Opinion
M. Van Smith, Counsel for Plaintiff(s).
Francis J. Ortman, III, G Daniel Newland, Counsel for Defendant(s).
ORDER DENYING MOTION TO REMAND
RONALD WHYTE, District Judge.
Plaintiff Lois Marie Hudson's motion to remand was heard on September 10, 2004. Defendants opposed the motion. The court has reviewed the papers and considered the arguments of counsel. For the reasons set forth below, the court denies plaintiff's motion.
I. BACKGROUND
Plaintiff was defendant's employee from January 5, 1985 through March 15, 2002. Defendant Pinkerton's, Inc. dba Pinkerton Security and Investigation Services ("Pinkerton") operates in the county of Santa Clara, California. The position plaintiff held with defendant before 1999 is unclear, but since August 27, 1999, she worked in defendant's North San Jose office and performed scheduling and payroll duties. See Compl. ¶ 6. In July 2001, plaintiff was promoted to the position of manager of payroll and scheduling. Plaintiff alleges that despite the promotion, her salary was not equal to that of other male managers at her level. In August 2001, plaintiff claims that she discussed this problem with Thomas Hyler, a manager of Pinkerton, and defendant William Fox, a regional manager of Pinkerton. Plaintiff alleges that she demanded a higher raise equal to that of her male counter parts, and that defendant Fox grudgingly agreed, but told her that she would not receive a raise next year due to her present demand. See Compl. ¶ 7, 8. On February 26, 2002, plaintiff was demoted due to payroll errors, and thereon responsible only for scheduling, but her salary remained the same. See Compl. ¶ 9. On March 8, 2002, plaintiff was put on administrative leave because defendant Fox accused her of being an exempt employee and of having fraudulently received compensation for 168 hours of overtime worked between August 2001 and February 2002. See Compl. ¶ 11. On March 15, 2002, plaintiff alleges that defendant terminated her from employment due to a hostile work environment. See Compl. ¶ 13.
Plaintiff brought this action on March 7, 2003 in the Superior Court of the State of California for the County of Santa Clara. Her complaint alleges causes of action for unpaid wages, gender discrimination in violation of the Fair Employment and Housing Act, age discrimination, mental distress, and defamation. It is undisputed that plaintiff did not specify the statutory basis for her unpaid wages claim. On June 8, 2004, Judge Joseph H. Huber of the Superior Court granted summary adjudication to defendants on all but plaintiff's first cause of action for unpaid wages. On June 23, the parties met for a mandatory settlement conference where plaintiff filed and served a settlement conference statement indicating, for the first time in the course of litigation, that plaintiff sought liquidated damages under the federal Fair Labor Standards Act ("FLSA"). 29 U.S.C.S. §§ 201 et seq. Five days later, plaintiff filed her state court trial brief, again referencing damages under FLSA. On June 30, 2004, the parties appeared for a pre-trial conference in state court, where plaintiff stated on the record that she claimed relief under both the California Labor Code, Cal. Lab. Code § 203, and FLSA. The next day, on July 1, 2004, defendants removed the case to this court based on federal question jurisdiction. See 28 U.S.C. §§ 1331, 1441.
Plaintiff filed a motion to remand on July 30, 2004, arguing that defendants' Notice of Removal was filed more than thirty days from the date that it was ascertainable that the complaint alleged a claim under FLSA, and thus was no longer removable. Plaintiff also requests attorney's fees pursuant to 28 U.S.C. §§ 1446 and 1447(c). The questions before the court are: (1) whether the initial pleading sufficiently alleges plaintiff's unpaid overtime claim under FLSA, and so constituted notice to defendants that the case was removable, and (2) whether an award of attorney's fees is proper.
II. ANALYSIS
1. Motion to Remand
Any action based on a claim or right that arises under federal law may be removed to federal court pursuant to 28 U.S.C. § 1441, if a notice of removal is filed within thirty days after the defendant receives a copy of an amended pleading, motion, order, or other paper from which it may first be ascertained that the case is one which is or has become removable. 28 U.S.C. § 1446(b).
Plaintiff argues that defendants' removal was untimely and thus improper because defendants removed this case over a year after being served with the complaint. Defendants claim that notice of plaintiff's FLSA claim was not provided until plaintiff served her settlement conference statement on June 23, 2004. Consequently, defendants argue that the notice of removal was filed within thirty days of ascertaining such information, and this constituted a timely removal within the statutory period. Plaintiff counters that her initial pleading clearly alleged her claim for unpaid overtime, which states facts sufficient to bring a FLSA claim, and that this was sufficient notice of removability. Plaintiff argues that to the extent defendants were unable to ascertain this, they should have sought prior clarification.
In determining the presence or absence of federal jurisdiction, courts apply the "'well-pleaded complaint rule, ' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Calif. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838-839 (9th Cir. 2004) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)). The rule enables the plaintiff, as "master of the complaint, " to choose to have the cause heard in state court "by eschewing claims based on federal law." Caterpillar, 482 U.S. at 399. The court applies a strong presumption against removal, and federal jurisdiction must be rejected if there is any doubt as to the right of removal. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992).
