Opinion
Case No. 20-cv-08595-JSW
2021-04-08
Hany TANIOUS, et al., Plaintiffs, v. James B. GATTONI, et al., Defendants.
Motaz M. Gerges, Law Offices of Motaz M. Gerges, Northridge, CA, for Plaintiffs. Christopher Chad McNatt, Jr., Scopelitis Garvin Light Hanson & Feary, LLP, Pasadena, CA, Elizabeth Ashley Paynter, James Anthony Eckhart, Scopelitis Garvin Light Hanson and Feary, P.C., Indianapolis, IN, Adam Carl Smedstad, Scopelitis Garvin Light Hanson & Feary, P.C., Chicago, IL, for Defendants.
Motaz M. Gerges, Law Offices of Motaz M. Gerges, Northridge, CA, for Plaintiffs.
Christopher Chad McNatt, Jr., Scopelitis Garvin Light Hanson & Feary, LLP, Pasadena, CA, Elizabeth Ashley Paynter, James Anthony Eckhart, Scopelitis Garvin Light Hanson and Feary, P.C., Indianapolis, IN, Adam Carl Smedstad, Scopelitis Garvin Light Hanson & Feary, P.C., Chicago, IL, for Defendants.
ORDER DENYING PLAINTIFFS’ MOTION TO REMAND AND GRANTING DEFENDANTS LEAVE TO FILE SUR-REPLY
Re: Dkt. Nos. 11, 14
JEFFREY S. WHITE, United States District Judge Now before the Court are Hany Tanious ("Tanious") and Loussine S. Mazmanian's (together, "Plaintiffs") motion to remand and the administrative motion for leave to file a sur-reply filed by James B. Gattoni ("Gattoni"), Patrick J. O'Malley ("O'Malley"), Landstar System, Inc. ("LSI"), and Landstar Ranger, Inc. ("LRI") (collectively, "Defendants"). For the reasons set forth below, the Court DENIES Plaintiffs’ motion to remand and GRANTS Defendants’ motion to file a sur-reply.
BACKGROUND
Plaintiffs filed this putative class action in the Superior Court of California, County of Alameda on October 9, 2020. In their complaint, Plaintiffs alleged that Defendants engaged in a "deliberate scheme" to misclassify their California truck drivers as independent contractors. (Complaint ("Compl.") ¶ 1.) Plaintiffs assert thirteen causes of action, most of which arise under the California Labor Code, California's Unfair Competition Law, and the California Constitution. (Id. ¶¶ 116-249.)
On December 4, 2020, Defendants removed this case to the United States District Court for the Northern District of California. Defendants assert that the Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. section 1332(a), 28 U.S.C. section 1331, and the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. section 1332(d)(2).
On January 8, 2021, Plaintiffs filed a motion to remand, challenging Defendants’ three jurisdictional bases and arguing that CAFA's local-controversy exception, see 28 U.S.C. § 1332(d)(4)(A) (" Section 1332(d)(4)(A)"), precludes this Court from exercising subject matter jurisdiction over this case. Defendants filed an opposition on January 22, 2021. On January 29, 2021, Plaintiffs filed their reply, in which they argue—for the first time—that Defendants failed to show that they all consented to removal as required by 28 U.S.C. section 1446(b)(2)(A). Defendants seek leave to file a sur-reply in order to address Plaintiffs’ new argument.
The Court GRANTS this motion, and the sur-reply is deemed filed. (Dkt. No. 14-1.)
The Court will address additional facts as necessary in its analysis.
ANALYSIS
A. Applicable Legal Standard.
A defendant may remove any civil action over which district courts of the United States have original jurisdiction. Franchise Tax Bd. v. Constr. Laborers Vacation Tr. , 463 U.S. 1, 7-8, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (citation omitted); see also 28 U.S.C. § 1441. The action may be removed to the district court for the district and division embracing the location where the state court action is pending. Franchise Tax Bd. , 463 U.S. at 7-8, 103 S.Ct. 2841. However, federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).
