Opinion

Jose Landaverde v. Kinkisharyo International, L.L.C.

Court: District Court, C.D. California
Filed: Oct 6, 2020
Cited by: 0 cases
Authority: More cited than 31.2%

discussing a provision in a settlement agreement releasing parties from liability

How later courts described this case

discussing a provision in a settlement agreement releasing parties from liability
granting judicial notice as to CBA for preemption issues on judgment on the pleadings
stating that the attorneys’ fees shifting provisions in California Labor Code §§ 218.5 and 1194 do not apply to legal work relating to meal and rest period claims
defendant’s assumption of one missed rest period per week was “plausible” in light of the complaint’s allegation that the defendants “routinely” failed to pay for missed rest and meal breaks

Written by the judges who cited it.

The opinion

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

Present: The Honorable JOHN A. KRONSTADT, UNITED STATES DISTRICT JUDGE

Patricia Blunt Not Reported

Deputy Clerk Court Reporter / Recorder

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Not Present Not Present

Proceedings: (IN CHAMBERS) ORDER DEFENDANT’S MOTION TO DISMISS

PLAINTIFFS’ COMPLAINT (DKT. 10);

PLAINTIFFS’ MOTION TO REMAND PURSUANT TO 28 U.S.C. § 1447

(DKT. 12);

PLAINTIFFS’ MOTION FOR LEAVE TO FILE LATE OPPOSITION TO

DEFENDANT’S MOTION TO DISMISS (DKT. 21)

lL. Introduction

Anthony Loaiza and Jose Landaverde brought this putative class action against Kinkisharyo

International, LLC (“Kinkisharyo,” “Defendant”). The Complaint advances the following causes of action:

(i) violation of Cal. Lab. Code §§ 510 and 1198 for unpaid overtime, (ii) violation of Cal. Lab. Code

§§ 226.7 and 512(a) for unpaid meal period premiums, (iii) violation of Cal. Lab. Code § 226.7 for

unpaid rest period premiums, (iv) violation of Cal. Lab. Code §§ 1194, 1197, and 1197.1 for unpaid

minimum wages, (v) violation of Cal. Lab. Code §§ 201 and 202 for final wages not timely paid,

(vi) violation of Cal. Lab. Code § 204 for wages not timely paid during employment, (vii) violation of Cal.

Lab. Code § 226(a) for non-compliant wage statements, (viii) violation of Cal. Lab. Code § 1174(d) for

failure to keep requisite payroll records, (ix) violation of Cal. Lab. Code §§ 2800 and 2802 for

unreimbursed business expenses, and (x) violation of Cal. Bus. & Prof. Code § 17200. Dkt. 1-1 at 2.

On September 4, 2019, Defendant removed the action. Dkt. 1. On September 12, 2019, Defendant filed

a Motion to Dismiss Plaintiffs’ Complaint (the “Motion to Dismiss”). Dkt. 10. On October 10, 2019,

Defendant filed a Notice of Non-Opposition by Plaintiffs to Defendant’s Motion to Dismiss, which was

based on Plaintiffs’ failure to file a timely opposition. Dkt. 14. On October 11, 2019, Plaintiffs filed a

Response to Defendant's Notice of Non-Opposition by Plaintiffs to Defendant’s Motion to Dismiss,

which stated that Plaintiffs’ failure to file a timely opposition to the Motion to Dismiss was due to a

calendaring error by counsel. Dkt. 15. On October 15, 2019, Defendant filed a reply to Plaintiffs’

response. Dkt. 16.

On October 25, 2019, Plaintiffs filed a Motion for Leave to File Late Opposition to Defendant's Motion to

Dane 4 wf OG

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

Dismiss (the “Motion for Leave”). Dkt. 21. The Motion for Leave attached Plaintiffs’ Opposition to

Defendant's Motion to Dismiss Plaintiffs’ Complaint (the “Motion to Dismiss Opposition”). Dkt. 21-2.

Defendant filed an opposition to the Motion for Leave (the “Motion for Leave Opposition”). Dkt. 27.

Defendant also filed a reply in support of the Motion to Dismiss (the “Motion to Dismiss Reply”). Dkt. 30.

On October 4, 2019, Plaintiffs filed a Motion to Remand Pursuant to 28 U.S.C. § 1447 (the “Motion to

Remand”). Dkt. 12. Defendant filed an opposition to the Motion to Remand (the “Motion to Remand

Opposition”). Dkt. 22. Plaintiffs filed a reply in support of the Motion to Remand (the “Motion to Remand

Reply”). Dkt. 26.

A hearing on the three motions was conducted on February 10, 2020. Dkt. 39. For the reasons stated in

this Order, the Motion for Leave is GRANTED, the Motion to Remand is DENIED and the Motion to

Dismiss is GRANTED-IN-PART and DENIED-IN-PART.

Il. Motion to Remand

A. Factual Background

1. Allegations in the Complaint

Plaintiffs have brought this putative class action on behalf of the following proposed class: “All current

and former hourly-paid or non-exempt employees who worked for any of the Defendants within the

State of California at any time during the period from four years preceding the filing of this Complaint to

final judgment and who reside in California.” Dkt. 1-1 J 14.

The Compiaint alleges that Loaiza was employed from “approximately January 2017 to approximately

March 2018.” Dkt. 1-1 19. The Complaint alleges that Landaverde was employed from ‘approximately

January 2017 to approximately March 2018.” /d. {J 20.

The Complaint alleges that Defendant “engaged in a pattern and practice of wage abuse against their

hourly-paid or non-exempt employees within the State of California.” Dkt. 1-1 J 27. “This pattern and

practice involved, infer alfa, failing to pay them for all regular and/or overtime wages earned and for

missed meal periods and rest breaks in violation of California law.” /d.

The Complaint alleges that the “amount in controversy’ for the named Plaintiffs, including but not

limited to claims of compensatory damages, restitution, penalties, wages, premium pay, and pro rata

share of attorney[’s] fees, is less than seventy-five thousand dollars ($75,000).” Dkt. 1-1 1.

2. Rath Declaration

In support of the Motion to Remand Opposition, Defendant filed the Declaration of Melissa Rath (the

“Rath Declaration”). Dkt. 22-1. Rath is employed by Defendant as “the Administration, Contracts,

Purchasing Senior Manager.” /d. J 1. Rath provides information about the “corporate structure” and

citizenship of Defendant. See id. J 2-3. Rath also declares that she has “access to Defendant’s records

relating to its current and former employees” and has “personally reviewed Defendant’s business

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

records, including records pertaining to Defendant’s current and former employees who are in the

putative class as defined by the Complaint.” /d. J 4.

Rath declares that, based on her review of relevant records, Defendant “employed around 790 hourly,

non-exempt employees in California during the Class Period,” defined as any time between July 10,

2015 and the present. /d. 5. Based on a review of “data related to the dates putative class members

started and ended their employment,” Rath “determined that approximately 484 employees separated

from their employment with Defendant between July 10, 2016 and the present.” /d. J] 6.

Based on a review of “payroll records Defendant keeps in the regular course of business,” Rath

“determined that the putative class members worked an average of around 9.07 hours per business

day during the Class Period” and “that they worked an average of approximately 402 days each during

the Class Period.” /d. 7. Although the “hourly rate of pay for putative class members varied year to

year,” Rath determined, based on a review of “payroll information kept by Defendant in the regular

course of business and available to” Rath, that “the putative class members’ average hourly rate of pay

throughout the Class Period was $21.08.” /d. J 8.

Rath also declares that she is “familiar with Defendant's labor relations,” and that “the majority of the

putative class members are union workers -- around 653 of 790.” /d. 9. Rath declares that these

union workers are “represented by the International Brothers of Electrical Workers, Local 11 (the

‘Union’), and their employments are governed by a collective bargaining agreement between Defendant

and the Union. The CBA contains the union workers’ wage rates, as well as provisions relating to meal

and rest periods, employer control, and binding and exclusive grievance-arbitration provisions.” /d.

{| 10. Attached to the Rath Declaration is what is designated as a “true and correct copy of the

collective bargaining agreement.” /d.; see Dkt. 22-1 at 6 (the “CBA”). Based on “personnel records for

Plaintiffs Anthony Loaiza and Jose Landaverde,” Rath “determined that they worked for Defendant as a

Subassembly Technician and Wire Assembly Technician, respectfully” and that “[bJoth of their

employments with Defendant were governed by the CBA.” Rath Decl., Dkt. 22-1 11.

B. Analysis

1. Federal Question Jurisdiction under LMRA

a) Legal Standards

Section 301 of the Labor Management Relations Act (“LMRA”) “vests federal courts with jurisdiction to

hear suits ‘for violation of contracts between an employer and a labor organization representing

employees in an industry affecting commerce . . . without respect to the amount in controversy or

without regard to the citizenship of the parties.” McCray v. Marriott Hotel Servs., Inc., 902 F.3d 1005,

1009 (9th Cir. 2018) (quoting 29 U.S.C. § 184(a)). “By enacting the LMRA, Congress completely

preempted state law for certain labor-related claims.” /d. “In these areas, ‘the preemptive force of § 301

is so powerful as to displace entirely any state cause of action for violation of contracts between an

employer and a labor organization. Any such suit is purely a creature of federal law, notwithstanding the

fact that state law would provide a cause of action in the absence of § 301.” /d. (quoting Franchise Tax

Bd. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 23 (1983)). “In other words, a civil

complaint raising claims preempted by § 301 raises a federal question that can be removed to a federal

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

court.” Curtis v. Irwin Indus., Inc., 913 F.3d 1146, 1152 (9th Cir. 2019).

“Critically, ‘not every dispute concerning employment, or tangentially involving a provision of a

collective-bargaining agreement, is pre-empted by § 301.” Kobold v. Good Samaritan Reg’! Med. □□□□□□

832 F.3d 1024, 1032 (9th Cir. 2016) (quoting Allis-Chalmers Corp v. Lueck, 471 U.S. 202, 211 (1985)).

Supreme Court has stressed that ‘§ 301 cannot be read broadly to pre-empt nonnegotiable rights

conferred on individual employees as a matter of state law.” Curtis, 913 F.3d at 1152. “For this reason,

‘[s]etting minimum wages, regulating work hours and pay periods, requiring paid and unpaid leave,

protecting worker safety, prohibiting discrimination in employment, and establishing other worker rights

remains well within the traditional police power of the states,’ and claims alleging violations of such

protections will not necessarily be preempted, even when the plaintiff is covered by a CBA. /d. at 1152

(quoting Alaska Airlines v. Schurke, 898 F.3d 904, 919-20 (9th Cir. 2018) (en banc)).

