Opinion
2:20-cv-01428-MCE-JDP
09-30-2021
EDGAR MONTES SANCHEZ, ARTURO RAMIREZ ALVAREZ, FILIBERTO LOPEZ HERRERA, and DANIEL VARELAS HERRERA, as individuals and on behalf of all other similarly situated persons, Plaintiffs, v. SARBANAND FARMS, LLC, MUNGER BROS., LLC., CROWNE COLD STORAGE, LLC, ROBERT HAWK, CLIFF WOOLLEY, CSI VISA PROCESSING, SC, and DOES 1 through 10, Defendants.
MEMORANDUM AND ORDER
MORRISON C. ENGLAND, SENIOR UNITED STATES DISTRICT JUDGE.
Plaintiffs, who are seasonal farmworkers from Mexico, brought the present action against agricultural entities they worked for in the United States on grounds that their recruitment and employment as blueberry harvesters violated both California statutory and common law. Defendants include Munger Bros, LLC (“Munger”) and two other entities allegedly owned and/or managed by Munger, Sarbanand Farms, LLC and Crowne Cold Storage, LLC. In addition, Plaintiffs include CSI Visa Processing, SC (“CSI”), a farm labor contractor that supplies Mexican workers to agricultural employers in the United States, as an additional defendant. Finally, Plaintiffs name Cliff Woolley and Robert Hawk, both of whom serve in managerial positions for the Munger-related Defendants, on an individual basis.
All of these individuals and entities are collectively referred to in the body of this Memorandum and Order as “Defendants” unless otherwise noted. The Court notes, however, that Defendant CSI has not opposed Plaintiffs' Motion to Remand. Instead, CSI filed a Motion to Dismiss (ECF No. 19).
Plaintiffs' lawsuit was originally instituted in San Joaquin County Superior Court on June 11, 2020. On July 15, 2020, after Plaintiffs filed a First Amended Complaint (“FAC”) on or about July 10, 2020, also in state court, Defendants (except for CSI) removed the case to this Court on two grounds. First, Defendants claim that federal jurisdiction is conferred by the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d) (“CAFA”). Second, Defendants also argue that federal question jurisdiction is present in any event because Plaintiffs' claims for breach of farmworker H-2A visa requirements necessarily implicate issues of federal law sufficient to provide jurisdiction under 28 U.S.C. § 1331.
Presently before the Court is Plaintiffs' Motion to Remand (ECF No. 6), made on grounds that neither of Defendants' jurisdictional arguments have merit. As set forth below, Plaintiffs' Motion is GRANTED.
Having determined that oral argument would not be of material assistance, the Court ordered this matter submitted on the briefs in accordance with E.D. Local Rule 230(g).
The factual assertions included in this section are derived, at some points verbatim, from the allegations contained in Plaintiffs' FAC, ECF No. 10-1.
According to the operative FAC, Munger is the “number one producer of fresh blueberries in the world” and cultivates more than 3, 000 acres of blueberries in California, Washington, Oregon, British Columbia and Mexico. Since at least 2006, Munger has used the H-2A agricultural visa program to utilize foreign labor to harvest blueberries. H-2A visas strictly limit the terms and conditions of employment within the United States and preclude workers hired pursuant to such visas from leaving their authorized jobsite. Plaintiffs aver that Defendants were well aware of these restrictions and that Munger and its affiliated entities used CSI to recruit workers under the program in Mexico and to make the arrangements necessary to bring them to the United States.
In March 2017, Munger applied to the Department of Labor for authorization to import 387 Mexican H-2A workers to harvest and pack blueberries in California between May 15, 2017 and June 30, 2017. Additionally, at the same time and for the same period of employment, Defendant Crowne Cold Storage, which was managed by Munger, made a similar application for 171 agricultural workers, resulting in a total of 558 workers between the two entities. Finally, after concluding work in California, Defendant Sarbanand Farms, a wholly-owned subsidiary of Munger, applied for permission, also under the H-2A program, to have all 558 workers come to Washington and process blueberries there between July 10, 2017 and October 25, 2017.
Under the terms of the H-2A job orders, Defendants were required to guarantee the California minimum wage of $12.57 per hour along with applicable employment and wage-and-hour laws. Defendants were further obligated to obtain the necessary visas for the migrant workers, and provide them with inbound and return travel, along with subsistence costs incurred enroute, between the United States and Mexico. Moreover, Defendants had to furnish adequate housing for the workers while employed in this country.
