Opinion
No. C 05-0038 MHP.
March 24, 2005
MEMORANDUM AND ORDER
On January 3, 2005, FedEx Ground Package System, Inc. and the FedEx defendants ("defendants") filed a notice of removal from Alameda County Superior Court in this court pursuant to 28 U.S.C. sections 1446(b), 1441(b), and 1332. On February 2, 2005, Dean Alexander and a putative class of plaintiffs ("plaintiffs") filed a motion for remand to superior court pursuant to 28 U.S.C. section 1447(c). Plaintiffs argue lack of diversity jurisdiction, specifically that the amount in controversy in this action falls below the $75,000 minimum jurisdictional amount. Having considered the parties' arguments and submissions, the court enters the following memorandum and order.
Unless otherwise noted, background facts reflect plaintiffs' complaint.
Plaintiffs filed the present class action complaint in the Alameda County Superior Court alleging several violations of the California Labor Code and the California Business and Professions Code as well as common-law claims for intentional and/or negligent misrepresentation. Not. of Removal, Exh. A. Plaintiffs are package pick-up and delivery drivers who allege that FedEx misclassified them and similarly-situated employees as "independent contractors" to avoid legal obligations under California labor laws.
These violations include failure to pay overtime, late payment of wages, meal and rest break penalties, recovery of deductions from wages, reimbursement, and coercion. See Cal. Lab. Code §§ 201, 221, 223, 226.7, 450, 510, 1194, 2802.
Plaintiffs allege unfair business practices. See Cal. Bus. Prof. Code § 17200.
On January 3, 2005, defendants removed the action to federal court on the basis of diversity jurisdiction under 28 U.S.C. section 1332. Id. On February 2, 2005, plaintiffs filed a motion for remand on the basis that defendants had failed to file their notice of removal in a timely manner and failed to demonstrate that the amount in controversy satisfies the $75,000 jurisdictional prerequisite. Mot. for Remand ¶¶ 1-2. Plaintiffs subsequently conceded that defendants timely removed. Reply to Opp. for Mot. to Remand at 2, fn 1.
LEGAL STANDARD I. Removal
As a general rule, an action is removable to a federal court only if it might have been brought there originally. 28 U.S.C. § 1441(a). The notice of removal must be filed "within thirty days after receipt by the defendant, through service or otherwise, of a copy of the initial pleading . . . or within thirty days after the service of summons upon the defendant if such initial pleading has been filed in court." 28 U.S.C. § 1446(b). The removal statute is strictly construed against removal, and the court must reject federal jurisdiction if there is any doubt as to whether removal was proper. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996); Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988). The defendant bears the burden of proving the propriety of removal. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). If at any time before final judgment the court determines that it is without subject matter jurisdiction, the action shall be remanded to state court. See 28 U.S.C. § 1447(c).
II. Diversity Jurisdiction
A district court has diversity jurisdiction over any civil action between citizens of different states so long as the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. Where the amount of damages sought by a plaintiff is unclear, defendant must prove facts supporting the jurisdictional amount by a preponderance of the evidence. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403 (9th Cir. 1996); Gaus, 980 F.2d at 567 (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)); 28 U.S.C. § 1332(a). Thus, defendant must demonstrate that it is "more likely than not" that the amount in controversy exceeds $75,000. Sanchez, 102 F.3d at 404.
The district court determines whether defendant has met this burden by first considering whether it is "facially apparent" from the complaint that the jurisdictional amount has been satisfied. See Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). If the complaint does not clearly specify damages, the court may examine facts in the complaint and evidence submitted by the parties. The court may also require the parties to submit "summary-judgment-type evidence" relevant to the amount in controversy. Allen v. R H Oil Gas Co., 63 F.3d 1326, 1336 (5th Cir. 1995); Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). The jurisdictional minimum amount may be satisfied by considering claims for special and general damages, attorneys' fees, and punitive damages. See Conrad Assoc. v. Hartford Accident Indem. Co., 994 F. Supp. 1196, 1198 (N.D. Cal. 1998). In addition, in a class action, attorneys' fees "cannot be allocated solely to those [named] plaintiffs for purposes of amount in controversy." Id. at 942.
DISCUSSION
Plaintiffs assert that defendants cannot remove the original action to federal court because FedEx failed to meet its burden of proving, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional minimum of $75,000 for diversity actions. In addition, plaintiffs argue that defendants' notice of removal was fatally deficient because it lacked substantive allegations as to the amount in controversy. Defendants contend that the amount in controversy is met by at least some of the named plaintiffs when calculating damages, punitive damages, and attorneys' fees. Such a showing is sufficient to confer federal supplemental jurisdiction over all claims. The court finds that defendants have satisfied their burden as to the jurisdictional minimum. I. Sufficiency of Defendants' Notice of Removal
Plaintiffs' argument that the allegations set forth by defendants in their opposition to remand are time-barred and prohibited because the opposition contains new substantive allegations is unfounded. Plaintiffs claim that defendants failed to submit enough facts to this court in their notice of removal filed on January 3, 2005. Contrary to plaintiffs' assertion, defendants' notice of removal was not "grossly deficient" as originally filed solely because it alleged in a conclusive manner that the amount in controversy for each of the plaintiffs exceeded the $75,000 jurisdictional amount.
