Opinion
No. C 11-00606 WHA.
March 28, 2011
ORDER REMANDING ACTION TO STATE COURT
INTRODUCTION
In this 2007 suit concerning late wage payments, plaintiff moves to remand, arguing removal was untimely. Defendant argues that this action only became eligible for removal recently. This order disagrees. Plaintiff's motion is GRANTED.
STATEMENT
Plaintiff Jorge Pineda filed this alleged class action on October 22, 2007. Plaintiff's complaint states that he was employed by defendant Bank of America, that he resigned on May 11, 2006, and that defendant did not pay him his final wages until May 15, 2006 (First Amend. Compl. ¶ 4). On this basis and based on his allegation that defendant had a "policy or practice of not paying final wages timely upon termination" (id. at ¶ 10(c)), plaintiff alleges that defendant violated California Labor Code Sections 201 and 202, and he seeks penalties under Section 203, on behalf of himself and others similarly situated.Plaintiff's original complaint, the one filed in 2007, asserted a class definition as follows:
All persons whose employment with Bank of America in California ended during the period beginning four years prior to the filing of this action and ending on the date notice of this lawsuit is mailed to the class, whose final wage payment occurred after their last date of employment.
The parties agree that based on a four-year statute of limitations, there would be a sufficient amount in controversy given the quantity of class members to reach at least the five million dollar threshold under the Class Action Fairness Act. See 28 U.S.C. 1332(d). The parties agree that other elements of CAFA jurisdiction are met. Despite the fact that the original complaint clearly stated a four-year statute of limitations, however, defendant did not remove the case in 2007. Defense counsel now states: "Because the McCoy decision provided a one-year statute of limitations on the claims Plaintiff raises in his Complaint, leaving the Bank without sufficient matter in controversy with which to remove, the Bank answered the Complaint on December 4, 2007, but did not remove it" (Audero Decl. ¶ 5).
The McCoy decision just referred to is McCoy v. Kimco Staffing Services, Inc. At the time the complaint in the instant action was filed, a judge in Superior Court in Orange County had held in the McCoy action that penalties under Labor Code Section 203 were subject to a one-year statute of limitations (id. Exh. A). Therefore, on this basis alone, defendant herein elected to not remove this action. The parties agree that a one-year statute of limitations would yield an amount in controversy below the CAFA jurisdictional threshold. A petition for writ of mandate of the McCoy decision was denied by the California Court of Appeal after the instant complaint was filed but just before the time for removal expired, based on the date the complaint was served (id. Exh. B).
Returning to our case, defendant moved for judgment on the pleadings in April 2008, arguing that a one-year statute of limitations barred plaintiff's case, as he ended employment with defendant over one year before the complaint was filed. That motion was granted, and the complaint was dismissed without leave to amend (id. Exh. C). The California Court of Appeal affirmed dismissal (id. Exh. D). On November 18, 2010, the California Supreme Court reversed the decision of the Court of Appeal and remanded the action (id. Exh. E). The Supreme Court held that the relevant statute of limitations for Section 203 penalties is three years. Its decision abrogated the McCoy decision. Pineda v. Bank of America, N.A., 50 Cal.4th 1389, 1398 (2010).
This action was remitted to the Superior Court on January 10, 2011 (Audero Decl. Exh. G). Defendant filed its notice of removal on February 9, 2011. Plaintiff promptly moved to remand.
Seemingly as background, defendant raises the existence of a multidistrict litigation proceeding in the District of Kansas before the Honorable John W. Lungstrum, called In Re: Bank of America Wage and Hour Employment Practices Litigation, 2:10-md-02138-JWL-KGS. Defense counsel filed a notice of potential tag-along of this action to the MDL in Kansas the day after removal ( see Dkt. No. 9), but the clerk of the judicial panel on multidistrict litigation determined that this action is not appropriate for inclusion in the MDL on February 14 (Audero Decl. Exh. Q). MDL plaintiffs' counsel have sought review of that decision, but plaintiff herein opposes consolidation of this action with the MDL, and the panel has not taken any further action on MDL plaintiffs' counsel's request ( id. Exh. R and S).
The current motion for remand solely concerns whether removal was timely. Plaintiff argues that defendant waived removal in 2007, because it was apparent from the face of the original complaint that the CAFA jurisdictional requirements for federal removal jurisdiction were met. Defendant contends that in 2007 the amount in controversy did not exceed five million dollars, but that after the Supreme Court's decision "expanded" the applicable statute of limitations, the amount-in-controversy threshold was met, thus rendering removal appropriate for the first time in 2011. Again, the parties agree that if the statute of limitations for plaintiff's claim were one year, the amount in controversy would not amount to the five million dollars required by CAFA, but they also agree that if the statute of limitations were three or four years, the amount in controversy would exceed five million dollars. The parties agree the other CAFA requirements are met.
ANALYSIS
"If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. 1447(c). The "`strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper," and all ambiguity is resolved in favor of remand to state court. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). In determining the presence or absence of federal jurisdiction, we 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." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citation omitted).
A notice of removal must be filed within 30 days after receipt of the first pleading in the state action that sets forth a removable claim. Where removability is uncertain, the 30-day period is measured from the point at which defendant had notice that the action is removable. 28 U.S.C. 1446(b). To trigger the 30-day removal period, the facts supporting removal must be evident on the face of the complaint. Removability is "determined through examination of the four corners of the applicable pleadings, not through subjective knowledge or a duty to make further inquiry." Harris v. Bankers Life Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005) (emphasis added).
