Mangold v. Bucher and Christian Consulting, Inc.

Background

The proposed class includes all California citizens currently or formerly employed by a defendant as non-exempt employees in California. The case had been removed to federal court under the Class Action Fairness Act (CAFA), a federal law that can give federal courts jurisdiction over certain class actions.

Jurisdictional concerns

The court explained that CAFA generally requires an amount in controversy exceeding $5 million, at least one class member who is a citizen of a different state from a defendant, and at least 100 class members. CAFA also contains exceptions, including the local-controversy exception and the mandatory home-state exception. Those exceptions can require a federal court to decline jurisdiction when the class members, defendants, and underlying injuries are substantially tied to the state where the case was filed.

The court found that defendant BCForward Razor, LLC had not sufficiently alleged the parties’ citizenship. It also found that the notice of removal used the wrong standard for alleging an LLC’s citizenship under CAFA. Under that statute, an LLC is treated as a citizen of the state where it has its principal place of business and the state whose laws organize it. The notice instead alleged the citizenship of an LLC’s owners or members. For Gainwell Technologies LLC, the notice alleged the citizenship of its sole member but did not allege Gainwell Technologies LLC’s citizenship as required by CAFA. The court noted that a declaration described Gainwell as a California LLC, which could be significant because the local-controversy and home-state exceptions might bar federal jurisdiction.

Order

The court ordered all defendants to show cause in writing by October 14, 2022, why the case should not be remanded to the Superior Court of California for Santa Clara County. Defendants were required to provide sufficient proof, under the preponderance-of-the-evidence standard, that removal was proper under CAFA. The order stated that failing to respond would be treated as a concession that removal was improper and remand was appropriate. The plaintiff could reply by October 21, 2022, and the parties could file an agreed stipulation to remand instead of responding. The court vacated the October 3, 2022 initial case-management conference pending resolution of the jurisdictional issues. The opinion ordered briefing and did not itself remand the case.