Louis v. Healthsource Global Staffing, Inc.

Background

Patricia Louis and Morgan Murray sued Healthsource Global Staffing, Inc. in Alameda County Superior Court on behalf of a proposed class of “strikebreakers” hired for short-term assignments during labor disputes. They asserted various wage-and-hour claims under California law. The plaintiffs filed the action in December 2021 and an amended complaint on March 15, 2022.

Healthsource removed the case to federal court under the Class Action Fairness Act of 2005, which can provide federal jurisdiction over certain class actions. The plaintiffs moved to remand, meaning they asked the federal court to return the case to state court. They argued that Healthsource had not plausibly established the required amount in controversy of more than $5 million and that removal was untimely.

Amount in Controversy

The court rejected the plaintiffs’ argument that Healthsource had to provide evidence with its notice of removal. At that stage, a defendant generally needs only to make a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. After the plaintiffs factually challenged Healthsource’s estimate, however, Healthsource had to establish the amount by a preponderance of the evidence, meaning that it was more likely than not.

The court concluded that Healthsource met that burden based on the potential liability under California Labor Code section 203. That provision imposes a waiting-time penalty equal to one day of pay for each day wages are late, up to 30 days, when an employer fails to pay all wages owed immediately after an employee’s separation.

Healthsource estimated that the proposed class included 3,608 people who worked 2,260 separate assignments during the relevant period. It estimated average daily pay of $1,120 and used a 25% violation rate, producing an estimate of approximately $18,984,000 in section 203 penalties. The estimates were based on Healthsource’s business records and supported by a declaration from the person responsible for its primary oversight and management.

The court noted that the plaintiffs did not dispute the number of assignments or average daily pay, and nothing in the record indicated that those figures were unreliable. Although assuming the maximum 30-day penalty for every violation can be unreasonable in some cases, the court found the assumption reasonable here because the amended complaint alleged a uniform pattern and practice of wage violations. The court also noted that Healthsource used the lower 25% violation rate and showed that the $5 million threshold would still be met even with a 10% violation rate.

The court accepted Healthsource’s reading that each separate assignment could represent a potential waiting-time-penalty claim. It observed that California law treats employees released after completing a specific job assignment or time period as discharged for purposes of the relevant wage-payment rules. The court concluded that Healthsource had plausibly established that more than $5 million was reasonably at stake on this claim alone.

The court did not need to resolve the plaintiffs’ other objections to Healthsource’s estimates because those objections would not change the conclusion. It also stated that several objections were raised for the first time in the plaintiffs’ reply brief and therefore were not required to be considered, although the court independently reviewed them and found that they did not alter the result.

Timeliness of Removal

The court also rejected the plaintiffs’ argument that removal was untimely. Federal law generally gives a defendant 30 days to remove after receiving a pleading or other document that makes removability clear. Under the Ninth Circuit’s approach, that period begins when removability is affirmatively revealed in the initial pleading or made unequivocally clear and certain by another document.

The court found that neither the original complaint nor the amended complaint disclosed the potential size of the proposed class or the amount in controversy. The plaintiffs did not identify another pleading or document that triggered the removal deadline. Healthsource could not make the necessary calculations without reviewing its own business records to determine the likely number of class members, assignments, and average daily pay. The court therefore concluded that the 30-day limits did not apply and that Healthsource could remove the case at that time.

Disposition

Judge James Donato concluded that removal was timely and proper under the removal statute. The court denied the plaintiffs’ request for remand. The order addressed federal jurisdiction and the timing of removal; it did not decide the merits of the plaintiffs’ wage-and-hour claims.