Bendau v. Sequoia One PEO, LLC

Background

Gregory Bendau filed a proposed class action and a representative claim under California’s Private Attorneys General Act. The operative complaint alleged that the defendants violated the California Labor Code by failing to pay all wages owed, pay accrued and unused vacation time, maintain accurate payroll records, provide accurate wage statements, pay wages due at separation, and reimburse business expenses. It also alleged unfair business practices under California’s Unfair Competition Law.

The proposed class consisted of people who worked in California for the defendants and were classified as independent contractors during the alleged class period. Counsel stated that the class had 394 members and that the proposed settlement fund was $350,000. The court had previously considered the request for preliminary settlement approval and had set a final approval hearing, but later raised questions about jurisdiction and related state-court litigation.

Jurisdictional concerns

The court analyzed jurisdiction under the Class Action Fairness Act, a federal law that can provide jurisdiction over certain class actions when the amount in controversy exceeds $5 million, minimal diversity exists, and the class has at least 100 members. The court found that Bendau and at least two of the three defendants appeared to be California citizens. It also stated that South Lemon Provider Group, PA had dual citizenship in California and Florida during the case, while noting that South Lemon might not be a primary or necessary defendant.

The court concluded that the primary defendants appeared to be citizens of the state where the action was filed, which indicated insufficient diversity under the Class Action Fairness Act. The court also considered the statute’s local-controversy and home-state-controversy provisions, which can require or permit a federal court to decline jurisdiction over class actions with a local focus.

Related state-court litigation

The opinion identified overlapping class and representative proceedings in California state courts involving the same defendants, the same or overlapping California Labor Code provisions, and the same or overlapping work periods. One state-court class action involved 218 class members. The court stated that members of the federal proposed class might also be included in the state-court actions or other proceedings and might already have received payments or released claims.

Because of that potential overlap, the court stated that it was possible that fewer than 100 people remained in the federal class, which would undermine Class Action Fairness Act jurisdiction. The court also found that the circumstances appeared to make the case a local controversy. Bendau did not respond to the court’s notice of tentative ruling and questions; two defendants filed a partial response.

Ruling

The court dismissed the action without prejudice. It did not decide whether ECF No. 46, the amended motion for preliminary approval, amended ECF No. 44. The court encouraged the parties to file a notice of settlement if they had reached a global settlement resolving multiple lawsuits.

The clerk was ordered to close the case and terminate the matter. Future dates were vacated, and the remaining motions were rendered moot. The order resolved ECF Nos. 44 and 46. The judge’s name is not legible in the supplied text, so this summary identifies the decision-maker as the court.