Rodriguez v. Costco Wholesale Corporation

Background

Karen Rodriguez previously filed a representative action under California's Private Attorneys General Act against her employer, Costco Wholesale Corporation, alleging, among other things, that Costco failed to provide suitable seats for Membership Department employees in California. The parties later signed an amended settlement agreement addressing seating. Rodriguez then filed another complaint alleging inadequate seating and a third complaint alleging that Costco fraudulently induced her to sign the amended settlement agreement.

Costco removed the third case from Alameda County Superior Court to the U.S. District Court for the Northern District of California, relying on diversity jurisdiction. Rodriguez moved to remand, meaning to return the case to state court. Costco separately moved to dismiss the complaint.

Jurisdiction analysis

The court explained that diversity jurisdiction requires that the parties be citizens of different states and that more than $75,000 be in controversy. The parties appeared to agree that the citizenship requirement was satisfied: the complaint identified Rodriguez as a California resident, Costco as headquartered in Issaquah, Washington, and Michelle Hughes as an attorney licensed in Washington who worked for Costco as inside corporate counsel. The court stated that the only dispute was the amount in controversy.

Because Rodriguez's complaint did not specify the amount of compensatory or punitive damages sought, Costco had to show that it was more likely than not that the amount in controversy exceeded $75,000. The court concluded that Costco did not meet that burden.

For compensatory damages, Rodriguez alleged that Costco's failure to comply with the earlier settlement agreement caused her to repeat pre-filing requirements and spend additional time and effort responding to discovery in the later case. She did not quantify those damages. Costco pointed to a $15,000 incentive award Rodriguez had requested in the earlier litigation, but the court found that even this estimate was well below $75,000.

For punitive damages, Costco relied on summaries of verdicts from other fraud cases involving settlement agreements. The court denied Costco's request to take judicial notice of those publications because they appeared to be editorial summaries rather than public court records. The court further explained that, even if it considered the summaries, the cases did not show that punitive damages here would raise the total amount in controversy above $75,000. Using the $15,000 estimate, the ratios from the cited cases would support at most $22,500 in punitive damages and a total of $37,500.

Disposition

Judge Haywood S. Gilliam, Jr. granted Rodriguez's motion to remand. The court terminated Costco's motion to dismiss as moot, remanded the case to Alameda County Superior Court, and directed the clerk to close the federal case. The court also granted Costco's request for judicial notice of the amended settlement agreement and the complaint from the second related case, while denying as moot Costco's request for judicial notice as otherwise described in the opinion's footnote.