Felix Gunawan v. Transdev Alternative Services, Inc.

Background

The plaintiffs’ complaint asserted one cause of action under California’s Private Attorneys General Act (PAGA), California Labor Code sections 2698 and following. They alleged that Transdev Alternative Services, Inc. failed to provide accurate wage statements; provide legally required meal and rest periods; pay minimum, overtime, and sick-pay wages; reimburse required expenses; and pay wages when due. The defendant removed the case from state court. The plaintiffs moved to remand, arguing that the federal court lacked subject-matter jurisdiction.

Federal-Question Jurisdiction

The defendant argued that section 301 of the Labor Management Relations Act preempted the plaintiffs’ state-law claim because collective-bargaining agreements (CBAs) would need to be interpreted. Section 301 preemption can allow removal because it treats certain state-law claims as federal claims.

The court applied the Ninth Circuit’s two-step test. First, it considered whether the plaintiffs’ rights existed only because of a CBA. The court rejected that argument because the CBAs cited by the defendant did not meet California Labor Code section 514’s wage requirements for avoiding application of the state overtime law. In particular, the CBAs included training wages that were less than 30 percent above the applicable state minimum wage. The court therefore concluded that the relevant rights arose from state law, not solely from the CBAs.

Second, the court considered whether resolving the PAGA claim would require interpreting a CBA. The defendant did not identify any specific CBA provision that required interpretation or explain why merely consulting the agreements would be insufficient. The court held that the defendant had not shown that interpretation of a CBA was necessary and found that the plaintiffs’ claims were not preempted under section 301.

Diversity Jurisdiction

The defendant also argued that the court had diversity jurisdiction. That jurisdiction requires, among other things, an amount in controversy exceeding $75,000. The defendant estimated that the named plaintiffs’ penalties totaled $48,900 and argued that potential attorney’s fees would raise the amount above $75,000. The court explained that, in a representative PAGA action, only the named plaintiffs’ proportional share of attorney’s fees is considered. Because the defendant provided no estimate of that proportional share, the court found that it had not shown by a preponderance of the evidence that the amount-in-controversy requirement was met.

Disposition

The court GRANTED the plaintiffs’ motion to remand and REMANDED the case to San Francisco Superior Court. It TERMINATED AS MOOT the defendant’s administrative motion asking the court to treat its opposition as timely, because the court had considered the opposition as if it had been timely filed. The Clerk was directed to close the case.