PAGA/CAFA: Employer Could Not Remove Case to Federal Court

LILIANA CANELA,Plaintiff-Appellee

v.

COSTCO WHOLESALE CORPORATION, Defendant-Appellant.

The panel vacated the district court’s summary judgment with instructions to remand to state court because the district court lacked subject matter jurisdiction at the time the action was removed to federal court. Plaintiff, a Costco Wholesale Corporation employee, filed a state class action complaint alleging that Costco violated California Labor Code § 1198 by failing to provide her and other employees suitable seating. Plaintiff’s only claim arose under California’s Private Attorney General Act (“PAGA”). Costco removed the case to federal court based on the federal diversity statute, 28 U.S.C. § 1332(a), and the Class Action Fairness Act (“CAFA”). Concerning traditional diversity jurisdiction, the panel held that the amount in controversy did not meet the statutory threshold at the time of removal. Because the named plaintiff’s pro-rata share of civil penalties, including attorney’s fees, totaled $6,600 at the time of removal, and the claims of other employees could not be aggregated with hers under Urbino v. Orkin Services of California, Inc., 726 F.3d 1118 (9th Cir. 2013), the requisite $75,000 jurisdictional threshold was not met. Accordingly, the district court lacked diversity jurisdiction at the time of removal.

The panel held that the district court also lacked subject matter jurisdiction under CAFA because plaintiff’s standalone PAGA lawsuit was not, and could not have been, filed under a state rule similar to Rule 23 of the Federal Rules of Civil Procedure. The panel held that the holding in Baumann v. Chase Investment Services Corp., 747 F.3d 1117, 1122 (9th Cir. 2014), that “PAGA actions are [] not sufficiently similar to Rule 23 class actions to trigger CAFA jurisdiction,” controlled the outcome of this appeal. The panel rejected Costco’s argument that because the named plaintiff originally sought class status in her complaint, her case was filed as a class action within the meaning of CAFA. The panel also rejected Costco’s argument that the decisions in Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161 (2014), and Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., 761 F.3d 1027 (9th Cir. 2014), compelled a different result.

Read the entire opinion here:

https://cdn.ca9.uscourts.gov/datastore/opinions/2020/07/09/18-16592.pdf