1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 MICHAEL THAI, Case No. 2:21-cv-03319-FLA (GJSx)

12 Plaintiff, ORDER (1) DENYING PLAINTIFF’S 13 v. MOTION TO REMAND [DKT. 13]; 14 (2) DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE TEAM INDUSTRIAL SERVICES, INC. 15 FIRST AMENDED COMPLAINT et al., 16 [DKT. 23]; AND Defendants. (3) CONSOLIDATING ACTION 17 WITH RELATED CASE 18 19 20 RULING 21 Before the court are two motions: (1) Plaintiff Michael Thai’s (“Thai” or 22 “Plaintiff”) Motion to Remand (“Motion”) (Dkt. 13-1, “Mot. to Remand”); and 23 (2) Plaintiff’s Motion for Leave to First a First Amended Complaint (Dkt. 23-1, “Mot. 24 to Amend”). Defendant Team Industrial Services, Inc. (“Defendant” or “Team”) 25 opposes both motions. Dkts. 16, 25. 26 On July 22, 2021, the court found these matters appropriate for resolution 27 without oral argument and vacated the hearing set for July 23, 2021. Dkt. 32; see Fed. 28 R. Civ. P. 78(b); Local Rule 7-15. For the reasons stated below, the court (1) 1 DENIES Plaintiff’s Motion to Remand, (2) DENIES Plaintiff’s Motion for Leave to 2 File a First Amended Complaint, and (3) CONSOLIDATES the action with the 3 related case styled Alex Esqueda v. Team Industrial Services, Inc., et al., Case No. 4 2:21-cv-03321-FLA (GJSx) (“Esqueda action”). 5 BACKGROUND 6 Plaintiff filed this action against Defendant in Los Angeles Superior Court on 7 June 24, 2019. Dkt. 1-6 (“Compl.”). In the class action Complaint, Plaintiff brings 8 the following causes of action: (1) Unfair Competition in Violation of California 9 Business and Professions Code § 17200, et seq.; (2) Failure to Pay Minimum Wages 10 in Violation of California Labor Code §§ 1194, 1197, and 1197.1; (3) Failure to Pay 11 Overtime Wages in Violation of California Labor Code § 510, et seq.; (4) Failure to 12 Provide Required Meal Periods in Violation of California Labor Code §§ 226.7 and 13 512 and the Applicable IWC Wage Order; (5) Failure to Provide Required Rest 14 Periods in Violation of California Labor Code §§ 226.7 and 512 and the Applicable 15 IWC Wage Order; (6) Failure to Provide Accurate Itemized Statements in Violation of 16 California Labor Code § 226; (7) Failure to Provide Wages When Due in Violation of 17 California Labor Code §§ 201, 202, and 203; (8) Violation of the Fair Credit 18 Reporting Act for Failure to Make Proper Disclosures as Required Under

1681, et seq.; (9) Violation of the Fair Credit Reporting Act for Failure to Obtain 20 Proper Authorization as Required Under

, et seq.; and 21 (10) Violations of the Private Attorney’s General Act, California Labor Code § 2698, 22 et seq. Id. 23 Defendant removed the action to federal court on April 16, 2021. Dkt. 1. In its 24 Notice of Removal, Defendant argues the court has jurisdiction over the action under 25 the Class Action Fairness Act of 2005 (“CAFA”),

(d), because on 26 March 17, 2021, Plaintiff stated for the first time in a mediation brief that the number 27 of class members includes 2,000 employees and generates over $225 million in 28 potential damages. See

In response, Plaintiff argues that reliance on the 1 confidential mediation brief for removal purposes is improper. See Mot. to Remand 2. 2 On June 25, 2021, the court ordered the parties to submit supplemental briefing 3 on three issues: (1) the reasonable estimate of Plaintiff’s total class damages, 4 including attorney’s fees, against Defendant; (2) whether any confidentiality 5 agreement between the parties and/or evidentiary privilege applies to Plaintiff’s 6 damages estimate in its mediation brief, and whether any legal authority bars the court 7 from considering that estimate for the limited purpose of determining CAFA amount- 8 in-controversy jurisdiction; and (3) whether this action should be consolidated with 9 the related Esqueda action. Dkt. 24. Both parties submitted supplemental briefs on 10 July 9, 2021. See Dkts. 27, 28. 11 MOTION TO REMAND 12 I. Legal Standard 13 A defendant may remove an action from state court to federal court if the 14 plaintiff could have originally filed the action in federal court. See 28 U.S.C. 15 § 1441(a). The Class Action Fairness Act of 2005 (“CAFA”) provides federal subject 16 matter jurisdiction if (1) the proposed plaintiff class is not less than 100 members, 17 (2) the parties are minimally diverse, and (3) the aggregate amount in controversy 18 exceeds $5 million.

