GUILLEN v. UG2

Background

Melvin Guillen, a former employee of UG2, LLC, filed a putative state-law wage-and-hour class action in Santa Clara County Superior Court. The complaint asserted nine causes of action, including claims for unpaid overtime and minimum wages, unreimbursed business expenses, missed meal and rest periods, waiting-time penalties, wage-statement penalties, unfair competition, and civil penalties under California’s Private Attorneys General Act.

UG2 removed the case to federal court under the Class Action Fairness Act (CAFA), which provides federal jurisdiction over qualifying class actions. UG2 estimated that the case involved at least 1,307 non-exempt employees and a total amount in controversy of $9,877,331, including attorneys’ fees. Guillen moved to remand, arguing that UG2’s assumptions were unreasonable.

Legal Standard

A defendant may remove a case only when the federal court would have had original subject-matter jurisdiction. Under CAFA, the relevant requirements included at least 100 class members, minimal diversity of citizenship, and an amount in controversy exceeding $5,000,000. The removing party bears the burden of establishing those requirements. When the amount is disputed, the defendant must show by a preponderance of the evidence that it exceeds the threshold. Reasonable assumptions may be used, but speculation and conjecture are insufficient.

Analysis

The court found that the class-size requirement was met because the proposed class included at least 100 employees. The record also showed minimal diversity because at least one proposed class member was a California citizen and UG2 was a Massachusetts citizen.

The court accepted UG2’s estimates for unpaid regular wages, unpaid overtime, meal-period premiums, rest-period premiums, and waiting-time penalties. The complaint’s allegations of routine, systemic, or uniform violations supported UG2’s conservative assumptions for those categories.

The court reduced UG2’s estimate for California Labor Code section 558 penalties. UG2 had assumed a violation in every pay period for all employees over four years, but its own wage-violation assumptions supported applying penalties to only half of the pay periods. UG2 also failed to account for the one-year limitations period. Because the record did not identify the exact number of employees during the relevant year, the court reduced the employee count by 75%, resulting in $310,412.50 in section 558 penalties.

The court reduced liquidated damages from $283,116 to $141,558 because UG2’s calculation improperly counted the unpaid wages twice. The court also reduced wage-statement penalties from $2,548,650 to $637,162.50 because UG2 had included employees from a four-year period even though the claim was subject to a one-year limitations period.

UG2’s corrected calculations for the categories addressed in its notice of removal totaled $3,610,582. The court rejected UG2’s proposed addition of attorneys’ fees. Even using UG2’s proposed 25-percent fee estimate, the total would have been only $4,513,227.50, below the CAFA threshold. The court also explained that the case used a statutory fee-shifting framework based on the lodestar method, not UG2’s proposed percentage-of-recovery method. Finally, UG2 had provided no reasonable estimates for the unreimbursed-expense, unfair-competition, or Private Attorneys General Act claims.

Disposition

The court held that the amount in controversy supported by the record was $3,610,582, below CAFA’s $5,000,000 requirement. It granted Guillen’s motion to remand and remanded the case to Santa Clara County Superior Court.