Garay v. Southwest Airlines Co.

Background

Marco Garay filed a proposed employment-related class action against Southwest Airlines Co. in Alameda County Superior Court. The complaint asserted six California-law claims involving meal periods, rest periods, hourly and overtime wages, wage statements, final wages, and unfair competition. The complaint did not state the amount of damages sought.

Southwest first removed the action to federal court in December 2018, invoking the Class Action Fairness Act (CAFA). CAFA permits federal jurisdiction over qualifying class actions when, among other requirements, the amount in controversy exceeds $5 million. The court previously remanded the case because Southwest had not shown, by a preponderance of the evidence, that the amount in controversy exceeded that threshold. The court found that Southwest had improperly assumed a 100 percent violation rate without supporting evidence.

Southwest removed the action a second time in August 2019, again relying on CAFA. This time, Southwest relied on declarations from Michelle Inlow, including data about overtime hours, wage statements, and employees who had separated from the company. Southwest contended that more than $5 million was in controversy. Garay did not challenge Southwest’s evidence concerning the amount in controversy; instead, he argued that Southwest could not remove the case a second time on the basis of information it could have used during the first removal.

Issue and analysis

The issue was whether Southwest’s later investigation created a new and different ground for removal. Generally, after a federal court remands a case, a defendant may file another removal only if later pleadings or events reveal a new and different basis for federal jurisdiction. Examples include a change in the law or a later state-court order expanding a proposed class.

The court noted that the Ninth Circuit had not decided whether information that was available to a defendant during the first removal—but was not cited then—could justify a second removal. The court considered decisions from other California federal courts holding that previously available business or payroll information did not create a new and different basis for removal.

The court concluded that Southwest had not shown that the underlying employment information was unavailable when it first removed the case. Although Southwest’s Technology Department took four months to develop systems and conduct quality-control reviews that produced the later statistics, Southwest did not show that anything prevented it from pursuing that investigation earlier. The court also found that the raw employment information used to generate the statistics had likely been in Southwest’s business records during the relevant period, and Southwest offered no testimony to the contrary.

The court held that a defendant may not make successive removal attempts based on information that was in its possession during the earlier removal but was not then used. Otherwise, defendants could make repeated removal attempts based on increasingly detailed information. The court clarified that a later removal could still be based on genuinely new information produced by Garay in discovery.

Disposition

Judge Phyllis J. Hamilton granted Garay’s motion to remand and remanded the action to Alameda County Superior Court. The order resolved the federal-court removal issue and did not decide the merits of Garay’s wage-and-hour claims.