The Ninth Circuit has adopted a two-step inquiry to determine whether a claim is preempted under

§ 301. Curtis, 913 F.3d at 1152. First, if the “asserted cause of action involves a ‘right [that] exists solely

as a result of the CBA,” then “the claim is preempted, and [the] analysis ends there.” /d. (alteration in

original) (quoting Kobold, 832 F.3d at 1032; Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th

Cir. 2007)). “The essential inquiry is this: Does the claim seek ‘purely to vindicate a right or duty created

by the CBA itself[?]’” /d. (alteration in original) (quoting Schurke, 898 F.3d at 921).

Second, if a “plaintiffs state law right is substantially dependent on analysis” of the CBA, then the claim

is preempted. Curtis, 913 F.3d at 1153 (quoting Kobald, 832 F.3d at 1033). This second step “turns on

whether the claim cannot be resolved by simply ‘look[ing] to’ versus ‘interpreting’ the CBA.” /d. (quoting

Kobold, 832 F.3d at 1033). In this context, “interpretation” is “construed narrowly” and a state claim may

“avoid preemption if it does not raise questions about the scope, meaning, or application of the CBA.”

Id. “[C]laims are only preempted to the extent there is an active dispute over ‘the meaning of contract

terms.” /d. (quoting Schurke, 898 F.3d at 921).

b) Application

(1) First Cause of Action: Cal. Lab. Code §§ 510, 1198

The First Cause of Action alleges violations of Cal. Lab. Code §§ 510 and 1198 based on alleged

failure to pay overtime wages. Dkt. 1-1 J] 49-57. Section 510(a) provides, inter alia, that hours in

excess of a 40-hour workweek or an 8-hour workday must be compensated at one-and-one-half rate of

pay. However, Section 510(a) does not apply to an employee working pursuant to “[aJn alternative

workweek schedule adopted pursuant to a collective bargaining agreement pursuant to Section 514.”

Section 514 provides that Section 510 does not apply to “an employee covered by a valid collective

bargaining agreement’ that contains certain provisions. As Curtis explains, “the default definition of

overtime and overtime rates in section 510 does not apply to an employee who is subject to a qualifying

CBA.” 913 F.3d at 1153-54. Therefore, if the CBA that applies to an employee is a “qualifying CBA”

carved out from Section 510 by Section 514, then the right to overtime pay “exists solely as a result of

Such an agreement must “expressly provide[] for the wages, hours of work, and working conditions of the

employees” and “provide[] 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.

Dawns A wt OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

the CBA” and “therefore is preempted under § 301.” Curtis, 913 F.3d at 1154 (quoting Kobold, 832 F.3d

at 1032).

Although Sections 510 and 514 collectively may create some uncertainty, Curtis resolved it. Section

510(a)(2) carves out only employees working pursuant to an “alternative workweek schedule adopted

pursuant to a collective bargaining agreement pursuant to Section 514,” Section 514 states that Section

510 does not apply to any employee covered by a qualified CBA and does not mention alternative

workweek schedules. No evidence has been presented as to whether Loaiza and/or Landaverde had

alternative workweek schedules.? However, Curtis addresses the matter at issue: “[I]f a CBA satisfies

the requirements of section 514, the requirements of section 510(a) ‘do not apply.” 913 F.3d at 1154.

Subsequent district court decisions relying Curtis have applied this holding without requiring evidence

of an alternative workweek schedule worked by an employee, so long as a qualifying CBA governs the

work of relevant employees. E.g., Linebarger v. Graphic Packaging Intl, LLC, No. SA CV 20-00309

JVS (JDEx), 2020 WL 1934958, at *5 (C.D. Cal. Apr. 22, 2020); Franco v. E-3 Sys., No. 19-CV-01453-

HSG, 2019 WL 6358947, at *3 (N.D. Cal. Nov. 8, 2019); Diaz v. Sun-Maid Growers of California, No.

1:19-CV-00149 LUO (SKO), 2019 WL 1785660, at *7 (E.D. Cal. Apr. 24, 2019).

The CBA is a “qualifying CBA” under Section 514 and Curtis. The Plaintiffs do not disagree. See Dkt.

21-2 at 18-22.The CBA contains express provisions regarding wages, hours of work and working

conditions. See Dkt. 22-1 at 12 (working conditions); Dkt. 22-1 at 14-17 (work week, working hours and

overtime); Dkt. 22-1 at 28 (wages). The CBA includes Appendix A, which provides a table of wages by

skill classification. /d. at 32-33. These wages exceed the threshold for the applicable California

minimum wage for each corresponding year. Compare Dkt. 22-1 at 32-33 with Industrial Welfare

Commission, History of California Minimum Wage,

https:/Awww.dir.ca.gov/iwc/minimumwagehistory.htm; Industrial Welfare Commission, Official Notice

California Minimum Wage, https://www.dir.ca.gov/iwc/MW-2019.pdf.*

Plaintiffs present two alternative arguments, neither of which is persuasive. First, Plaintiffs argue that,

because the Complaint alleges only state law claims and does not refer to the CBA, there is no LMRA

preemption. See Dkt. 21-2 at 18-20. Claims “style[d] as state law claims” can still be preempted by

LMRA. See Curtis, 913 F.3d at 1151. Artful pleading cannot sidestep Section 301 preemption. See,

Milne Employees Ass'n v. Sun Carriers, 960 F.2d 1401, 1406 (Sth Cir. 1991); Young v. Anthony’s

Fish Grottos, Inc., 830 F.2d 993, 997 (9th Cir. 1987); Watkins v. Woodridge Prods., Inc., No. CV 19-

5821 PSG (MAAx), 2020 WL 949513, at *1 n.2 (C.D. Cal. Feb. 27, 2020); Huitron v. U.S. Foods, Inc.,

No. CV 14-09402 MMM (PLAx), 2015 WL 1524398, at *3 (C.D. Cal. Mar. 31, 2015).

2 The CBA provides that the “normal scheduled workweek is Monday through Friday,” but the employer may

establish, modify or change employee schedules “and the applicable work week.” Dkt. 22-1 at 14. The CBA

provides for both the usual workweek of five, eight-hour days and for an alternative workweek of four, ten-hour

days. See jd. at 15. Although Rath declares that Plaintiffs were employed under the CBA (Dkt. 22-1 {| 11) and the

Complaint makes the general allegation that Plaintiffs worked in excess of eight hours per day “and/or” 40 hours

per week (Dkt. 1-1 {] 26), no evidence has been presented as to whether Loaiza and Landaverde “work[ed]

pursuant to . . . [aJn alternative workweek” (Cal. Lab. Code § 510).

3 For employers of 25 or more employees: (i) $13.00 in 2020; (ii) $12.00 in 2019; (iii) $11.00 in 2018; (iv) $10.50

in 2017; (v) $10.00 in 2016.

Danses EC wf OG

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

Second, Plaintiffs argue that Section 514 is an affirmative defense that does not give rise topreemption

on a motion to dismiss. Dkt. 21-2 at 20. Plaintiffs fail to address Kobold or Curtis. Plaintiffs’ reliance on

earlier cases that are inconsistent with both is unpersuasive. See Dkt. 12 at 25; Dkt. 26 at 8. Placencia

v. Amcor Packaging Distribution, Inc., No. SA CV 14-0379 AG (JPRx), 2014 WL 2445957, at *2 (C.D.

Cal. May 12, 2014), was decided before Curtis and Kobold. It relied on Ninth Circuit caselaw that was

subsequently deemed to have been overruled. See Curtis, 913 F.3d at 1155. Similarly, Macias v. Levy

Premium Foodservices Limited Partnership, No. 2:14-cv-09220 SVW (PLAx), 2015 WL 12747900 (C.D.

Cal. Feb. 12, 2015), relies on the same Ninth Circuit precedent and Placencia to reach a conclusion

that is not consistent with Curtis. Thus, Macias held that Section 514 is only an affirmative defense that

does not provide a basis for preemption, but Curtis holds that Section 514 bars any claim under Section

510 and leads to preemption. See 913. F3d. at 1153-54.

Because there is a sufficient showing that the CBA is a qualifying CBA under Section 514 and Curtis,

and Plaintiffs do not contest whether the CBA is qualifying under Section 514, the overtime provisions

of Section 510 do not apply to Plaintiffs. Therefore, their overtime claims are based on rights that arise

solely from the CBA. See Curtis, 913 F.3d at 1152. Consequently, the first cause of action for unpaid

overtime is preempted under step one of the Ninth Circuit test, and the removal of this action was

permitted. /d.

2. Supplemental Jurisdiction

Where there is original jurisdiction over a claim, “the district courts shall have supplemental jurisdiction

over all other claims that are so related to claims in the action within such original jurisdiction that they

form part of the same case or controversy under Article Ill of the United States Constitution.” 28 U.S.C.

§ 1367(a); see also United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966); Bahrampour v.

Lampert, 356 F.3d 969, 978 (9th Cir. 2004) (“A state law claim is part of the same case or controversy

when it shares a ‘common nucleus of operative fact’ with the federal claims and the state and federal

claims would normally be tried together.” (quoting Trs. of the Constr. Indus. & Laborers Health &

Welfare Trust v. Desert Valley Landscape Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003)). “The

decision to exercise [supplemental] jurisdiction remains discretionary with the district court.” Mendoza v.

Zirkle Fruit Co., 301 F.3d 1163, 1174 (9th Cir. 2002).

A district court may decline to exercise supplemental jurisdiction over a claim that arises out of a

common nucleus of operative facts that provide the basis for a claim for which there is federal subject

matter jurisdiction. Declining to exercise such jurisdiction is appropriate under the following

circumstances:

(1) the claim raises a novel or complex issue of State law,

(2) the claim substantially predominates over the claim or claims over which the district

court has original jurisdiction,

(3) the district court has dismissed all claims over which it has original jurisdiction, or

(4) in exceptional circumstances, there are other compelling reasons for declining

jurisdiction.

