Becerra-Zamora v. Gruma Corporation

Background

Yesica Becerra-Zamora filed a PAGA-only action in California state court. The action seeks civil penalties based on allegations that Gruma Corporation and the other defendants failed to pay overtime and minimum wages, failed to accurately record time worked, permitted off-the-clock work, failed to include all compensation in calculating the regular rate of pay, and failed to properly implement an alternative workweek schedule.

Defendants removed the case to federal court based on diversity jurisdiction. They estimated that the PAGA penalties at issue totaled $77,900 and added $19,475 for attorney fees, producing an estimated amount in controversy of $97,375. Becerra moved to remand, meaning she asked the federal court to return the case to state court. Defendants also moved to consolidate this case with an earlier related proceeding and moved to compel arbitration.

Amount in Controversy

Federal diversity jurisdiction requires the amount in controversy to exceed $75,000, and the removing defendants had the burden to prove that requirement by a preponderance of the evidence. The court held that defendants did not meet that burden.

First, defendants used the higher penalty amount for subsequent violations across many claims. The court explained that defendants had not shown a reasonable basis for applying those higher penalties to claims involving overtime and minimum wages. The court noted that the higher rate might be appropriate for some claims alleging intentional or willful conduct concerning wage statements and employee records, but defendants had not used calculations limited to those claims.

Second, defendants counted 100 percent of the potential PAGA penalties. PAGA provides that 75 percent of recovered penalties goes to the Labor and Workforce Development Agency and 25 percent goes to aggrieved employees. Following one line of decisions from the Northern District of California, the court held that the agency’s 75 percent share should not be combined with Becerra’s 25 percent share to satisfy the amount-in-controversy requirement. At most, 25 percent of defendants’ penalty estimate could be attributed to the amount in controversy.

Third, defendants added attorney fees using a 25-percent benchmark without supporting evidence. The court found that this approach, drawn from class-action and common-fund cases, was not persuasive for this PAGA action. Because defendants provided no estimate based on the required lodestar method—a calculation based on reasonable attorney hours and rates—the court excluded the proposed $19,475 attorney-fee amount.

Other Motions and Disposition

The court granted Becerra’s motion to remand because defendants failed to prove that the amount in controversy met the $75,000 jurisdictional threshold. The court denied defendants’ motion to consolidate this case with the earlier related proceeding. It also deferred defendants’ motion to compel arbitration for resolution by the state court after remand.

The court stated that Becerra had properly voluntarily dismissed the earlier related proceeding because defendants had not served an answer or moved for summary judgment. It stated that the earlier proceeding was dismissed and that the Clerk’s Office would close it. The order did not decide whether the PAGA claims must ultimately be arbitrated.