported by evidence. Although Plaintiff disputes both estimates, she submits no evidence to controvert them.

C. Attorneys' Fees

Attorneys' fees awarded under fee-shifting statutes or contracts are included in the amount in controversy. Fritsch v. Swift Transp. Co. of Arizona, LLC, 899 F.3d 785, 794 (9th Cir. 2018). Defendant estimates potential fees of $1,379,952 if fees related to meal and rest break premiums are considered, and $730,800 in fees if they are excluded. The Court excludes the higher estimate because the fee-shifting provisions under Labor Code sections 218.5 and 1194 do not apply to meal and rest period claims. Kirby v. Immoos Fire Protection, Inc., 53 Cal. 4th 1244, 1254-55 (2012).

Defendant's fee estimate is based solely on a 25% benchmark, or “per se” rule, which the Court declines to adopt. Fritsch, 899 F.3d at 795 (“[T]he defendant must prove the amount of attorneys' fees at stake by a preponderance of the evidence; we may not relieve the defendant of its evidentiary burden by adopting a per se rule for one element of the amount at stake in the underlying litigation”). Defendant provides no evidence for the estimate and identifies no other basis upon which to calculate estimated fees. Accordingly, the Court excludes the fee estimate from the amount in controversy. As discussed above, however, Defendant's estimates of the amount in controversy are plausible and supported by evidence, and exceed the required amount without including potential fees.

IV. CONCLUSION

For the reasons discussed herein, the Court finds that Defendant has met its burden to show by a preponderance of the evidence that the aggregate amount in controversy exceeds $5,000,000 and DENIES the motion to remand.

IT IS SO ORDERED.

Eumi K. Lee United States District Judge