28 U.S.C. § 1367(c); see also Patel v. Kent Sch. Dist., 648 F.3d 965, 971 (9th Cir. 2011).

Dans □□ OG

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

All causes of action advanced by the Complaint share a common nucleus of operative facts related to

Plaintiffs’ employment. See Dkt. 1-1. Based on the current posture of the action, the relevant factors do

not support declining supplemental jurisdiction over the non-preempted state-law claims.

3. CAFA Jurisdiction

“CAFA gives federal district courts original jurisdiction over class actions in which the class members

number at least 100, at least one plaintiff is diverse in citizenship from any defendant, and the

aggregate amount in controversy exceeds $5 million, exclusive of interest and costs.” /barra v.

Manheim Investments, Inc., 775 F.3d 1193, 1195 (9th Cir. 2015).

a) Class Size and Minimal Diversity

Plaintiffs do not challenge the minimum class size and minimal diversity requirements. See generally

Dkt. 12. The Rath Declaration supports the assertion that there at least 100 members of the putative

class. See Dkt. 22-1 75. As to citizenship, limited liability companies (“LLCs”) are citizens of “every

state of which its owners/members are citizens.” Johnson v. Columbia Properties Anchorage, LP, 437

F.3d 894, 899 (9th Cir. 2006). Defendant states that it is a limited liability company with a single

member: “Kinki Sharyo Co., Lid.” Dkt. 1 at 6. Rath declares that Kinki Sharyo Co., Ltd. is the “sole

of Defendant, is incorporated in Japan, and has its principal place of business in “Higashi-

Osaka, Japan.” Dkt. 22-1 Jf] 2-3. Because Defendant's sole member is a citizen of Japan, see 28

U.S.C. § 1332(c)(1), Defendant is also a citizen of Japan. Given that each Plaintiff is a citizen of

California, there is minimal diversity as required by 28 U.S.C. § 1332(d)(2).

b) Amount in Controversy

(1) Legal Standards

“In determining the amount in controversy, courts first look to the complaint. Generally, the sum claimed

by the plaintiff controls if the claim is apparently made in good faith.” /barra, 775 F.3d at 1197 (internal

quotations omitted). “Whether damages are unstated in a complaint, or, in the defendant's view are

understated, 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.” /d.

A defendant is only required to file a notice of removal that includes “a plausible allegation that the

amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co. v.

Owens, 574 U.S. 81, 89 (2014). However, if a plaintiff contests these allegations, “both sides submit

proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy

requirement has been satisfied.” /d. The preponderance of the evidence standard requires that “the

defendant must provide evidence establishing that it is more likely than not that the amount in

controversy exceeds that amount.” Sanchez v. Monumental Life ins. Co., 102 F.3d 398, 404 (9th Cir.

1996) (internal quotation marks omitted). The parties may submit evidence, including affidavits or

declarations, or other “summary-judgment-type evidence relevant to the amount in controversy at the

time of removal.” /barra, 775 F.3d at 1197 (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

373, 377 (9th Cir. 1997)). “[A] defendant cannot establish removal jurisdiction by mere speculation and

conjecture, with unreasonable assumptions.” /d.

“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.” /barra, 775 F.3d at 1198. “As with other important areas of our law, evidence may be direct

or circumstantial. In either event, a damages assessment may require a chain of reasoning that

includes assumptions. When that is so, those assumptions cannot be pulled from thin air but need

some reasonable ground underlying them.” /d. at 1199. “Under the preponderance of the evidence

standard, if the evidence submitted by both sides is balanced, in equipoise, the scales tip against

federal-court jurisdiction.” /d.

amount in controversy reflects the maximum recovery the plaintiff could reasonably recover.”

Arias v. Residence Inn by Marriott, 936 F.3d 920, 927 (9th Cir. 2019). Assumptions underlying a

defendant’s “chain of reasoning need not be proven; they instead must only have ‘some reasonable

ground underlying them.” /d. (quoting /barra 775 F.3d at 1199). Assumptions “may be reasonable if

[they are] founded on the allegations of the complaint.” /d. at 925.

Under certain circumstances, attorney's fees may also be included in the amount in controversy. “[I]f

the law entitles the plaintiff to future attorneys’ fees if the action succeeds, then there is no question that

future attorneys’ fees are at stake in the litigation, and the defendant may attempt to prove that future

attorneys’ fees should be included in the amount in controversy.” Fritsch v. Swift Transp. Co. of Ariz.,

899 F.3d 785, 794 (9th Cir. 2018) (internal quotation marks, citation and brackets omitted). However, “a

court's calculation of future attorneys’ fees is limited by the applicable contractual or statutory

requirements that allow fee-shifting in the first place.” /d. at 796. For example,

[a] state may adopt the lodestar method for determining reasonable attorneys’ fees under

certain statutes, see Ketchum v. Moses, 24 Cal. 4th 1122, 1131 (2001), or (as in this case)

not allow recovery of attorneys’ fees for legal work on certain types of claims, see Kirby v.

Immoos Fire Prot., Inc., 53 Cal. 4th 1244, 1255 (2012) (stating that the attorneys’ fees

shifting provisions in California Labor Code §§ 218.5 and 1194 do not apply to legal work

relating to meal and rest period claims). The court’s determination regarding the amount

of attorneys’ fees at stake must take into account these statutory and contractual

restrictions.

Fritsch, 899 F.3d at 796. Moreover, “the defendant must prove the amount of attorneys’ fees at stake

by a preponderance of the evidence” /d.

As a general rule of interpretation in connection with evaluating the propriety of a removal under CAFA,

“Congress and the Supreme Court have instructed us to interpret CAFA’s provisions under section

1332 broadly in favor of removal.” Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1184 (9th Cir.

2015). “Congress intended CAFA to be interpreted expansively.” /barra, 775 F.3d at 1197.

(2) Waiver

Defendant maintains that Plaintiffs’ have “waived their right to challenge the amount in controversy

Danes □□ □□□ OE

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

because their remand motion produces no evidence or argument to explain what is contested and

why.” Dkt. 22 at 7. /barra requires that “both sides submit proof and the court decides, by a

preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.”

775 F.3d at 1197 (quoting Dart, 574 U.S. at 88). /barra clarified that the “Supreme Court did not decide

the procedure for each side to submit proof on remand, and here we need not decide the procedural

issue, either.” /d. at 1199-1200. /barra explained that, “[w]ithout deciding the procedure under which the

parties should submit proof, the Supreme Court stated in Dart that ‘[iJn such a case [when the

defendant’s assertion of the amount in controversy is challenged], both sides submit proof and the court

decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has

been satisfied.” 775 F.3d at 1199 n.4 (quoting Dart, 574 U.S. at 88).

Many district courts have applied the same procedure where a plaintiff challenges the amount-in-

controversy requirement for CAFA jurisdiction: “[T]he burden of adducing evidence rests with defendant

and . plaintiff need not proffer evidence until defendant has proffered sufficient proof to meet its initial

burden.” Blevins v. Republic Refrigeration, Inc., No. 15-04019 MMM (MRWx), 2015 WL 12516693, at

*5 (C.D. Cal. Sept. 25, 2015) (collecting cases).4

Under these standards, Plaintiffs’ failure to provide evidentiary support for the Motion to Remand did

not result in a waiver of their ability to contest whether the amount in controversy is at least $5 million.

However, their failure to submit evidence affects their ability to seek to rebut the evidence proffered by

Defendant as to the amount in controversy.

(3) Competence and Admissibility of Rath Declaration

Plaintiffs argue that the Rath Declaration is not competent evidence and should not be given “any

weight.” Dkt. 26 at 4-5. Courts routinely accept declarations from human resources personnel and

similar administrative managers as credible evidence to support CAFA removal. See Alvarez v. Office

Depot, Inc., No. CV 17-7220 PSG (AFMx), 2017 WL 5952181, at *2 (C.D. Cal. Nov. 30, 2017)

(collecting cases). “A declaration from a person with knowledge of the relevant data is clearly an

appropriate form of evidence.” Ruano v. Sears Roebuck & Co., No. CV 15-6060 PSG (FFMx), 2015 WL

6758130, at *4 (C.D. Cal. Nov. 5, 2015). “Neither /barra nor Dart Cherokee calls into question the long-

* See also, e.g., Akana v. Estee Lauder Inc., No. CV 19-00806 JAK (PLAx), 2019 WL 2225231, at *7 n.6 (C.D.

Cal. May 23, 2019); Amirian v. Umpqua Bank, No. CV 17-7574 FMO (FFMx), 2018 WL 3655666, at *2 (C.D. Cal.

July 31, 2018); Ruano v. Sears Roebuck & Co., No. CV 15-6060 PSG (FFMx), 2015 WL 6758130, at *2 (C.D. Cal.

Nov. 5, 2015); Vitale v. Celadon Trucking Servs., No. CV 15-5193 PSG (GJSx), 2015 WL 5824721, at *2 (C.D.

Cal. Oct. 2, 2015); Buehler v. Saddle Creek Corp., No. CV 15-01361 SJO (KKx), 2015 WL 5618871, at *2 (C.D.

Cal. Sept. 23, 2015); Townsend v. Brinderson Corp., No. CV 14-5320 FMO (RZx), 2015 WL 3970172, at *3 (C.D.

Cal. June 30, 2015); Mejia v. DHL Express (USA), Inc., No. CV 15-890 GHK (JCx), 2015 WL 2452755, at *2 (C.D.

Cal. May 21, 2015). Moreover, Ritenour v. Carrington Mortgage Services LLC, 228 F. Supp. 3d 1025 (C.D. Cal.

2017), does not speak to the contrary, because it found defendant's “detailed, reasonable calculations” were

“sufficient to meet [defendant’s] burden, especially since Plaintiffs offer no alternative amount-in-controversy or

rebuttal evidence.” /d. at 1031. Ritenour identified the absence of a rebuttal as supporting a sufficient showing and

did not hold that the plaintiffs’ failure waived any amount-in-controversy argument. /d.

Danes □□ □□ OE

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

standing practice of accepting such declarations in lieu of the underlying records.” Amaya v. Consol.

Container Co., LP, No. 2:15-CV-03369-SVW-PLA, 2015 WL 4574909, at *2 (C.D. Cal. July 28, 2015).

