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2 3 4 . 5 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 DEARL POWELL, CHRISTINA Case No.: 3:20-cev-2412-BEN-LL 11 GAST and ELIVHA GONZALEZ, ORDER: . individuals and on behalf ofall others =| 12 || similarly situated, (1) DENYING MOTION TO

DISMISS;

13 . Plaintiffs, (2) GRANTING MOTION TO 14 Vv. STRIKE; AND | □ 15 3) DENYING MOTION TO □ WALMART INC., a Delaware (3) REMAND 16 || corporation; WAL-MART . ASSOCIATES, INC., a Delaware _ [ECF Nos. 8, 9] 17 corporation; WAL-MART STORES, 1g || INC. Delaware corporation, 19 Defendants. □ 20 Before the Court are the (1) Motion to Dismiss and/or Motion to Strike brought by 21 || Defendants Walmart Inc., Wal-Mart Associates, Inc., and Wal-Mart Stores, Inc. 22 (collectively, “Wal-Mart”), ECF No. 8, and (2) Motion to Remand of Plaintiffs Dearl 23 || Powell, Christina Gast, and Elijha Gonzalez’s (collectively, “Plaintiffs”), ECF No. 9. For 24 || the following reasons, the Court (1) DENIES the Motion to Dismiss, (2) GRANTS the 25 || Motion to Strike, and (3) DENIES the Motion to Remand. □ 26 BACKGROUND 27 Plaintiffs are former Wal-Mart employees in California whose employment ceased 28 between April 6, 2017, and the present. Compl., ECF No. 1-2, 5. While they were dL

| j]employed by Wal-Mart, they were paid sick pay. Jd. During the same period Plaintiffs 2 ||earned sick pay, they also earned non-discretionary incentive wages including, but not 3. || limited to, “MYSHARE Incentive Pay.” Jd. MYSHARE Incentive Pay is a bonus paid 4 || quarterly to some employees based on the employees and their stores meeting certain 5 || performance goals. Opp’n, ECF No. 11, 10. Here, Plaintiffs allege they were not paid 6 || adequate sick pay during their employment because their sick pay did not include non- 7 discretionary incentive wages, such as MYSHARE Incentive Pay. Compl., ECF No. 1-2, 8 According to Plaintiffs, Wal-Mart’s sick pay policy violates California Labor Code 9 || section 246 (“Section 246”). Id. They further allege they are owed waiting time 10 || penalties consistent with California Labor Code section 203 (“Section 203”) because the 11 ||adequate amount of sick pay was not paid immediately when they left their employment 12 || with Wal-Mart. /d. Plaintiffs seek to represent a class of similarly situated individuals. 13 14 After removing the case to this Court, Wal-Mart filed a Motion to Dismiss the 15 || Complaint, arguing Plaintiffs failed to allege sufficient facts to show Wal-Mart willfully 16 || failed to pay wages due, and therefore their claim fails as a matter of law. Mot., ECF No. 17 8,4. Wal-Mart also moved to strike the part of the caption of Plaintiffs’ Complaint that 18 ||referred to a violation of California Labor Code section 226 (“Section 226”), because the 19 Complaint itself contained no facts or argument alleging a violation of this statute. Jd. at 20 Plaintiffs responded by opposing the Motion to Dismiss, conceding the Motion to 21 Strike, and moving to remand. Opp’n, ECF No. 12, 7 fn.1; Mot., ECF No. 9. Th support 22 || of their Motion to Remand, Plaintiffs argue Wal-Mart has not produced sufficient 23 || evidence to show the amount in controversy requirement has been met that would 24 || establish the Court’s subject matter jurisdiction under the Class Action Fairness Act 25 || (“CAFA”). Mot., ECF No. 9, 9 (citing 28 U.S.C. § 1332(d)(2)). 26 Because the Parties agree Wal-Mart’s Motion to Strike should be granted and the 27 || Court is satisfied that the reference to Section 226 is immaterial, see Federal Rule of Civil 28 || Procedure 12(f), the Court strikes the part of the caption of Plaintiffs’ Complaint that

