Phillips v. Pacific Maritime Association

Background

Jasmine Phillips filed a putative class action in state court alleging eight California wage-and-hour claims against Pacific Maritime Association and other defendants. The claims concerned unlawful business practices, minimum wages, overtime compensation, meal periods, rest periods, wage statements, expense reimbursement, and sick wages. Phillips stated in her remand motion that she intended to dismiss the sick-wage claim, but the claim remained in the operative complaint.

Ceres Marine Terminals, Inc. and SSA Terminals, LLC removed the case to federal court. They asserted jurisdiction under the Class Action Fairness Act (CAFA), as well as federal-question and supplemental jurisdiction. Phillips moved to remand the case to state court.

CAFA jurisdiction

CAFA permits federal jurisdiction over a class action when there is minimal diversity, the proposed class has at least 100 members, and the amount in controversy exceeds $5 million. Minimal diversity requires at least one plaintiff to be a citizen of a different state from at least one defendant.

The court found minimal diversity because Phillips did not dispute that she was a California citizen, and defendants presented evidence that Ceres was incorporated in Maryland and had its principal place of business in Washington. The court therefore found Ceres to be a citizen of Maryland and Washington, making it diverse from Phillips. The court noted that the evidence submitted about SSA Terminals’ citizenship was inadequate, but found that it did not need to resolve SSA Terminals’ citizenship because Ceres satisfied the minimal-diversity requirement.

Phillips did not dispute that the proposed class had at least 100 members. Defendants submitted evidence that the class contained at least 19,347 members.

Amount in controversy

The court considered Phillips’s rest-period claim. The complaint alleged that Phillips and the proposed California labor subclass were “from time to time” denied required rest periods and were not provided one hour of pay in place of those periods. Defendants presented evidence that class members worked 11,630,371 shifts lasting at least 3.5 hours during the relevant period and that the lowest possible contract rate during the class period was $32.31.

Using those figures, the court calculated that a 100% violation rate would produce $375,777,287.01 in claimed rest-period pay. The court found that only an approximately 1.331% violation rate was needed to exceed $5 million. Although defendants had no separate evidence establishing that particular violation rate, the court found the assumption reasonable because it was based on the complaint’s allegation that rest periods were denied “from time to time.” The court also noted that Phillips did not propose an alternative assumption supported by evidence.

Disposition

The court concluded that all three CAFA requirements were satisfied and that more than $5 million was in controversy. It denied Phillips’s motion to remand because the court had CAFA jurisdiction over the case. The court did not reach defendants’ alternative arguments that two claims were completely preempted by the Labor Management Relations Act and that those claims supported federal-question jurisdiction, with supplemental jurisdiction over the remaining claims.