It is well settled that a defendant's notice of removal may be amended freely prior to the expiration of the initial thirty-day removal period established by 28 U.S.C. section 1446. See Barrow Dev. Co. v. Fulton Ins. Co., 418 F.2d 316, 318 (9th Cir. 1969) (allowing amendment where allegations of jurisdiction where "defective in form but not so lacking in substance as to prevent their amendment."); Smiley v. Citibank, 863 F. Supp. 1156, 1162 (C.D. Cal. 1993); 28 U.S.C. § 1653. After the thirty-day removal period, case law indicates that the notice may be amended "only to set out more specifically the grounds for removal that already have been stated, albeit imperfectly, in the original notice." C. WRIGHT, A. MILLER M. KANE, Federal Practice Procedure § 3733 at 358 (3d ed. 1998). Furthermore, construing a defendant's opposition to a motion for remand as an amendment to its notice for removal is proper. See Willingham v. Morgan, 395 U.S. 402, 407, n. 3 (1969).
Cohn v. Petsmart, 281 F.3d 837, 840 (9th Cir. 2002), is instructive in this regard. The underlying record in Cohn shows that although the notice of removal merely alleged that the amount in controversy exceeded $75,000 "without alleging any underlying facts to support this assertion", a later submission with the opposition to the motion to remand set forth the basis for the assertion. Id. at 840 n. 1. Plaintiff had filed his complaint in state court on May 11, 1998. The notice of removal was filed on June 1, 1998, and the basis for the actual amount in controversy, a settlement letter, was not cited to the court until June 29, 1998, when the opposition was filed, more than fifteen days after the removal period. See id., Appellant's Opening Brief, 2000 WL 34004374 at 15-17, 23-25 (No. 00-35328).
This court construes defendants' opposition to the motion for remand filed on February 21, 2005 as an explanatory, not substantive, amendment to the petition provided on their notice for removal on February 3, 2005. See Barrow, 418 F.2d at 321. Despite the expiration of the initial thirty-day removal period, the court allows the amendment to an imperfect original petition by defendants. The defendants' opposition to remand does not offer new grounds for removal, rather it only seeks to explain and clarify facts asserted in their removal notice. Id. at 318. The original and subsequent affidavits and pleadings submitted by defendants provided enough facts for this court to sustain a removal motion and to analyze the jurisdictional question.
II. Amount in Controversy
The parties do not dispute diversity of citizenship. Accordingly, this motion turns on whether the requisite "amount in controversy" exists. Federal district courts have jurisdiction only where the matter in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Plaintiffs seek compensatory damages (collectively "damages"), punitive damages, and attorneys' fees. The issue is thus whether the sum of all damages and attorneys' fees satisfies the jurisdictional minimum.
In a class action, at least the named class representative must exceed the $75,000 amount in controversy requirement in order for a district court to have diversity jurisdiction. See Gibson v. Chrysler Corp., 261 F.3d 927, 941 (9th Cir. 2001); Kanter v. Warner-Lambert, Co., 265 F.3d 853 (9th Cir. 2001). If there is original jurisdiction over the named plaintiff based on diversity, then supplemental jurisdiction will attach to the claims of all other plaintiffs. See Gibson, 261 F.3d at 940; 28 U.S.C. § 1367(a). Section 1367(a) provides that "in any civil action of which the district courts shall have original jurisdiction, 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."
The present action represents a variation of the circumstances in Gibson, because the class sought for certification has several named plaintiffs. However, the plain reading of section 1367 and Gibson's analysis of the legislative history still applies. The Ninth Circuit interpreted the enactment of section 1367 as overruling Zahn v. International Paper Co., 414 U.S. 291 (1973) and the holding that each member of a class must satisfy the amount in controversy requirement. Instead, section 1367(a) is interpreted as providing "that a federal district court has supplemental jurisdiction over claims that are related to claims in 'any civil action of which the district courts have original jurisdiction.'"Gibson, 261 F.3d at 940. Original jurisdiction is established "by looking at any claim in the complaint over which there is subject matter jurisdiction." Id. (emphasis added). Therefore, applying the same Gibson rationale, if this court has jurisdiction over any of the claims of the named plaintiffs, then it also has supplemental jurisdiction over all other claims.
