Opinion
3:23-cv-01798-BEN-DDL
06-18-2024
ANTHONY CUSHMAN, individually and on behalf of others similarly situated; and MARITZA HERNANDEZ, individually and on behalf of other similarly situated, Plaintiffs, v. PHYSICAL REHABILITATION NETWORK, LLC, a Delaware limited liability company; HEALTHCARE EMPLOYEE SERVICES, LLC, a California limited liability company; and DOES 1 through 50, inclusive, Defendants.
ORDER GRANTING PLAINTIFFS' MOTION TO REMAND
[ECF NO. 3]
HON. ROGER T. BENITEZ UNITED STATES DISTRICT JUDGE
On July 21, 2023, Plaintiffs Anthony Cushman and Maritza Hernandez (“Plaintiffs”) filed a putative class action complaint in San Diego County Superior Court against Defendants Physical Rehabilitation Network, LLC and Healthcare Employee Services, LLC (“Defendants”) alleging nine state law claims for various wage and hour violations. ECF No. 1-3. On September 28, 2023, Defendant removed the action to this Court pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1453(b).
Before the Court is Plaintiffs' Motion to Remand. ECF No. 3. Defendants filed an opposition to this motion. ECF No. 4. Plaintiffs submitted a reply. ECF No. 5. The briefing was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 6. The Court further ordered the parties to submit additional briefing. ECF No. 11. Both parties provided a response to this Order. ECF Nos. 12-14. After considering the applicable law and the parties' arguments, the Court GRANTS Plaintiffs' Motion to Remand.
I. BACKGROUND
Plaintiff Anthony Cushman was employed by Defendants as a Patient Account Representative between June 2016 and February 11, 2021. ECF No. 1-3, Complaint ¶ 19. Plaintiff Maritza Hernandez was also employed by Defendants as a Patient Account Representative between 2014 and January 2023. Id. ¶ 20. Plaintiffs allege Defendants engaged in an ongoing and systematic scheme of wage abuse against their hourly-paid or non-exempt employees, violating California labor law requirements surrounding time keeping, meal and rest periods, overtime pay, and accurate wage statements. Id. ¶ 24-43. The Complaint does not estimate the number of potential class members, but defines the class as “[a] 11 current and former non-exempt employees of any of the Defendants within the State of California at any time commencing four (4) years preceding the filing of Plaintiffs' complaint...” Id. ¶ 14. The Complaint does not state an amount in controversy.
II. LEGAL STANDARDS
A defendant in state court may remove a civil action to federal court so long as that case could originally have been filed in federal court. 28 U.S.C. § 1441(1); City of Chi v. Int'l Coll, of Surgeons, 522 U.S. 156, 163 (1997). Removal of a state action may be based on either diversity or federal question jurisdiction. City of Chi, 522 U.S. at 163; Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Generally, removal statutes are strictly construed, and removal jurisdiction is to be rejected in favor of remand if there are doubts as to the right of removal. Nev. v. Bank of Am. Corp., 672 F.3d 661, 667 (9th Cir. 2012).
For cases removed under CAFA, there is no presumption against removal. Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014). CAFA vests original jurisdiction in federal courts for class actions where the purported class is more than 100 members, there is minimal diversity, and the amount in controversy exceeds $5,000,000. Bush v. Cheaptickets, Inc., 425 F.3d 683, 684 (9th Cir. 2005). Unlike the complete diversity of citizenship required by 28 U.S.C. § 1332(a), CAFA requires only “minimal diversity.” Bush, 425 F.3d at 684. This occurs when “any member of a class of plaintiffs is a citizen of a State different from any defendant.” Ehrman v. Cox Commc'n, Inc., 932 F.3d 1223, 1226 (9th Cir. 2019) (quoting 28 U.S.C. § 1332(d)(2)(A)). The burden to prove the basis of removal remains with the party invoking the court's jurisdiction. Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 684 (9th Cir. 2006).
III. DISCUSSION
Plaintiffs make two arguments in their motion to remand. ECF No. 3, Motion to Remand (“Mot.”). First, they argue that Defendant's removal is untimely. Mot. at 8-11. Second, Plaintiffs argue Defendants have failed to properly establish the amount in controversy exceeds $5,000,000. Mot. at 12-21.
A. Timeliness
CAFA provides two timelines for removal: (1) during the first 30 days after the defendant receives the initial pleading; or (2) during the first 30 days after the defendant receives an amended pleading, motion, order, or other paper from which it may be first ascertained that the case is one which is or has become removable. Reyes v. Dollar Tree Stores, Inc., 781 F.3d 1185, 1189 (9th Cir. 2015) (citing 28 U.S.C. § 1446(b)(1) and (b)(3) (internal quotations removed)).
“The first time period under § 1446(b)(1) is triggered if the case stated by the initial pleading is removable on its face and the second time period under § 1446(b)(3) is triggered if the initial pleading does not indicate that the case is removable.,.” Chi-Fu Hsueh v. Bankers Life and Casualty Co., 421 F.Supp.3d 937, 941 (S.D. Cal. 2019) (citing Carvalho v. Equifax Info. Serves., LLC, 629 F.3d 876, 885 (9th Cir. 2010) (internal quotations removed)). “[T]he ground for removal must be revealed affirmatively in the initial pleading in order for the first thirty-day clock under § 1446(b) to begin.” Harris v. Bankers Life and Casualty Co., 425 F.3d 689, 695 (9th Cir. 2005).
Plaintiffs argue Defendants' Notice of Removal is procedurally defective because Defendants failed to remove the action within 30 days of receipt of the complaint. Mot. at 9. Defendants argue their removal was timely because the Complaint does not clearly state on its face grounds for removal. ECF No. 4, “Oppo.” at 9-10. Defendants assert the complaint alleged all parties were California citizens and did not state an amount in controversy, and the question of removability required investigation. Oppo, at 9. Defendants argue because the complaint did not “state grounds for removability on its face”, receipt of the complaint did not trigger the first 30-day time period. Id.