In contravention of these requirements, Plaintiffs claim that the workers were not properly reimbursed for travel and visa costs they incurred, and were not paid for overtime incurred, for transportation to and from their jobsites, for waiting time, and for meal and rest breaks as required by law. In addition, despite being brought to the United States to work some five months in both California and Washington, some of the workers allege they were sent back to Mexico once the California blueberry crop was harvested.
Citing these alleged shortcomings, and as already indicated above, this lawsuit was filed in state court on June 11, 2020, on behalf of four of the H-2A workers imported by the Munger-related entities. Plaintiffs assert twelve causes of action under California law, both on their own behalf and for others similarly situated. Class action allegations are made, not only for all those workers brought by Munger and its affiliates from Mexico in 2017, but also for two subclasses consisting of those workers sent back to Mexico after the California season (the “California subclass, ” which Plaintiffs estimate at up to about 35 individuals), and for those workers denied mandatory rest periods (Plaintiffs do not quantify the number, stating only that over 10 persons are involved in the so-called “Rest Period subclass”).
After Plaintiffs filed a FAC, also in state court, Defendants removed the action here on grounds that federal jurisdiction is conferred by CAFA, and upon the argument that because the federal H-2A visa program is implicated by Plaintiffs' lawsuit, the case raises a federal question in any event.
Plaintiffs now move to remand these proceedings to state court, arguing that Defendants have not demonstrated, as they must in order to qualify for federal class action treatment under the provisions of CAFA, that the amount in controversy exceeds the sum of $5,000,000.00. Plaintiffs also allege that federal question jurisdiction is not conferred simply because the federal H-2A visa program happens to be implicated, and accordingly urge this Court to remand the matter back to San Joaquin County where it originated.
STANDARD
When a case “of which the district courts of the United States have original jurisdiction” is initially brought in state court, the defendant may remove it to federal court “embracing the place where such action is pending.” 28 U.S.C. § 1441(a). There are two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 28 U.S.C. § 1331, and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court has federal question jurisdiction in “all civil actions arising under the Constitution, laws, or treaties of the United States.” Id. § 1331. A district court has diversity jurisdiction “where the matter in controversy exceeds the sum or value of $75,000, . . . and is between citizens of different states, or citizens of a State and citizens or subjects of a foreign state . . . .” Id. § 1332(a)(1)-(2).
A defendant may remove any civil action from state court to federal district court if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). “The party invoking the removal statute bears the burden of establishing federal jurisdiction.” Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citing Williams v. Caterpillar Tractor Co., 786 F.2d 928, 940 (9th Cir. 1986)). Courts “strictly construe the removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (internal citations omitted). “[I]f there is any doubt as to the right of removal in the first instance, ” the motion for remand must be granted. Id. Therefore, “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded” to state court. 28 U.S.C. § 1447(c).
The district court determines whether removal is proper by first determining whether a federal question exists on the face of the plaintiff's well-pleaded complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). If a complaint alleges only state-law claims and lacks a federal question on its face, then the federal court must grant the motion to remand. See 28 U.S.C. § 1447(c); Caterpillar, 482 U.S. at 392. Nonetheless, there are rare exceptions when a well-pleaded state-law cause of action will be deemed to arise under federal law and support removal. They are “(1) where federal law completely preempts state law, (2) where the claim is necessarily federal in character, or (3) where the right to relief depends on the resolution of a substantial, disputed federal question.” ARCO Envtl. Remediation L.L.C. v. Dep't of Health & Envtl. Quality, 213 F.3d 1108, 1114 (9th Cir. 2000) (internal citations omitted).
ANALYSIS
A. Jurisdiction Under CAFA
Plaintiffs first take issue with Defendants' claim that their lawsuit was properly removable because federal jurisdiction is conferred by CAFA. Under CAFA, federal district courts have jurisdiction to adjudicate class actions provided that certain conditions are met, including 1) that the proposed class has more than 100 members; 2) that the parties are minimally diverse; and 3) that the amount in controversy in the aggregate exceeds the sum or value of $5,000,000.00. 28 U.S.C. § 1332(d)(2); see also Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1195 (9th Cir. 2015).
For purposes of satisfying the amount in controversy requirement, a defendant asserting CAFA jurisdiction must include in the notice of removal “a plausible allegation that the amount in controversy requirement exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014). Mere legal conclusions do not suffice; an underlying factual basis must be alleged. Leite v. Crane Co., 749 F.3d 1117, 1122 (9th Cir. 2014) (citing Gaus v. Miles, 980 F.2d 564, 567 (9th Cir. 1992)), cert. denied, 574 U.S. 934 (2014).