The burden of establishing federal jurisdiction for purposes of removal is on the party seeking removal, and the removal statute is construed strictly against removal jurisdiction. Valdez v. Allstate Ins. Co. , 372 F.3d 1115, 1117 (9th Cir. 2004) ; see also Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992). To determine whether the removing party has met its burden, a court may consider the contents of the removal petition and "summary-judgment-type evidence." Valdez , 372 F.3d at 1117. A court must evaluate whether it has jurisdiction based on the circumstances that exist at the time the notice of removal is filed. See, e.g., Sparta Surgical Corp. v. Nat'l Ass'n of Secs. Dealers, Inc. , 159 F.3d 1209, 1211 (9th Cir. 1998).
A party seeking to establish diversity jurisdiction must demonstrate that no defendant is a citizen of the same state as any plaintiff and show that the amount in controversy exceeds $75,000. 28 U.S.C. § 1441(b) ; see also 28 U.S.C. § 1332(a). Complete diversity must exist "as of the time the complaint is filed and removal is effected." Strotek Corp. v. Air Transp. Ass'n of Am. , 300 F.3d 1129, 1132 (9th Cir. 2002).
B. Plaintiffs’ Consent Argument Fails.
In their reply, Plaintiffs argue that removal is improper because Defendants’ counsel has failed to show that all Defendants have consented to removal as required by 28 U.S.C. section 1446(b)(2)(A). Specifically, Plaintiffs contend that because Gattoni and O'Malley have not provided declarations of their own citizenship, Defendants’ counsel may not be in contact with them whatsoever. Defendants argue that Plaintiffs waived their ability to challenge removal and contend that the consent issue is irrelevant because all defendants are represented by the same counsel and filed the notice of removal together.
First, the Court agrees with Defendants that Plaintiffs have waived their consent-based challenge to removal. A party seeking to challenge removal "on the basis of any defect other than lack of subject matter jurisdiction" must file a motion to remand within 30 days after a notice of removal is filed. 28 U.S.C. § 1447(c). Defendants filed their notice of removal on December 4, 2020, and Plaintiffs did not move to remand until January 8, 2021. Accordingly, Plaintiffs waived their procedural objection by failing to file a motion to remand within 30 days of the notice of removal's filing. See, e.g., Vasquez v. N. Cnty. Transit Dist. , 292 F.3d 1049, 1060 n.5 (9th Cir. 2002) (noting that party waived consent-based challenge by failing to timely file a motion to remand); Jasper v. Maxim Integrated Prods., Inc. , 108 F. Supp. 3d 757, 763 (N.D. Cal. 2015) (concluding that plaintiff waived procedural challenge to removal by failing to file a motion to remand within the 30-day period).
Moreover, even if Plaintiffs’ procedural challenge were timely, it would fail nonetheless. It is true that "all defendants who have been properly joined and served must join in or consent to" removal. 28 U.S.C. § 1446(b)(2)(A). However, this does not require "individual consent documents on behalf of each defendant." Proctor v. Vishay Intertechnology Inc. , 584 F.3d 1208, 1225 (9th Cir. 2009). Other courts within this circuit have concluded that formal consent is unnecessary "where the pleadings demonstrated defendants were all represented by the same counsel." Lewis v. City of Fresno , 627 F. Supp. 2d 1179, 1186 (E.D. Cal. 2008) (concluding that express consent was unnecessary where defendants were represented by the same counsel, defendants jointly filed the notice of removal, all defendants were on the civil cover sheet filed with the removal notice, and the allegedly non-consenting defendant paid the removal notice's filing fee); see also Bogosian v. CR Title Servs., Inc. , No. 5:11-cv-02043 EJD (HRL), 2011 WL 3607892, at *3 n.3 (N.D. Cal. Aug. 16, 2011) (noting that a defendant's consent could be "inferred because she [was] represented by the same counsel as the removing defendants"). The Court finds the reasoning in these cases persuasive.