However, not every such declaration provides admissible, necessary evidence. For example, if the data

offered is insufficient or lacks a sufficient foundation to support certain assumptions or calculations, the

statements in a declaration may be insufficient to establish the amount in controversy. Akana v. Estee

Lauder Inc., No. LA CV-19-00806-JAK-PLAx, 2019 WL 2225231, at *5-6 (C.D. Cal. May 23, 2019).

(4) Application

The Notice of Removal provided allegations as to the amount in controversy for a portion of the causes

of action advanced by the Complaint. Dkt. 1 at 8-12. This included meal period premiums, rest period

premiums, waiting time penalties and attorney’s fees. /d. Based only on these claims, Defendant

argued that the amount in controversy was $5,623,000, independent of the amounts at issue with

respect to Plaintiffs’ claims for unpaid overtime wages, unreimbursed business expenses or penalties

for inaccurate wage statements and failure to keep requisite payroll records. /d. at 12. Defendant did

not present evidence to support these allegations in the Notice of Removal. See generally id.

The Motion to Remand Opposition provides a broader showing as to the amount in controversy. It

assesses the amount in controversy for the first six causes of action. See Dkt. 22 at 10-14. In support of

Defendant’s position, it presents the Rath Declaration. Dkt. 22-1. As noted, Rath is the “Administration,

Contracts, Purchasing Senior Manager” of Defendant. /d. [ 1. Rath states that she “personally reviewed

Defendant’s business records, including records pertaining to Defendant’s current and former

employees who are in the putative class as defined by the Complaint.” /d. 4.

a removing defendant makes specific factual allegations establishing jurisdiction and can

support them. . . with evidence combined with reasonable deductions, reasonable inferences, or other

reasonable extrapolations[,] [t]hat kind of reasoning is not akin to conjecture, speculation, or star

gazing.” Blevins, 2015 WL 12516693, at *7 (quoting /barra, 775 F.3d at 1197). “Defendants need not

‘research, state, and prove the plaintiffs claim for damages,’ particularly since the question asks only

what the plaintiff has ‘put in controversy,’ not how much the defendant should truly owe.” /d. (quoting

Toys ‘R’ Us - Delaware, Inc., No. 14-CV-05550-MEJ, 2015 WL 395214 (N.D. Cal. Jan. 29,

2015)).

(a) First Cause of Action: Overtime Wages

The Complaint alleges that Defendant violated Cal. Lab. Code §§ 510 and 1198 and corresponding

Industrial Welfare Commission (“IWC”) Wage Orders by “intentionally and willfully fail[ing] to pay

overtime wages owed to Plaintiffs and the other class members.” Dkt. 1-1 Jf] 49-57. The Complaint

alleges that California law requires payment of overtime wages at a rate of “time-and-one-half’ for all

hours worked in excess of eight hours in a day or 40 hours in a workweek. /d. Jf] 51-53. The Complaint

alleges that, during the relevant time period, Plaintiffs and other class members “worked in excess of

eight (8) hours in a day, and/or in excess of forty (40 hours) in a week” and that Defendant failed to

provide the required compensation for the overtime work. /d. J] 53-57. The Complaint defines the

proposed class as “[a]ll current and former hourly-paid or non-exempt employees who worked for any

of the Defendants within the State of California at any time during the period from four years preceding

the filing of this Complaint to final judgment and who reside in California.” /d. J 14. The Complaint was

Danae 4N □□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

filed on July 10, 2019. /d. at 2. The alleged class period would start on July 10, 2015. /d. J 21.

In her declaration, Rath she states that she has “personally reviewed Defendant's business records,

including records pertaining to Defendant’s current and former employees who are in the putative class

as defined by the Complaint.” Dkt. 22-1 4. She then declares that “Defendant employed around 790

hourly, non-exempt employees in California during the Class Period.” /d. 15. She adds that, based on

“payroll records Defendant keeps in the regular course of business,” putative class members “worked

an average of around 9.07 hours per business day during the Class Period.” /d. J 7. Rath next declares

that the putative class members “worked an average of approximately 402 days each during the Class

Period.” /d. She then declares that, the “hourly rate of pay for putative class members varied year to

year” and the “average hourly rate of pay throughout the Class Period was $21.08” for the putative

class members. /d. 7 8.

Relying on this data, Defendant provides a calculation of a portion of what it claims to be the amount at

issue. This calculation multiples the putative class size (790 members), the average overtime amount

worked per day (1.07 hours), the average days worked during the class period (402 days), the average

hourly rate of pay ($21.08 / hour), and the overtime rate alleged by the complaint (0.5). Dkt. 22 at 11.

This results in a figure of $3,581 ,603.72.

Although Plaintiffs maintain that “Plaintiffs never allege that no overtime was paid,” the Complaint

alleges that “Defendants intentionally and willfully failed to pay overtime wages owed to Plaintiffs and

the other class members,” “Defendants failed to pay overtime wages to Plaintiffs and the other class

members for all overtime hours worked,” and Plaintiffs “were not receiving accurate overtime

compensation for all overtime hours worked.” Dkt. 1-1 ff] 28, 39, 55. The Complaint does not narrow

these allegations to state, for example, that only a partial overtime rate of pay was provided, that

overtime wages were infrequently or sometimes paid, or that only full-time employees were deprived of

overtime wages. Indeed, the Complaint does not distinguish full-time and part-time employees with

respect to the claim of failure to pay overtime compensation.

It was reasonable for Defendant to rely on the broad allegations of the Complaint to determine the

“maximum recovery plaintiff could reasonably recover.” See Arias 936 F.3d at 925, 927. Here, that

maximum recovery would be the total unpaid overtime compensation for putative class members during

the relevant time period. This is stated above, and is based on payroll records from which the average

time worked has been estimated. Nor did Defendant’s reliance on the unqualified and broad allegations

of the Complaint as to alleged failure to pay overtime wages generate a “speculative violation rate”

(Dkt. 26 at 6). Therefore, Defendant has met its burden as to the calculation of $3,581,603.72 as the

amount in controversy for the First Cause of Action.

(b) Second and Third Causes of Action: Rest and Meal Period

Violations

The Complaint alleges that, for putative class members scheduled to work for six hours or less and who

did not waive their meal periods, putative class members were required to work for more than five

hours “without an uninterrupted meal period of not less than thirty (30) minutes and/or rest period.” Dkt.

1-1 {| 63. For putative class members scheduled to work for longer than six hours, the Complaint

alleges that putative class members were required to work for periods longer than five hours “without

Daas 44 □□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

an uninterrupted meal period of not less than thirty (30) minutes and/or rest period.” /d. J 64. The

Complaint alleges that Defendant “intentionally and willfully required Plaintiffs and the other class

members to work during meal periods and failed to compensate Plaintiffs and the other class members

the full meal period premium for work performed during meal periods. /d. 65.

The Complaint alleges that Defendant “required Plaintiffs and other class members to work four (4) or

more hours without authorizing or permitting a ten (10) minute rest period per each four (4) hour period

worked.” Dkt. 1-1 J 73. The Complaint also alleges that Defendant required Plaintiffs and the putative

class members to “work during rest periods and failed to pay Plaintiffs and the other class members the

full rest period premium for work performed during rest periods.” /d. 74. The Complaint alleges that

putative class members are entitled to recover “one additional hour of pay at the employees’ regular

hourly rate of compensation for each work day that the rest period was not provided.” /d. | 77.

Rath declares that 790 putative class members were employed during the relevant time period and

that, on average, these putative class members worked for 402 days. Dkt. 22-1 J] 5, 7. Based on the

allegation that such meal period violations entitle putative class members “one additional hour of pay at

the employee’s regular rate of compensation for each work day that the meal or rest period is not

provided” and the average hourly rate stated of $21.08 (Dkt. 22-1 J 8), Defendant calculated an amount

in controversy for the second cause of action as $6,694,586.40. Dkt. 22 at 11 (790 putative class

members x 402 average days worked x $21.08 meal period premium = $6,694 ,586.40). This calculation

relies on a 100% violation rate, i.e., every putative class member experienced a meal period violation

for every day worked.

Similarly, based on 790 putative class members, 402 average days worked, and a $21.08 average

hourly wage, Defendant calculates an amount in controversy for the third cause of action as the same

amount, i.e., $6,694,586.40. Dkt. 22 at 12. This calculation relies on the same data as the meal period

violations and relies on the same 100% violation rate, i.e., every putative class member experienced

one rest period violation for every day worked.

Reasonable assumptions as to violation rates depend upon the allegations of the complaint. Where

plaintiffs have alleged “consistent,” “systematic,” or “uniform” policies depriving workers of meal or rest

periods, such allegations can support a 100% violation rate. See Archuleta v. Avcorp Composite

Fabrication, Inc., No. CV 18-8106 PSG (FFMx), 2018 WL 6382049, at *4 (C.D. Cal. Dec. 6, 2018)

(collecting cases); Sanchez v. Russell Sigler, Inc., No. CV 15-01350-AB (PLAx), 2015 WL 12765359, at

*2 (C.D. Cal. Apr. 28, 2015) (approving a 100% violation rate where the Complaint alleged “universal

deprivation of meal and rest periods”). However, where a complaint alleges that meal and rest periods

were “regularly” or “often” denied, courts have approved reasonable assumptions for violation rates

between 20% and 50%. See Blevins, 2015 WL 12516693, at *9 (collecting cases). Such assumed

violation rates are reasonable particularly when a plaintiff “does not provide an alternate estimate.” See

Blevins, 2015 WL 12516693, at *9.

Unlike the data presented for overtime violations, where Defendant offered evidence supporting the

average overtime hours of 1.07 hours per work day for putative class members, the data as to meal

and rest breaks is not specific as to the number of average meal and rest period violations or a sample

data set from which to extrapolate. The Complaint alleges that Defendant “engaged in a pattern and

practice of wage abuse,” which “involved, inter alia, failing to pay them for all regular and/or overtime

Daan 49 □□□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

wages earned and for missed meal periods and rest breaks in violation of California law.” Dkt. 1-1 J 27.

Therefore, based on this “pattern and practice” allegation, applying a reasonable assumption for a

violation rate is appropriate, particularly in light of Plaintiffs’ failure to offer an alternative estimate. See

Arias, 936 F.3d at 927 (defendant’s assumption of one missed rest period per week was “plausible” in

light of the complaint’s allegation that the defendants “routinely” failed to pay for missed rest and meal

breaks); Blevins, 2015 WL 12516693, at *9.

