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Smith v. Brinker International, Inc.

United States District Court, N.D. California
May 5, 2010
No C 10-0213 VRW (N.D. Cal. May. 5, 2010)

Summary

refusing to consider defendant's calculation for overtime damages where defendant assumed each plaintiff worked 2.5 hours overtime each day but that assumption was not supported by the allegations in the complaint and defendants provided no sufficient basis to apply its assumption.

Summary of this case from Adkins v. J.B. Hunt Transp., Inc.

Opinion

No C 10-0213 VRW.

May 5, 2010


ORDER


On December 8, 2009 plaintiffs Marc Smith and Ken Whelan filed a class action in Contra Costa superior court against defendants Brinker International, Inc and Brinker Restaurant Corporation, and filed an amended complaint on January 11, 2010. Plaintiffs purport to represent the proposed class of all current and former "Assistant Managers" or persons with similar titles or duties who worked for defendants in the state of California at any time during the period from four years prior to filing of the complaint to final judgment. Doc #1 at 66. On January 15, 2010 defendants filed a notice of removal of the action to this court pursuant to 28 USC §§ 1441 and 1446. Doc #1. On February 12, 2010 defendants renoticed their motion to dismiss and plaintiffs filed a motion to remand. The court finds the matters suitable for decision without hearing. Having considered the papers submitted by the parties and the relevant legal authority, the court GRANTS plaintiffs' motion to remand (doc #17) and DENIES AS MOOT the motion to dismiss (doc #14).

I

Plaintiffs were employed by defendants as "Assistant Managers" at Chili's Grill Bar restaurants located in California; plaintiff Smith was employed from June 2007 to February 2009, and plaintiff Whelan from January 2006 to October 2009. FAC ¶¶ 12, 13. Plaintiffs allege that defendants misclassified their Assistant Managers as exempt from overtime and other state laws. FAC ¶¶ 21, 23 (Doc #1 at 64).

The operative complaint alleges eight causes of action on behalf of the proposed class, alleging that defendants (1) intentionally and willfully failed to pay overtime wages (Cal Labor Code §§ 510, 1198); (2) intentionally and willfully required plaintiffs to work during meal periods and failed to pay the full meal period premium for work performed during meal periods (id §§ 226.7, 512(a)); (3) willfully required plaintiffs to work during rest periods and failed to pay plaintiffs the full rest period premium for work performed during rest periods (id § 226.7); (4) intentionally and willfully failed to pay plaintiffs timely wages (id § 204); (5) intentionally and willfully failed to pay wages within 72 hours of termination (id §§ 201, 202); (6) intentionally and willfully failed to provide plaintiffs with complete and accurate wage statements (id § 226(a)); (7) intentionally and willfully failed to keep complete and accurate payroll records (id § 1174(d)); and (8) engaged in unlawful business practices (Cal Bus Prof Code § 17200). Doc #1 at 70-81.

Plaintiffs seek compensatory damages, prejudgment interest, statutory premiums and penalties under the California Labor Code, civil penalties under the Private Attorneys General Act, attorney fees and injunctive relief. Doc #1 at 81-85. The operative complaint does not state a specific amount of damages.

II

Any civil action brought in state court of which the federal district courts have original jurisdiction may be removed. 28 USC § 1441(a). Jurisdiction founded on 28 USC § 1332 requires complete diversity between the parties and an amount in controversy in excess of $75,000, exclusive of interest and costs. Removal statutes are construed narrowly in favor of remand to protect the jurisdiction of state courts. Harris v Bankers Life and Cas Co, 425 F3d 689, 698 (9th Cir 2005) (citing Shamrock Oil Gas Corp v Sheets, 313 US 100, 108-09 (1941)).

Where the complaint does not specify the amount sought as damages, the removing party must prove by a preponderance of the evidence that the amount in controversy meets the jurisdictional threshold. Abrego v The Dow Chemical Co, 443 F3d 676, 683 (9th Cir 2006). To satisfy the burden to demonstrate the amount in controversy, defendants may rely upon facts presented in the removal petition as well as any "summary-judgment-type evidence relevant to the amount in controversy at the time of removal."Singer v State Farm Mut Auto Ins Co, 116 F3d 373, 377 (9th Cir 1997) (quotation omitted). Conclusory allegations as to the amount in controversy are insufficient. Gaus v Miles, Inc, 980 F2d 564, 567 (9th Cir 1992).

