Olson v. Becton, Dickinson and Company

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8 UNITED STATES DISTRICT COURT

9 SOUTHERN DISTRICT OF CALIFORNIA

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PHIL OLSON, individually, and on behalf Case No.: 19cv865-MMA (BGS)

11 of other members of the general public

similarly situated, ORDER DENYING PLAINTIFF’S

12 MOTION TO REMAND

13 Plaintiff, [Doc. No. 8]

v.

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BECTON, DICKINSON AND

15 COMPANY, a New Jersey corporation,

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Defendant.

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19 Plaintiff Phil Olson (“Plaintiff”) filed this putative class action against Defendant

20 Becton, Dickinson, and Company (“Defendant”) in the Superior Court of California,

21 County of San Diego. See Doc. No. 1, Ex. A (hereinafter “Compl.”). On May 8, 2019,

22 Defendant removed the action to this Court pursuant to the Class Action Fairness Act

23 (“CAFA”), 28 U.S.C. § 1332(d). See Doc. No. 1. On June 7, 2019, Plaintiff filed a

24 motion to remand this action back to state court. See Doc. No. 8. Defendant filed an

25 opposition, to which Plaintiff replied. See Doc. Nos. 9, 10. The Court found the matter

26 suitable for determination on the papers and without oral argument pursuant to Civil

27 Local Rule 7.1.d.1. See Doc. No. 11. For the reasons set forth below, the Court

28 DENIES Plaintiff’s motion to remand.

1 BACKGROUND

2 Plaintiff, a California resident, previously worked for Defendant as a non-exempt

3 employee in California from December 2016 to September 2017. See Compl. ¶¶ 16-17.

4 Defendant is a New Jersey corporation, with its principal place of business in New

5 Jersey. See Doc. No. 1, ¶ 12.

6 On April 5, 2019, Plaintiff filed this putative class action in San Diego Superior

7 Court on behalf of himself and all other similarly situated California employees, alleging

8 the following eight claims for relief: (1) failure to pay overtime wages, in violation of

9 Cal. Lab. Code §§ 510, 1198; (2) failure to provide meal periods, in violation of Cal. Lab.

10 Code §§ 226.7, 512(a); (3) failure to provide rest periods, in violation of Cal. Lab. Code §

11 226.7; (4) failure to pay minimum wages, in violation of Cal. Lab. Code §§ 1194, 1197;

12 (5) failure to timely pay wages, in violation of Cal. Lab. Code §§ 201, 202; (6) failure to

13 provide complete and accurate wage statements, in violation of Cal. Lab. Code § 226(a);

14 (7) failure to reimburse necessary business-related expenses and costs, in violation of Cal.

15 Lab. Code §§ 2800, 2802; and (8) unfair and unlawful business practices, in violation of

16 Cal. Bus. & Prof. Code § 17200 et seq. See Compl. Plaintiff defines the proposed class

17 as “[a]ll current and former California-based . . . hourly-paid or non-exempt individuals

18 employed . . . by Defendants within the State of California at any time during the period

19 from four years preceding the filing of this Complaint to final judgment.” Id. ¶ 12.

20 LEGAL STANDARD

21 “As a general matter, defendants may remove to the appropriate federal district

22 court ‘any civil action brought in a State court of which the district courts of the United

23 States have original jurisdiction.’ 28 U.S.C. § 1441(a). The propriety of removal thus

24 depends on whether the case originally could have been filed in federal court.” City of

25 Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 163 (1997). The “propriety of removal”

26 in this case arises under “CAFA[, which] gives federal courts jurisdiction over certain

27 class actions, defined in § 1332(d)(1), if the class has more than 100 members, the parties

28 are minimally diverse, and the amount in controversy exceeds $5 million.” Dart

1 Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 84-85 (2014).

2 A notice of removal must contain a “short and plain statement of the grounds for

3 removal.” 28 U.S.C. § 1446(a). There is no presumption against removal jurisdiction in

4 CAFA cases. See Dart, 574 U.S. at 89 (noting “CAFA’s provisions should be read

5 broadly, with a strong preference that interstate class actions should be heard in a federal

6 court if properly removed by any defendant”) (internal quotations omitted). The burden

7 of establishing removal jurisdiction under CAFA lies with the proponent of federal

8 jurisdiction. See Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1199 (9th Cir. 2015).