When, as here, the claimed amount in controversy is contested by the Plaintiffs, the defense bears the burden of establishing, by “a preponderance of the evidence, ” that the $5,000,000 threshold has been met. Rodriguez v. AT&T Mobility Servs. LLC, 728 F.3d 975, 977 (9th Cir. 2013). It is not enough to offer “mere speculation and conjecture, with unreasonable assumptions.” Ibarra, 775 F.3d at 1197. Instead, CAFA requires that the removing party, once pressed to do so, support its amount in controversy allegations with real evidence. See Dart Cherokee, 574 U.S. at 89; Ibarra, 775 F.3d at 1197-98. The Ninth Circuit in particular has stated that “summary-judgment type evidence” is required for a removing defendant to meet its burden of demonstrating the requisite amount in controversy when challenged. Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997).
The Court now applies these principles to the factual basis offered by Defendants in response to Plaintiffs' assertion that this case is not worth $5,000,000.00, despite Defendants' claim that as much as $8,029,626.30 is in controversy. Plaintiffs' First through Third Causes of Action are misrepresentation claims on behalf of the California-subclass, only, which Plaintiffs estimate as including only up to 35 individuals. Defendants argue that those causes of action alone carry the potential for damages of some $1,047,337.20. They base that total on 78 days of work missed due to not harvesting the Washington crop, multiplied by a daily compensation rate of $192.82 for each of the 35 workers during that period.
Defendants make assumptions when making daily estimates that are not borne out by either Plaintiffs' allegations or any evidence they offer. First, Defendants assert the daily rate paid by Munger, whose H-2A workers were contracted to work six 10-hour days, at a per hour rate of $12.57, should include, in addition to the $125.70 regular time another 2.2 hours of overtime (at time-and-a-half, or $18.87 for each overtime hour). While Defendants purport to base that figure, which totals approximately $168.21, on the FAC, that is an unreasonable reading of Plaintiffs' operative pleading. All the FAC says is that Plaintiffs “at various times relevant to this action” worked in excess of 10 hours per day and were therefore entitled to overtime. FAC, ¶¶ 152-53. It does not state, as Defendants claim, that they “regularly” worked in excess of those hours, much less than the estimated 2.2 hours per day consumed by transportation and waiting time caused them to do so. Yet Plaintiffs' figure, which includes 2.2 hours for each employee in the subclass for each and every day, does just that. Defendants' assumption in that regard is not warranted on the basis of Plaintiffs' allegations alone as Defendants assert, and in the Court's view the only daily wage that has been adequately demonstrated is $125.70, for 10 hours at $12.57 an hour.
See Defs.' Opp., ECF No. 9, 8:21-24.
While the Court recognizes that only 387 of the 558 H-2A workers at issue in this case worked at Munger, with the other 171 working at Crowne on an eight-hour per day, five-day per week basis, it uses the higher Munger figures as representing the maximum amount that the 35 workers could reasonably claim, provided in fact they all were employed by Munger.
Defendants reach even further, however, in attempting to inflate Plaintiffs' overall daily compensation by including an additional $12.57 per worker per day in hotel costs, despite the fact that those costs were borne by the employer and not the H-2A workers under the terms of the program. Also unwarranted is Defendants' claim that $12.07 per day should be included as daily food costs despite the fact that any such costs were deducted from Plaintiffs' pay and therefore would not add to the amount in controversy. See Decl. of Stephanie Thiessen, ECF No. 9-2, ¶ 7 and Exh. C. Consequently, at most, Defendants have demonstrated a $125.70 daily rate. Multiplying that rate times 78 days for 35 employees yields a total of $343,161.00. Even when that amount is doubled as a statutory penalty under California Labor Code § 972, as Defendants have calculated, a total figure of only $686,322.00 is indicated, substantially less than Defendants' claimed total of $1,047,337.20.
Plaintiffs' Fourth and Fifth Causes of Action seek damages on behalf of the entire class for unpaid wages for travel time. Arguing that any such wages should be paid at the overtime rate is not warranted for the same reasons outlined above. It is patently unreasonable to assume, based only on the allegations of the FAC, that each of the 558 H-2A workers are entitled to be paid for waiting and transportation time at an overtime rate, for each and every day they worked. Consequently, while Defendants assign an additional $787,288.06 to those allegations, the Court does not believe that amount, or indeed any specific figure, has been properly substantiated.
Proceeding to Plaintiffs' Sixth Cause of Action, that claim seeks recovery of contractual wages, reimbursement of expenses for travel and visa costs, and alleged unpaid work time and overtime. Even Defendants agree that this claim appears little more than an amalgam of claims already made under the Fourth, Fifth, and Seventh Causes of Action, and Defendants concede that assigning it any independent value would “constitute double recovery” since it “seek[s] the same exact damages as other claims.” Defs.' Opp., ECF No. 9, 10:24-26. Therefore, the Court assigns no additional amount in controversy to the Sixth Cause of Action.