Plaintiffs contend that defendants have failed to demonstrate that it is more likely than not that each plaintiff's damages exceed $75,000. Having reviewed the evidence offered by defendants, the court determines that defendants have failed to meet their burden to establish the jurisdictional requirement for removal.

Plaintiff Marc Smith allegedly worked as an assistant manager for a Chili's restaurant in California from June 2007 to February 2009, or approximately 85 weeks. Doc #1 at 63. In the removal notice, as supplemented by the brief and supporting declaration in opposition to the motion to remand, defendants suggest that the amount in controversy as to plaintiff Smith is $84,471.85. Doc #21 at 11. To arrive at an hourly rate based on Mr Smith's starting salary of $50,000 per year as a Chili's Manager, defendant calculates an hourly rate of $24.04, and $36.06 for time and one-half overtime. Doc #1 at 4; Doc #21 at 13. Defendants proceed on the assumption that Mr Smith worked 2.5 hours of overtime everyday of the 85 weeks that he worked for defendants.

Table 1: Defendants' Estimate of Marc Smith's Alleged Damages Smith Damages Calculation Amount 1st COA: unpaid overtime 5 days/wk × 2.5 hrs/day × $36.06 × 85 $38,313.75 [assuming 2.5 hrs weeks overtime per day at $36.06/hr] 1st COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 2d COA: missed meal 5 days/wk × 85 wks × $24.04 $10,217.00 period [one hour meal period premium per day] 2d COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 3d COA: missed rest 5 days/wk × 85 wks × $24.04 $10,217.00 periods [one hour premium per day] 3d COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 4th COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 5th COA: statutory 30 days × [($24.04 × 8 hrs/day) + $8,474.10 waiting time penalties ($36.06 × 2.5 hrs/day overtime) [assuming daily wage of $282.47, including 2.5 hrs overtime] 5th COA: PAGA penalties withdrawn (doc # 21 at 8 n2) $0.00 6th COA: statutory ($50 for pay period #1) + ($100 × 42 $4,000.00 penalties for failure to (periods #2-#43)) provide itemized wage statements [maximum statutory penalty: $4000] 6th COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 7th COA: statutory Civil penalty: $500 $500.00 penalties for failure to keep complete payroll records 7th COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] Attorney fees for 1st and no estimate $0.00 8th COA Defendants' TOTAL $84,471.85 estimate for Smith

Plaintiff Ken Whelan allegedly worked as an assistant manager for a Chili's restaurant from January 2006 to October 2009, or approximately 195 weeks. Doc #1 at 63. Based on a starting salary of $50,000 per year, and applying the assumption of 2.5 overtime hours each day, Defendants contend that the amount in controversy is $176,998.35, calculated as shown in Table 2. Doc #21 at 12.

Table 2: Defendants' Estimate of Ken Whelan's Alleged Damages Whelan Damages Calculation Amount 1st COA: unpaid overtime 5 days/wk × 2.5 hrs/day × $36.06 × $87,896.25 [assuming 2.5 hrs 195 weeks overtime per day at $36.06/hr] 1st COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 2d COA: missed meal 5 days/wk × 195 wks × $24.04 $23,439.00 period [one hour meal period premium per day] 2d COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 3d COA: missed rest 5 days/wk × 195 wks × $24.04 $23,439.00 periods [one hour premium per day] 3d COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 4th COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 5th COA: statutory 30 days × [($24.04 × 8 hrs/day) + $8,474.10 waiting time penalties ($36.06 × 2.5 hrs/day overtime) [assuming daily wage of $282.47, including 2.5 hrs overtime] 5th COA: PAGA penalties withdrawn (doc # 21 at 8 n2) $0.00 6th COA: statutory ($50 for pay period #1) + ($100 × 97 $4,000.00 penalties for failure to (periods #2-#98)) provide itemized wage statements [maximum statutory penalty: $4000] 6th COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 7th COA: statutory Civil penalty: $500 $500.00 penalties for failure to keep complete payroll records 7th COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] Attorney fees for 1st and no estimate $0.00 8th COA Defendants' TOTAL $176,998.35 estimate for Whelan

