Amort v. Ecco Retail, LLC

Background

William M. Amort filed a putative wage-and-hour class action in San Mateo County Superior Court against ECCO Retail, LLC, ECCO USA, Inc., and ECCO. He alleged nine violations of the California Labor Code and California Business and Professions Code, including unpaid minimum and overtime wages, missed meal and rest periods, unreimbursed business expenses, inaccurate wage statements, late wage payments, and unpaid termination wages. He sought damages, statutory penalties, injunctive relief, and other relief for a proposed class of current and former non-exempt employees in California.

The defendants removed the case to federal court under the Class Action Fairness Act of 2005 (CAFA). CAFA provides federal jurisdiction over qualifying class actions when, among other requirements, the amount in controversy exceeds $5 million. Defendants initially estimated the amount in controversy at $7,001,708.60 and later revised the estimate to $5,118,971.62. Amort moved to remand, arguing that defendants’ calculations relied on unsupported assumptions. Defendants separately moved to dismiss under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6).

Amount-in-Controversy Analysis

The court explained that, after a plaintiff disputes the amount in controversy, the removing defendant must show by a preponderance of the evidence that the amount more likely than not exceeds $5 million. The court may consider evidence outside the complaint, but the defendant may not rely on speculation, conjecture, or unreasonable assumptions.

The court found that defendants had not justified their estimates for meal-period and rest-period premiums. Although defendants described their calculations as using a 30% violation rate, the court concluded that the calculations effectively assumed higher violation rates because they were based on particular numbers of missed periods per workweek. Defendants did not provide sufficient evidence supporting those assumptions.

The court also rejected defendants’ $1,400,006.40 estimate for waiting-time penalties. That calculation assumed that each of 394 terminated employees was owed eight hours of wages per day for 30 days. The court noted that defendants’ own evidence showed that many employees worked less than 30 hours per week and that defendants offered no evidence establishing that every terminated employee worked eight-hour days.

The court did not consider amounts for unreimbursed business expenses or unfair-business-practices claims because defendants had not provided estimates for those claims. The court accepted or used the supported amounts of $716,134 for unpaid minimum wages and liquidated damages and $906,150 for wage-statement penalties, totaling $1,622,284. Adding attorney fees calculated at 25% of that supported amount produced a total supported amount in controversy of $2,027,855, well below CAFA’s $5 million threshold.

Ruling

Judge Donna Ryu held that defendants failed to prove that the amount in controversy exceeded $5 million. The court therefore concluded that it lacked jurisdiction under CAFA and granted Amort’s motion to remand. The case was remanded to San Mateo County Superior Court.

Because the court lacked jurisdiction, it denied defendants’ motion to dismiss as moot. The court did not decide the merits of Amort’s wage-and-hour claims or defendants’ dismissal arguments.