Hass v. Flowers Bakeries Sales of Norcal

Background

Michael Hass filed a putative class action in state court against Flowers Bakeries Sales of Norcal, LLC, and other defendants, alleging violations of California wage-and-hour laws. The defendants removed the case to federal court based on diversity jurisdiction rather than the Class Action Fairness Act. Diversity jurisdiction requires, among other things, that more than $75,000 be in controversy as to the relevant plaintiff.

The court ordered the defendants to explain how federal removal jurisdiction existed. The defendants estimated that the amount in controversy as to Hass was $152,632, consisting of $28,282 in damages and penalties and $124,350 in attorneys’ fees. Their fee estimate assumed 150 hours of attorney work at a rate of $829 per hour. Hass did not challenge the removal allegations.

Court’s Analysis

A defendant seeking removal bears the burden of showing that removal is proper. When the amount in controversy is unclear, the defendant must prove by a preponderance of the evidence that the amount exceeds the jurisdictional threshold. The federal court also has an independent duty to determine whether it has subject-matter jurisdiction, meaning legal authority to hear the case.

The court applied binding Ninth Circuit precedent holding that, in a putative class action based on ordinary diversity jurisdiction, potential attorneys’ fees must be attributed pro rata to the proposed class members when the fee-shifting law does not award fees exclusively to the named plaintiff. The court concluded that California Labor Code sections 226(e)(1) and 1194 authorize attorneys’ fees for an injured employee or an employee receiving less than the legal minimum wage or overtime compensation, rather than exclusively for the named plaintiff. The potential fees therefore had to be divided among the class members for purposes of calculating the amount in controversy.

The defendants argued that fees should instead be calculated from work on Hass’s individual claims because the class had not been certified and might never be certified. The court rejected that argument. It explained that the jurisdictional inquiry concerns possible liability at the time of removal, not the defendant’s likely eventual liability, and that the lack of class certification did not eliminate the need to apportion potential fees among the proposed class members. The court also found that the defendants identified no Ninth Circuit authority supporting their proposed individual-claims calculation.

Disposition

The court REMANDS the case to Humboldt County Superior Court. It held that the defendants had not shown that Hass’s damages and his share of the potential attorneys’ fees exceeded $75,000. The order resolved the federal court’s removal jurisdiction and did not decide the merits of the wage-and-hour claims.