Defendants' assumption that each plaintiff worked 2.5 hours overtime each day is not supported by the allegations in the operative complaint. Plaintiffs allege that they "regularly and consistently worked over eight (8) hours in a day, twelve (12) hours in a day, or forty (40) hours in a week during their employment with Defendants." FAC ¶ 20. The complaint does not quantify the number of overtime hours that are allegedly subject to compensation, nor the number of meal and rest periods that defendants allegedly failed to provide. Defendants provide no sufficient basis to apply its assumption of 2.5 overtime hours each day towards calculating the amount in controversy. The court may not base its jurisdiction on speculation and conjecture.Lowdermilk v US Bank Nat'l Assn, 479 F3d 994, 1002 (9th Cir 2007).

To support their estimate of the amount in controversy, defendants offer the declaration of Ms Hukill, the director of HR compliance for Brinker International Payroll Company, LP. Ms Hukill offers general information about the starting salary of a manager at Chili's restaurants, and the schedules of those managers as a general matter, based on her firsthand knowledge in her professional capacity and her review of business records. Doc #21 at 13-14. Because Ms Hukill offers general information based on her familiarity with Chili's restaurant employees, plaintiffs' objections based on lack of foundation and personal knowledge and irrelevance are overruled; rather, the limited scope of Ms Hukill's statements will go to the weight of her testimony. The court notes that Ms Hukill indicates that she reviewed Messrs Smith and Whelan's new hire data sheets from the Brinker corporate office recruiting department files and considers that defendants have access to and/or control over plaintiffs' time sheets or employment records to establish the number of hours that each plaintiff worked during each pay period. Yet defendants have foregone the opportunity to offer reliable information about plaintiffs' employment records to meet their burden to establish the amount in controversy.

Defendants have failed to provide any evidence relating to either plaintiff's actual earnings or number of hours worked, asking the court to assume that each plaintiff worked an additional 2.5 hours each day in order to reach the amount in controversy threshold. Nor do defendants offer settlement letters reflecting a reasonable estimate of plaintiffs' claim. Cf Cohn v Petsmart, Inc, 281 F3d 837, 840 (9th Cir 2002). Defendants suggest that plaintiffs have not submitted evidence to dispute defendants' estimates, but plaintiffs do not bear the burden to demonstrate the amount in controversy. See Abrego, 443 F3d at 683 (rejecting argument that Class Action Fairness Act of 2005 shifted burden to plaintiffs seeking remand to refute existence of jurisdiction).

Defendants point out that where an underlying statute authorizes attorney fees pursuant to mandatory or discretionary language, such fees may be included in the calculation of the jurisdictional amount. Doc #1 at 9. If defendants were able to demonstrate by a preponderance of the evidence what amount of fees would be in controversy, the court would be permitted to consider the fees toward calculating the amount in controversy. See Galt G/S v JSS Scandinavia, 142 F3d 1150, 1156 (9th Cir 1998) (including claimed attorney fees to reach amount in controversy). In Galt, the claimant sought diversity jurisdiction over its $13,500 equitable indemnity claim against a third party following settlement of an action for cargo damage. The claimant demonstrated that it had spent $44,266.65 in attorney fees defending against the claim for damages in the principal action. The court aggregated the claimed amount of attorney fees with the amount sought on the equitable indemnity claim to reach the then-required $50,000 amount in controversy. 142 F3d at 1155.

Defendants, however, have not met their burden to demonstrate the amount of attorney fees that would be placed in controversy here. Defendants do not offer any estimate or calculation of fees which plaintiffs may seek, and the court declines to speculate as to the amount of fees.

