BENITEZ v. HYATT CORPORATION 50 (2024)

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND

(ECF No. 13)

Presently before the Court are Plaintiff Rogeberto Benitez's Motion to Remand Case to State Court (“Mot.,” ECF No. 13) and Memorandum of Points and Authorities (“Mem.,” ECF No. 13-1) in support thereof. Defendant Hyatt Corporation filed an Opposition to the Motion (“Opp'n,” ECF No. 15), relying in part on arguments and evidence contained within their Notice of Removal (“NOR,” ECF No. 1) and the Declaration of Christina Alvarado (“Alvarado Decl.,” ECF No. 1-3). Plaintiff then submitted a Reply (“Reply,” ECF No. 17). The Court previously took this matter under submission without oral argument pursuant to Civil Local Rule 7.1(d)(1). See ECF No. 19. Having carefully considered the Parties’ arguments and the law, the Court GRANTS Plaintiff's Motion.

BACKGROUND

Plaintiff initiated this putative class action by filing his Complaint (“Compl.,” ECF No. 1-2 Ex. A) on July 7, 2023, in the Superior Court of California, County of San Diego. The Complaint contains ten causes of action, including (1) unfair competition in violation of Cal. Bus. & Prof. Code §§ 17200–17210; (2) failure to pay minimum wages in violation of Cal. Lab. Code. §§ 1194, 1197, and 1197.1; (3) failure to pay overtime wages in violation of Cal. Lab. Code § 510; (4) failure to provide required meal periods in violation of Cal. Lab. Code. §§ 226.7, 512, and the applicable Industrial Welfare Commission (“IWC”) Wage Order; (5) failure to provide required rest periods in violation of Cal. Lab. Code §§ 226.7, 512 and the applicable IWC Wage Order; (6) failure to provide accurate itemized statements in violation of Cal. Lab. Code § 226; (7) failure to reimburse employees for required expenses in violation of Cal. Lab. Code § 2802; (8) failure to provide wages when due in violation of Cal. Lab. Code §§ 201, 202, and 203; (9) failure to pay sick pay wages in violation of Cal. Lab. Code §§ 201–204, 233, and 246; and (10) failure to provide gratuities in violation of Cal. Lab. Code § 351. See generally Compl.

Plaintiff seeks to represent a “California [C]lass” of “all individuals who are or previously were employed by [Defendant] at [Defendant's] Hyatt Regency in La Jolla, California ․ and classified as non-exempt employees ․ at any time during the period beginning four (4) years prior to the filing of [t]he Complaint.” Id. ¶ 4. Plaintiff also seeks to represent a California Labor Sub-Class, which is identical to the California Class save its use of a three-year class period. Id. ¶ 44.

On September 14, 2023, Defendant removed this action to this Court pursuant to 28 U.S.C. §§ 1332, 1441, 1446, and 1453. See NOR at 1. Defendant claims this Court may exercise diversity jurisdiction under the Class Action Fairness Act (“CAFA”) pursuant to 28 U.S.C. § 1132(d). Id. Plaintiff's Motion followed.

LEGAL STANDARD

Generally, defendants may remove to the appropriate federal district court “any civil action brought in a State court of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). In other words, “[t]he propriety of removal depends on whether the case originally could have been filed in federal court.” City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997). “The party seeking the federal forum bears the burden of establishing that the statutory requirements of federal jurisdiction have been met.” Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 978 (9th Cir. 2013).

CAFA gives federal courts jurisdiction over certain class actions if (1) the class has more than 100 members, (2) the parties are minimally diverse, and (3) the amount-in-controversy exceeds $5,000,000. 28 U.S.C. §§ 1332(d)(2), (d)(5)(B); see Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592, 133 S.Ct. 1345, 185 L.Ed.2d 439 (2013). While courts typically “strictly construe the removal statute against removal jurisdiction,” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992), “no antiremoval presumption attends cases invoking CAFA,” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).

To satisfy CAFA's amount-in-controversy requirement, “a removing party must initially file a notice of removal that includes ‘a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.’ ” LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1202 (9th Cir. 2015) (quoting Dart Cherokee, 574 U.S. at 89, 135 S.Ct. 547). At that point, the “notice of removal ‘need not contain evidentiary submissions.’ ” Arias v. Residence Inn by Marriott, 936 F.3d 920, 922 (9th Cir. 2019) (quoting Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015)).