9 “[W]hen a defendant seeks federal-court adjudication, the defendant’s amount-in-

10 controversy allegation should be accepted when not contested by the plaintiff or

11 questioned by the court.” Dart, 574 U.S. at 87. “Evidence establishing the amount is

12 required” where, as here, the plaintiff challenges the defendant’s amount in controversy

13 assertion. Id. at 89. “In such a case, both sides submit proof and the court decides, by a

14 preponderance of the evidence, whether the amount-in-controversy requirement has been

15 satisfied.” Id. at 88 (citing 28 U.S.C. § 1446(c)(2)(B)). “Under the preponderance of the

16 evidence standard, a defendant must establish ‘that the potential damage could exceed the

17 jurisdictional amount.’” Bryant v. NCR Corp., 284 F. Supp. 3d 1147, 1149 (S.D. Cal.

18 2018) (quoting Rea v. Michaels Stores Inc., 742 F.3d 1234, 1239 (9th Cir. 2014)). “[I]n

19 assessing the amount in controversy, a removing defendant is permitted to rely on ‘a

20 chain of reasoning that includes assumptions.’” Arias v. Residence Inn by Marriott, No.

21 19-55803, 2019 WL 4148784, at *4 (9th Cir. Sept. 3, 2019) (publication forthcoming)

22 (quoting Ibarra, 775 F.3d at 1199). “Such ‘assumptions cannot be pulled from thin air

23 but need some reasonable ground underlying them.’ An assumption may be reasonable if

24 it is founded on the allegations of the complaint.” Id.

25 DISCUSSION

26 There is no dispute that the proposed class includes more than 100 employees or

27 that the parties are minimally diverse. Thus, the sole issue before the Court is whether

28 Defendant has shown, by a preponderance of the evidence, that the amount in

1 controversy exceeds $5 million.

2 1. Requests for Judicial Notice

3 As an initial matter, Defendant requests that the Court take judicial notice of the

4 complaint and the plaintiff’s reply brief in support of a motion to remand filed in a

5 similar action, Baretich v. Everett Fin., Inc., No. 18cv1327-MMA (BGS) (S.D. Cal.). See

6 Doc. No. 9-6. Because the Court need not rely on these documents in reaching its

7 conclusion below, the Court DENIES AS MOOT Defendant’s request for judicial

8 notice.

9 Additionally, Plaintiff requests that the Court take judicial notice of the

10 Undersigned’s decision on the motion to remand in Baretich. See Doc. No. 10-1.

11 Plaintiff’s request is misguided because the Court need not take judicial notice of its

12 previous decisions and “a request for judicial notice is not a proper vehicle for legal

13 argument.” Garcia v. California Supreme Court, No. CV 12-4504-DWM, 2014 WL

14 309000, at *1 (N.D. Cal. Jan. 21, 2014); see also McVey v. McVey, 26 F. Supp. 3d 980,

15 984 (C.D. Cal. 2014); Ghalehtak v. FNBN I, LLC, No. 15-CV-05821-LB, 2016 WL

16 2606664, at *3 (N.D. Cal. May 6, 2016). Accordingly, the Court DENIES Plaintiff’s

17 request for judicial notice.

18 2. Amount in Controversy Calculations

19 Plaintiff’s Complaint is silent with respect to damages sought, aside from

20 indicating that “the ‘amount in controversy’ for the named Plaintiff, including claims for

21 compensatory damages, restitution, penalties, wages, premium pay, and pro rata share of

22 attorney’s fees, is less than seventy-five thousand dollars ($75,000).” Compl. ¶ 1.

23 Plaintiff argues that the Court should grant his motion to remand because “Defendant’s

24 amount in controversy calculations . . . are based solely on unsupported assumptions.”

25 Doc. No. 8 at 8.

26 To support the amount in controversy calculations in its Notice of Removal,

27 Defendant filed the declaration of Alex Peraza, who is employed by Defendant in the

28 position of Human Resources Business Partner. See Doc. No. 1-8 (hereinafter “Peraza

1 Decl.”) ¶ 1. In his role as HR Business Partner, Peraza is familiar with Defendant’s

2 corporate and business records. See id. ¶ 2. In preparing his declaration, Peraza

3 reviewed personnel and employment data for putative class members. See id. Peraza

4 notes that during the class period, Defendant employed in the aggregate at least 572 non-

5 exempt employees in California who worked approximately 39,740 pay periods and had

6 an average hourly rate of approximately $27.90. See id. ¶ 6. During the class period,

7 non-exempt employees were issued wage statements on a bi-weekly basis. See id.

