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8 United States District Court 9 Central District of California

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11 SHANNA CHARLES, Case № 2:23-cv-02011-ODW (AFMx)

12 Plaintiff, ORDER REMANDING CASE

13 v.

14 TRANSDEV SERVICES, INC. et al.,

15 Defendants.

16 17 I. INTRODUCTION 18 This is an employment discrimination and wage-and-hour action initially brought 19 in state court by Plaintiff Shanna Charles against her employer Transdev Services, Inc. 20 and Transdev supervisor Brian Otchis. Defendants removed the case to this Court, 21 alleging subject matter jurisdiction based on both diversity and federal preemption 22 under the Labor Management Relations Act (“LMRA”). The Court ordered the parties 23 to show cause why the case should not be remanded for lack of subject matter 24 jurisdiction. (OSC, ECF No. 19.) For the following reasons, the Court finds Defendants 25 fail to establish subject matter jurisdiction and accordingly REMANDS the case. 26 II. BACKGROUND 27 As alleged in the operative Complaint, Charles, a Black woman, began working 28 for Transdev in February 2018. (Notice of Removal (“NOR”), Ex. A (“Compl.”) ¶ 7, 1 ECF No. 1.) During her employment, Charles experienced race- and gender-based 2 workplace harassment in the form of biased and harassing comments by one of her co- 3 workers, a man. (Id. ¶ 8.) Charles complained to Transdev’s human resources 4 department, which failed to take action to address the harassment. (Id. ¶ 9.) 5 In 2021, Charles filed a complaint with the Equal Opportunity Employment 6 Commission, and thereafter, Transdev fired the offending co-worker. (Id. ¶ 10.) 7 However, Transdev also began retaliating against Charles by exaggerating minor 8 transgressions and finding additional pretext to reprimand or discipline her. (Id. ¶ 12 9 (listing instances).) Additionally, Charles did not receive the meal breaks, rest breaks, 10 regular wages, and overtime wages California’s wage-and-hour statutes guarantee 11 employees. (Id. ¶¶ 13–16.) 12 On February 14, 2023, Charles initiated this action against Defendants Transdev 13 Services, Inc. and Brian Otchis in state court for workplace discrimination in violation 14 of the California Fair Employment and Housing Act (“FEHA”), constructive discharge, 15 and violations of the wage-and-hour provisions of the California Labor Code. (NOR 16 ¶ 6; Compl.) On March 17, 2023, Defendants removed the action to this Court based 17 on (1) diversity jurisdiction, and (2) federal question jurisdiction due to preemption 18 under the LMRA. (See NOR ¶¶ 22–95.) The Court ordered the parties to show cause 19 why the case should not be remanded for lack of subject matter jurisdiction. (OSC.) 20 Defendants responded to the Court’s Order to Show Cause, while Charles did not. 21 (OSC Resp., ECF No. 20.) 22 III. LEGAL STANDARD 23 “Federal courts are courts of limited jurisdiction. They possess only that power 24 authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 25 511 U.S. 375, 377 (1994). Federal courts have original jurisdiction where an action 26 arises under federal law, or where the plaintiff’s citizenship is diverse from each 27 defendant’s citizenship and the amount in controversy exceeds $75,000. 28 U.S.C. 28 §§ 1331, 1332(a). “[T]he core principle of federal removal jurisdiction on the basis of 1 diversity” is that diversity “is determined (and must exist) as of the time the complaint 2 is filed and removal is effected.” Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 3 1129, 1131 (9th Cir. 2002). 4 Federal courts have an obligation to determine the existence of subject matter 5 jurisdiction, regardless of whether the parties raise the issue. See Augustine v. United 6 States, 704 F.2d 1074, 1077 (9th Cir. 1983). The court may raise the issue of subject 7 matter jurisdiction on its own initiative at any stage in the litigation. Arbaugh v. Y&H 8 Corp., 546 U.S. 500, 506 (2006); Snell v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 9 2002). “[B]oth sides submit proof,” and the court decides whether the defendant has 10 proven the amount in controversy by a preponderance of the evidence. Dart Cherokee 11 Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88–89 (2014). “If at any time before 12 final judgment it appears that the district court lacks subject matter jurisdiction, the case 13 shall be remanded.” 28 U.S.C. § 1447(c). 14 “The ‘strong presumption’ against removal jurisdiction means that the defendant 15 always has the burden of establishing that removal is proper,” whether removal is 16 challenged by an opponent or by the court. Gaus v. Miles, Inc., 980 F.2d 564, 566 17 (9th Cir. 1992) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 18 290 (1938)). 