A 25% violation rate is a reasonable and conservative assumption where the Complaint alleges a

pattern or practice of wage abuse and fails to allege universal or uniform deprivations of meal and rest

periods. Applying such a violation rate results in a total amount in controversy for the Second and Third

Causes of Action of $3,347,293.

Because the figures for the amounts in controversy for the first three causes of action total

$6,928,896.92, it is unnecessary to calculate the amounts in controversy as to the remaining causes of

action. However, in the interest of completeness, they are evaluated.

(i) Fourth Cause of Action

The Complaint alleges that Defendant “failed to pay minimum wage to Plaintiffs and the other class

members as required.” Dkt. 1-1 80. The Complaint alleges that the putative class is “entitled to

recover the unpaid balance of their minimum wage compensation.” /d. | 81. The Complaint also alleges

that the putative class is entitled to recover “a penalty of $100.00 for the initial failure to timely pay each

employee minimum wages, and $250.00 for each subsequent failure to pay each employee minimum

wages.” /d. J 82.

Defendant claims that it is “unclear from the Complaint how many hours of work Plaintiffs allege each

putative class member is owed.” Dkt. 22 at 12. The Complaint alleges that Defendant's “pattern and

practice of wage abuse” includes a failure to pay putative class members “all regular and/or overtime

wages earned.” Dkt. 1-1 J] 27. Defendant bases its amount in controversy calculation for the fourth

cause of action on Plaintiffs’ attempt to recover, “at the very least”, minimum wages spent working

through meal periods. Dkt. 22 at 12. Defendant contends that this totals $3,347,293.20. It calculated

this figure by multiplying 790 putative class members, by an average of 402 days worked, by an

average hourly rate of pay of $21.08 per hour, and a meal period time of 0.5 hours. /d. at 12-13.

Defendant did not explain clearly why it used an hourly rate of pay of $21.08 as the minimum wage

rate, instead of the $10.00 rate cited as “California’s minimum wage at the start of the limitations period”

or the $17.00 rate cited as the “lowest pay rate outlined in the CBA.” Dkt. 22 at 8 & n.1. Defendant’s

calculation also assumes a 100% violation rate, i.e., that putative class members were not paid

minimum wage for working through a meal period for every day of work.

There are several problems with this calculation. First, it appears to overlap with the prior ones as to the

claims for unpaid wages. Therefore, it is double-counting. Second, it applies a 100% violation rate,

when a 25% violation rate is a reasonable assumption based on the Complaint’s allegations that the

failure to pay wages was a “pattern and practice.” Dkt. 1-1 J 27. Third, it applies an average hourly rate

of pay of $21.08 rather than the $10 minimum wage. Putting aside double-counting, using the same

Daas 49 □□□□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

formula identified by Defendant, but using a 25% violation rate and a $10.00 minimum wage would

result in $396,975 (790 putative class members x 402 average days worked x $10.00 wage rate at a

25% violation rate, and a half hour meal period). However, because this amount appears to constitute

double-counting, it is not included in the jurisdictional calculation.

Defendant also presents a calculation for statutory penalties with respect to the Fourth Cause of Action.

Dkt. 22 at 13. Defendant assumes that putative class members “worked 7 days a week” and were “paid

on a biweekly basis.” /d. Given that the Rath Declaration does not state that the putative class

members worked seven days a week, that is discusses the average hours worked per “business day”

(Dkt. 22-1 J 7), and the lack of clarity as to whether biweekly pay periods is an assumption (Dkt. 22 at

13), insufficient evidentiary support has been presented to support including statutory penalties in the

calculation of the amount in controversy. Therefore, the amount proffered by Defendant is not included

in the calculation of the amount in controversy.

(ii) Fifth Cause of Action

The Complaint alleges that Defendant “intentionally and willfully failed to pay Plaintiffs and the other

class members who are no longer employed by Defendants their wages, earned and unpaid, within

seventy-two (72) hours of their leaving Defendants’ employ.” Dkt. 1-1 | 86. The Complaint alleges that,

in the event of such a failure, “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 is commenced,” but this period shall not exceed

thirty days. /d. J 88. The Complaint seeks to recover the “statutory penalty wages for each day they

were not paid,” up to the thirty day maximum. /d. J 89.

Actions for final wages not paid as required by Cal. Lab. Code §§ 201, 203, and 203 are subject toa

three-year statute of limitations. Pineda v. Bank of Am., N_A., 50 Cal. 4th 1389, 1395 (2010); see also

Cal. Code Civ. Proc. § 338(a); Hassan v. Praxair, Inc., No. LA CV 18-02811 JAK (AFMx), 2019 WL

3064435, at *5 (C.D. Cal. Mar. 4, 2019). No evidence has been offered as to why there should be any

tolling of the limitations period. Therefore, the amount in controversy is limited to the period starting on

July 10, 2016.

The Rath Declaration states that “approximately 484 employees separated from their employment with

Defendant between July 10, 2016, and the present.” Dkt. 22-1 46. This finding was based on “data

related to the dates putative class members started and ended their employment.” /d. Defendant's

calculation for the amount in controversy for the Fifth Cause of Action assumes that Defendant failed to

pay final wages to all 484 separated employees for the maximum 30 days. Dkt. 22 at 13. Unlike the

data presented as to overtime hours or the allegations as to patterns or practices for other wage

abuses, Defendant has not adequately shown why it is appropriate to assume a universal maximum

penalty rate for payment of final wages. See Beck v. Saint-Gobain Containers, 2016 WL 4769716, at

*10 (C.D. Cal. Sept. 12, 2016); Vasserman v. Henry Mayo Newhall Memorial Hospital, 65 F. Supp. 3d

932, 978, 979 (C.D. Cal. 2014) (Morrow, J.). The Rath Declaration does not provide data as to the

average delay, if any, in payment of final wages following separation. Absent further evidentiary support

or more universal and categorical allegations in the Complaint, no reasonable calculation can be

reached as to the amount in controversy for the Fifth Cause of Action for waiting time penalties.

Daas 4A wf OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

(iii) Sixth Cause of Action

The Compiaint alleges that Defendant “intentionally and willfully failed to pay Plaintiffs and the other

class members all wages due to them, within any time period permissible under California Labor Code

section 204.” Dkt. 1-1 | 94. The Complaint alleges that the putative class is entitled to recover “all

remedies available for violations of California Labor Code section 204.” /d. J 95.

Defendant states that the statutory penalties for § 204 violations include $100 for the initial violation and

$200 for each subsequent one. Dkt. 22 at 14 (citing California Labor Code § 210). Defendant then

calculates the amount in controversy for the Sixth Cause of Action by assuming that the 402 average

work days “roughly equates to 28 biweekly pay periods,” which leads to one initial penalty of $100 and

27 subsequent $200 penalties for each of the 790 putative class members. /d. However, as noted

earlier, Defendant did not present sufficient evidentiary support for the claim that 28 biweekly pay

periods were the average for putative class members; the Rath Declaration does not include such a

statistic. Defendant has calculated this average of 28 biweekly pay periods by dividing 402 average

work days by seven-day work weeks and then multiplying that amount by two to calculate the number

of biweekly pay periods. See Dkt. 22 at 13.

There are deficiencies with this analysis. It is unclear how Defendant reached the conclusion that

putative class members worked a seven-day work week. The Rath Declaration appears to assume an

average five-day work week. Thus, it mentions “business days” and employees who “worked an

average of approximately 402 days each during the Class Period.” Dkt. 22-1 J 7. Therefore, and in light

of the lack of support for the assumed violation rate, Defendant's arguments as to the amount in

controversy for the Sixth Cause of Action are insufficient and are not applied in calculating the total

amount in controversy.

(iv) Seventh, Eight, Ninth and Tenth Causes of Action

Defendant does not identify an amount in controversy for the Seventh through Tenth Causes of Action.

Dkt. 22 at 14.

(v) Attorney’s Fees

The amount in controversy includes “attorneys’ fees awarded under fee-shifting statutes or contract.”

Fritsch v. Swift Transportation Co., 899 F.3d 785, 793 (9th Cir. 2018). “[I]f the law entitles the plaintiff to

future attorneys’ fees if the action succeeds, ‘then there is no question that future [attorneys’ fees] are

at stake in the litigation.” /d. (quoting Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 417 (9th Cir.

2018)). However, Fritsch rejected the principle that 25 percent of an alleged recovery should be per se

appropriate. /d. at 796. Fritsch noted that the possible recovery of attorney's fees depends on the type

of claim. /d. For example, the “fee shifting provisions” of Cal. Lab. Code §§ 218.5 and 1194 “do not

apply to legal work relating to meal and rest period claims.” /d. (citing Kirby v. Immoos Fire Prot., Inc.,

53 Cal. 4th 1244, 1255 (2012)).

Cal. Lab. Code § 1194 permits recovery of “reasonable attorney’s fees” and “costs of suit” for actions

brought to recover the unpaid balance of minimum wage or overtime compensation. Cal. Lab. Code

§ 218.5 permits recovery of “attorney's fees and costs to the prevailing party” in an action brought for

Dawns 4E wt OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

“nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.”

Although these statutes permit the recovery of attorneys’ fees under certain circumstances, Defendant

did not expressly include attorney’s fees as part of its calculation of the amount in controversy. See Dkt.

22 at 14 (“Again, this does not consider potential damages for Plaintiffs’ four remaining claims or

potential attorneys’ fees, which are authorized by statutes underlying [certain causes of action].”). Even

if it were assumed that Defendant had presented this issue,° “simply ask[ing] the Court to adopt the 25

percent benchmark’ fails to meet the burden necessary to add such an amount to the calculation.

Zamarripa v. Superior Talent Resources, Inc., No. SA CV 19-0982-DOC (MAAx), 2019 WL 3246502, at

*6 (C.D. Cal. July 19, 2019): see also Akana, 2019 WL 2225231, at *8 (refusing to permit the

“conclusory assertion” that a 25% attorneys’ fee recovery would be a reasonable estimate).

(5) Conclusion

For the foregoing reasons, the First Cause of Action places $3,581,603.72 in controversy. The Second

and Third Causes of Action together place $3,347,293.20 in controversy. These two amounts total

more than $5,000,000. Defendant has met its burden to demonstrate the amount in controversy for

certain causes of action. This amount is sufficient to support the amount in controversy required by 28

U.S.C. § 1332(d). Therefore, the burden shifted to Plaintiff to present evidence to support a lower

amount. As stated earlier, Plaintiff has foregone the opportunity to seek to do so.

