Insights

Home > News & Insights > Insights > California Employee Class Action on Wages and Breaks Confirms Narrow Threshold for Federal Jurisdiction

Share this on:   a b j c

California Employee Class Action on Wages and Breaks Confirms Narrow Threshold for Federal Jurisdiction

Published by on September 14, 2015

On February 18, 2005, Congress enacted the Class Action Fairness Act of 2005 (“CAFA”), which significantly expanded federal diversity jurisdiction over many class actions. See 28 U.S.C. § 1332(d). Pursuant to § 1332(d), the CAFA gives federal courts jurisdiction over class actions if the class has more than 100 members, the parties are minimally diverse, […]

On February 18, 2005, Congress enacted the Class Action Fairness Act of 2005 (“CAFA”), which significantly expanded federal diversity jurisdiction over many class actions. See 28 U.S.C. § 1332(d). Pursuant to § 1332(d), the CAFA gives federal courts jurisdiction over class actions if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million.

Importantly, federal courts generally aggregated the claims of individual class members when determining whether the CAFA’s $5 million amount in controversy threshold is met. See § 1332(d)(6).

In a recent opinion issued on July 30, 2015, however, the Ninth Circuit Court of Appeal delivered a major setback to defendants seeking to remove pursuant to the CAFA by aggregating class claims and non-claims for the amount in controversy.

In Yocupicio v. PAE Group, Inc., No. 15-55878, 2015 WL 4568722 (9th Cir. 2015), the Ninth Circuit held that where a plaintiff files an action containing class claims as well as non-class claims, and the class claims do not meet the CAFA amount in controversy requirement while the non-class claims, standing alone, do not meet diversity of citizenship jurisdiction requirements, the amount involved in the non-class claims cannot be used to satisfy the CAFA jurisdictional amount, and the CAFA diversity provisions cannot be invoked to give the district court jurisdiction over the non-class claims.

In the underlying case (Yocupicio v. PAE Group, Inc., No. CV 14-8958-GW JEMX, 2014 WL 7405445, at *4 (C.D. Cal. Dec. 29, 2014)), the plaintiff claimed her employer violated the California Labor Code by, among other things, denying her and other similarly situated employees meal and rest breaks, timely pay and minimum wages.

The plaintiff also alleged a representative claims under the California Private Attorneys General Act of 2004 (“PAGA”). After she filed the complaint in state court, defendant employer removed it to federal court under the CAFA, estimating that the lawsuit sought $1.65 million for the class claims and $3.25 million for the PAGA claims, for a total more than the CAFA’s jurisdictional threshold requirement of $5 million after reasonable attorneys’ fees were added. The plaintiff sought remand to state court. The district court denied plaintiff’s motion to remand, finding that consideration of the value of the PAGA claims in determining the amount in controversy for federal jurisdiction pursuant to the CAFA was appropriate.

The Ninth Circuit reversed the district court’s decision, however, determining that the statute was not intended to permit federal courts jurisdiction over “all representative actions or on cases where a class claim was only a part, perhaps a small part, of a civil action. By narrowly interpreting the CAFA, the Ninth Circuit found that the statute grants federal jurisdiction only when the class claims alone meet the $5 million threshold.

Laconic Lookout:

Unlike other removal statutes, the CAFA does not contain a presumption against removal. The Ninth Circuit’s decision in Yocupicio, however, limits defendant employer’s ability to remove because it does not allow for the aggregation of class claims with non-claims when determining whether the $5 million amount in controversy requirement is met.

Employees will cite this decision to avoid removal to federal court if it appears non-class claims are used to reach the $5 million amount in controversy requirement pursuant to the CAFA.

Source: Class Action Fairness Act of 2005, CAFA, 28 U.S.C. § 1332(d), class action, amount in controversy, Private Attorneys General Act of 2004, PAGA, Ninth Circuit Court of Appeal

Topics: , , ,

Share:   a b j c