19 IV. DISCUSSION 20 Defendants fail to demonstrate diversity jurisdiction because they fail to 21 demonstrate by a preponderance of the evidence that over $75,000 is in controversy. 22 Defendants also fail to demonstrate federal preemption under the LMRA because they 23 fail to demonstrate that the operative collective bargaining agreement qualifies for the 24 exemption provided by California Labor Code section 514. Thus, no basis for this 25 Court’s subject matter jurisdiction exists, and it is appropriate to remand the matter. 26 A. Diversity Jurisdiction—Amount in Controversy 27 With regard to diversity jurisdiction, the principal issue is whether the amount of 28 money Charles places in controversy with her claims exceeds $75,000. In their 1 Response to the Court’s order to show cause, Defendants indicate that the following 2 categories of damages are at issue: (1) lost wages; (2) emotional distress; (3) wage-and- 3 hour claims; (4) punitive damages; and (5) attorneys’ fees. (OSC Resp. 17–21.) 4 Charles did not file a reply to Defendants’ Response and therefore did not contest 5 Defendants’ characterization of her damages categories. The Court adopts Defendants’ 6 five categories of damages for the purpose of this analysis and considers each category 7 in turn. 8 1. Lost Wages 9 Defendants assert that $3,688.00 in lost wages are in controversy, representing 10 wages lost between the date of Charles’s final workday and the date the case was 11 removed. (OSC Resp. 17–18.) This category of damages arises from Charles’s 12 discrimination and retaliation claims and represents the wages Charles would have 13 earned had her employment not terminated. See, e.g., Zamudio v. Aerotek, Inc., 14 No. 1:21-cv-01673-JLT-BAK (SKO), 2022 WL 458059, at *3 (E.D. Cal. Feb. 15, 15 2022) (calculating lost wages for purposes of determining amount placed in controversy 16 by wrongful termination claim); Adkins v. J.B. Hunt Transp., Inc., 293 F. Supp. 3d 17 1140, 1144 (E.D. Cal. 2018) (defining this type of lost wages as “back pay” and 18 distinguishing from “front pay”). However, Defendants provide no evidence 19 whatsoever to substantiate (1) the date of Charles’s final workday, (2) Charles’s hourly 20 wage, and (3) the number of hours per week Charles typically worked. (See generally 21 Resp.) Moreover, none of this information appears on the face of the Complaint. (See 22 generally Compl.) Defendants simply assert this information in their OSC Response 23 and ask the Court to accept it as true. 24 In ordering Defendants to show cause regarding subject matter jurisdiction, the 25 Court clarified that its Order to Show Cause was “a dual-pronged inquiry into both the 26 facial sufficiency of Defendants’ jurisdictional allegations as well as the factual 27 sufficiency of Defendants’ demonstration of subject matter jurisdiction, which the 28 Court now calls on Defendants to make.” (OSC 2.) By way of this language and the 1 remainder of the Order to Show Cause, the Court called upon Defendants to 2 demonstrate, by a preponderance of the evidence, the amount of money Charles’s 3 Complaint places in controversy. (Id.) By failing to produce any evidence whatsoever 4 to support their lost wages calculations, Defendants fail to demonstrate by a 5 preponderance of the evidence that any amount of lost wages is in controversy. 6 Defendants makes an additional effort to demonstrate the amount of lost wages 7 in controversy by pointing to Charles’s prayer for relief “in the sum of $250,000.” (OSC 8 Resp. 18.) However, Charles’s prayer for $250,000 is not tethered to any specific 9 factual allegations; moreover, the figure comprises not only lost wages but also 10 “includ[es] losses for pain, suffering and emotional distress, . . . and other incidental 11 and consequential expenses.” (Compl., Prayer ¶¶ 1–3.) Accordingly, Charles’s prayer 12 for $250,000 in relief provides little to no evidence of the amount of lost wages actually 13 in controversy in this case and is insufficient to meet Defendants’ burden. 14 2. Emotional Distress Damages 15 Defendants assert that $250,000 in emotional distress damages are in 16 controversy, (Resp. 18–19), based on Charles’s prayer “for general damages including 17 losses for pain, suffering and emotional distress, as allowed by law, in the sum of 18 $250,000.” (Id., Prayer ¶ 1.) Courts may properly consider emotional distress damages 19 as part of the amount in controversy for jurisdictional purposes. Sasso v. Noble Utah 20 Long Beach, LLC, No. 2:14-cv-09154-AB (AJWx), 2015 WL 898468, at *6 (C.D. Cal. 21 Mar. 3, 2015). However, for two reasons, Defendants fail to demonstrate that any 22 emotional distress damages are in controversy here. 23 First, as with their lost wages argument, Defendants point to a prayer for 24 $250,000 that consists of several categories of damages, not just emotional distress 25 damages, as proof of $250,000 in emotional distress damages alone. This is illogical. 