(d)(2), (5)(B). “Congress intended CAFA to be 19 interpreted expansively.” Ibarra v. Manheim Invs., Inc.,

(9th 20 Cir. 2015). 21 The party seeking removal bears the burden of establishing federal subject 22 matter jurisdiction under CAFA. Abrego v. Dow Chem. Co.,

(9th 23 Cir. 2006). Where the amount in controversy is not apparent from the face of the 24 complaint, the removing party “must prove by a preponderance of the evidence that 25 the amount in controversy requirement [under CAFA] has been met.”

While 26 generally, “a defendant’s notice of removal need include only a plausible allegation 27 that the amount in controversy exceeds the jurisdictional threshold,” where a plaintiff 28 contests the amount in controversy put forth by the defendant, “[e]vidence 1 establishing the amount is required….” Dart Basin Operating Co. v. Owens,

81, 89 (2014). The parties, thus, “may submit evidence outside the complaint, 3 including affidavits or declarations, or other ‘summary-judgment-type evidence 4 relevant to the amount in controversy at the time of removal.’” Ibarra,

1197 (quoting Singer v. State Farm Mut. Auto. Ins. Co.,

(9th Cir. 6 1997)). “Under this system, a defendant cannot establish removal jurisdiction by mere 7 speculation and conjecture, with unreasonable assumptions.”

8 Removal under CAFA must also be timely. A defendant must remove the case 9 to federal court “(1) during the first thirty days after the defendant receives the initial 10 pleading, or (2) during the first thirty days after the defendant receives ‘an amended 11 pleading, motion, order or other paper from which it may be first ascertained that the 12 case is one which is or has become removable.’” Reyes v. Dollar Tree Stores, Inc., 13

(9th Cir. 2015) (quoting

(b)(1) and (b)(3)) 14 (italics omitted). The first time period under § 1446(b)(1) is “triggered if the case 15 stated by the initial pleading is removable on its face,” and the second time period 16 under § 1446(b)(3) is “triggered if the initial pleading does not indicate that the case is 17 removable, and the defendant receives a copy of an amended pleading, motion, order 18 or other paper from which removability may first be ascertained.” Carvalho v. 19 Equifax Info. Servs., LLC,

(9th Cir. 2010) (internal quotation 20 marks and citations omitted). 21 II. Analysis 22 1. Timeliness 23 Defendant alleges removal is timely under

(b)(3) because the 24 notice of removal was filed on April 16, 2021, which was within thirty days of service 25 of Plaintiff’s March 17, 2021 mediation brief, in which Defendant learned for the first 26 time that jurisdiction pursuant to CAFA is proper. Dkt. 1 ¶¶ 3-5. Plaintiff argues 27 Defendant’s removal was untimely because Defendant could have ascertained the 28 potential amount in controversy from information in its possession before Plaintiff 1 served the mediation brief, and asserts it is “disingenuous” for Defendant to claim that 2 it learned the amount in controversy from Plaintiff’s brief. Mot. to Remand 11-12. 3 The court disagrees and finds Defendant’s removal was timely. 4 First, if the face of the Complaint does not reveal the case is removable, 5 Defendant does not have an affirmative obligation to calculate the amount in 6 controversy to determine whether CAFA jurisdiction is proper under 28 U.S.C. 7 § 1446(b)(1). Harris v. Bankers Life & Cas. Co.,

(9th Cir. 2005) 8 (“removability under § 1446(b) is determined through examination of the four corners 9 of the applicable pleadings, not through subjective knowledge or a duty to make 10 further inquiry”). Indeed, the Complaint in this action specifically alleges that the 11 amount in controversy is less than $5 million. Compl. ¶¶ 4, 6. Defendant, therefore, 12 did not have any obligation to provide its own estimate of the amount in controversy 13 and remove the case to federal court within thirty days of service of the Complaint 14 pursuant to

(b)(1). 15 Second, removal was proper under

(b)(3). A mediation brief 16 constitutes “other paper” under

(b)(3) from which “it may be first 17 ascertained that the case is one which is … removable.” See, e.g., Vitale v. Celadon 18 Trucking Servs. Inc., No. 2:16-cv-08535-PSG (GJSx),