However, when a plaintiff contests the defendant's calculations, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Dart Cherokee, 574 U.S. at 88, 135 S.Ct. 547. “The preponderance of the evidence standard, in practical terms, requires the defendant to provide persuasive evidence that ‘the potential damages could exceed the jurisdictional amount,’ as opposed to requiring ‘a prospective assessment of defendant's liability’ to any degree of certainty.” Richards v. Now, LLC, No. 218CV10152SVWMRW, 2019 WL 2026895, at *5 (C.D. Cal. May 8, 2019) (internal citations omitted) (quoting Lewis v. Verizon Commc'ns, Inc., 627 F.3d 395, 397, 400 (9th Cir. 2010)).

The amount-in-controversy inquiry begins with the plaintiff's complaint. Greene v. Harley-Davidson, Inc., 965 F.3d 767, 771 (9th Cir. 2020). Beyond the complaint, parties may provide “affidavits or declarations, or other ‘summary-judgment-type evidence.’ ” Ibarra, 775 F.3d at 1197 (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). Further, a defendant's “damages assessment” may rely on “a chain of reasoning that includes assumptions” if such assumptions have “some reasonable ground underlying them.” Id. at 1199. “Once plaintiff has challenged removal, however, defendants must establish that their assumptions are reasonable, not merely plausible.” Urias v. Labcorp Peri-Approval & Commercialization Inc., No. 23-CV-1815 JLS, ––– F.Supp.3d ––––, ––––, 2024 WL 226819, at *2 (S.D. Cal. Jan. 8, 2024) (citing Arias, 936 F.3d at 927).

In short, “CAFA's requirements are to be tested by consideration of real evidence and the reality of what is at stake in the litigation, using reasonable assumptions underlying the defendant's theory of damages exposure.” Ibarra, 775 F.3d at 1198. Courts “weigh the reasonableness of the removing party's assumptions” and should “not supply further assumptions of [their] own.” Harris v. KM Indus., Inc., 980 F.3d 694, 701 (9th Cir. 2020). Though both parties may offer evidence, the burden of proof ultimately rests on the removing defendant. “[I]f the evidence submitted by both sides is balanced, in equipoise, the scales tip against federal-court jurisdiction.” Ibarra, 775 F.3d at 1199.

ANALYSIS

The sole question before the Court is whether CAFA's amount in controversy requirement is met, as neither side disputes that the proposed class consists of more than 100 individuals or that the Parties are minimally diverse. The Court will begin resolving the Parties’ dispute over the burden each bears with respect to the instant Motion. Then, the Court will examine Defendant's proposed valuations of the Complaint's claims for missed meal periods, missed rest periods, and waiting-time penalties. As the Court concludes Defendant has failed to meet its burden to establish that its proposed valuations for these claims are reasonable by a preponderance of the evidence—and the other claims valued by Defendant together do not approach CAFA's $5 million threshold—the Court will GRANT Plaintiff's Motion.

I. The Parties’ Burdens

The Parties first dispute the burden plaintiffs bear when opposing removal under CAFA. Defendant argues that “Plaintiff cannot merely claim Defendant's calculations are improper without presenting his own contrary calculations with evidentiary support.” Opp'n at 2 (capitalization altered). Defendant relies on Dart Cherokee, wherein the Supreme Court stated, “when a defendant's assertion of the amount in controversy is challenged,” “both sides submit proof.” 574 U.S. at 88, 135 S.Ct. 547.

Defendant's argument is inconsistent with Harris, in which the Ninth Circuit affirmed a district court's decision to remand a class action even though the plaintiff “did not introduce evidence outside the pleadings.” 980 F.3d at 700. Under Harris, a plaintiff need “come forward with contrary evidence only when the removing defendant has first come forward with sufficient evidence” to show that the assumptions underlying its amount-in-controversy calculation are reasonable. See Dunn v. SHC Servs., Inc., No. 121CV00744NONESAB, 2021 WL 5122057, at *7 (E.D. Cal. Nov. 4, 2021) (emphasis added); Townsend v. Brinderson Corp., No. CV 14-5320 FMO RZX, 2015 WL 3970172, at *3 (C.D. Cal. June 30, 2015) (“[N]either Dart Cherokee nor Ibarra mandate that a plaintiff must always submit evidence challenging the amount in controversy.”). Accordingly, a plaintiff can secure remand by showing, through argument alone, that the defendant has relied on unsupported, unreasonable assumptions. This is true because “the burden of demonstrating the reasonableness of the assumptions on which the calculation of the amount in controversy [is] based remain[s] at all times with [the defendant].” Harris, 980 F.3d at 701.