26 Charles’s bare, conclusory prayer for amalgamated damages does not provide sufficient 27 proof of the amount of emotional distress damages actually in controversy. 28 1 Second, Defendants fail to present any similar cases for comparison. To 2 determine the amount of emotional distress damages in controversy, courts consider the 3 amount of emotional distress damages awarded by juries in similar cases. Kroske v. 4 U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005); Adkins v. J.B. Hunt Transp., Inc., 5 293 F. Supp. 3d 1140, 1146–47 (E.D. Cal. 2018). Here, Defendants fail in their burden 6 because they fail to cite any similar cases and describe how the facts of this case are 7 similar to the facts of the other cases. Defendants simply cite another case where the 8 court compared the facts of that case to other cases. (Resp. 18–19.) This is insufficient. 9 Accordingly, the Court does not include any emotional distress damages in the 10 demonstrated amount in controversy. 11 3. Wage-and-Hour Claims 12 Defendants assert that Charles places $20,666.62 in controversy by way of her 13 wage-and-hour claims. (Resp. 19–20.) Defendants’ figure includes $5,392.92 in 14 overtime pay, $5,532 in waiting time penalties, $7,191.60 in meal and rest break 15 penalties, and $2,550 in wage statement penalties. (Id. at 20.) These calculations, like 16 Defendants’ lost wages calculations, are based on numerical assumptions regarding 17 Charles’s hourly rate, the number of hours per week she worked on average, and her 18 last day of work. However, Defendants fail in their burden in relation to the wage-and- 19 hour claims for two reasons. 20 First, as discussed in the context of lost wages, Defendants provide no proof 21 whatsoever of any of the numerical assumptions they used for their calculations, 22 including Charles’s hourly wage, the number of hours per week Charles worked on 23 average, and Charles’s last day of work. Defendants simply set forth these figures in 24 their brief and ask the Court to accept them. 25 Defendants fail in their burden because arguments in an attorney-authored brief 26 are not evidence. See Barcamerica Int’l USA Tr. v. Tyfield Imps., Inc., 289 F.3d 589, 27 593 n.4 (9th Cir. 2002). The Court expressly invited Defendants to submit evidence on 28 the issue of the amount in controversy, and Defendants did not submit any evidence at 1 all. Accordingly, Defendants fail to demonstrate by a preponderance of the evidence 2 that any amount of damages is in controversy in relation to Charles’s wage-and-hour 3 claims. 4 For a second, independent reason, Defendants fail in their burden of 5 demonstrating the value of Charles’s overtime, meal break, and rest break claims. 6 Regarding the frequency of Transdev’s failure to provide Charles with the required meal 7 and rest breaks, the Complaint indicates simply that Defendants committed this failure 8 “on multiple occasions.” (Compl. ¶¶ 13, 73.) Regarding the frequency of Transdev’s 9 overtime violations, the Complaint does not indicate anything at all. (See id. ¶¶ 62–69.) 10 Based on Charles’s bare allegations, it is neither reasonable nor logical for Defendants 11 to simply assume, as they do, one missed meal break per week, one missed rest break 12 per week, and one unpaid overtime hour per week. “Faced with a vague pleading, . . . 13 the much-more-sensible route would be to try to pin Plaintiff down, in state court . . . , 14 with respect to what the Complaint’s allegations actually mean with respect to violation 15 rates.” Toribio v. ITT Aerospace Controls LLC, No. 2:19-cv-05430-GW (JPRx), 16 2019 WL 4254935, at *3 (C.D. Cal. Sept. 5, 2019). Otherwise, amount-in-controversy 17 calculations on vague wage-and-hour claims become, as they have in this case, “a 18 wasteful and silly, but routine, exercise in mathematical fantasyland.”1 Id.; see Peters 19 v. TA Operating LLC, No. 5:22-cv-01831-JGB (SHKx), 2023 WL 1070350, at *10 20 (C.D. Cal. Jan. 26, 2023) (“[T]his Court does not find Defendants’ assumption 21 unreasonable simply because it is too low; it finds it unreasonable because is it ‘pulled 22 from thin air.’” (quoting Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1199 (9th Cir. 23 2015)); see also Gonzalez v. Randstad Pros. US, LLC, No. 2:22-cv-05744-JLS (PDx), 24 25