1 refers to a violation of Section 226. The Court next turns to Wal-Mart’s Motion to 2 |; Dismiss and Plaintiffs’ Motion to Remand. . 3 LEGAL STANDARDS 4 A. Motion to Dismiss □□ 5 A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal 6 || theory or on the absence of sufficient facts alleged under a cognizable legal theory. 7 || Johnson v,. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. 8 Block, 250 F.3d 729, 732 (9th Cir. 2001). When considering a Rule 12(b)(6) motion, the 9 court “accept[s] as true facts alleged and draw[s] inferences from them in the light most 10 || favorable to the plaintiff.” Stacy v. Rederite Otto Danielsen, 609 F.3d 1033, 1035 (9th . 11 |/Cir. 2010). A plaintiff must not merely allege conceivably unlawful conduct but must ‘12 allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. 13 |v. Twombly, 550 U.S. 544, 570 (2007). “A claim is facially plausible ‘when the plaintiff 14 || pleads factual content that allows the court to draw the reasonable inference that the 15 || defendant is liable for the misconduct alleged.” Zixiang Liv. Kerry, 710 F.3d 995, 999 16 (9th Cir. 2013) (quoting Ashcroft v. Igbal, 556 U.S. 662, 678 (2009)). “Threadbare 17 || recitals of the elements of a cause of action, supported by mere conclusory statements, do 18 ||not suffice.” Igbal, 556 U.S. at 678. 19 B. Motion to Remand . Wal-Mart removed this case under CAFA, which confers jurisdiction to district 21 || courts in any civil action where three requirements are met: “(1) the matter in 22 controversy exceeds the sum or value of $5,000,000, exclusive.of interests and costs, (2) 23 proposed class consists of more than 100 members, and (3) any member of the class 24 || of plaintiffs is a citizen of a State different from any defendant.” Fritsch v. Swift Transp. 25 || Co. of Arizona, LLC, 899 F.3d 785, 788 (9th Cir. 2018) (quoting 28 U.S.C. § 1332(d)(2)) 26 || (internal quotation marks omitted). A notice of removal must contain “a short and plain 27 || statement of the grounds for removal.” 28 U.S.C. Section 1146(a). Moreover, “no 28 || antiremoval presumption attends cases invoking CAFA, which Congress enacted to 3

1 || facilitate adjudication of certain class actions in federal court.” Dart Cherokee □□□□□ 2 || Operating Co. v. Owens, 574 U.S. 81, 89 (2014). 3 || ANALYSIS. 4 A. Motion to Dismiss 5 Wal-Mart argues Plaintiffs’ Complaint does not allege sufficient facts to show 6 Wal-Mart acted willfully in failing to pay all wages due at termination. Mot., ECF No. 8, 7 4, Accordingly, Wal-Mart contends that Plaintiffs have failed to plausibly plead an 8 || essential element of a violation of Section 203, and therefore the claim should be 9 |i dismissed. 7d. In response, Plaintiffs argue their Complaint contains sufficient □□□□□□□ 10 || detail to allege Wal-Mart has violated Section 203. Opp’n, ECF No. 12, 14. 11 California requires employers to calculate their non-exempt employees’ accrued 12 || sick leave pay in the same manner that the employer calculates “the regular rate of pay 13 || for the workweek in which the employee uses paid sick leave, whether or not the 14 || employee actually works overtime in that workweek.” Cal. Lab. Code § 246(1)(1); see . 15 || also Compl., ECF No. 1-2, 8-9. The rate of sick pay is calculated by dividing the 16 |}employee’s total wages (not including overtime premium pay) by the employee’s total □ 17 hours worked in the full pay periods of the prior 90 days of employment. Cal. Lab. Code 18 § 246(1)(2); see also Compl., ECF No. 1-2, 9. Willful failure to pay wages of an 19 ||employee who is discharged or quits can result in a penalty and gives rise to a private 20 || cause of action. Cal. Lab. Code § 203. 21 Here, Plaintiffs contend that sick pay should be considered “wages” for purposes 22 || of the California Labor Code. Opp’n, ECF NO. 12, 11 (citing Flores v. Dart Container 23 || Corp., Case No. 2:19-cv-00083-WBS-EFB, 2020 WL 2770073, at *1 (E.D. Cal. May 28, 24 || 2020) (finding “paid sick leave [to be] wages within the meaning of [California Labor 25 || Code] Section 200(a).”). Further, they argue Wal-Mart willfully failed to pay sick pay at 26 proper rate, taking into account MYSHARE incentive pay, and therefore they are 27 || entitled to damages. Compl., ECF No. 1-2, 8. To support their argument that Wal- 28 || Mart’s failure was willful, Plaintiffs argue Wal-Mart knows it is not correctly paying sick