, at *3 (C.D. 19 Cal. Feb. 15, 2017). Plaintiff does not dispute the March 17, 2021 mediation brief 20 was the first time Defendant received notice that Plaintiff contended the amount-in- 21 controversy could exceed $5 million. See Mot. to Remand 11-12. Thus, Defendant 22 had thirty days to remove the case after receipt of Plaintiff’s mediation brief 23 containing the damages estimate of over $225 million. Defendant removed the action 24 25 26 27 28 1 on April 16, 2021, which was within thirty days of being served the mediation brief. 2 Dkt. 1 ¶ 3. Accordingly, removal was timely.1 3 2. Amount-in-Controversy 4 As the parties do not contest CAFA’s jurisdictional requirements of minimum 5 diversity and class numerosity, the sole remaining dispute is whether CAFA’s 6 requirement that the amount in controversy exceed $5 million is met. See Mot. to 7 Remand 6; Dkt. 16 (“Opp. to Mot. to Remand”) at 6. 8 In response to the court’s order for supplemental briefing in this action, 9 Defendant submitted evidence on July 9, 2021, independent of Plaintiff’s mediation 10 brief, demonstrating that the amount in controversy exceeds $5 million. See Dkts. 28, 11 28-1. Specifically, Defendant estimates that the amount in controversy for this 12 putative class action is at least $20,677,697.70. Dkt. 28 at 7. Defendant calculates 13 this figure based on Plaintiff’s ten causes of action, the estimated class sizes for each, 14 the applicable limitation periods and statutory damages, and average hourly pay rates. 15

. 16 Plaintiff does not argue or submit evidence in his supplemental briefing to 17 establish that a reasonable estimate of his class claims amounts to $5 million or less. 18 See Dkt. 27. Instead, Plaintiff acknowledges Defendant is in possession of “all payroll 19 information to provide a reasonable damages analysis to support removal.”

. 20 Notably, Plaintiff does not affirmatively disavow damages meeting or exceeding $5 21 22

23 1 Although the court ultimately does not rely upon the damages figure in the mediation 24 brief to find the amount in controversy satisfied under CAFA, the additional evidence 25 Defendant submitted on July 9, 2021 to support its amount in controversy calculation—and upon which the court does rely—was timely submitted in response 26 to the court’s request for supplemental briefing. See Dkt. 28. As the removal was 27 timely in response to the mediation brief, the court will consider the evidence submitted with Defendant’s July 9, 2021 supplemental brief in determining whether 28 federal jurisdiction exists here. 1 million, despite having alleged that the aggregate amount in controversy is under this 2 sum. Compare Dkt. 27 with Compl. ¶¶ 2, 4. 3 After reviewing the parties’ papers, the court is satisfied that Defendant’s 4 calculation is based on reasonable assumptions, e.g., that putative class members 5 experienced one-half hour of unpaid overtime per workweek or were denied a meal 6 break once per workweek. See Dkt. 28 at 11-12; see also Ibarra,

7 (noting the court is to test whether CAFA’s requirements are met by a preponderance 8 of the evidence by considering “the reality of what is at stake in the litigation, using 9 reasonable assumptions underlying the defendant’s theory of damages exposure”). 10 The court, therefore, concludes Defendant has met its burden to establish federal 11 subject matter jurisdiction under CAFA. 12 Plaintiff’s Motion to Remand, therefore, is DENIED. Having denied the 13 motion on this basis, the court need not address the parties’ arguments whether 14 Plaintiff’s estimate from his mediation brief supports federal jurisdiction under 15 CAFA. 16 3. Plaintiff’s Request to Strike 17 Plaintiff requests the court strike the Declaration of Michael Cross (Dkt. 1-4) 18 because the statements (1) were improperly introduced and are statutorily protected by 19 the California mediation and settlement privilege, and (2) are inadmissible hearsay. 20 Dkt. 27 at 1. As the court did not rely on the Cross Declaration in resolving the 21 instant Motion to Remand, the request is DENIED as moot. 22 MOTION FOR LEAVE TO FILE FIRST AMENDED COMPLAINT 23 Plaintiff also requests leave to file a First Amended Complaint to add a breach 24 of contract claim. See generally Mot. to Amend. Plaintiff contends Defendant 25 breached two non-disclosure agreements on April 16, 2021, when it filed its notice of 26 removal and relied on the damages estimate in Plaintiff’s mediation brief for CAFA 27 jurisdiction purposes. Id. at 1. 28 1 Fed. R. Civ. P. 15(a)(2) (“Rule 15(a)(2)”) permits a party to amend its pleading 2 with the opposing party’s written consent or the court’s leave. In addition, the court 3 may, upon motion and reasonable notice and on just terms, “permit a party to serve a 4 supplemental pleading setting out any transaction, occurrence, or event that happened 5 after the date of the pleading to be supplemented.” Fed. R. Civ. P. 15(d) (“Rule 6 15(d)”). An amended complaint “typically relates to matters that have taken place 7 prior to the date of the pleading that is being amended.” ConnectU LLC v. 8 Zuckerberg,

(1st Cir. 2008); Stinson v. BNSF Ry. Co., Case No. 5:14- 9 cv-00143-AB (SPx),

, at *2 (C.D. Cal. Nov. 24, 2014). 10 In contrast, a supplemental pleading is used to allege relevant facts that 11 occurred after the original pleading was filed. Keith v. Volpe,

, 473-74 12 (9th Cir. 1988); Stinson,

, at *2. The standards for granting a 13 motion for leave to file a supplemental pleading are the same as those for granting a 14 motion to file an amended complaint under Rule 15(a). Frederick v. Cal. Dept. of 15 Corr. and Rehab., No. 3:08-cv-02222 MMC (PR),

, at *2 (N.D.