26 1 The complaint Charles filed with the Equal Employment Opportunity Commission (“EEOC Complaint”), which is attached to the state-court Complaint accompanying Defendants’ Notice of 27 Removal, contains additional details about the nature of these wage-and-hour claims, but Defendants 28 do not engage with the information in the EEOC Complaint in any way. (See generally Resp.; Compl. Ex. 1 (“EEOC Compl.”).) 1 2022 WL 17081053, at *3–4 (C.D. Cal. Nov. 18, 2022) (recognizing that courts differ 2 in their approaches to this issue and adopting the approach embodied in Toribio). 3 For these reasons, Defendants fail to demonstrate by a preponderance of the 4 evidence that any amount of damages is in controversy in relation to Charles’s wage- 5 and-hour claims. 6 4. Punitive Damages 7 Defendants argue that $55,000 in punitive damages are in controversy. 8 (Resp. 20–21.) “‘It is well established that punitive damages are part of the amount in 9 controversy’ for purposes of establishing diversity jurisdiction.” Sasso, 2015 WL 10 898468, at *6 (citing Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001)). 11 However, “the mere possibility of a punitive damages award is insufficient to prove that 12 the amount in controversy requirement has been met.” Ogden v. Dearborn Life Ins. 13 Co., --- F. Supp. 3d. ---, 2022 WL 17484616, at *3 (D. Ariz. 2022). “Defendant must 14 present appropriate evidence, such as jury verdicts in analogous cases, to show that a 15 claim for punitive damages establishes that it is more likely than not that the amount in 16 controversy exceeds $75,000.” Id. This involves “articulat[ing] why the particular 17 facts that are alleged in the instant action might warrant extraordinary punitive 18 damages.” Id. (quoting Haisch v. Allstate Ins. Co., 942 F. Supp. 1245, 1249 (D. Ariz. 19 1996)). 20 Defendants support their assertion that $55,000 in punitive damages are in 21 controversy by citing to a case in which a court found $55,000 of punitive damages to 22 be in controversy. (OSC Resp. 20–21.) In making this argument, Defendants 23 misconstrue their burden. Defendants’ task is not merely to cite to other cases where 24 courts found $55,000 in punitive damages to be in controversy for the purpose of subject 25 matter jurisdiction. Instead, Defendants must cite to other cases where a party actually 26 received a verdict awarding a particular amount of punitive damages and explain how 27 the facts of this case are similar to the facts of those other cases. See Ogden, 2022 WL 28 1 17484616, at *3. Defendants fail to carry this burden and accordingly fail to show that 2 any particular amount of punitive damages is in controversy in this case. 3 5. Attorneys’ Fees 4 Defendants argue that $30,000 in attorneys’ fees are in controversy, based on 100 5 hours of attorney work billed at $300/hour. (OSC Resp. 21.) When, as here, an 6 underlying statute authorizes an award of attorneys’ fees, the fees may be included in 7 the amount in controversy. See Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 8 (9th Cir. 1998). The Court accepts Defendants’ argument for the purposes of this 9 analysis and assumes $30,000 in attorneys’ fees to be in controversy in this case. 10 6. Summary 11 In summary, Defendants generally fail to support any of their amount-in- 12 controversy calculations with evidence and accordingly fail in their burden. That said, 13 even accepting Charles’s hourly rate and other assumptions as Defendants assert them 14 to be, these assumptions support, at most, the lost wages claim ($3,688), the waiting 15 time penalties claim ($5,532), and the wage statement penalties claim ($2,550), for a 16 total of $11,770. Adding this amount to the $30,000 in presumed attorneys’ fees yields 17 a number well below the jurisdictional threshold. Accordingly, the Court lacks diversity 18 jurisdiction. 19 Defendants’ argument regarding Otchis’s status as a sham defendant is moot, and 20 the Court does not reach it. 21 B. Federal Question Jurisdiction—LMRA Preemption 22 Defendants also assert that this Court has subject matter jurisdiction because the 23 case raises a federal question. Specifically, Defendants argue that Charles’s overtime 24 claim is preempted under § 301 of the Labor Management Relations Act (“LMRA”). 