Here, as in Harris, Plaintiff has “ma[de] a reasoned argument as to why ․ assumptions on which [Defendant's jurisdictional allegations] are based are not supported by evidence”; i.e., are unreasonable. See id. at 700. Specifically, Plaintiff points out that Defendant has provided no evidence to support its assumption that relevant class members consistently worked shifts of sufficient length to qualify for meal breaks, rest periods, and—in the case of terminated/departed employees—a per-day waiting-time penalty equivalent to eight hours of pay. Mem. at 4, 14–16. This argument closely resembles that considered sufficient by the Ninth Circuit in Harris. 980 F.3d at 700–01. Plaintiff need do no more.

The Court thus proceeds to evaluate whether Defendant has met its burden to prove that the assumptions underlying its amount-in-controversy calculation are reasonable.

II. Meal Break and Rest Period Claims

A. Defendant's Estimate

Plaintiff alleges Defendant “from time to time” failed to provide California Class members with legally required meal and rest periods. Compl. ¶¶ 98, 102. Under California law, “[a]n employer shall not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes.” Cal. Lab. Code § 512. Additionally, an employee who works four hours or a “major fraction thereof” is entitled to a rest period of 10 minutes. See Cal. Code Regs. tit. 8, § 11050(12)(A). Employers must pay their workers “one additional hour of pay at the employee's regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” Cal. Lab. Code § 226.7.

Defendant estimates the amount in controversy associated with Plaintiff's meal-and rest-period claims as follows. First, Defendant provides evidence gleaned from an analysis of their payroll records. Defendant's Human Resources Analyst Christina Alvarado declares that during the relevant period, Defendant employed 540 current and former non-exempt employees.¹ Alvarado Decl. ¶ 6. These employees worked “a total of approximately 36,213 workweeks,” received an average of $19.38 in pay per hour, and worked five days per week on average. Id.

Defendant then supplements the above evidence with two assumptions. First, Defendant assumes that that the average California Class member worked five shifts per week of sufficient length to qualify for meal and rest breaks. See NOR at 12–18. Second, Defendant assumes the average California Class member missed—and did not receive compensation for—two meal periods and two rest periods each week. Id. So, per Defendant, the amount placed in controversy by Plaintiffs’ meal-and rest-period claims totals $2,807,231.76.²

B. Analysis

To meet its burden, Defendant must show that the above assumptions are reasonable. Under binding precedent, Defendant's first assumption does not so qualify.

In Harris, the Ninth Circuit found that a defendant relied on unreasonable assumptions—and therefore failed to meet its burden under CAFA—where it “failed to provide any evidence to support its assumption that all [class members] ․ worked shifts long enough to qualify for meal or rest periods.” 980 F.3d at 701. The Ninth Circuit recognized that this assumption “exaggerate[d]” the amount in controversy, noted the defendant had adequate opportunity to provide evidence regarding shift length and failed to adduce said evidence, and thus held that remand was justified. Id. at 701–702. This was true even though the relevant class was made up of refinery workers who may well have worked shifts of sufficient length. See id. at 708 (Collins, J., dissenting).

So too here. Defendant has offered no evidence regarding the average shift length worked by California class members. See generally Alvarado Decl; Opp'n. Nor can Defendant rely on the Complaint to justify its assumption that class members consistently worked shifts of sufficient length; the Complaint alleges only that California class members “were required from time to time to work as ordered by [Defendant] for more than five (5) hours.” Id. ¶ 11 (emphasis added). Absent evidence in this regard, Defendant has failed to meet its burden with respect to its meal-and rest-period estimates. Harris, 980 F.3d at 701–702; see also Alvarez v. Off. Depot, Inc., No. CV177220PSGAFMX, 2017 WL 5952181, at *4 (C.D. Cal. Nov. 30, 2017) (“[C]ourts have refused to credit calculations that assume violations without considering whether the shifts in question necessarily permitted meal and rest breaks.”).