A. Damages for Named Plaintiff Jarrett Henderson
It is well established that removal cannot be based solely on conclusive allegations and that defendant must provide enough facts to support its assertions as to the minimum jurisdictional requirement. See Gaus, 980 F.2d at 567. Defendants have provided detailed explanations of how they arrived at the figures used to calculate the jurisdictional amount. This court is satisfied that such calculations are reasonable and well within the range of damages originally offered in defendants' removal motion.
See White Dec., Wolfrum Dec., Marmon Dec., and accompanying exhibits.
Plaintiff Henderson seeks damages for violations under California Labor Code sections 510, 1194, 201, 226.7, 221, 223, 450, 2802. Compl., at. 1. Defendants contend that wages and expenses allegedly owed plaintiff will amount to more than $75,000 exclusive of punitive damages and attorneys' fees. Plaintiffs argue that the damages calculations by defendants are too speculative and imprecise.
The original complaint in the case was filed on November 17, 2004. Obeying the applicable statute of limitations for the causes of action, the calculations for damages is based on economic injuries suffered over a period of at least four years (November 17, 2000 until the entry of judgment).
Defendants calculate plaintiff Henderson's compensatory damages as follows. Plaintiff's claims are approximately $25,816.84 and $13,347.12 for maintenance and insurance expenses. The price of the two vehicles he purchased is estimated to be $45,270.53, based on available purchase data for similar vehicles. Overtime owed is estimated at $11,936.38, and meal and break penalties are estimated at $3,541.20. Opp. to Remand at 11-12. Even accounting for minor calculation errors, plaintiff Henderson's damages alone are more than $99,000 without assessing punitive damages or attorneys' fees, well within the damages range of $69,163.96 and $123,163.96 estimated by defendants in their notice of removal. Not. of Removal, Marmon Dec., Exh. 2.
Plaintiffs argue that defendants offer new calculations of economic damages and that they are too speculative and imprecise. They point to mathematical mistakes in some of the calculations by defendants but only offer alternative calculations for some. They contest defendants' estimates for maintenance and insurance expenses as inflated and erroneous. They offer alternate estimates of $20,399.68 and $10,010.34 respectively. Even accepting the lower adjusted estimates by the plaintiffs as to some of the damages categories, plaintiff Henderson's amount in controversy would still fall well over the jurisdictional minimum because of attorneys' fees and punitive damages.
In regards to plaintiff Henderson, plaintiffs arrive at the $20,399.68 figure for maintenance expenses by correcting a misquote from the Wolfrum declaration accompanying defendants' notice of removal. They also offer different date ranges for the calculation of insurance expenses. Taking those into account, the estimate for insurance expenses is closer to $10,000.
Attorneys' fees are not considered part of the amount in controversy for diversity purposes unless there is an underlying statute authorizing such award. See Brady v. Mercedes-Benz USA, 243 F. Supp. 2d 1004, 1010 (N.D. Cal. 2002). Attorneys' fees are statutorily available in this action under California Labor Code sections 1194(a) and 2802 and will be added to the amount in controversy calculations. See Conrad, 994 F.Supp. at 1198; Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). On their original notice of removal, defendants estimated attorneys' fees for each named and unnamed plaintiff to be $25,000. Not. of Removal, ¶ 15. In their amendment, defendants further clarified this amount to be approximately $35,359.24 for a class action of this nature. Even if this court assessed the low end of the range of damages plaintiff Henderson is likely to recover ($69,163.96), an award of attorneys' fees one third the size of defendants' estimate (between $25,000 and $35,000 per plaintiff) would be enough to push the total amount over the minimum jurisdictional amount for named plaintiff Henderson.
Punitive damages can also be part of the calculation of the minimum jurisdictional amount. See Conrad, 994 F. Supp. at 1198. Defendants' estimate of punitive damages varies between a 2:1 and 10:1 ratio of compensatory damages likely to be awarded. Not. for Removal, ¶ 14; Opp. to Remand, at 14-16. It is true that this range is quite large, but it is also true that even by looking at the low end of this range, plaintiff Henderson's punitive damages would put him well over the minimum jurisdictional amount.
Based on the evidence of reasonable damages provided by defendants, and taking plaintiffs' refutations into account, this court is satisfied that defendants have met their burden of proving the jurisdictional minimum by a "more likely than not standard" for at least named plaintiff Henderson. See Simmons v. PCR Tech., 209 F. Supp. 2d 1029 (N.D. Cal. 2002). Therefore, given the circuit's analysis of 28 U.S.C. section 1367 and this court's reading of Gibson, the court asserts diversity jurisdiction over plaintiff Henderson's claims and exercises supplemental jurisdiction on all claims for both named and unnamed plaintiffs. Thus, plaintiffs' motion for remand to superior court is denied.
CONCLUSION
For the above reasons the court hereby DENIES plaintiffs' motion to remand the pending action to Alameda County Superior Court.
IT IS SO ORDERED.