Here, Defendants are represented by the same counsel and jointly filed the notice of removal. Defendants jointly filed not only their notice of removal, but also their opposition to Plaintiffs’ motion to remand and their motion for leave to file a sur-reply. Moreover, the civil cover sheet Defendants filed upon removal includes all Defendants. Therefore, even if Plaintiffs’ procedural challenge were timely, the Court can infer all Defendants consented to removal from the circumstances of this case. Accordingly, Defendants’ removal of this case was not procedurally improper.
C. This Court Has Diversity Jurisdiction.
Next, Plaintiffs argue that Defendants have neither established complete diversity of citizenship nor demonstrated that the amount in controversy exceeds $75,000. The Court addresses each issue in turn.
1. There is complete diversity of citizenship.
As a preliminary matter, the parties agree that Plaintiffs are California citizens. However, Plaintiffs argue that complete diversity is lacking for three reasons: (1) Gattoni and O'Malley are California citizens, (2) LRI and LSI are California corporations, and (3) the unnamed Doe defendants are California citizens.
First, Plaintiffs contend that Defendants have not offered "any proof" to support their assertion that Gattoni and O'Malley are, respectively, Florida and Iowa citizens. Instead, Plaintiffs seem to argue that O'Malley and Gattoni are "California residents" solely because their complaint identifies them as such. Generally, defendants are presumed to know their own citizenship. See, e.g., Leon v. Gordon Trucking, Inc. , 76 F. Supp. 3d 1055, 1063 (C.D. Cal. 2014) ("[A] corporate defendant, like any other, is presumed to know its own citizenship."). Further, "[t]he place where a person lives is taken to be his domicile until facts adduced establish the contrary." Anderson v. Watts , 138 U.S. 694, 706, 11 S.Ct. 449, 34 L.Ed. 1078 (1891).
Here, in addition to their allegations of their own citizenship, Defendants offer a declaration from Nancy J. Hasty ("Hasty"), Vice President of Human Resources for Landstar Systems Holdings, Inc. (Declaration of Nancy Hasty, Dkt. No. 12-2.) Hasty states that Gattoni has been a Florida resident since December 4, 2020 and has his tax information sent to Florida. (Id. ¶ 3.) Hasty also states that O'Malley resided in Florida at the time of his retirement on February 7, 2020, but he now has a "permanent residence" in Iowa. (Id. ¶ 4.) Beyond Plaintiffs’ unsubstantiated assertion that Gattoni and O'Malley are California residents, there is no evidence suggesting that Gattoni and O'Malley’s states of residence have changed. The Court concludes that Defendants have shown, by a preponderance of the evidence, that Gattoni and O'Malley were Florida citizens at the time of the complaint and removal to this Court.
Second, Plaintiffs do not challenge Defendants’ allegations that LRI and LSI are Delaware corporations with their principal places of business in Florida. However, Plaintiffs argue that LRI and LSI are also California corporations because they are "incorporated with the California Secretary of State[ ] as foreign companies." (Mot. to Remand ¶ 32.) But an entity's registration as a "foreign corporation" in California does not make it a California corporation. See, e.g., Martinez v. Am.’s Wholesale Lender , No. 18-CV-02869-LHK, 2019 WL 2451010, at *2 (N.D. Cal. June 12, 2019) (noting that if a corporation "were incorporated in California ... [it] would not register ... as a foreign corporation"); Mueller v. Clarke , No. SACV 20-01401-CJC(ADSx), 2020 WL 5759122, at *2 (C.D. Cal. Sept. 28, 2020) (concluding that an entity which was registered as a foreign corporation in California was a Texas corporation for purposes of diversity jurisdiction). Because registration with California as a foreign corporation does not constitute incorporation in California, the Court concludes that LRI and LSI are each Florida and Delaware corporations.