III. Waiting-Time Penalties

A. Defendant's Estimate

Under California law, “[i]f an employer willfully fails to pay ․ any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.” Cal. Lab. Code § 203. Plaintiff seeks waiting-time penalties stemming from multiple alleged violations of California's Labor Code, including Defendant's alleged willful failure to pay overtime and sick pay. See, e.g., Compl. ¶¶ 81, 96, 119–120, 124.

An employer “need only have caused and failed to remedy a single violation per employee for waiting time penalties to apply.” Noriesta v. Konica Minolta Bus. Sols. U.S.A., Inc., No. EDCV190839DOCSPX, 2019 WL 7987117, at *6 (C.D. Cal. June 21, 2019). “Under section 203, an employee's rate of pay must be calculated as a daily figure, which can then be multiplied by the number of days of nonpayment for a maximum of 30 days.” Mamika v. Barca, 68 Cal.App.4th 487, 80 Cal. Rptr. 2d 175, 179 (1998). Additionally, “the calculation of waiting time penalties under § 203 must be colored by the nature and duration of the work at issue.” Montoya v. Sights on Serv., Inc., No. 819CV02334JLSSHK, 2020 WL 550691, at *4 (C.D. Cal. Feb. 4, 2020). Courts may use eight-hour workdays when calculating penalties owed to full-time workers but must otherwise make “the appropriate downward adjustment.” Id.

Defendant again turns to the Alvarado Declaration to support its estimated amount in controversy for waiting time penalties. Alvarado declares that, based on her review of payroll records, Defendant employed 264 non-exempt employees who were either terminated or left Defendant's employ during the three-year class period.³ Alvarado Decl. ¶ 7. These employees earned an average of $18.71 per hour. Id.

Defendant supplements this evidence with three assumptions. Specifically, Defendant assumes each departed employee (1) is entitled to waiting time penalties, see NOR ¶ 57; (2) is entitled to thirty days of penalties, id. ¶ 55; and (3) worked eight hours per day on average, id. ¶ 57. Based on these assumptions and the above evidence, Defendant estimates that the amount placed in controversy by Plaintiff's waiting-time penalties claim is $1,185,465.60.⁴

B. Analysis

Plaintiff challenges each of the above assumptions. See Mem. at 15–17. As the Court agrees with Plaintiff that Defendant's third assumption—regarding the length of the average workday—is unsupported by evidence and therefore unreasonable, the Court need not address Plaintiff's remaining challenges. See Harris v. KM Indus., Inc., No. 19-CV-07801-WHO, 2020 WL 1970704, at *2–3 (N.D. Cal. Apr. 24, 2020) (remanding case based on lack of evidence of shift length despite the court's determination that the defendant's assumed violation rate was reasonable), aff'd, 980 F.3d 694 (9th Cir. 2020); Dunn, 2021 WL 5122057, at *18 (“In sum, the failure to establish sufficient support for any one of the [defendant's assumptions] would be fatal to [the defendant's] waiting time penalties claim calculations.”).

Defendant's third assumption suffers from the same defects as Defendant's insufficient meal-and rest-period assumption; it is (1) “factually unsupported” and (2) “exaggerate[s] the amount in controversy.” See Harris, 980 F.3d at 702. Regarding factual support, Defendant has neither offered evidence nor pointed to allegations in the Complaint suggesting that its departed employees worked full-time. See NOR ¶¶ 52–57; Alvarado Decl. ¶ 7; Opp'n ¶ 12–13. And with respect to the amount in controversy, if many of the departed employees worked less than eight-hours per day, the total penalties to which those employees are entitled would be substantially reduced. See Montoya, 2020 WL 550691, at *4.