C. Conclusion

For the reasons stated above, the Motion to Remand is DENIED.

Ill. Motion to Dismiss

A. Motion for Leave

1. Background

The Motion to Dismiss was filed on September 12, 2019, and initially scheduled to be heard on

January 27, 2020. Dkt. 10. On that day, on the Court’s own motion, the Motion to Dismiss was

continued to February 10, 2020. Dkt. 11. The order continuing the hearing stated that “Counsel shall

refer to the Court’s standing Order with respect to the briefing schedule for motions. /d. The Standing

Order issued on September 6, 2019. Dkt. 6. The Standing Order provides a briefing schedule different

than the one in the Local Rules, and provides: “Please read this section carefully. This Court’s schedule

for briefing motions differs significantly from the briefing schedule set by the Local Rules.” Dkt. 6 at 8.

Pursuant to the Standing Order's briefing schedule, an opposition to the Motion to Dismiss was due on

or before October 3, 2019.

No timely opposition was filed by that date. On October 10, 2019, Defendant filed a notice of non-

See Dkt. 22 at 10 n.3 (Therefore, because attorneys’ fees ‘are at stake in the litigation,’ they ‘should be

included in the amount in controversy.” (quoting Fritsch, 899 F.3d at 788)).

Dane 4 wf OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

opposition. On October 11, 2019, Plaintiffs filed a response, which cited a calendaring error as the

cause for the missed deadline. Dkt. 15. On October 15, 2019, Defendant filed a reply to its notice of

non-opposition. Dkt. 16. On October 25, 2019, Plaintiffs filed the Motion for Leave, which seeks leave to

file a late opposition based on excusable neglect. Dkt. 21. The Motion for Leave maintains that there

was no prejudice to Defendant, the reason for the delay was excusable, and there was no bad faith.

See id. Defendant filed an opposition to the Motion for Leave, which cited Plaintiffs’ Counsel’s previous

failure to abide by this Court’s Standing Order. See Dkt. 22 at 6.

2. Analysis

The Motion for Leave presents a sufficient showing of excusable neglect to permit filing of the Motion to

Dismiss Opposition. Whether there is excusable neglect depends on a consideration of four factors:

“(1) the danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on

the proceedings; (3) the reason for the delay; and (4) whether the movant acted in good faith.” Bateman

v. U.S. Postal Service, 231 F.3d 1220, 1223-24 (9th Cir. 2000) (citing Pioneer Investment Servs. Co. v.

Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 395 (1993)).

The prejudice, delay, and impact on Defendant and these proceedings were minimal. Instead of an

opposition being filed on October 3, 2019, it was filed on October 25, 2019. Given a hearing date of

February 10, 2020, any prejudice imposed by such a short delay is negligible. Plaintiffs have presented

a sufficient showing as to good faith efforts to comply with the briefing schedule and filed a prompt

response to the notice of non-opposition. However, the reason for delay weighs against granting leave

to file the opposition. The order that continued the hearing on the Motion to Dismiss instructed the

parties to “refer to the Court’s Standing Order with respect to the briefing schedule.” Dkt. 11. The

Standing Order specifically notes that the schedule for briefing motions “differs significantly from the

briefing schedule set by the Local Rules.” Dkt. 6 at 8. And, although Plaintiffs’ Counsel states that a

calendaring error occurred in which the terms of the Standing Order was not applied, Plaintiffs’ Counsel

previously committed the same calendaring error with regard to the Standing Order in a previous case

before this Court. See Dkt. 21 at 2, Silva v. AvalonBay Communities, Inc., No. 2:15-cv-4157 JAK

(PLAx) (C.D. Cal. July 15, 2015).

Even where a reason for delay is “weak” and counsel shows a “lack of regard for his client’s interests

and the court's docket,” such conduct is only “negligence and carelessness,” not “deviousness or

willfulness.” Based on a consideration of the matters presented by the Motion for Leave, sufficient good

cause has been shown to find excusable neglect in Plaintiffs’ failure to file a timely opposition to the

Motion to Dismiss. Therefore, the Motion for Leave is GRANTED. Exhibit D to the Haber Declaration

(Dkt. 21-2 at 7-30) is accepted as the opposition to the Motion to Dismiss.

In addition to this calendaring error, it appears that Plaintiffs’ Counsel has not fully complied with Local

Rule 7-3 and the Standing Order to discuss thoroughly the substance of the Motion to Remand before

filing it. See Dkt. 22 at 15-16 (citing Dkt. 22-2). Although Defendant was not prejudiced by this non-

compliance, future failures by Plaintiffs’ counsel to comply with Local Rules or the Standing Order as to

scheduling or meet-and-confer obligations will not be excused or may result in the imposition of

sanctions.

Daan 47 □□□□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

B. Request for Judicial Notice

Defendant filed a Request for Judicial Notice in Support of Defendant’s Motion to Dismiss Plaintiffs’

Complaint (the “Request for Judicial Notice”). Dkt. 10-5. Defendant requests judicial notice of the

“Collective Bargaining Agreement between International Brotherhood of Electrical Workers, Local 11,

and Kinkisharyo International, L.L.C. and Altech Services, Inc., dated March 22, 2016 through P3010

Project Completion” (the “CBA”), which is attached as Exhibit A to the Declaration of Philip Shecter.

Dkt. 10-5 at 2 (citing Dkt. 10-3).

Fed. R. Evid. 201(b) provides that a court “may judicially notice a fact that is not subject to reasonable

dispute because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be

accurately and readily determined from sources whose accuracy cannot reasonably be questioned.”

More specifically, a court “may take judicial notice of ‘matters of public record.” Lee v. City of Los

Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (quoting Mack v. South Bay Beer Distrib., 789 F.2d

1279, 1282 (9th Cir. 1986)). Such matters of public record include “documents on file in federal or state

courts.” Harris v. Cty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012).

A motion to dismiss is generally “limited to the [contents of] the complaint, materials incorporated into

the complaint by reference, and matters of which the court may take judicial notice.” Metzler Inv.

GMBH v. Corinthian Cs., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). In considering materials

incorporated into the complaint, the court may review the full text of a document even if the complaint

quotes only part of it. Cooper v. Pickett, 137 F.3d 616, 623 (9th Cir. 1997). A court may also consider

“evidence on which the complaint ‘necessarily relies’ if: (1) the complaint refers to the document; (2) the

document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy

attached to the 12(b)(6) motion.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (discussing a

provision in a settlement agreement releasing parties from liability).

Plaintiffs do not object to the Request for Judicial Notice. However, courts have adopted different

positions on whether to take judicial notice of CBAs in considering a motion to dismiss under Fed. R.

Civ. P. 12(b)(6) when the complaint does not incorporate the CBA by reference. Compare Lefevre v.

Pacific Bell Directory, No. 14-cv-03803-WHO, 2014 WL 5810530, at *2 (N.D. Cal. Nov. 7, 2014)

(denying judicial notice for motion to dismiss); Schroeder v. Envoy Air, Inc., No. 16-04911-MWF-KS,

2017 WL 10525816 (C.D. Cal. Feb. 6, 2017) (same) with Sarmiento v. Sealy, Inc., 367 F. Supp. 3d

1131, 1142 (N.D. Cal. 2019) (granting judicial notice as to CBA for preemption issues on judgment on

the pleadings); Hernandez v. Sysco Corp., No. 16-CV-06723-JSC, 2017 WL 1540652, at *2 (N.D. Cal.

Apr. 28, 2017) (same); Alcala v. Republic Bag, Inc., No. ED CV-18-272 JGB SHKx, 2018 WL 1633588,

at *1 (C.D. Cal. Apr. 3, 2018) (granting judicial notice for motion to remand).

In light of Plaintiffs’ non-opposition to the Request for Judicial Notice and the practice of taking judicial

notice of collective bargaining agreements for purposes of a motion to dismiss in labor law cases, the

Request for Judicial Notice is GRANTED.

Danae 40 ~F OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

Cc. Factual Background

1. Allegations in the Complaint

As stated above, the Complaint advances ten causes of action: (i) violation of California Labor Code

§§ 510 and 1198 for unpaid overtime, (ii) violation of California Labor Code §§ 226.7 and 512(a) for

unpaid meal period premiums, (iii) violation of California Labor Code § 226.7 for unpaid rest period

premiums, (iv) violation of California Labor Code §§ 1194, 1197, and 1197.1 for unpaid minimum

wages, (Vv) violation of California Labor Code §§ 201 and 202 for final wages not timely paid,

(vi) violation of California Labor Code § 204 for wages not timely paid during employment, (vii) violation

of California Labor Code § 226(a) for non-compliant wage statements, (viii) violation of California Labor

Code § 1174(d) for failure to keep requisite payroll records, (ix) violation of California Labor Code §§

2800 and 2802 for unreimbursed business expenses, and (x) violation of California Business and

Professions Code § 17200. Dkt. 1-1 at 2.

The Complaint alleges that Loaiza was employed from “approximately January 2017 to approximately

March 2018.” Dkt. 1-1 | 19. The Complaint alleges that Landaverde was employed from ‘approximately

January 2017 to approximately March 2018.” /d. J] 20.

The Complaint alleges that Defendants “engaged in a pattern and practice of wage abuse against their

hourly-paid or non-exempt employees within the State of California.” Dkt. 1-1 J 27. “This pattern and

practice involved, inter alfa, failing to pay them for all regular and/or overtime wages earned and for

missed meal periods and rest breaks in violation of California law.” /d.

2. Relevant Provisions of the CBA

A collective bargaining agreement is attached as Exhibit A to the Declaration of Philip Shecter. Dkt. 10-

3. The agreement (the “CBA’”) is titled “International Brothers of Electrical Workers, Local 11 and

Kinkisharyo International LLC & Altech Services, Inc. March 22, 2016 through P3010 Project

Completion.” Dkt. 10-3.

Article 7, Section 2(e) provides for arbitration of complaints related to “meal and rest periods”:

Any complaint arising in connection with the application or interpretation of this Article,

including but not limited to claims regarding alleged missed meal and rest periods and/or

alleged payments for missed meal and rest periods shall be exclusively subject to the

grievance and arbitration procedure set forth in this Agreement and shall not be subject to

resolution by way of court, a jury trial, or an administrative proceeding, regardless of

whether the claim alleges a violation of this Agreement or of a statutory, regulatory, and/or

common law duty or requirement. The Arbitrator may award remedies under this

Agreement and under applicable State and Federal laws. Any claims asserted under this

Section shall be subject to the applicable statutory time limitations provided for under the

Labor Code.