It is the Seventh Cause of Action where Plaintiffs seeks indemnification for visa expenses, as well as transportation and subsistence costs incurred while travelling to and from the United States that were not reimbursed by Defendants. Defendants assign a per employee value of $638.78 to each of the 558 H-2A workers based on the average amount paid by Defendants for those expenses. They therefore arrive at an amount in controversy for the Seventh Cause of Action totaling $356,439.24. Defendants' own records, however, document that they have already paid $353,888.00 for visa and travel costs, which is nearly the amount assigned to the claim by Defendants. Thiessen Decl., ¶ 7. Since Plaintiffs seek only reimbursement for their own out-of-pocket expenses (see FAC, ¶¶ 171-72), the amount in controversy figure advanced by Defendants is not based upon either evidence or reasonable assumptions and is accordingly disregarded.
Plaintiffs' Eighth Cause of Action avers that because the entire class represented by Plaintiffs was not provided all wages due at the time their employment ended, waiting time penalties are payable, pursuant to California Labor Code § 203, in an amount equal to one day's wage, up to a maximum amount of 30 days for each day's wages are unpaid. FAC ¶¶ 177-78. Defendants include within the daily wage overtime for each and every employee, allegedly in reliance on Plaintiffs' claims, but as indicated above the FAC does not support any such reading. Instead, at most, the evidence presented and Plaintiffs' assertions documents a ten-hour per day, six-day work week at Munger (which, at $12.57 an hour gives a total of $125.70), and an eight-hour per day, five-day work week at Crowne ($100.56 at the same rate of pay). Given the 387 employees at Munger and the 171 employed by Crowne, multiplying the above figures by 30 results in a potential amount in controversy of $1,975,249.80, again less than the $2,553,700.50 advanced by Defendants.
The Ninth Cause of Action is predicated upon California Labor Code § 226(e), which permits an employee who has not been provided with accurate wage statements to recover a penalty in the amount of $50.00 for the initial pay period and $100.00 for each subsequent pay period where a compliant wage statement is not furnished, up to a maximum per employee penalty of $4,000.00. Given the 558 employees involved and the fact that, according to the FAC, they worked seven weeks in California, Defendants calculate a total potential amount in controversy for that claim of $362,700.00, which the Court believes is permissible.
Defendants' calculation of the amount at stake in the Tenth Cause of Action also appears reasonable. That claim seeks damages on behalf of the Rest Period subclass for failure to provide legally mandated rest periods and, under California Labor Code § 226.7, such failure entitles an employee to additional compensation in an amount equal to one hour of the employee's regulator rate of pay for each day the rest period is denied. Defendants calculate the amount in controversy by multiplying the number of employees in the subclass (10) by the average number of work days in California (42) and the hourly wage ($12.57) for a total of $5,279.40. See Opp, 13:20-22.
Because Defendants concede that the final two claims asserted by Plaintiffs (the Eleventh and Twelfth Causes of Action) do not appear to implicate any additional damage claims and seek the same recovery as Plaintiffs' other causes of action (Id. at 13:26-27), the only remaining issue is whether the potential for punitive damages and attorney's fees augments the amounts recognized above. The FAC seeks punitive damages only as to four of the twelve causes of action pled against Defendants, the Second through Fifth Causes of Action. As indicated above, the Court has concluded that only with respect to the Second and Third Causes of Action have Defendants identified a cognizable amount in controversy ($686,322.00). Even though that amount has already been doubled as a statutory penalty under California Labor Code § 972, Defendants posit a potential punitive damage figure of $523,668.60, arguing that the 1:1 compensatory/punitive ratio approved by the Ninth Circuit in Greene v. Harley Davidson, 965 F.3d 767, 771-72 (2020) supports an additional punitive damage assessment in the same amount for amount in controversy purposes. That argument is unavailing because Plaintiffs cannot recover both statutory double damages under the California Labor Code and seek punitive damages on their tort claims, here for negligent and intentional misrepresentation. Instead, in order to avoid a double recovery, Plaintiffs must elect their remedy. See Marshall v. Brown, 141 Cal.App.3d 408, 419 (1983) (under analogous Labor Code provision). Because Defendants have already doubled Plaintiffs' base damages under the California Labor Code they cannot do so again, and consequently no additional amount in controversy for punitive damages has been identified.
$523,668.60 is the amount advanced by Defendants as representing the amount in controversy for the First through Third Causes of Action, prior to any statutory double penalty being applied.