Here, plaintiff's complaint does not refer to any federal claim or statute. In the first cause of action for unpaid wages, plaintiff seeks California state law damages for "waiting time penalties" and "special damages for unpaid wages and accrued vacation time." Even if defendants had noticed that claims for unpaid wages could arise under both state and federal law, it is a "long-settled understanding that the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow v. Pharmaceuticals, Inc., 478 U.S. 804, 808 (1986). The federal controversy cannot be "merely a possible or conjectural one." Gully v. First Nat'l Bank in Meridian, 299 U.S. 109, 113 (1936). Therefore, the fact that plaintiff's claims for unpaid wages could have possibly arisen under FLSA does not make the federal question ascertainable on the face of the complaint.
Contrary to plaintiff's assertions in her motion to remand, this court does not hold that defendants have a duty to ascertain whether a plaintiff makes claims under federal law. See Mot. 4:18-21. While it is true that the case law cited by plaintiff from other circuits supports her contention that a defendant must remove within the thirty-day period after service of the complaint regardless of whether jurisdictional requirements are explicitly stated in the initial pleadings, "case law within the Ninth Circuit suggests that a defendant may rely on the pleadings before the thirty-day period begins to run." Kirkland v. Morton's of Chicago, No. 96-2301, 1996 WL 532118, at 2 (N.D. Cal. Sept. 16, 1996) ( citing Riggs v. Continental Baking Co., 678 F.Supp. 236, 238 (N.D. Cal. 1988); Jong v. General Motors Corp., 359 F.Supp. 223 (N.D. Cal. 1973)).
Courts in the Ninth Circuit tend to follow the "paper in the case" rule for determining when the thirty-day provision commences to run. Id. The elements of removability must be specifically indicated in official papers before the statutory period begins to run. Riggs, 678 F.Supp. at 238. "Thus, the defendant does not have to speculate as to facts forming the basis for removal." Jong, 359 F.Supp. at 226. In Kirkland, a court of this district denied plaintiff's motion for remand and gave several reasons for adopting the "paper in the case rule." Kirkland, 1996 WL 532118. First, as mentioned above, case law in the Ninth Circuit tends to allow the defendants to rely on the pleadings. Id. at 4. Second, this rule makes sense of section 1446(b), which clearly "uses the pleadings or papers in the case to trigger the removal time." Id. Third, "neither the parties nor the court should be left to divine" plaintiff's intentions to claim damages under FLSA where the pleadings lack a clear statement of such intent. Id.
The majority of cases in this circuit have held that removability must be clear from the pleadings. In Jong, the court denied plaintiff's motion to remand even though there was evidence that defendants had actual knowledge of facts entitling them to federal jurisdiction months prior to removal. That court held, based on the plain language of section 1446(b), that "where a case is not originally removable, the time for removal begins only after defendant receives a copy of a pleading, motion, or other paper which shows that the action has become removable. Therefore, the time period to remove an action cannot depend on defendant's actual knowledge, because the statute expressly allows a defendant to rely on papers presented to it." Jong, 359 F.Supp. at 226. See Rains v. Criterion Sys. Inc., 80 F.3d 339, 344 (9th Cir. 1996) (holding that even direct and indirect references to Title VII in the complaint were not sufficient to establish federal jurisdiction in a wrongful termination action). See also Duncan v. Stuetzle, 76 F.3d 1480 (9th Cir. 1996) (remanding a case because plaintiff's complaint, on its face, did not state a claim arising under federal law, none of plaintiff's causes of action required resolution of any federal question, and alternative, state-law based theories of relief existed for each claim). But see Kaneshiro v. North Am. Co. for Life and Health Ins., 496 F.Supp. 452 (D. Haw. 1980) (holding that where no pleading sets out the jurisdictional elements, if it is at all ascertainable from the pleadings that a case may be removable, the defendant bears the burden of discovering and proving those facts).
This court will follow the majority rationale that under section 1446(b), where a case is not originally removable, the time for removal begins only after defendant receives "a copy of a pleading, motion, or other paper" which shows that the action has become removable. See 28 U.S.C. § 1446(b). The phrase "other paper" has "been interpreted as documents generated within the state court litigation.'" Biggs v. Wilen, 97 F.Supp. 1040, 1047 (D. Nev. 2000). Here, defendants did not receive notice of the facts indicating removablility until the week of June 23, 2004 in plaintiff's settlement conference statement, trial brief, and pretrial conference admission. All three of these documents constitute "other paper" under section 1446(b) and showed that the action had become removable under the statute. Accordingly, defendants removed the case one week later. Thus, the notice of removal was timely filed within the meaning of 28 U.S.C. § 1446(b), and plaintiff's motion to remand to state court is DENIED.
2. Attorney's Fees
As removal was proper, plaintiff's request for attorney's fees is DENIED.
III. ORDER
For the foregoing reasons, the court denies the motion for remand as follows:
1. Plaintiff's motion for remand is denied;
2. Plaintiff's request for attorney's fees is denied.