Dkt. 10-3 at 12.

Dane 408 ~F OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

Article 7, Section 3 provides for arbitration of disputes related to methods of payment:

The Employer shall have a regular designated payday for all Employees, which may be

changed with two weeks’ notice to the Union so long as the Employer does not change

the pay period to less than two pay periods a month. Should the Employer wish to change

the pay period to less than two pay periods a month, the Employer may only do so with

two weeks’ notice to, and agreement by, the Union. The parties agree that in disputes

regarding whether an Employee is paid untimely or inaccurately under applicable state or

federal law (i.e. minimum wage, overtime, failure to pay wages) the sole and exclusive

remedy shall be the binding grievance and arbitration procedure set forth in Article 10. In

the event that the parties cannot resolve the matter informally under that procedure, such

dispute shall be submitted to binding arbitration. An arbitrator shall have the power to

award an appropriate remedy, including waiting time penalties, other monetary awards

and injunctive relief.

Dkt. 10-3 at 13.

Article 10 provides “grievance and arbitration” procedures. Dkt. 10-3 at 17-18. In particular, Article 10

defines “grievance”:

For the purpose of this Agreement, the term, “grievance” is defined as a dispute between

the Employer and the Union on behalf of any Employee (other than a probationary

Employee) regarding the interpretation of any express provision of the Agreement, or any

question of fact arising out of any alleged violation of any express provision of this

Agreement which is not otherwise excluded from this grievance procedure.

Dkt. 10-3 at 17.

Article 10 then details a grievance procedure. Dkt. 10-3 at 17-18.

D. Analysis

1. Failure to Grieve

a) Legal Standards

The right of an employee to a judicial forum for statutory claims can be waived by a union’s collective

bargaining agreement where such a waiver is “clear and unmistakable.” Wright v. Universal Maritime

Serv. Corp., 525 U.S. 70, 80-81 (1998); see also Powell v. Anheuser-Busch Inc., 457 Fed. Appx. 679,

680 (9th Cir. 2011). Provisions that attempt “to provide a blanket waiver to all federal and state causes

of action[] have been routinely rejected by both the U.S. Supreme Court and Ninth Circuit.” Smith v.

Serv. Employees Int'l Union, Local 521, No. 16-CV-02547-LHK, 2016 WL 4268713, at *8 (N.D. Cal.

Aug. 14, 2016) (collecting cases). Recent, unpublished Ninth Circuit cases cite to the consensus

among circuit courts that a CBA must identify specific statutes to provide a clear and unmistakable

waiver. Wawock v. CS/ Elec. Contractors, Inc., 649 F. App'x 556, 558 (9th Cir. 2016) (citing /barra v.

UPS, 695 F.3d 354, 356-60 (Sth Cir. 2012)); see also Powell, 457 Fed. Appx. at 680.

Dans OFF wf OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

Smith held that a blanket waiver was not clear and unmistakable where the employer agreed to “comply

with all applicable federal, state and local laws and regulations, including, but not limited to, provisions

of the California Labor Code, Industrial Welfare Commission’s Orders and Fair Labor Standards Act”

and the employees “agree[d] to resolve any wage and hour claims... . arising from . . . these other

federal, state and local laws through the grievance and arbitration procedure.” /d. at 9.

In Martinez v. J. Fletcher Creamer & Son, Inc., No. CV 10-0968 PSG (FMOx), 2010 WL 3359372, at *4

(C.D. Cal. Aug. 13, 2010), the court addressed a “narrow” question: “[C]an a collective bargaining

agreement that does not mention any of the statutes at issue constitute a “clear and unmistakable”

waiver of an employee's right to sue in a judicial forum under those statutes?” /d. Martinez held that it

was “compelled to answer in the negative.” /d. lt was “undisputed” that the CBA in Martinez did “not

directly refer to any of the relevant statutes,” notwithstanding that the relevant CBA provision provided

that “[aJny dispute or grievance arising from this Wage Order shall be processed under and in

accordance with [the grievance procedure]” and that the grievance procedure “shall be the exclusive

method for resolving all alleged violations off] this Wage Order ... .” /d. at *1. Because there was no

reference to the specific statutes at issue, Martinez declined to find a clear and unmistakable waiver.

Other district courts have recognized an apparent “agreement that a statute must specifically be

mentioned in a CBA for it to even approach Wrighi?’s clear and unmistakable standard.” Wawock v.

CSI Electric Contractors, Inc., No. 2:14-cv-06012 SVW (MANx), 2014 WL 5420900 (C.D. Cal. Oct. 21,

2014) (quoting Batten v. SS! Servs., Inc., 185 F.3d 625, 631 (6th Cir. 1999), affd 649 Fed. Appx. 556

(9th Cir. 2016); see also Preddy v. Davidson Hotel Co. LLC, No. 18-CV-07730 DMR, 2019 WL

3254237, at *4 (N.D. Cal. July 19, 2019); Hoko v. Transit Am. Servs., No. 14-CV-01327 LHK, 2014 WL

3963033, at *6 (N.D. Cal. Aug. 13, 2014).

In light of these decisions, Defendant's reliance on Sanchez v. Securitas Sec. Servs. USA, Inc., No.

2:17-CV-08462-SVW-E, 2018 WL 5861258, at *2 (C.D. Cal. July 17, 2018), is unpersuasive. Although

Sanchez states that the CBA language there was “almost identical” to CBA language in 74 Penn Plaza

LLC v. Pyett, 556 U.S. 247, 256 (2009), which referred to claims made pursuant to Title VII, the ADA

and the ADEA, the CBA in Sanchez did not identify particular statutes and instead identified “statutory

claims” related to payment of wages, rest periods and similar claims. See 2018 WL 5861258 at *1-2, *3.

Courts vary in the proper method by which to raise a plaintiffs purported failure to exhaust remedies

under a CBA. They include motions for judgment on the pleadings, motions for summary judgment and

motions to dismiss. See, e.g., Preddy, 2019 WL 3254237, at *4 (motion for judgment on the pleadings);

Martinez, 2010 WL 3359372 (motion for summary judgment); Sanchez, 2018 WL 5861258 (motion for

summary judgment); Smith, 2016 WL 4268713 (motion to dismiss); Partida, 2019 WL 1601387 (motion

to dismiss).

b) Application

Both Article 7, Section 2(e) and Article 7, Section 3 -- governing meal and rest periods and method of

payment, respectively -- direct employees to the grievance and arbitration procedure in Article 10. Dkt.

10-3 at 12-13.

Any complaint arising in connection with the application or interpretation of this Article,

Dane 94 OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

including but not limited to claims regarding alleged missed meal and rest periods and/or

alleged payments for missed meal and rest periods shall be exclusively subject to the

grievance and arbitration procedure set forth in this Agreement and shall not be subject to

resolution by way of court, a jury trial, or an administrative proceeding, regardless of

whether the claim alleges a violation of this Agreement or of a statutory, regulatory, and/or

common law duty or requirement.

Dkt. 10-3 at 12.

The parties agree that in disputes regarding whether an Employee is paid untimely or

inaccurately under applicable state or federal law (i.e. minimum wage, overtime, failure to

pay wages) the sole and exclusive remedy shall be the binding grievance and arbitration

procedure set forth in Article 10. In the event that the parties cannot resolve the matter

informally under that procedure, such dispute shall be submitted to binding arbitration. An

arbitrator shall have the power to award an appropriate remedy, including waiting time

penalties, other monetary awards and injunctive relief.

Dkt. 10-3 at 13.

Article 10 provides the procedures for “grievance and arbitration.” See Dkt. 10-3 at 17-18. Article 10,

Section 1(b) states the procedure that must be followed for “any grievance” that “arise[s] under and

during the term” of the CBA. /d. at 18. However, Article 10 defines “grievance” as a “dispute” between

the employer and the union on behalf of any employee regarding either (i) “the interpretation of any

express provision” of the CBA or (ii) “any question of fact arising out of any alleged violation of any

express provision of [the CBA], which is not otherwise excluded from this grievance procedure.” /d. at

17. This definition of “grievance” makes no mention of state law or federal law claims.

There are two related reasons that preclude a finding of clear and unmistakable waiver. First, Article 7,

Sections 2(e) and 3 do not identify the statutes as to which employees are waiving their rights. Section

2(e) mentions violations of “a statutory, regulatory, and/or common law duty or requirement.” Dkt. 10-3

at 12. Section 3 mentions disputes related to an employee being “paid untimely or inaccurately under

applicable state or federal law (i.e., minimum wage, overtime, failure to pay wages).” /d. at 13. These

provisions do not state that employees are waiving their right to a judicial forum for resolution of claims

under the California Labor Code or IWC Wage Orders, or the provisions of them that are relevant here.

Second, these provisions direct employees to the “grievance and arbitration procedure” of Article 10.

However, as discussed above, the definition of “grievance” under Article 10 does not mention any state

or federal statutes. The definition of “grievance” also states that it includes a dispute over a question of

fact arising out of an alleged violation of an express provision of the CBA “which is not otherwise

excluded from this grievance procedure.” /d. at 17. It remains unclear what would otherwise be

excluded from the grievance procedure. However, this language does not support a showing of a

waiver of statutory rights given that the definition of grievance does not mention state or federal law.

An employee seeking to understand whether a meal and rest period violation or overtime violation

under state law is to be arbitrated is presented with two articles of the CBA that are not in complete

harmony. Article 7, Sections 2(e) and 3 refer to claims arising under statutes or state or federal law

Danae 99 □□□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

without identifying particular statutes. Then, it directs that such claims under state or federal law are

subject to Article 10. Article 10 does not mention such claims and limits its procedure to “grievance[s].”

Article 10 defines “grievance” without mentioning state or federal law, but only “a dispute” between

employer and employee “regarding the interpretation of any express provision” of the CBA or “any

question of fact arising out of any alleged violation.” Given the failure to identify particular statutes and

the lack of clarity in the relationship between Article 7 and Article 10, there is not a clear and

unmistakable waiver of state and federal statutory rights.