Finally, Plaintiffs contend that diversity is lacking because they "have pled California resident Doe Defendants." (Mot. to Remand ¶ 9.) However, in diversity cases, "the citizenship of defendants sued under fictitious names shall be disregarded." 28 U.S.C. § 1441(b)(1) ; see also Cripps v. Life Ins. Co. of N. Am. , 980 F.2d 1261, 1266 (9th Cir. 1992) (noting that section 1441 "provide[s] that the citizenship of ‘Doe’ defendants ... shall be disregarded for jurisdictional purposes"). Nor is this case one in which the Doe defendants are described with enough specificity to render their citizenship relevant to the diversity analysis. See, e.g., Gardiner Fam., LLC v. Crimson Resource Mgmt. Corp. , 147 F. Supp. 3d 1029, 1036 (E.D. Cal. 2015) (disregarding Doe defendants’ citizenship because the "charges ... [were] so general that no clues exist[ed] as to their identity, citizenship, or relationship to the action"). As a result, the Doe defendants’ alleged California citizenship does not defeat diversity.
In sum, at the times of the complaint's filing and the case's removal, Gattoni and O'Malley were Florida citizens and LRI and LSI were both Delaware and Florida corporations. Plaintiffs were California citizens. Accordingly, the Court concludes that there is complete diversity of citizenship.
The Court observes that O'Malley is now an Iowa citizen; however, this still does not change its conclusion with respect to the presence of complete diversity.
2. The amount in controversy exceeds $75,000.
Plaintiffs also argue that the amount in controversy does not exceed $75,000 and allege that Defendants "fictitiously manufacture[d]" their numbers. (Mot. to Remand ¶ 6.)
Where a plaintiff disputes the defendant's amount-in-controversy allegations, "both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied." Dart Cherokee Basin Operating Co., LLC v. Owens , 574 U.S. 81, 88, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014). Courts may "consider allegations in the complaint and in the notice of removal, as well as summary-judgment-type evidence." Chavez v. JPMorgan Chase & Co. , 888 F.3d 413, 416 (9th Cir. 2018). "[T]he amount in controversy ... is determined by the complaint operative at the time of removal and encompasses all relief a court may grant on that complaint if the plaintiff is victorious." Id. at 414-15. This amount may include "damages (compensatory, punitive, or otherwise) and ... attorneys’ fees awarded under fee shifting statutes." Gonzales v. CarMax Auto Superstores, LLC , 840 F.3d 644, 648-49 (9th Cir. 2016). "Conclusory allegations as to the amount in controversy are insufficient." Matheson v. Progressive Specialty Ins. Co. , 319 F.3d 1089, 1090-91 (9th Cir. 2003).
Here, Plaintiffs seek benefits, lost wages, medical expenses, emotional distress damages, punitive damages, civil penalties, injunctive relief, and attorneys’ fees. (Compl. at 49-52.) However, Defendants argue that Tanious's lost wages claim, alone, exceeds the $75,000 threshold. (Not. of Removal at 4.) Tanious's employment allegedly ended on October 29, 2018. (Compl. ¶ 164.) Thus, as Defendants argue, twenty-five months passed between Tanious's termination and the case's removal on December 4, 2020. (Not. of Removal at 4.) Defendants state that Tanious earned $13,938.47 per month in 2016, $16,575.93 per month in 2017, and $15,978.51 per month for the ten months he worked in 2018. (Id. ) Additionally, Defendants have submitted a declaration from Gregg Nelson, Vice President, Business Capacity Owner Retention, of Landstar Transportation Logistics, Inc., who confirms Tanious's income and proffers Tanious's 2017 and 2018 1099 forms. (Declaration of Gregg Nelson, Dkt. No. 12-1.) From these income figures, Defendants estimate that Tanious "would have continued to gross around $16,000 per month." (Id. at 5.) Defendants then multiply this monthly average by twenty-five to conclude that the amount in controversy with respect to Tanious's lost wages claim is $400,000. (Id. )
Contrary to Plaintiffs’ assertions, Defendants have sufficiently demonstrated, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional threshold. See, e.g., Simmons v. PCR Tech. , 209 F. Supp. 2d 1029, 1032 (N.D. Cal. 2002) (calculating amount in controversy for lost wages claim by multiplying the plaintiff's assumed monthly income by the number of months between termination and removal). Not only does Plaintiffs’ claim for lost wages exceed $75,000 on its own, but Plaintiffs’ other claims for punitive and compensatory damages further support the finding that the amount-in-controversy requirement is met. See Gonzales , 840 F.3d at 648-49. Therefore, the Court is satisfied that the amount in controversy exceeds $75,000.
