1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 TIFFANY MCDONALD, Case No.: 22cv495-L-AGS

12 Plaintiff, ORDER GRANTING PLAINTIFF’S 13 v. MOTION TO REMAND

14 CIRCLE K STORES, INC., [ECF No. 7] 15 Defendant. 16 17 Pending before the Court in this putative class action alleging wages and hours 18 violations under California law is Plaintiff’s motion to remand to the action to State 19 court. Defendant filed an opposition and Plaintiff replied. For the reasons stated below, 20 the motion is granted. 21 Plaintiff filed a complaint in State court asserting numerous California Labor Code 22 violations and violation of California Business and Professions Code § 17200 on behalf 23 of non-exempt employees of Defendant Circle K Stores, Inc. employed since January 1, 24 2021. (ECF No. 1-2 at 60, Second Am. Class Action Compl. (“Compl.”).) Plaintiff also 25 filed this action pursuant to the California Private Attorneys General Act, Cal. Lab. Code 26 § 2698 et seq. (“PAGA”). (Id. at 1.) Plaintiff alleged that Defendant failed to pay all due 27 minimum and overtime wages, provide meal periods, permit rest breaks, provide accurate 28 itemized wage statements, and failed to timely pay all wages due upon separation from 1 employment. Defendant removed the action to this Court under

and 2 1446 based on diversity jurisdiction under the Class Action Fairness Act,

1332(d) ("CAFA"). 4 "CAFA gives federal district courts original jurisdiction over class actions in which 5 the class members number at least 100, at least one plaintiff is diverse in citizenship from 6 any defendant, and the aggregate amount in controversy exceeds $5 million, exclusive of 7 interest and costs." Ibarra v. Manheim Inv., Inc.,

(9th Cir. 2015) 8 (citing

(d)).1 “In order to remove, the defendant must file a notice of 9 removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and 10 containing a short and plain statement of the grounds for removal.” Salter v. Quality 11 Carriers, Inc.,

, 962 (9th Cir. 2020). In its notice of removal, Defendant 12 asserted, among other things, that Plaintiff's claims placed more than $5 million in 13 controversy. (ECF No. 1, “Not. of Removal,” at 8.) 14 The plaintiff may challenge a notice of removal with a motion to remand. See, 15 e.g., Harris v. KM Indus., Inc.,

, 699 (9th Cir. 2020). Here, Plaintiff 16 challenged the allegations in support of the amount in controversy. She did not dispute 17 that the other jurisdictional requirements were met. 18 A plaintiff can make “either a ‘facial’ or ‘factual’ attack on the defendant's 19 jurisdictional allegations.”

20 A facial attack accepts the truth of the defendant's allegations but asserts that they are insufficient on their face to invoke federal jurisdiction. A factual 21 attack contests the truth of the ... allegations themselves. 22 23

24 The parties disagree whether Plaintiff’s motion made a facial or factual attack. To 25 calculate the amount in controversy, Defendant used a four-year liability period, resulting 26

