Brown v. AUTO WAREHOUSING CO.

Background

Mario Brown brought a class action in California state court against his employer, Auto Warehousing Co., and 100 Doe Defendants. The complaint asserted five California claims: failure to pay minimum wage for all hours worked; failure to authorize or permit meal periods; failure to reimburse employment-related expenses; failure to provide complete and accurate wage statements; and unfair business practices.

Auto Warehousing removed the case to federal court, relying on either federal-question jurisdiction under the Labor Management Relations Act (LMRA) or diversity jurisdiction under the Class Action Fairness Act of 2005 (CAFA). Auto Warehousing then moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), and asked the court to take judicial notice of two collective bargaining agreements (CBAs) governing Brown’s employment. Brown moved to remand the case to state court.

Motion to Remand

The court denied Brown’s motion to remand because federal jurisdiction was proper under CAFA. CAFA required Auto Warehousing to show by a preponderance of the evidence that more than $5 million was in controversy.

The court found that Auto Warehousing met that burden. Auto Warehousing identified an average of 160 non-exempt employees per year during the relevant four-year period and used actual wage information, including Brown’s hourly rate of $17.73. The court concluded that Auto Warehousing’s assumptions were reasonable in light of Brown’s allegations that the company had an ongoing policy of rounding down employees’ daily hours, including time associated with meal breaks. Its calculations put the estimated amount in controversy well above $5 million, even without including some additional damages and penalties.

Because removal was proper under CAFA, the court also declined to award Brown attorneys’ fees and costs for litigating the remand motion.

Judicial Notice and Motion to Dismiss

The court granted Auto Warehousing’s request for judicial notice of the 2018 and 2021 CBAs. The court considered the agreements only to determine what they said and to evaluate the preemption arguments, not to establish disputed facts outside the agreements.

The court denied Auto Warehousing’s motion to dismiss. It held that none of Brown’s claims was preempted under Section 301 of the LMRA. Section 301 preemption can apply when a claim arises solely from a right or duty created by a CBA or when resolving the claim requires interpreting a CBA.

The minimum-wage claim was not preempted because Brown alleged that he was not paid at all for certain periods when the company rounded down his hours, rather than challenging the rate at which he was paid. The court also stated that even if the claim included an overtime component, Auto Warehousing had not shown that the CBAs met the statutory wage-rate requirement for the applicable overtime exemption.

The meal-period claim was not preempted because it depended on whether Brown received required thirty-minute meal periods for each five-hour work period, not on interpreting the CBAs’ provisions concerning lunch-break timing.

The reimbursement claim was not preempted because it arose from California Labor Code Section 2802, which requires an employer to reimburse necessary employment-related expenses. The court concluded that resolving Brown’s allegation that employees had to purchase tools did not require interpreting CBA provisions requiring the company to furnish or replace tools.

The court also rejected Auto Warehousing’s argument that the wage-statement and unfair-business-practices claims were derivative claims preempted because the underlying claims were preempted. Since the underlying wage, meal-period, and reimbursement claims were not preempted, the court found that these derivative claims were not preempted either.

Because the claims were not preempted, the court held that Brown was not required to exhaust the CBAs’ grievance procedures before filing suit. The court separately concluded that the CBAs’ grievance and arbitration provisions did not apply because Brown’s claims arose from state-law rights and did not concern interpreting or applying the CBAs.

Disposition

Judge Rita F. Lin denied Brown’s motion to remand, granted Auto Warehousing’s request for judicial notice, and denied Auto Warehousing’s motion to dismiss.