Class Action Fairness Act: Determining the “Amount in Controversy” in California
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The Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2), confers federal subject matter removal jurisdiction over purported class actions filed in state court when, among other things, there is an amount-in-controversry (“AIC”) exceeding $5,000,000.  Deciding whether a class action can be properly removed under CAFA typically turns on whether this high jurisdictional threshold can be met.

In Carlos Marquez v. Toll Glob. Forwarding (USA), Inc., No. 2:18-cv-03054-ODW (ASx), 2018 BL 217556 (C.D. Cal. June 19, 2018), Plaintiff brought a wage and hour class action in California state court asserting claims on behalf of non-exempt current and former employees of Defendants. Defendants removed the class action to federal court under CAFA, prompting Plaintiff to seek remand of his class action to state court. While the class complaint failed to expressly allege any specific amount of damages, Plaintiff’s remand papers alleged the aggregate class claims he asserted failed to meet the $5 Million AIC required for CAFA jurisdiction.

Beyond its falure to assert any amount of damages, the class complaint further complicated the AIC inquiry by failing to articulate the specific number of wage violations the purported class was asserting. Plaintiff did, however, define his proposed “meal and rest break” subclass as “employees who did not receive a break on every shift.” (Emphasis added.)  On this basis, Defendants calculated the proposed class’s projected damages for meal and rest break violations based on a 100% violations rate.  This resulted in an AIC of $6,327,883 for meal and rest break violations alone.

In seeking remand, Plaintiff did not object to the wage figures or the number of subclass members Defendants relied upon in rendering their AIC calculations. Plaintiff did, however, object to Defendants’ assumption of a 100% violations rate.

First, Plaintiff claimed Defendants’ violations rate assumption was speculative and lacking foundation. Second, Plaintiff noted that when describing his proposed “meal and rest break” subclass, he alleged Defendants failed to implement a relief system by which employees could receive work free rest breaks, forcing glass members to “often forego a meal period and/or work during their meal period.” (Emphasis added.)  The use of the word “often” in this context suggests that Defendants’ violations rate was less than 100%. Other than making this superficial semantic argument, Plaintiff submitted  no counter-evidence to disprove or discredit Defendants’ 100% violations rate assumption, nor did Plaintiff submit any evidence that might have otherwise allowed Defendants (or the court) to more precisely calculate the AIC.

In opposing Plaintiff’s motion to remand, Defendants cited to several district court cases holding that 100% violations rate assumptions were fair and appropriate when the class complaint at issue is bereft of allegations relating to specific wage violations and uses only conclusory language to describe the nature or regularity of these violations. Nevertheless, in a unsolicited concession to Plaintiff, Defendants’ oppositionincluded a serparate, alternative AIC calculation, which assumed the class complaint’s use of the word  “often” was tantamount to suggesting Defendants had only a 50% violations rate. Hwoever, Defendants found that even when assumptions were decreased by 50%, and all projected damages across Plaintiffs’ range of of wage claims were halved, the parties still arrived at a AIC of $ 6,394,228.12.

The Court found Defendants’ alternative violation rate based on Plaintiff’s “often” language to be fair and reasonable.  Oda v. Gucci America, Inc. Nos. 2:14-cv-7468-SJW (JPRx), 2:14-cv-07469-SJW (JPRx), [2015 BL 2952], 2015 U.S. Dist. LEXIS 1672 , [2015 BL 2952], 2015 WL 93335 , at *5 (C.D. Cal. Jan. 7, 2015) (finding a 50% violation rate for break violations reasonable given allegation that class members “sometimes” did not receive all breaks.).  Finding the AIC far exceeded CAFA’s threshold irrespective of the assumptions relied upon by Defendants used, the District Court denied Plaintiff’s motion for remand.

  • Partner

    Roland’s practice focuses exclusively on employment and labor law. Roland has exclusively handled employment cases since 1992.  His recent awards and recognition include the following:  2020 Top Labor and Employment Lawyer in ...


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