27 1 Unless stated otherwise, internal ellipses, brackets, citations, and quotation marks 28 1 in approximately 200,590 total workweeks. (Not. of Removal at 5; see also ECF No. 8-2, 2 “Dunn Decl.” at 2.) This assumption accounted for nearly $3 million for Plaintiff’s rest 3 period claim, or more than half of Defendant’s calculated aggregate amount of 4 approximately $5.1 million. (Not. of Removal at 6, 8.) Plaintiff challenged the four-year 5 liability period arguing that it “grossly inflates” the amount in controversy, given that the 6 class period was only 16 months, starting on January 1, 2021. (ECF no. 7-1, “Mot.” at 8- 7 9.) Plaintiff’s claims are stated on behalf of a putative class of Defendant’s non-exempt 8 employees who had been employed on or after January 1, 2021. (Compl. at 3-4.) 9 Because Plaintiff directly challenged the factual basis for Defendant’s assumption of a 10 four-year liability period and the reasonableness of the resulting approximately 200,590 11 total workweeks, she made a factual attack on the amount-in-controversy allegation. Cf. 12 Harris, 980 F.3d at 700. 13 The fact that Plaintiff did not introduce evidence in support of her challenge is not 14 fatal to the determination that she made a factual attack. See Harris, 980 F.3d at 700. “A 15 factual attack ... need only challenge the truth of the defendant’s jurisdictional allegation 16 by making a reasoned argument as to why any assumptions on which they are based are 17 not supported by evidence.” Id. 18 “When a plaintiff mounts a factual attack, the burden is on the defendant to show, 19 by the preponderance of the evidence, that the amount in controversy exceeds the $5 20 million jurisdictional threshold.” Harris, 980 F.3d at 699. Accordingly, Defendant had 21 the burden “of supporting its jurisdictional allegations with competent proof.” Id. at 701. 22 With its opposition, Defendant filed a declaration of Claudia Garcia, Defendant’s 23 Director of Human Resources & Training, to authenticate the database used to make the 24 amount-in-controversy calculation (ECF No. 8-2), and a declaration of defense counsel’s 25 paralegal who used the database to calculate the amount in controversy (Dunn. Decl.). 26 These declarations do not address the reasonableness of Defendant’s assumption of a 27 four-year liability period. 28 / / / / / 1 Defendant also filed a Request for Judicial Notice. (ECF No. 9.) The Court takes 2 judicial notice of the Order Granting Final Approval of the Class Action Settlement and 3 Approval of the PAGA Settlement Order and Judgment filed on February 18, 2022, in 4 Swayzer v. Circle K Stores, Inc. in the Superior Court for the State of California for the 5 County of Sacramento (ECF no. 9-1, “Swayzer Order”)). See Fed. R. of Evid. 201. 6 Defendant did not rely on the Swayzer Order to support its assumption of a four-year 7 liability period but to argue that Plaintiff’s counsel could potentially recover the same 8 amount of attorney’s fees as the class counsel in Swayzer. (Opp’n at 14.) Accordingly, 9 Defendant presented no proof to support the reasonableness of its four-year liability 10 period assumption. 11 The Swayzer Order shows that Defendant’s four-year liability period assumption 12 and the resulting calculation of nearly $3 million in controversy for the rest break claim, 13 are unreasonable and unsupported for the reasons raised in Plaintiff’s motion. The 14 Swayzer class action was filed against the same Defendant for the same wages-and-hours 15 and PAGA claims as the pending action. (Cf. Compl. with Swayzer Order at 7-9; see also 16 Opp’n at 14 (Swayzer “is nearly identical wage and hour class action that previously 17 drove a stay of this case[.]”).) The difference between the two actions is that the Swayzer 18 class included Circle K non-exempt employees “during the period of February 11, 2015 19 to December 31, 2020” (Swayzer Order at 6), while this action includes Circle K non- 20 exempt employees “at any time between January 1, 2021 and the date of class 21 certification” (Compl. ¶ 20). Accordingly, this action picks up where the Swayzer action 22 ended. 23 Defendant knew this when it filed the Notice of Removal in this action. The same 24 counsel represented Circle K Stores, Inc. in Swayzer as in the pending case. The Swayzer 25 docket shows that the settlement was reached no later than February 17, 2021, and before 26 April 11, 2022, when Defendant filed its Notice of Removal in this case. Nevertheless, 27 Defendant did not take the opportunity in its opposition to explain why a four-year 28 liability period is reasonable in this action despite the Swayzer Order. 1 The unreasonableness of Defendant’s assumption of a four-year liability period is 2 underscored by the release provisions in the Swayzer Order: 3 9. Final Judgment is hereby entered in this action. The Final Judgment shall bind each Participating Class Member.[2] The Final Judgment shall 4 operate as a full release and discharge of Defendant ... ("Released Parties") 5 from any and all Released Class Claims that occurred during the Class Period[3] as to the Participating Class Members. The Released Class Claims 6 are defined as any and all California state, local and common law claims for 7 unpaid wages and overtime compensation (including but not limited to any claims based on working "off-the-clock"), unpaid minimum wages, unpaid 8 rest break premiums, unpaid meal period premiums, waiting time penalties, 9 wage statement penalties, any and all claims for civil penalties (including those asserted under PAGA) based on any of the acts alleged in the 10 Actions[4] or arising out of the facts, matters, transactions or occurrences set 11 forth in the Actions as set forth above and any other violation of any wage and hour, wage payment, wage deduction, meal and rest break, 12 recordkeeping, unfair business practice or any other wage-related statutes, 13 laws or regulations ... California Class Member or CSR Sub-Class Member[5] arising out of the acts alleged in the Actions or arising out of the 14 facts, matters, transactions or occurrences set forth in the Actions during the 15 California Class Period and CSR Sub-Class Period ("Released California Class Member and CSR Sub-Class Member Claims"). Released California 16 Class Member and CSR Sub-Class Member Claims shall also include any 17 and all claims for attorneys' fees, costs, expenses, interest, penalties, liquidated damages, punitive damages and any other damages or relief that 18 have been or could have been asserted by any California Class Member or 19 CSR Sub-Class Member arising out of the acts alleged in the Actions or arising out of the facts, matters, transactions or occurrences set forth in the 20 Actions. Specifically excluded from the Released California Class Member 21 and CSR Sub-Class Member Claims are claims that: (1) cannot be waived as 22

