Collins v. Hilton Management LLC

Background

Shasta Collins sued Hilton Management LLC in the San Francisco Superior Court on behalf of a proposed class of non-exempt employees. The complaint alleged California wage-and-hour violations arising from work at the Hilton San Francisco Union Square Hotel. Hilton removed the case to federal court under the Class Action Fairness Act of 2005 (CAFA), which can provide federal jurisdiction over certain class actions.

Collins moved to remand, meaning she asked the federal court to return the case to state court. She argued that Hilton had not plausibly established the more-than-$5-million amount in controversy required for CAFA jurisdiction. Collins did not dispute the required minimum diversity of citizenship or argue that the proposed class had fewer than 100 members. The only disputed issue was the amount in controversy.

Court’s Analysis

The court explained that, under CAFA, there is no presumption against removal. Hilton did not have to prove the amount in controversy with certainty or establish the merits of Collins’s claims. It only had to plausibly show that it was reasonably possible that potential liability exceeded $5 million. The court could consider reasonable assumptions based on the complaint and outside evidence, including business records. Prospective attorney’s fees also had to be included.

For meal- and rest-break violations, Hilton relied on payroll records showing approximately 1,737 current and former employees within the proposed class. Hilton used a 159-workweek class period, an average hourly rate of $16.15, and an assumption of one meal- or rest-break violation per week for each proposed class member. Those assumptions produced an estimated $4.46 million in penalties. The court found Hilton’s estimates conservative because they used reduced employment during the COVID-19 pandemic, the lowest hourly rate in the relevant range, and less than a 100-percent violation rate. The court rejected Collins’s argument that the complaint’s references to violations occurring “from time to time” and “periodically” made Hilton’s estimate implausible, because the complaint also alleged systematic and uniform violations under a corporate policy and practice.

For waiting-time penalties under California Labor Code section 203, Hilton used payroll records showing 840 former non-exempt employees whose employment ended during the class period. Hilton estimated approximately $2.5 million by using an average hourly rate of $16.15, 7.5-hour workdays for full-time employees, and 3-hour workdays for part-time employees. The court found the inference of potential section 203 violations across those former employees reasonable and said Hilton was not required to identify each employee affected with greater specificity at the removal stage.

The complaint also sought attorney’s fees under California Labor Code section 218.5 and related provisions. Hilton estimated fees at 25 percent of the $2.5 million waiting-time-penalty estimate. The court found that percentage reasonable and credited approximately $626,000 toward the amount in controversy.

Disposition

The court concluded that Hilton plausibly showed that potential liability could exceed $5 million. It held that the case was properly removed under CAFA and denied Collins’s motion to remand. The order addressed federal jurisdiction and removal; it did not decide the merits of the alleged wage-and-hour violations.