8 In opposition to Plaintiff’s remand motion, Defendant filed a supplemental

9 declaration of Alex Peraza. See Doc. No. 9-1 (hereinafter “Supp. Peraza Decl.”). In his

10 supplemental declaration, Peraza provides a spreadsheet outlining Defendant’s non-

11 exempt full-time employees in California during the class period. See id., Ex. 1. Exhibit

12 1 sets forth each employee’s identification number, hire date, termination date (if

13 applicable), hourly rate, the number of wage statements during the class period, the

14 number of meal and rest period violations per wage statement based on Plaintiff’s

15 allegations at an assumed 25% violation rate, and the total alleged amount of meal and

16 rest period premium pay in controversy. See id. Declarant Peraza further provides, as

17 Exhibits 2 and 3 respectively, spreadsheets outlining: (a) non-exempt employees from

18 April 5, 2018 through May 8, 2019; and (b) discharged non-exempt employees from

19 April 5, 2016 to May 8, 2019. See id., Exs. 2, 3. Based on Peraza’s declarations and the

20 attached exhibits, Defendant calculates the amount in controversy to exceed $9,000,000,

21 exclusive of Plaintiff’s overtime claims, unpaid wages, or unreimbursed business

22 expenses claims. See Doc. No. 9 at 4.

23 In reply, Plaintiff argues that “Defendant continues to make speculative

24 assumptions concerning the frequency of alleged violations across the board, and

25 erroneously assumes varying violation rates without evidentiary support.” Doc. No. 10 at

26 10. As such, Plaintiff asserts that Defendant fails to prove, by a preponderance of the

27 evidence, that the amount in controversy is greater than $5,000,000. See id.

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1 a. Meal and Rest Break Claims

2 The Court first considers the amount in controversy calculations concerning

3 Plaintiff’s meal and rest break claims. Plaintiff alleges that employees were required to

4 work without meal periods or rest breaks “[a]s a pattern and practice during the relevant

5 time period set forth herein.” Compl. ¶¶ 57, 66. Plaintiff further claims that Defendant

6 failed to compensate employees for work performed during meal and rest periods. Id. ¶¶

7 58-59, 67-68.

8 Defendant focuses on the phrase “pattern and practice” to characterize the

9 frequency of the alleged violations. See Doc. No. 9 at 5. Defendant, taking into account

10 the information from Peraza’s declarations, calculates the amount in controversy for

11 Plaintiff’s meal and rest break claims as follows: “[T]he total amount of meal and rest

12 period premium pay in controversy was approximately $5,543,730 (39,740 pay periods x

13 5 total violations per pay period x $27.90 per hour = $5,543,730).” Id. Defendant argues

14 that assuming a 25% violation rate to determine five violations per pay period is

15 conservative because it is “based on admissible evidence and proper assumptions derived

16 from the alleged ‘pattern and practice’ of meal and rest period violations alleged by

17 Plaintiff.” Id. Thus, Defendant calculates Plaintiff’s second and third causes of action as

18 placing $5,543,730 in controversy. See id. Defendant also notes, “Case law finds that

19 similar allegations can even support higher violation rates as a matter of law.” Doc. No.

20 1 at 10 (citing Elizarraz v. United Rentals, Inc., 2019 WL 1553664, at *3-4 (C.D. Cal.

21 Apr. 9, 2019) (finding violation rates of 50% for meal period claims and 25% for rest

22 period claims reasonable in light of “pattern and practice” allegations).

23 Plaintiff does not dispute the veracity of Defendant’s evidence, but contends that

24 Defendant’s assumption of a 25% violation rate is unreasonable because Peraza’s

25 declarations do not indicate how frequently putative class members missed meal and rest

26 breaks, whether they were offered late meal and rest breaks, or were offered meal and

27 rest breaks of a shorter duration than what is required by law. See Doc. No. 8 at 11.

28 Here, the Court first looks to the allegations in the Complaint to determine the

1 appropriate violation rate. See Ibarra, 775 F.3d at 1197 (“In determining the amount in

2 controversy, courts first look to the complaint.”); LaCross v. Knight Transp. Inc., 775

3 F.3d 1200, 1202 (9th Cir. 2015) (“[O]ur first source of reference in determining the

4 amount in controversy [is] plaintiff’s complaint”). Defendant “bears the burden to show

5 that its estimated amount in controversy relied on reasonable assumptions.” Ibarra, 775

6 F.3d at 1199. Plaintiff alleges that the meal and rest break violations occurred as part of a

7 “pattern and practice.” Compl. ¶¶ 57-59, 66-68. Defendant argues that 25% is an

8 “extremely conservative estimate” for a violation rate based on “pattern and practice”

9 allegations. See Doc. No. 1 at 9. The Ninth Circuit has made clear that assumptions for

10 an amount in controversy calculation “cannot be pulled from thin air[.]” Ibarra, 775 F.3d

11 at 1199. However, “in assessing the amount in controversy, a removing defendant is

12 permitted to rely on ‘a chain of reasoning that includes assumptions’ . . . [which] may be

13 reasonable if [they are] founded on the allegations of the complaint.” Arias, 2019 WL

14 4148784, at *4 (quoting Ibarra, 775 F.3d at 1199).