Plaintiffs' motion argues the complaint “unequivocally pled.. .that Defendants are out of state limited liability companies.” Mot. at 9. Defendants allege “the Complaint (inaccurately) alleged the parties were all California citizens[.]” Oppo, at 9. Neither characterization is completely accurate. The Complaint alleges that one Defendant, Healthcare Employee Services LLC, is a California limited liability company and one Defendant, Physical Rehabilitation Network LLC, is a Delaware limited liability company. Compl. ¶¶ 8-9.
Additionally, Defendants argue the complaint does not estimate the number of putative class members or state any amount in controversy. The Ninth Circuit has repeatedly held, in different contexts, that defendants do not have a duty to investigate within the first thirty-day window that which the complaint does not allege. See Harris, 425 F.3d at 695; Roth v. CHA Hollywood Medical Center, L.P., 720 F.3d 1121, 1123-24 (9th Cir. 2013) (defendant could remove case outside of both thirty-day windows if it discovers on its own investigation that case is removable). Here, Defendants were required to investigate all three elements of jurisdiction under CAFA. Although, noted below, parties dispute the applicable test for determining the Defendants' citizenship, for the purpose of Plaintiff s timeliness argument, the Court finds under Harris and Roth, Defendants' Notice of Removal was not untimely.
B. Proof of Court's Jurisdiction
In the Notice of Removal, Defendants indicate that Defendant Physical Rehabilitation Network LLC is a limited liability corporation organized under the laws of the state of Delaware, not California. ECF No. 1, Notice of Removal (“NOR”) ¶ 22. The Notice of Removal states the citizenship of a limited liability company for the purposes of diversity jurisdiction is determined by the citizenship of its members. NOR ¶ 20. The NOR lists a series of member limited liability companies for both Defendants, ultimately arriving at PRN Intermediate Holdco, Inc., a Delaware corporation with its principal place of business in Texas. NOR ¶¶ 22-24. Accordingly, the Notice of Removal indicates both Defendants would be considered citizens of Delaware and Texas. Id. ¶ 25.
However, Plaintiffs argue for the purposes of CAFA, a limited liability corporation is treated as an unincorporated association and accordingly “deemed to be a citizen of the State where it has its principal place of business and the State under whose laws it is organized.” ECF No. 5, “Reply” at 2 (citing 28 U.S.C. § 1332(d)(10)). Plaintiff cites to persuasive authority from the Fourth and Seventh Circuits interpreting this clause. Reply at 2-3 (citing Ferrell v. Express Check Advance of S.C. LLC, 591 F.3d 698, 699-700 (4th Cir. 2010) and City of E. St. Louis, Illinois v. Netflix, Inc., 83 F.4th 1066, 1071 (7th Cir. 2023)).
City of E. St. Louis, Illinois v. Netflix cites to the Ninth Circuit opinion in Abrego as similarly deciding this issue. Id. at 1071 (citing Abrego Abrego v. Dow Chemical Co., 443 F.3d 676, 684 (9th Cir. 2006)). However, while Abrego notes departure from the traditional diversity rule codified in § 1332(d)(10), it does not address whether a limited liability company falls under this provision. See Abrego, 443 F.3d at 684-85. Abrego was primarily concerned with the question of whether CAFA shifted the burden of proof on removal. Id.
Whether a limited liability company falls under this exception has not been squarely addressed by the Ninth Circuit. However, several district courts in this circuit, including this Court, have cited to Ferrell and found a limited liability company would fall under § 1332(d)(10). Ramirez v. Carefusion Resources, LLC, No. 18-CV-2852-BEN-MSB, 2019 WL 2897902 at *2-3 (S.D. Cal. Jul. 5, 2019); see also Marroquin v. Wells Fargo, LLC, No. 1 l-cv-163-L-BLM, 2011 WL 476540 at *2 (S.D. Cal. Feb. 3, 2011); Jack v. Ring, LLC, 553 F.Supp.3d 711, 714-16 (N.D. Cal. Aug. 10, 2021). Additionally, in Jack, at least one judge agreed that a limited partnership should be considered an unincorporated association under CAFA. Id. at 715 (citing Davis v. HSBC Bank Nevada, N.A., 557 F.3d 1026, 1032 & n.13 (9th Cir. 2009) (Kleinfeld, J., concurring) (applying § 1332(d)(10)).
Given the above, the Court ordered both parties to brief the issue of Defendants' principal place of business. ECF No. 11. Unfortunately, neither party directly responded to the Court's order. Instead, Defendants reprised their argument that citizenship of a limited liability company is determined by the citizenship of its members. ECF No. 12 at 4. Defendants did not acknowledge Davis, Ramirez, or § 1332(d)(10) in their additional brief. Plaintiffs also did not address the issue of Defendants' principal place of business, choosing to reprise arguments from their motion that the Defendants' removal was untimely. ECF No. 14 at 2-4. However, it is the Defendants in this case, not Plaintiffs, who cany the burden to demonstrate this Court's jurisdiction. Abrego, at 686 (CAFA “does not alter the longstanding rule that the party seeking federal jurisdiction on removal bears the burden of establishing that jurisdiction.”).
IV. CONCLUSION
Given no evidence was presented regarding the location of Defendants' principal place of business, the Court finds the Defendants have not properly carried their burden to demonstrate this Court's jurisdiction under CAFA. For the foregoing reasons, the Court GRANTS Plaintiffs' Motion to Remand and ORDERS this case REMANDED back, to San Diego County Superior Court.
IT IS SO ORDERED.