Finally, with respect to potential attorney's fees, Defendants urge the Court to assess $1,605,925.26, which represents 25 percent of their total calculated damages for amount in controversy purposes of $6,423,701.04. Defendants make this calculation despite including a declaration from their own counsel indicating that attorney's fees to take the case through trial will be at least $500,000.00. Opp., 14:25-27, citing Decl. of William Woolman, ECF No. 9-1, at ¶¶ 11-12. By using a percentage of the estimated total recovery, however, Defendants contemplate a fee award based on the so-called common fund doctrine, where fees are awarded as a percentage of total damages in order to equitably spread the costs of litigation between the benefiting parties. In the present case, however, attorney's fees are explicitly sought by statute under California Code of Civil Procedure § 1021.5 and various California Labor Code provisions. See FAC, ¶ 201. Statutory attorney fees, unlike those sought under a common fund basis, are typically determined through the lodestar method which assesses the number of hours expended together with a reasonable hourly rate and may adjust the figure using a multiplier depending on the complexity of the case and other factors. See, e.g., Serrano v. Priest, 20 Cal.3d 25, 48 (1977). Since the present case has only just been commenced, not surprisingly there is no data cited as to the reasonableness of any hours expended or the rate being charged, and defense counsel's blanket assertion that the case could cost $500,000.00 with no supporting detail whatsoever is insufficient. The Court therefore declines to include any award of attorney's fees as an amount in controversy given the evidence before it.
In light of all the above, the Court finds the following figures to have been established for purposes of CAFA's amount in controversy requirement: for the First through Third Causes of Action, $686,322.00; for the Eighth Cause of Action, $1,975,249.80; for the Ninth Cause of Action, $362,700.00; and for the Tenth Cause of Action, $5,279.40. These figures total $3,029,551.20, well below the $5,000,000 threshold needed for CAFA jurisdiction, and the Court thus finds that jurisdiction on that basis is lacking.
B. Federal Question Jurisdiction
Defendants alternatively argue that this Court has jurisdiction on grounds that a federal question has been raised under 28 U.S.C. § 1331. According to Defendants, while the twelve causes of action pled in the FAC are state law claims, because they raise “substantial” questions under the federal H-2A visa program as to whether various requirements of that program were violated, Plaintiffs' state claims in fact come within federal jurisdiction.
Plaintiffs' argument in this regard has already been rejected. In Nieto-Santos v. Fletcher Farms, 743 F.2d 638 (9th Cir. 1984), the Ninth Circuit affirmed the district court's remand of a case which involved, like the present matter, state law claims by farmworkers whose employment was regulated under the visa program for temporary unskilled workers, then called the “H-2” program. According to the court, “absent evidence of congressional intent to make contractual rights and duties ‘federal in nature,' even causes of action based on an alleged breach of a federally-mandated contract provision present ‘only state-law claims.'” Id. at 641, citing Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 23 (1982). Significantly, too, subsequent district court decisions, in accord with Nieto-Santos, have found that analogous contract, wage and hour law, and misrepresentations claims by H-2A workers like Plaintiffs herein do not “arise under” federal law so as to trigger federal question jurisdiction, even though H-2A regulations may control the terms of the workers' contracts. See, e.g., Salinas de Valle v. Sierra Cascade Nursery, Inc., No. 2:06-cv-2274-GEB-DAD, 2007 WL 214604 at *2 (E.D. Cal. Jan. 25, 2007) (remand proper because no “substantial federal question that is so important that it sensibly belongs in federal court” was implicated under those circumstances (internal quotations and citations omitted)); Castillo v. Western Range Ass'n, No. 3:16-cv-00237-RJC-VPC, 2017 WL 1364584 at *6 (D. Nev. Apr, 13, 2017) (dismissing complaint for lack of subject matter jurisdiction because even if H-2A regulations incorporated into worker contracts, no substantial federal question raised).
Therefore, in addition to failing to meet the requirements for federal jurisdiction under CAFA, Defendants' alternative argument that federal question jurisdiction is present in any event also fails.
CONCLUSION
For all the above reasons, Plaintiffs' Motion to Remand (ECF No. 6) is GRANTED on grounds that Defendants have not demonstrated, as they must, that federal jurisdiction over the subject matter of this lawsuit is present. Given the Court's finding that federal jurisdiction is lacking, Defendant CSI's Motion to Dismiss (ECF No. 19) is DENIED as moot.
The Clerk of the Court is directed to remand this case to the originating state court, the Superior Court of the State of California in and for the County of San Joaquin, for final adjudication. The Clerk shall thereafter close the case in this Court.
IT IS SO ORDERED.