). 17 Under Rule 15(a), the court should “freely give leave” for a party to amend its 18 pleading “when justice so requires.” Fed. R. Civ. P. 15(a)(2). Granting leave to 19 amend is left to the sound discretion of the court, and the court “must be guided by the 20 underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the 21 pleadings or technicalities.” United States v. Webb,

(9th Cir. 22 1981). Accordingly, the policy favoring amendments to pleadings is “to be applied 23 with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc.,

, 24 1051 (9th Cir. 2013) (quoting Owens v. Kaiser Found. Health Plan, Inc.,

(9th Cir. 2001)). Supplemental pleadings, however, may not introduce an 26 entirely separate and distinct claim, Planned Parenthood of S. Ariz. v. Neely,

400, 402 (9th Cir. 1997), and “some relationship must exist between the newly alleged 28 matters and the subject of the original action,” Volpe,

. 1 Here, the proposed FAC seeks to amend the Complaint to add facts regarding 2 Defendant’s alleged breach of confidentiality agreements that were entered into after 3 this litigation was initiated. Mot. to Amend 1. Thus, the court interprets Plaintiff’s 4 request to file an amended Complaint as a request to file a supplemental Complaint. 5 See Cabrera v. City of Huntington Park,

(9th Cir. 1998) (noting the 6 erroneous characterization of a pleading as an amended pleading as opposed to a 7 supplemental pleading is “immaterial”). 8 Plaintiff’s proposed allegations concern Defendant’s alleged noncompliance 9 with confidentiality agreements entered into during this litigation, and raise separate 10 and distinct claims that do not have any relationship to the existing claims for Labor 11 Code violations. Plaintiff’s proposed breach of contract claims are more appropriately 12 heard in state court as a separate lawsuit. See Judge Virginia A. Phillips et al., Rutter 13 Group Practice Guide: Federal Civil Procedure Before Trial ¶ 8:1731 (Cal. & 9th Cir. 14 ed. 2021) (“Leave to file a supplemental pleading will be denied where the 15 supplemental pleading asserts new and distinct claims unrelated to the original 16 complaint that should be the subject of a separate lawsuit. A supplemental complaint 17 would not promote judicial efficiency in such cases….”). 18 Accordingly, the court DENIES Plaintiff’s Motion for Leave to File a First 19 Amended Complaint. 20 CONSOLIDATION 21 Fed. R. Civ. P. 42(a) (“Rule 42(a)”) allows consolidation of “actions involving 22 a common question of law or fact.” District courts have broad discretion under Rule 23 42(a) to consolidate cases pending in the same district, Garity v. APWU Nat’l Labor 24 Org.,

(9th Cir. 2016), and may consolidate cases sua sponte, In 25 re Adams Apple, Inc.,

(9th Cir. 1987). In determining whether 26 to consolidate, “a court weighs the interest in judicial convenience against the 27 potential for delay, confusion, and prejudice caused by consolidation.” Paxonet 28 Commc’ns, Inc. v. TranSwitch Corp.,

(N.D. Cal. 2003). 1 Neither party opposes the consolidation of this action with the related Esqueda 2 | action, Case No. 2:21-cv-03321-FLA (GJSx). Given the overlapping questions of law 3 || and fact, the court CONSOLIDATES the two actions for all purposes including, but 4 | not limited to, discovery, pretrial proceedings, and trial. No further filings shall be 5 || made or accepted in the Esqueda action, and the file shall be administratively closed. 6 | All pleadings therein shall maintain their legal relevance. Any further pleadings or 7 | other filings received by the Clerk of Court for Case No. 2:21-cv-03321-FLA (GJSx) 8 | shall be filed in the consolidated action bearing Case No. 2:21-cv-03319-FLA (GJSx). 9 CONCLUSION 10 For the foregoing reasons, the court (1) DENIES Plaintiff's Motion to Remand, 11 | (2) DENIES Plaintiff's Motion for Leave to File a First Amended Complaint, and 12 | (3) CONSOLIDATES this action with the related case styled Alex Esqueda v. Team 13 | Industrial Services, Inc., et al., Case No. 2:21-cv-03321-FLA (GJSx). 14 15 IT IS SO ORDERED. 16 17 | Dated: October 1, 2021

19 FERNANDO'L. AENLLE-ROCHA United States District Judge 20 21 22 23 24 25 26 27 28 10