25 (NOR ¶ 93; OSC Resp. 22–24.) 26 Section 301(a) of the LMRA provides district courts with jurisdiction over claims 27 arising from “violation of contracts between an employer and a labor organization 28 representing employees.” 29 U.S.C. § 185(a). Federal substantive law preempts state 1 law in an action arising under § 301 to further the interest in uniform federal 2 interpretation of collective bargaining agreements. Allis-Chalmers Corp. v. Lueck, 3 471 U.S. 202, 209–10 (1985). 4 To determine whether a state law claim is preempted by § 301 of the LMRA, the 5 Court must first consider whether the asserted cause of action involves a right conferred 6 upon an employee by virtue of state law or by the operative collective bargaining 7 agreement (“CBA”). Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 8 2007). If the right exists “solely as a result of the CBA, then the claim is preempted.” 9 Id. However, “claims are not simply CBA disputes by another name . . . if they just 10 refer to a CBA-defined right, rely in part on a CBA’s terms of employment, run parallel 11 to a CBA violation, or invite use of the CBA as a defense.” Alaska Airlines Inc. v. 12 Schurke, 898 F.3d 904, 921 (9th Cir. 2018) (en banc) (citations omitted). 13 Second, if the right does exist independently of the CBA, the Court must then 14 consider whether it is “substantially dependent on analysis of a collective-bargaining 15 agreement.” Burnside, 491 F.3d at 1059 (quoting Caterpillar Inc. v. Williams, 482 U.S. 16 386, 394 (1987)). If the claim requires the court to “interpret,” rather than merely “look 17 to,” the CBA, then the claim is “substantially dependent” thereon and is preempted by 18 § 301. Id. at 1059–60. “The plaintiff’s claim is the touchstone for this analysis; the 19 need to interpret the [CBA] must inhere in the nature of the plaintiff’s claim.” Detabali 20 v. St. Luke’s Hosp., 482 F.3d 1199, 1203 (9th Cir. 2007) (quoting Cramer v. Consol. 21 Freightways, Inc., 255 F.3d 683, 691 (9th Cir. 2001) (en banc)). 22 Here, Defendants argue that Charles’s overtime claim is statutorily barred by 23 California Labor Code section 514 and that accordingly, pursuant to Curtis v. Irwin 24 Industries, 913 F.3d 1146, 1150 (2019), her overtime claim necessarily arises from or 25 requires interpretation of the CBA, preempting the claim. (OSC Resp. 23.) 26 The flaw in Defendants’ argument is that it fails to demonstrate that the operative 27 CBA is a qualifying CBA under Labor Code section 514. The California Labor Code 28 1 provision on which Charles’s overtime claim relies, section 510, is subject to an 2 exception for employees covered by qualifying CBAs. Specifically: 3 Sections 510 and 511 [for overtime violations] do not apply to an employee 4 covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions 5 of the employees, and if the agreement provides premium wage rates for 6 all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage. 7 8 Cal. Lab. Code § 514. Here, Defendants fail to engage with the provisions of the 9 operative CBA to demonstrate that, as the section 514 exemption requires, the CBA 10 provides (1) premium wages for all overtime hours worked and (2) a regular hourly rate 11 of pay of not less than thirty percent more than state minimum wage. Accordingly, 12 Defendants fail to show that Charles’s overtime claim is subject to the section 514 13 exemption for qualifying CBAs and accordingly fail to show that the LMRA preempts 14 Charles’s overtime claim. 15 Defendants do not suggest any other basis for federal question jurisdiction. 16 Accordingly, Defendants fail to demonstrate subject matter jurisdiction based on a 17 federal question. 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 1 Vv. CONCLUSION 2 For the foregoing reasons, the Court REMANDS the matter to the Superior Court 3 || of California, County of Los Angeles, 111 North Hill Street, Los Angeles CA 90012, 4|| Case No. 23STCV03162. The Court VACATES all dates and deadlines in this matter. 5 || The Clerk of the Court shall close this case. 6 7 IT IS SO ORDERED. 8 9 July 7, 2023 ss 10 : 5 Géed

OTIS D. WRIGHT, II

3 UNITED STATES DISTRICT JUDGE

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