Price v. McGee Air Services, Inc.

Background

Price filed a putative class action in San Mateo Superior Court and later amended the complaint. He alleged that McGee improperly rounded employees’ time records, causing them not to be paid for all hours worked. He also alleged rest-period problems and that McGee failed to include bonuses and other pay when calculating meal-period premiums. The complaint asserted claims for minimum wages, meal-period premiums, rest-period violations, wage statements, waiting-time penalties, violations of California’s Unfair Competition Law, and civil penalties under the Private Attorneys General Act.

McGee removed the case to federal court. Price moved to remand, arguing that McGee had not shown that the case met the Class Action Fairness Act’s amount-in-controversy requirement.

Legal standard

The Class Action Fairness Act gives federal courts jurisdiction over certain class actions when, among other requirements, the amount in controversy exceeds $5 million, the parties have minimal diversity of citizenship, and the proposed class has at least 100 members. The defendant bears the burden of showing by a preponderance of the evidence—a showing that something is more likely than not—that the amount in controversy exceeds $5 million.

Court’s analysis

The court focused on whether the amount-in-controversy requirement was satisfied. McGee submitted a declaration from its Managing Director of Finance, Marie Underwood, providing information about California non-exempt employees, workweeks, wages, and the company’s timekeeping system. The court found that the evidence, together with reasonable assumptions drawn from the complaint, was sufficient even though McGee did not provide the exact amount of time each employee was allegedly underpaid.

The court concluded that it was reasonable to assume that the alleged rounding policy affected each proposed class member at least once and that employees who quit or were discharged therefore had some unpaid wages when they left. Under California Labor Code section 203, waiting-time penalties can equal an employee’s daily wages for up to 30 days when an employer willfully fails to pay wages owed at separation.

McGee calculated the alleged waiting-time penalties using 566 employees who quit or were discharged between February and December 2021, at $14 per hour, and at least 895 employees who quit or were discharged between January 2022 and December 22, 2022, at $15 per hour. Assuming eight-hour workdays and the maximum 30-day penalty, McGee calculated $1,901,760 for the first period and $3,222,000 for the second period, for a total of $5,123,760. The court found these calculations sufficiently supported and noted that Price did not substantively dispute them.

Disposition

Judge Haywood S. Gilliam, Jr. denied Price’s motion to remand. The court also set a case management conference for December 5, 2023, directed the parties to meet and confer, and ordered them to submit a revised joint case management statement with a proposed schedule through class certification proceedings.