For these reasons, the Motion to Dismiss is DENIED based on the claim that Plaintiffs failed to exhaust

the grievance and arbitration procedures in the CBA for those claims that are not preempted for the

reasons stated in the following section.

2. LMRA Preemption

a) Legal Standards

As noted, the Ninth Circuit applies a two-step inquiry to determine whether there is preemption under

§ 301. Curtis, 913 F.3d at 1152. First, if the “asserted cause of action involves a ‘right [that] exists solely

as a result of the CBA,” then “the claim is preempted, and [the] analysis ends there.” /d. (alteration in

original) (quoting Kobold, 832 F.3d at 1032; Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th

Cir. 2007)). “The essential inquiry is this: Does the claim seek ‘purely to vindicate a right or duty created

by the CBA itself[?]’”” /d. (alteration in original) (quoting Schurke, 898 F.3d at 921).

Second, if a “plaintiffs state law right is substantially dependent on analysis” of the CBA, then the claim

is preempted. Curtis, 913 F.3d at 1153 (quoting Kobald, 832 F.3d at 1033). This second step “turns on

whether the claim cannot be resolved by simply ‘look[ing] to’ versus ‘interpreting’ the CBA.” /d. (quoting

Kobold, 832 F.3d at 1033). In this context, “interpretation” is “construed narrowly” and a state claim may

“avoid preemption if it does not raise questions about the scope, meaning, or application of the CBA.”

Id. “[C]laims are only preempted to the extent there is an active dispute over ‘the meaning of contract

/d. (quoting Schurke, 898 F.3d at 921).

b) Application

(1) First Cause of Action

As discussed above, Cal. Lab. Code § 510 does not apply to qualifying CBAs under Cal. Lab. Code

§ 514. See Curtis, 913 F.3d at 1154. The Motion to Dismiss and Motion to Remand each relied on a

sufficient showing that the CBA is a qualifying one under Section 514 and Plaintiffs failed to contest

whether the CBA was a qualifying CBA under Section 514. The analysis applied above, as to the

Motion to Remand and LMRA preemption for removal, also applies here. Because Section 510 does

not apply to employees covered by the CBA, the right to overtime exists solely because of the CBA.

Therefore, LMRA preemption is appropriate.

Although leave to amend should be freely given, a district court may dismiss a cause of action without

leave to amend where amendment would be futile. See Cervantes v. Countrywide Home Loans, Inc.,

656 F.3d 1034, 1041 (9th Cir. 2011). Because Plaintiffs’ claims under Cal. Lab. Code § 510 are

Dane 99 □□□□ OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

preempted by the LMRA, amendment of the First Cause of Action would be futile. See Gillette v. Stater

Bros. Markets, No. EDCV191292JVSKKX, 2019 WL 8017735, at *7 (C.D. Cal. Sept. 23, 2019)

(dismissing, without leave to amend, a cause of action based on violations of Cal. Lab. Code § 510

where it was preempted by the LMRA); Coleman v. S. Wine & Spirits of California, Inc., No. 11-501 SC,

2011 WL 3359743, at *5 (N.D. Cal. Aug. 2, 2011) (“preemption under section 301 of the LMRA is a

basis for dismissal with prejudice.”). Accordingly, granting leave to amend would be unwarranted.

For these reasons, the Motion to Dismiss is GRANTED as to the First Cause of Action, which is

DISMISSED WITH PREJUDICE.

(2) Second and Third Causes of Action

Defendant maintains that Plaintiffs’ claims for meal and rest period claims “cannot be adjudicated

without interpretation of numerous CBA provisions governing Plaintiffs’ employment.” Dkt. 10-1 at 12.

Defendant also argues that, because the manner of waiver of these periods differs under the CBA and

California law, the state-law claims for meal and rest periods will substantially depend on interpreting

these CBA provisions. /d. at 12-13. For example, under the CBA, an employee may voluntarily waive a

meal period and “will be presumed to have done so if the meal period is not taken.” Dkt. 10-3 at 12. An

employee is authorized and “must take” a rest period for every four hours worked. /d. Moreover, the

CBA provides that it is the employee’s duty and responsibility to notify his supervisor that he was not

able to take a meal (or rest period) at the time the meal/rest period was missed.” /d.

As stated earlier, “interpretation” of a CBA is “construed narrowly” in the context of determining whether

a state-law claim is “substantially dependent” on the CBA at issue. Curtis, 913 F.3d at 1153. Claims are

“only preempted to the extent there is an active dispute over ‘the meaning of contract terms.” /d.

(quoting Schurke, 898 F.3d at 921). Defendant has not shown that there is an active dispute as to the

meaning of terms relevant to meal and rest breaks in the CBA. Nor has Defendant presently shown

how particular requirements of the CBA effect a waiver of meal or rest periods will require more than

simple reference or application. See Kobold, 832 F.3d at 1033. Accordingly, the Motion to Dismiss is

DENIED as to the Second and Third Causes of Action as to preemption of state-law claims for meal

and rest periods. However, this determination is without prejudice to a subsequent review if an active

dispute arises as to the scope or meaning of the CBA that would require the type of interpretation

identified in Kobold as warranting preemption.

(3) Fourth Cause of Action

The Fourth Cause of Action alleges a violation of Cal. Lab. Code §§ 1194, 1197, and 1197.1 for unpaid

minimum wages. Minimum wage claims under Cal. Lab. Code. § 1194 are not exempt under Cal. Lab.

Code § 514. Therefore, they involve a state law right that does not exist solely because of the CBA.

See Parker v. Cherne Contracting Corp., No. 18-CV-01912-HSG, 2019 WL 359989, at *6 (N.D. Cal.

Jan. 29, 2019). Parker explained that courts routinely allow wage and hour claims “based on a failure to

compensate at all for certain hours allegedly worked.” /d. at *6. That a CBA defines wages for

employees does not create a dispute about CBA terms. /d. Because the Fourth Cause of Action relies

on Section 1194 and does not require interpretation of the CBA, the Fourth Cause of Action is not

preempted under LMRA and the Motion to Dismiss is DENIED as to the Fourth Cause of Action.

Danae OA wf OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

(4) Fifth through Tenth Causes of Action

The Motion to Dismiss relies on Parker for the proposition that claims derivative of preempted claims

should be dismissed (Dkt. 10-1 at 12). However, Parker held that minimum wage claims were not

preempted by LMRA and did not dismiss those advanced there as derivative. 2019 WL 359989 at *6.

Parker declined to dismiss a PAGA cause of action “based in part on Plaintiffs minimum wage claim,”

because the minimum wage claim under Section 1194 had not been preempted. /d.

Defendant argues that the remaining causes of action are “derivative” of either the First Cause of Action

for overtime compensation, or the Second and Third Causes of Action for meal and rest periods. Dkt.

10-1 at 12-14. The Fourth Cause of Action alleges a failure to pay a minimum wage. Dkt. 1-1 ff] 78-83.

The Fifth and Sixth Causes of Action allege failure to pay timely wages either after separation or during

employment. /d. 84-95. The Seventh Cause of Action alleges a failure to provide accurate itemized

wage statements. /d. Jf] 96-102. The Eighth Cause of Action alleges a failure to maintain payroll

records. /d. Jf] 103-107. The Ninth Cause of Action alleges a failure to reimburse business expenses.

Id. JJ] 108-112. The Tenth Cause of Action alleges a violation of Cal. Bus. & Prof. Code § 17200 based

on the other state law violations alleged in the Complaint. /d. ] 113-119.

As discussed above, the First Cause of Action is preempted. The Second, Third and Fourth Causes of

Action are not preempted based on the allegations in Complaint.

Certain portions of some of these remaining causes of action may rely, in part, on the preempted first

cause of action. For example, as to the Fifth, Sixth and Seventh Causes of Action, whether wages were

timely and accurately paid and accurate itemized wage statements provided, may rely in part on

whether overtime wages were accurately recorded and paid. Although some of these remaining causes

of action may be based in part on the alleged failure to pay proper overtime compensation, e.g., the

First Cause of Action that is preempted, they may also be based on the alleged failure to pay minimum

wages, i.e., the Fourth Cause of Action, which is not preempted. To the extent that remaining causes of

action do not rely on an overtime compensation violation under § 510, they survive. See Parker, 2019

WL 359989, at *6 (declining to dismiss cause of action that relied upon un-preempted minimum wage

claim). To the extent that such remaining causes of action do rely on the preempted First Cause of

Action, they are derivatively preempted. /d. (dismissing with leave to amend those causes of action that

relied upon the preempted claims).

For these reasons, the Motion to Dismiss is GRANTED-IN-PART and the Fifth through Tenth Causes

of Action are DISMISSED WITHOUT PREJUDICE and with leave to amend to present allegations not

premised on overtime compensation violations in the First Cause of Action that are preempted. The

Motion to Dismiss is DENIED-IN-PART as to the Fifth through Tenth Causes of Action to the extent

those claims do not rely on the First Cause of Action.

IV. Conclusion

For the reasons stated in this Order, the Motion to Remand (Dkt. 12) is DENIED. The Motion for Leave

(Dkt. 21) is GRANTED. The Motion to Dismiss (Dkt. 10) is GRANTED-IN-PART and DENIED-IN-PART

as follows:

Dane OF wt OC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL

Case No. LA CV19-07662 JAK (KSx) Date October 6, 2020

Title Anthony Loaiza et al. v. Kinkisharyo International, LLC et al.

1. The Motion to Dismiss is DENIED as to the failure to grieve or arbitrate.

2. The Motion to Dismiss is GRANTED WITH PREJUDICE, i.e., without leave to amend, as to the

preemption of the First Cause of Action.

3. The Motion to Dismiss is GRANTED-IN-PART as to the preemption of the Fifth through

Tenth Causes of Action to the extent that those claims are derivative of the First Cause

of Action.

4. The Motion to Dismiss is DENIED as to the preemption of the Second, Third and Fourth

Causes of Action.

5. The Motion to Dismiss is DENIED-IN-PART as to the preemption of the Fifth through

Tenth Causes of Action to the extent those claims do not rely on the First Cause of

Action.

Any amended complaint shall be filed within 14 days of the issuance of this Order. Defendant shall

answer or otherwise respond within 14 days of the date on which an amended complaint is filed.

IT IS SO ORDERED.

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Initials of Preparer PB

Dane OL wf OC

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