Figueroa v. Multi-Color Corporation

Background

Victor Figueroa and Alden Perez filed a putative wage-and-hour class action in Napa County Superior Court against Multi-Color Corporation. They alleged violations of the California Labor Code and sought damages, statutory penalties, and other relief for a proposed class of current and former non-exempt hourly employees who worked in California during the relevant period. The complaint asserted claims involving minimum wages, sick time, meal periods, rest breaks, wage statements, waiting-time penalties, expense reimbursement, and California’s unfair-competition law.

Multi-Color removed the case to federal court under the Class Action Fairness Act of 2005, commonly called CAFA. CAFA gives federal courts jurisdiction over certain class actions when the class and aggregate amount in controversy exceed $5 million, excluding interest and costs. Plaintiffs did not dispute that CAFA’s requirements concerning minimum diversity and class numerosity were satisfied. They disputed only whether the amount in controversy exceeded $5 million.

Parties’ Arguments and Evidence

In its notice of removal, Multi-Color estimated the amount in controversy at $5,374,975.20 for several claims. In its opposition to the remand motion, it revised the estimate upward to $8,560,775.20 by adding estimates for minimum-wage, expense-reimbursement, and untimely-payment claims. The estimates included $1,159,726.40 for meal-period claims and $1,223,782.40 for rest-period claims, for a combined $2,383,508.80.

Multi-Color supported its calculations with employment records and a declaration from economist Ariel Kumpinsky. Kumpinsky relied on payroll and time records, identified the number of shifts exceeding six hours or three and one-half hours, and used an average hourly rate of $27.20. Multi-Color applied a 20% assumed violation rate to the meal- and rest-period calculations.

Plaintiffs argued that the $27.20 average hourly rate and the number of applicable shifts were unsupported. They also argued that the complaint did not specify how often meal and rest periods were missed, so Multi-Color had not adequately supported the 20% violation rate. Plaintiffs did not provide their own alternative calculations or evidence. The court stated that plaintiffs’ failure to file a reply meant they conceded the estimates for the minimum-wage, untimely-payment, and expense-reimbursement claims, which totaled $3,185,800. Multi-Color did not provide an estimate for the unfair-business-practices claim, so the court did not include that claim in its calculation.

Court’s Analysis

When a plaintiff disputes the amount in controversy, the removing defendant must show by a preponderance of the evidence that it is more likely than not that the amount exceeds the jurisdictional threshold. The court may consider evidence outside the complaint, including declarations and other evidence relevant to the amount in controversy when the case was removed. The defendant may use reasonable assumptions, but may not rely on speculation, conjecture, or unreasonable assumptions.

The court found Multi-Color’s evidence about the average hourly rate and the number of qualifying shifts sufficiently credible. It also concluded that plaintiffs had not shown the 20% meal- and rest-period violation rates were unreasonable. The complaint alleged that employees were regularly denied compliant meal periods and rest breaks and described uniform policies, practices, operational requirements, and work demands. The court concluded that the $2,383,508.80 estimate for those claims was reasonable and supported.

Adding that amount to the $3,185,800 in estimates for the minimum-wage, untimely-payment, and expense-reimbursement claims produced an amount in controversy of at least $5,569,308.80. Because that amount exceeded CAFA’s $5 million threshold, the court concluded that federal jurisdiction was established.

Disposition

The court denied plaintiffs’ motion to remand. The opinion did not decide the underlying wage-and-hour claims; it decided whether the action would remain in federal court under CAFA.