15 In Arias, the plaintiff alleged that the defendant routinely failed to provide

16 compensation for missed rest breaks, among other claims. See id. at *5. For the

17 plaintiff’s rest break claim, the defendant assumed one missed rest break per week (a

18 20% violation rate) and calculated the amount in controversy to be $2,155,493, in its

19 most conservative estimate. See id. at *2. The defendant also suggested that assuming

20 three missed rest periods per week (a 60% violation rate) would be conservative and

21 would place $6,466,480 in controversy. See id. The Ninth Circuit indicated that the

22 defendant’s “assumptions are plausible and may prove to be reasonable in light of the

23 allegations in the complaint.” Id. at *5. The court made clear that a defendant need not

24 “prove it actually violated the law at the assumed rate.” Id. “‘The amount in controversy

25 is simply an estimate of the total amount in dispute, not a prospective assessment of

26 defendant’s liability.’” Id. (emphasis added) (quoting Lewis v. Verizon Commc’ns, Inc.,

27 627 F.3d 395, 401 (9th Cir. 2010)). Rather, “[w]here a removing defendant has shown

28 potential recovery ‘could exceed $5 million and the [p]laintiff has neither acknowledged

1 nor sought to establish that the class recovery is potentially less,’ the defendant ‘has

2 borne its burden.’” Id.

3 Plaintiff cites to several cases wherein district courts, including this Court, rejected

4 the defendant’s proposed violation rates as speculative and arbitrary. All of these cases,

5 however, predate the Ninth Circuit’s recent opinion in Arias, which this Court is bound

6 by. In this case, Defendant determined that a 25% violation rate is appropriate by

7 carefully analyzing Plaintiff’s “pattern and practice” allegations in the Complaint and

8 reviewing relevant caselaw. See Bryant, 284 F. Supp. 3d at 1151 (finding a 60%

9 violation rate for the meal period claim and a 30% violation rate for the rest period claim

10 proper where the complaint alleged that the defendant had a “policy and practice” of meal

11 and rest period violations); Elizarraz, 2019 WL 1553664, at *3-4 (finding a 50%

12 violation rate for the meal periods and a 25% violation rate for the rest periods reasonable

13 where the complaint alleged a “pattern and practice” of meal and rest period violations).

14 Additionally, “while not required, Plaintiff has not offered any better estimate of the

15 alleged violation rate, despite the fact that []he most likely knows at least roughly how

16 often []he was not afforded the required meal [and rest] breaks.” Lopez v. Adesa, Inc.,

17 No. EDCV 19-1183 PSG (RAOx), 2019 WL 4235201, at *3 (C.D. Cal. Sept. 6, 2019).

18 Thus, upon review of Plaintiff’s allegations, Defendant’s evidence, and the

19 applicable caselaw, the Court finds that application of a 25% violation rate is reasonable.

20 See Arias, 2019 WL 4148784, at *5 (“[A]ssumptions made part of the defendant’s chain

21 of reasoning need not be proven; they instead must only have ‘some reasonable ground

22 underlying them.’”) (quoting Ibarra, 775 F.3d at 1199). Accordingly, the Court finds

23 that Defendant has satisfied its burden, by a preponderance of the evidence, that the

24 amount in controversy with respect to Plaintiff’s meal and rest break claims is

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1 $5,543,730.1 As a result, the Court has subject matter jurisdiction and remand is

2 improper.

3 CONCLUSION

4 Based on the foregoing, the Court DENIES Plaintiff’s motion to remand.

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6 IT IS SO ORDERED.

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8 Dated: September 25, 2019

9 _____________________________

10 HON. MICHAEL M. ANELLO

United States District Judge

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27 1 Because the amount in controversy for Plaintiff’s meal and rest break claims exceeds the

jurisdictional threshold, the Court need not calculate the amount in controversy for Plaintiff’s wage

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