Murphy v. The Finish Line, Inc.

Background

Zachary Murphy filed a proposed wage-and-hour class action against The Finish Line, Inc. in Alameda County Superior Court. The complaint alleged claims for unpaid minimum and overtime wages, missed meal periods and rest breaks, inaccurate wage statements, unpaid wages at separation, and violation of California Business and Professions Code section 17200. Murphy later filed an amended complaint adding a claim under California’s Private Attorneys General Act, Labor Code section 2698.

The Finish Line removed the case to federal court under the Class Action Fairness Act, or CAFA. Murphy asked the federal court to remand, meaning return, the case to state court. He argued that the removal was untimely under the federal removal statute because The Finish Line removed the case 93 days after receiving the original complaint and 21 days after receiving the amended complaint.

Legal Standard

Federal law generally provides two 30-day periods for removal. The first begins when the defendant receives an initial pleading that shows the case is removable. The second begins when the defendant receives an amended pleading, motion, order, or other paper from which removability can first be determined if the initial pleading did not show that the case was removable.

The court explained that the 30-day clock begins when the plaintiff’s pleading affirmatively reveals facts showing possible federal jurisdiction. A defendant does not generally have a duty to investigate removability when the pleading does not provide that notice, although it must use reasonable intelligence in evaluating the information actually pleaded. Under Ninth Circuit precedent, a defendant may investigate and remove a CAFA case outside the two 30-day periods if neither period was triggered.

Court’s Analysis

The parties did not dispute that the CAFA requirements were satisfied, including the requirements concerning the proposed class’s size, the amount involved, and differences in citizenship. The only issue was whether The Finish Line’s notice of removal was timely.

The court found that the complaint and amended complaint were unclear about removability. Although they estimated that the proposed class included more than 100 people, they did not provide enough information to calculate the amount involved. They stated only that the damages exceeded the minimum jurisdictional limits of the state superior court. They did not specify, among other things, the number of meal- and rest-period violations per class member during the relevant period.

The Finish Line used its own business records to estimate that the class included approximately 5,612 people who worked approximately 218,399 biweekly pay periods at an average hourly rate of $13.31. That investigation indicated that the amount involved exceeded $5 million, the relevant CAFA threshold. The Finish Line removed the case 21 days after receiving the amended complaint.

The court rejected Murphy’s argument that The Finish Line had to prove it removed the case within 30 days after its own investigation established removability. Because neither of the statutory 30-day periods had been triggered by the pleadings, the court concluded that the removal was timely.

Disposition

The court denied Murphy’s motion to remand. The order addressed only the timeliness of removal and did not decide the merits of the wage-and-hour claims. Judge William Orrick signed the order.