Herrera v. C & J Clark America Inc

Background

Juan Carlos Herrera filed a proposed class action in Alameda County Superior Court alleging nine California wage-and-hour claims, including failure to pay minimum and overtime wages, failure to provide meal and rest periods, failure to reimburse business expenses, inaccurate wage statements, inadequate payroll records, waiting-time penalties, and unfair competition.

C & J Clark America Inc. and the other defendants removed the case to federal court under the Class Action Fairness Act (CAFA). CAFA permits federal jurisdiction over a class action when the proposed class has at least 100 members, at least one plaintiff is a citizen of a different state from at least one defendant, and the total amount in controversy exceeds $5 million, excluding interest and costs.

Herrera moved to remand the case to state court. The parties did not dispute that the proposed class had at least 100 members or that the citizenship requirement was met. They disputed whether the amount in controversy exceeded $5 million.

Amount in Controversy

The defendants submitted payroll evidence showing 1,058 California employees in the proposed classes during the relevant period, approximately 63,000 workweeks, and the employees’ average wages and work hours. The defendants initially estimated that at least $71,926,040.45 was in controversy, excluding attorney’s fees and certain claims. That estimate included meal-period damages, rest-period damages, unreimbursed cell-phone expenses, wage-statement penalties, waiting-time penalties, and penalties under California’s Private Attorneys General Act.

Herrera argued that the amount was $4,977,657.71. For purposes of the motion, he accepted the defendants’ estimates of the number of employees, average wages, and workweeks, but challenged the defendants’ assumptions about violation rates and expenses and reduced the estimate based on statutes of limitations. The defendants did not dispute Herrera’s argument that Private Attorneys General Act penalties should not be included, so the court excluded those penalties from its calculation.

The court focused on wage-statement and waiting-time penalties. The defendants’ evidence showed that those penalties alone placed at least $7 million in controversy over the four-year class period. Herrera did not dispute the defendants’ estimates of the potential penalty amounts per employee. Instead, he argued that one-year and three-year statutes of limitations reduced the amounts attributable to those claims.

Court’s Reasoning

The court held that, under Ninth Circuit law, it could not consider a possible statute-of-limitations defense when determining the amount in controversy. The amount in controversy measures what is at stake in the litigation, not the amount the plaintiff will probably recover or the defendant will probably owe. Considering the defense would require a merits-based, fact-specific inquiry into the likely success of that defense.

The court distinguished situations in which a statute or other rule directly limits the damages available. In those circumstances, the limitation can affect the amount in controversy. Here, however, Herrera asked the court to apply possible affirmative defenses to reduce the amount at stake. The court concluded that this was not proper at the jurisdiction stage.

Disposition

The court concluded that the defendants proved, by a preponderance of the evidence, that the proposed class had at least 100 members, that at least one plaintiff was diverse in citizenship from at least one defendant, and that the aggregate amount in controversy exceeded $5 million. Judge Jacquelyn Scott Corley therefore denied Herrera’s motion to remand. The order disposed of Docket No. 12.