Because complete diversity exists and the amount-in-controversy requirement is met, the Court has diversity jurisdiction over this matter. Accordingly, the motion to remand is DENIED.
D. Section 1332(d)(4)(A) Does Not Preclude Diversity Jurisdiction.
Additionally, Plaintiffs argue that Section 1332(d)(4)(A) —CAFA's local-controversy exception—precludes this Court from exercising any form of subject matter jurisdiction over this case. However, Plaintiffs are mistaken in their interpretation of Section 1332(d)(4)(A).
Although CAFA vests federal courts with original jurisdiction over class actions, it also delineates circumstances in which district courts may or must decline to exercise CAFA jurisdiction. Serrano v. 180 Connect, Inc. , 478 F.3d 1018, 1023 (9th Cir. 2007). One of these "exceptions" to CAFA jurisdiction is the local-controversy exception, which "provides that ‘a district court shall decline to exercise jurisdiction’ [under 28 U.S.C. section 1332(d)(2) ] over a class action in which the plaintiff class and at least one defendant meet certain characteristics that make the case a local controversy." Id. at 1022 (quoting 28 U.S.C. § 1332(d)(4)(A) ).
The local-controversy exception does not deprive courts of jurisdiction; rather, it requires courts to decline to exercise CAFA jurisdiction over cases with specific characteristics. See id. ("Implicit in ... subsection[ ] ... (d)(4) is that the court has jurisdiction, but the court ... must decline to exercise such jurisdiction."). In other words, the local-controversy exception is not "jurisdictional" in nature. Visendi v. Bank of Am., N.A. , 733 F.3d 863, 869 (9th Cir. 2013). While the Ninth Circuit has yet to address an argument like that of Plaintiffs, other circuits that have done so have rejected it. See, e.g., Blevins v. Aksut , 849 F.3d 1016, 1019-20 (11th Cir. 2017) (concluding that CAFA's local-controversy exception did not preclude district courts from exercising federal question jurisdiction over a class action); Graphic Comms. Local 1B Health & Welfare Fund A v. CVS Caremark Corp. , 636 F.3d 971, 973 (8th Cir. 2011) ("[T]he local controversy provision operates as an abstention doctrine, which does not divest the district court of subject matter jurisdiction.").
Because the local-controversy exception only limits the types of cases over which courts can exercise CAFA jurisdiction, the Court concludes that it does not affect subject matter jurisdiction in this case.
E. Plaintiffs’ Request for Attorneys’ Fees is Denied.
Plaintiffs request an award of attorneys’ fees and costs incurred as a result of Defendants’ allegedly improper removal. See 28 U.S.C. § 1447(c) ("An order remanding the case may require a payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal."). Because the Court denies the motion to remand, it also denies the request for attorneys’ fees.
CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiffs’ motion to remand and DENIES the request for attorneys’ fees. The Court also GRANTS Defendants’ motion for leave to file a sur-reply in opposition to Plaintiffs’ motion to remand.
In addition, the Court SETS the initial case management conference for May 7, 2021 at 11:00 a.m. The parties’ joint case management statement shall be filed no later than April 30, 2021.