Indeed, multiple district courts have refused to credit waiting-time-penalty estimates offered by Defendants who fail to provide shift-length evidence. See Melead v. TVI, Inc., No. SACV2001224CJCADSX, 2020 WL 5407456, at *3 (C.D. Cal. Sept. 9, 2020); Dunn, 2021 WL 5122057, at *17–18; Vasserman v. Henry Mayo Newhall Mem'l Hosp., 65 F. Supp. 3d 932, 978–79 (C.D. Cal. 2014). And courts that have upheld waiting-time penalty estimates have emphasized the shift-length evidence provided by defendants. See Ford v. CEC Ent., Inc., No. CV 14-01420 RS, 2014 WL 3377990, at *2–4 (N.D. Cal. July 10, 2014) (noting the defendant's initial penalty estimate was unreasonable absent shift-length data, but finding that defendant provided said data in its opposition); Carranza v. Nordstrom, Inc., No. EDCV1401699MMMDTBX, 2014 WL 10537816, at *13 (C.D. Cal. Dec. 12, 2014) (same); Salonga v. Aegis Senior Cmtys., LLC, No. 22-CV-00525-LB, 2022 WL 1439914, at *6 (N.D. Cal. May 6, 2022) (underscoring that the defendant had provided “critical information such as ․ the average shift length”).

In light of Defendant's failure to demonstrate that its shift-length assumption is reasonable, Defendant has failed to meet its burden with respect to waiting-time penalties.

IV. Value Assigned to Unsupported Claims

“Where a defendant's assumption is unreasonable on its face without comparison to a better alternative, a district court may be justified in simply rejecting that assumption and concluding that the defendant failed to meet its burden.” Jauregui v. Roadrunner Transp. Servs., Inc., 28 F.4th 989, 996 (9th Cir. 2022). That said, where a court rejects a defendant's assumption because it identifies a better alternative assumption (e.g., because the defendant used the incorrect statutory minimum wage in its calculations), a court should “consider the claim under the better assumption—not just zero-out the claim.” Id. at 995–96.

In Harris, the Ninth Circuit affirmed the district court's decision to assign a $0 valuation to a claim that relied on an unsupported shift-length assumption. See 980 F.3d at 701. Here, as in Harris, neither Defendant nor Plaintiff provide critical shift-length related evidence, and the Court sees no “better alternative” source for such evidence. Accordingly, the Court assigns a $0 valuation to Plaintiff's meal-period claim, rest-period claim, and waiting-time penalties. See id.

V. Amount in Controversy Final Calculations

This Court need not address whether Defendant's remaining estimates are reasonable; even if the Court assumes those valuations are correct, their combined total falls well short of $5 million.⁵ See Carranza, 2014 WL 10537816, at *17 (remanding case without analysis of all claims because “even if the court credited [the defendant's analysis of the remaining claims],” “the amount in controversy would fall far short of the jurisdictional minimum”). As Defendant has not met its burden to establish the amount in controversy by a preponderance of the evidence, remand is appropriate.

CONCLUSION

In light of the foregoing, the Court GRANTS Plaintiff's Motion to Remand (ECF No. 13) and REMANDS this action to the Superior Court of California, County of San Diego. As this concludes the litigation in this matter, the Clerk of the Court SHALL CLOSE the file.

IT IS SO ORDERED.

Attachment

[Editor's Note: The preceding image contains the reference for footnotes ⁶ ,⁷ ,⁸ ].

FOOTNOTES

1.   Plaintiff does not dispute that the statute of limitations—and associated class period—for his meal-break and rest-period claims is four years.

2.   ((36,213 workweeks) x ($19.38 per hour) x (2 meal-period premium payments per week)) + ((36,213 workweeks) x ($19.38 per hour) x (2 rest-break premium payments per week)) = $2,807,231.76.

3.   Plaintiff again does not dispute that the relevant statute of limitations for waiting-time penalties—and the associated class period—is three years.

4.   (264 departed employees) x ($18.71 per hour) x (eight-hour average day's work) x (thirty days) = $1,185,465.60.

5.   Defendant's estimated amount in controversy, with and without unsupported estimates, is set forth in the table on the last page of this Order, infra.

6.   Though the Complaint includes only ten causes of action, see generally Complaint, Defendant values Plaintiffs’ claim for waiting-time penalties separately from Plaintiffs’ related claim for failure to timely pay wages owed during employment. See NOR at 27. Thus, this table includes 11 claims.

7.   See NOR at 27.

8.   Defendant elected to not value some of Plaintiffs’ claims; accordingly, said claims cannot be weighed in Defendant's favor for purposes of the remand analysis. See Harris, 980 F.3d at 697 (affirming remand of a case where the defendant elected to value only “five of the eight causes of action.”).

Janis L. Sammartino, United States District Judge