23 2 “Every person in the Class who did not opt out is a Participating Class Member.” 24 (Swayzer Order ¶ 2.) Nine individuals opted out of the Class. (Id.) 25 3 All class and sub-class periods in the Swayzer settlement ended on December 31, 2020. (Swayzer Order ¶¶ 1.a., 1.b., 8.) 26 4 “Actions” refers to the four class actions consolidated in the Swayzer action. See 27 Swayzer Order ¶¶ 11, 12. 5 “CSR Sub-Class” refers to a sub-class of customer service representatives. 28 1 a matter of law, such as claims for unemployment insurance, workers' compensation and vested benefits covered by ERISA; (2) claims for 2 wrongful termination, discrimination, retaliation and harassment under any 3 state or federal civil rights law, including Title VII and California's Fair Employment and Housing Act; and 3) claims outside the temporal scope of 4 the California Class Period and CSR Sub-Class Period. 5 10. The Final Judgment shall also operate as a full release and discharge 6 of Defendant and the Released Parties from any and all Released PAGA 7 Claims that occurred during the PAGA Sub-Class Period as to the PAGA Sub-Class Members. "Released PAGA Claims" are defined as the claims 8 asserted by the PAGA Sub-Class Members for alleged violations of the 9 California Labor-Code and IWC Wage Order provisions identified in the PAGA Notices sent to the LWDA and further identified in the operative 10 complaints in the Actions that are alleged to have occurred during the PAGA 11 Sub-Class Period ("Released PAGA Sub-Class Claims”).

12

13 The Swayzer settlement release covers all claims alleged in this action for the period prior 14 to January 1, 2021, including wages-and-hours claims, claims for violation of California 15 Business and Professions Code § 17200, and PAGA claims. 16 In its opposition, Defendant argued its assumption of a four-year liability theory 17 was reasonable because the complaint did not expressly delimit the liability period, and 18 four years coincided with the relevant statute of limitations. (ECF No. 8, “Opp’n” at 9.) 19 Defendant acknowledged that the complaint defined the class as current and former non- 20 exempt employees employed by Defendant “at any time between January 1, 2021, and 21 the date of class certification.” (Id. (citing Compl. ¶ 20.).) Defendant did not explain 22 why its four-year liability period was reasonable despite the Swayzer Order. 23 CAFA’s jurisdictional requirements, including the amount in controversy, “are to 24 be tested by consideration of real evidence and the reality of what is at stake in the 25 litigation, using reasonable assumptions underlying the defendant’s theory of damages 26 exposure.” Harris, 980 F.3d at 701. Considering the Swayzer Order, remedies for 27 alleged violations occurring prior to January 1, 2021, do not appear to be at stake in this 28 litigation. Defendant’s arguments are unavailing. Accordingly, Defendant failed to 1 || meet its burden by a preponderance of the evidence to support its assumption of a four- 2 || year liability period to calculate the amount in controversy in this action. 3 Plaintiff’s motion to remand is granted. This action is remanded to the Superior 4 Court of the State of California for the County of San Diego. 5 6 IT IS SO ORDERED. 7 8 ||Dated: February 1, 2023 1 fee fp 10 H . James Lorenz, United States District Judge

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