Because defendants' calculation of damages for alleged overtime and missed meal and rest periods is speculative and based on conjecture, the court limits the calculation of the amount in controversy to the reasonably certain amount of statutory penalties that could be claimed. As a matter of convenience, the court uses the statutory penalties calculated by defendants in Tables 1 and 2 above, recognizing that the waiting time penalty was based on an assumption of 2.5 overtime hours per day. The court also acknowledges plaintiffs' objection to defendants' inflated PAGA penalties without regard to the one year statute of limitations. Again, solely for convenience, the court refers to defendants' calculation to determine whether the amount in controversy has been met without the speculative estimates of compensation claimed for overtime, meal and rest periods.

As calculated in Tables 3 and 4, below, the statutory penalties for plaintiff Smith estimated by defendants total $25,724.10; for plaintiff Whelan, the estimated penalties total $42,224.10. Because the amount in controversy for each plaintiff on the present record does not reach the jurisdictional threshold of $75,000, remand is appropriate and the motion to dismiss, therefore, is moot. The court recognizes that should subsequent developments in superior court establish an amount in controversy exceeding $75,000, defendants may once again seek removal. That, however, will come — if at all — on another day.

Table 3: Estimated Statutory Damages for Smith Smith Statutory Calculation Amount Damages 1st COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 2d COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 3d COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 4th COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 5th COA: statutory 30 days × [($24.04 × 8 hrs/day) + $8,474.10 waiting time penalties ($36.06 × 2.5 hrs/day overtime) [assuming 2.5 hrs overtime] 5th COA: PAGA penalties withdrawn (doc # 21 at 8 n2) $0.00 6th COA: statutory ($50 for pay period #1) + ($100 × 42 $4,000.00 penalties for failure to (periods #2-#43)) provide itemized wage statements [maximum statutory penalty: $4000] 6th COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] 7th COA: statutory Civil penalty: $500 $500.00 penalties for failure to keep complete payroll records 7th COA: PAGA penalties 25% of [($100 for pay period #1) + $2,125.00 ($200 × 42 (periods #2 — #43))] TOTAL (Smith) $25,724.10 Table 4: Estimated Statutory Damages for Whelan Whelan Statutory Calculation Amount Damages 1st COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 2d COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 3d COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 4th COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 5th COA: statutory 30 days × [($24.04 × 8 hrs/day) + $8,474.10 waiting time penalties ($36.06 × 2.5 hrs/day overtime) [assuming 2.5 hrs overtime] 5th COA: PAGA penalties withdrawn (doc # 21 at 8 n2) $0.00 6th COA: statutory ($50 for pay period #1) + ($100 × 97 $4,000.00 penalties for failure to (periods #2-#98)) provide itemized wage statements [maximum statutory penalty: $4000] 6th COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] 7th COA: statutory Civil penalty: $500 $500.00 penalties for failure to keep complete payroll records 7th COA: PAGA penalties 25% of [($100 for pay period #1) + $4,875.00 ($200 × 97 (periods #2 — #98))] TOTAL (Whelan) $42,224.10

IV

For the foregoing reasons, the court GRANTS plaintiffs' motion to remand and REMANDS the action to Contra Costa superior court. The clerk is directed to terminate all motions and close the file.

IT IS SO ORDERED.


Summaries of

Smith v. Brinker International, Inc.

United States District Court, N.D. California
May 5, 2010
No C 10-0213 VRW (N.D. Cal. May. 5, 2010)

refusing to consider defendant's calculation for overtime damages where defendant assumed each plaintiff worked 2.5 hours overtime each day but that assumption was not supported by the allegations in the complaint and defendants provided no sufficient basis to apply its assumption.

Summary of this case from Adkins v. J.B. Hunt Transp., Inc.

including only 25% of the total recovery possible under PAGA in calculating the amount in controversy on a PAGA claim

Summary of this case from Vasserman v. Henry Mayo Newhall Mem'l Hosp.

including only 25% of the total possible recovery under PAGA for purposes of calculating the amount in controversy

Summary of this case from Hernandez v. Towne Park, Ltd.
Case details for

Smith v. Brinker International, Inc.

Case Details

Full title:MARC SMITH; ET AL, Plaintiffs, v. BRINKER INTERNATIONAL, INC; ET AL…

Court:United States District Court, N.D. California

Date published: May 5, 2010

Citations

No C 10-0213 VRW (N.D. Cal. May. 5, 2010)

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