Ramirez v. HV Global Management Corporation

Background

Nelson Ramirez sued HV Global Management Corporation and HV Global Group, Inc. The complaint alleged ten causes of action under the California Labor Code and Business and Professions Code. Ramirez alleged that defendants failed to pay him for hours worked and failed to provide required meal periods and rest breaks while he worked as a non-exempt employee from September 2010 through September 2019. He sought to represent a class of current and former hourly-paid, non-exempt employees.

Defendants removed the case from state court to federal court. Ramirez moved to remand, meaning he asked the court to return the case to state court. He challenged only the defendants’ showing that the amount in controversy exceeded $5 million under the Class Action Fairness Act (CAFA), although defendants had also identified another potential basis for federal jurisdiction.

Legal Standard

CAFA gives federal courts jurisdiction over certain class actions when the amount in controversy exceeds $5 million, the proposed class has more than 100 members, and at least minimal diversity exists between the parties. The party that removed the case must establish federal jurisdiction by a preponderance of the evidence, meaning that the jurisdictional facts are more likely true than not.

The court treated Ramirez’s challenge as a factual attack because he disputed the truth and evidentiary support of defendants’ calculations. The court applied guidance from the Ninth Circuit’s decision in Jauregui v. Roadrunner Transportation Services, Inc. It explained that there is no general presumption against federal jurisdiction in CAFA cases, that a company employee’s declaration based on a review of business records can be competent evidence, and that a court should use a reasonable alternative assumption rather than assign a claim a value of zero merely because it rejects one assumption.

Amount-in-Controversy Analysis

For unpaid overtime and regular wages, defendants initially used a 100% violation rate. The court rejected that assumption because allegations of a “pattern and practice” did not necessarily mean that violations occurred during every shift. The court accepted defendants’ alternative 25% violation rate and calculated $1,193,306.85 for overtime and $795,537.90 for regular wages. The court also accepted the underlying employment data and assumptions presented in declarations from Ted Scholz, defendants’ Vice President of Human Resources.

For liquidated damages, the court accepted defendants’ revised calculation using the same 25% violation rate and an average minimum wage of $12.47. That calculation was $523,225.61.

For meal- and rest-break violations, the court rejected defendants’ initial 60% violation rate but accepted their alternative 25% rate. The court calculated $795,537.90 for meal-period violations and $795,537.90 for rest-period violations.

For waiting-time penalties, defendants had assumed that all 88 separated hourly employees were entitled to the maximum penalty. The court found that assumption insufficiently supported and instead used a 25% violation rate, producing $100,108.80.

For inaccurate wage statements, the court rejected defendants’ assumption that every wage statement was defective. It nevertheless declined to assign the claim a value of zero because the complaint alleged extensive Labor Code violations. Using a 25% violation rate, the court calculated $101,850 for this claim.

The court assigned a value of zero to the business-expense reimbursement claim. Unlike the other categories, defendants provided no facts or evidence supporting their assumption that each of 260 employees incurred $100 in business expenses.

The court included attorneys’ fees in the amount-in-controversy calculation and accepted a 25% estimate, which it described as the benchmark for reasonable attorneys’ fees in class actions. The resulting attorneys’ fees estimate was $1,076,276.24.

Disposition

Adding the accepted estimates produced a total amount in controversy of $5,381,381.20. Because that amount exceeded CAFA’s $5 million requirement, the court concluded that it had subject matter jurisdiction over the case. Judge Beth Labson Freeman ordered that Ramirez’s motion to remand be DENIED.