1 || pay and intends to do what it is doing. Opp’n, ECF No. 12, 15. 2 The California Court of Appeals has held that the standard for “willful” action by 3 employer in the context of Section 203 is not high, and the bar is surely met here. See 4 || Diaz v. Grill Concepts Servs., Inc., 23 Cal. App. 5th 859, 867 (2018). In Diaz, the 5 || California Court of Appeals held that “[t]he failure to pay is willful if the employer 6 ‘knows what [it] is doing [and] intends to do what [it] is doing.”” Jd. at 868 (quoting Jn 7 ||re Trombley, 31 Cal. App. 2d 269, 274 (1948)) (alterations in original). By contrast, “an 8 |}employer’s failure to pay is not willful if that failure is due to (1) uncertainty in the law .. 9 |}. [,] (2) representations by the taxing authority that no further payment was required... 10 ||[,] or G) the employer’s good faith mistaken belief that wages are not owed grounded in 11 good faith dispute, which exists when the employer presents a defense, based in law or 12 || fact which, if successful, would preclude any recovery on the part of the employee.” Jd. 13 ||(internal quotation marks and citations omitted). Evaluating the pleadings, such 14 || circumstances are not present here and the Court finds that Plaintiffs have plausibly 15 || alleged Wal-Mart acted willfully. Plaintiffs argue this area of law has been settled for 16 ||thirteen years, negating any possibility that a large employer such as Wal-Mart could 17 argue uncertainty in the law or a good faith belief that it was mistaken. Opp’n, ECF No. 18 ||9, 15. To be sure, Plaintiffs will have to prove willfulness with evidence later in this 19 || litigation, but at this point, they have plausibly pleaded the element to survive this Motion 20 ||to Dismiss. Accordingly, the Motion to Dismiss is denied. . 21 B. Motion to Remand 22 As required, Wal-Mart filed a notice of removal “containing a short and plain . 23 || statement of the grounds for removal.” 28 U.S.C. Section 1146(a). Further, the Parties 24 || appear to agree, and the Court is satisfied by the evidence, that the proposed class 25 ||/consists of more than 100 members and that CAFA’s minimal diversity requirement is 26 || satisfied. As these jurisdictional prongs exist, the Court only addresses Plaintiffs’ 27 |{argument that the amount in controversy requirement is not met. 28 When a defendant removes a case, the “notice of removal need include only a

1 || plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” 2 || Dart Cherokee, 574 U.S, at 9. From there, “the defendant’s amount in controversy 3 allegation should be accepted when not contested by the plaintiff or questioned by the 4 ||court.” Id. If, however, the plaintiff contests the amount in controversy, “both sides 5 submit proof and the court decides, by a preponderance of the evidence, whether the 6 ||amount in controversy requirement has been satisfied.” Id. at 88 (citing 28 U.S.C, § 7 || 1446(c)(2)(B)). Here, the Parties dispute whether Wal-Mart has adequately shown the 8 $5,000,000 amount in controversy requirement is met. 9 Wal-Mart argues the amount in controversy is met because it has reviewed its 10 records and relied on “an experienced economist and data analyst to determine the exact 11 {/number of former associates who received paid sick leave pay within 90 days of 12 |irecetving a MyShare Incentive award.” Opp’n, ECF No. 11,5. Using this data, Wal- 13 || Mart estimates “the amount in controversy on Plaintiffs’ waiting time penalties claim is 14 $37,953,720.” Id. In response, Plaintiffs argue Wal-Mart “made erroneous, unfounded 15 assumptions” about the size and nature of the class in order support CAFA’s minimum 16 || amount in controversy. Mot, ECF No. 9, 5. They argue Wal-Mart used a class definition 17 computing an amount in controversy that ignores the requirement that members of the 18 || class be paid sick pay during the same time period in which he or she earned non- 19 || discretionary incentive wages. Jd. at 5-6. 20 The Court has considered the facts in the removal petition and “summary- 21 judgment-type evidence relevant to the amount in controversy at the time of removal.” 22 Ibarra v. Manheim Invs., Inc., 775 1193, 1197 (9th Cir. 2015). Far from conclusory 23 || allegations that are “speculative and self-serving assumptions,” Wal-Mart has attempted 24 set forth “summary-judgment-type evidence” supporting its contention the amount in 25 controversy is met. On the other hand, Plaintiffs provide no evidence suggesting □□□□ 26 || the correct class size or amount in controversy might be. In failing to make such an 27 argument, Plaintiffs ignore a key part of the Supreme Court’s holding in Dart Cherokee: 28 || if Plaintiffs contest the amount in controversy, “both sides submit proof and the court

1 decides, by a preponderance of the evidence, whether the amount-in-controversy has 2.| been satisfied.” 574 U.S. at 88. 3 Based on the evidence before it, the Court concludes that at this time the amount in 4 || controversy requirement of CAFA appears to be met. Therefore, Plaintiffs’ Motion to 5 ||Remand is denied. 6 ||IV. CONCLUSION 7 For the foregoing reasons, the Court orders as follows: 8 1. Defendant’s Motion to Dismiss is DENIED. 9 2. Defendant’s Motion to Strike is GRANTED. 10 3. Plaintiffs’ Motion to Remand is DENIED. 11 IT IS SO ORDERED. 12 . 3 Dated: February £2021 . 1 Vy, LU JhAKA Le) / Aad T. ITEZ 14 | United States District Judge 15 16 . 17 18

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