In our case, defendant states that the original complaint was not removable because it made further inquiry of its own accord. That is, as opposed to the defendant in Harris who did not want to be held responsible for making further inquiry within the first 30 days after the complaint's filing, defendant in our case says: we want to be given credit for making further inquiry and concluding on our own that the amount in controversy could not have been as high as the complaint stated because the statute of limitations pled therein was too long under the law. Defendant wants to be allowed to remove now because it claims to have done extra-credit homework when the complaint was filed. But the removal statute does not tolerate such after-the-fact excuses, a path that would lead to undue satellite litigation over the defense motives and rationales for inaction. Once again, the law looks at the four corners of the applicable pleadings. See also Self v. Gen. Motors Corp., 588 F.2d 655, 657 (9th Cir. 1978) ("it is clear that the existence of federal jurisdiction is to be determined solely by an examination of the plaintiff's case, without recourse to the defendant's pleadings").
The relevant pleading in this case was the original complaint filed in state court in 2007. That complaint alleged a class definition as follows (emphasis added):
All persons whose employment with Bank of America in California ended during the period beginning four years prior to the filing of this action and ending on the date notice of this lawsuit is mailed to the class, whose final wage payment occurred after their last date of employment.
The parties agree that a four-year statute of limitations period yields an amount in controversy over the five million dollar threshold. It is obvious from this passage that the four corners of the applicable pleading stated a four-year statute of limitations period. Defendant does not contend otherwise. Hence, the time for removal expired in 2007, and defendant waived its right to remove by failing to do so then.
Defendant cites Christensen v. Northwest Airlines, Inc., 633 F.2d 529 (9th Cir. 1980), for the proposition that to determine whether a case was properly removed, a federal court must look to state law to determine whether a state claim is justiciable under that law. On this basis, defendant argues that, "had the Bank removed [the original complaint]," the case would have been remanded because "the Bank was bound under Christensen to calculate the matter in controversy under a one-year, rather than four-year, period" (Opp. 13). Christensen, however, is not applicable to our current situation. The court of appeals in Christensen affirmed a summary judgment order that dismissed the action for failure to meet the amount-in-controversy requirement. Here, in contrast, we are dealing with removal jurisdiction. State law is, of course, applicable to determining the merits of plaintiff's claims, but, as already discussed, it is not the source for divining whether removal jurisdiction exists; the complaint is.
Defendant argues that plaintiff's reliance on Reisman v. New Hampshire Fire Insurance Co., 312 F.2d 17, 19 (5th Cir. 1963), and St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 292 (1938), is misplaced. Defendant argues that these decisions are inapplicable because they held that subsequent trial court rulings do not retroactively affect the initial removability of a case. In other words, as opposed to in the instant matter, the cases were removed to federal court at the outset but a subsequent trial court ruling failed to require remand. Defendant therefore asserts "game, set, and match" for its position, because these cases do not present the precise procedural posture that we have here. Defendant ignores, however, that these decisions rely on the above-recited principle that removability depends on the applicable pleadings and that here examination of those pleadings shows that defendant waived removal in 2007.
Similarly, defendant argues that plaintiff's reliance on Rafiqzada v. U.S. Bank National Association, No. 02-cv-3316, 2002 WL 31430319, *3 (N.D. Cal. Oct. 29, 2002) (Illston, J.), is also misplaced. Again, defendant argues that Rafiqzada is inapplicable because it involved a different procedural posture from our case. In Rafiqzada, defendant removed after the California Supreme Court had confirmed that plaintiff could maintain the claims stated in the complaint, and the district court held that removal was untimely because "the same facts that formed the basis for defendants' assertion of removal jurisdiction . . . were pled in the complaint . . . when it was filed." Ibid. Defendant is correct that the facts of this case are not exactly the same, because here the California Supreme Court adjusted slightly the governing statute of limitations from what was pled in the original complaint — adjusting downward from four years to three years. Regardless, both in 2007 and now the CAFA jurisdictional requirements were met. The California Supreme Court's decision didn't change that. Rafiqzada is persuasive in that there, as here, removal was untimely because regardless of what the state court had held, removal was dependant on what was originally pled. As what was originally pled made the case originally eligible for removal, defendant waived its right to remove by failing to do so.
In the end, defendant fails to present any decision that supports its view that in 2007 removability of this action depended on what the McCoy decision said rather than on what was pled in the complaint. The parties in this action spent three years litigating what the statute of limitations should be as applied here. The idea that defendant should have been entitled to make removability dependent on its own view of that issue runs contrary to basic principles. Basic principles dictate that the complaint was what mattered, and the complaint pled a four-year statute of limitations, which defendant concedes meets the amount-in-controversy requirement. Defendant thus waived its right of removal in 2007.
If a defendant does not file a notice of removal before the removal period runs out, that defendant has waived the right to remove. Subsequent voluntary changes by plaintiff creating a new basis for removal do not change the waiver: "Changes to a complaint that create a new basis for removal do not undo the original waiver. If a case is removable from the outset, it must be removed within the initial thirty-day period specified by § 1446(b); subsequent events do not make it `more removable' or `again removable.'" Samura v. Kaiser Found. Health Plan, Inc., 715 F. Supp. 970, 972 (N.D. Cal. 1989) (Schwarzer, J.) (citation and internal quotation marks omitted). The parties agree with this principle. As defendant waived its right to remove this action in 2007, the fact that plaintiff filed a first amended complaint recently does not make the action removable now.
Because this order finds remand appropriate for the foregoing reasons, it need not address plaintiff's alternative argument that removal was untimely even if the recent California Supreme Court decision in this matter triggered eligibility for removal.
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Plaintiff also moves for attorney's fees, in the amount of $14,000, incurred in seeking remand of this action back to state court (see Karasik Decl. ¶¶ 4-5 and Supp. Decl. ¶ 2). "An order remanding [a] case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. 1447(c). Under the circumstances of this case, this order does not find it appropriate to award attorney's fees. Accordingly, plaintiff's motion for attorney's fees is DENIED.