Unreported / Non-Citable
Background
Raul Estrada Hernandez filed a putative class action in Sacramento County Superior Court on January 21, 2026, alleging that BFS Group of California LLC required off-the-clock work, including during meal breaks, and failed to pay all overtime owed. The complaint asserted eight California wage-and-hour and unfair-competition claims. BFS answered on February 26 and removed the case the next day under diversity jurisdiction and the Class Action Fairness Act. Hernandez moved to remand on March 13; BFS opposed, and Hernandez replied. The district court submitted the motion on the papers.
BFS asserted minimal diversity, a class exceeding 100 members, and more than $5 million in controversy. Hernandez disputed only the monetary threshold. He argued that employees whose claims overlapped a prior class settlement should be excluded from the employee and workweek counts, and that BFS's assumption of 30 minutes of unpaid overtime per workweek was unreasonable and unsupported. BFS supplied a declaration from human-resources vice president Chris Valle reporting approximately 7,994 California nonexempt employees, 549,082 workweeks, and pay data for the overtime class period. Hernandez did not challenge the accuracy of that evidence.
The Court’s Holding
The court denied remand. It characterized the prior-settlement argument as a merits defense presented as a jurisdictional objection. CAFA's amount in controversy estimates the maximum recovery reasonably at stake, not the defendant's likely liability after defenses. Determining the settlement's preclusive effect would improperly decide merits during the jurisdictional inquiry. The settlement did not alter Hernandez's pleaded class definition, and BFS could use that class period in its calculation. The court also declined to consider a full-faith-and-credit argument first raised in reply.
The court found Valle's payroll-based declaration reliable and BFS's overtime assumption reasonably grounded in the complaint's allegations of a policy or practice causing unpaid overtime, off-the-clock work, and shifts often exceeding ten hours. Hernandez sought additional evidence of violation rates rather than proposing a different reasonable rate, an approach the court held foreclosed by Ninth Circuit precedent. Using the $22.38 hourly rate for a class including current employees, the court calculated $9,216,341.37 for unpaid overtime alone. It therefore did not calculate the remaining claims or attorney's fees. The court denied the motion, denied the judicial-notice request as moot, set an initial scheduling conference for December 28, 2026 at 1:30 p.m. by Zoom, and required an updated joint status report by December 14.
Key Takeaways
- A prior settlement's possible preclusive effect is a merits defense and does not require reducing a pleaded class when determining CAFA jurisdiction.
- A removing employer may support the amount in controversy with a declaration based on employee payroll and wage data.
- A violation-rate assumption may rest on the complaint's allegations, and a plaintiff seeking a different assumption should propose a reasonable alternative rate.
- The overtime calculation alone exceeded CAFA's $5 million threshold, so the court did not value the other claims or attorney's fees.
- The action remains in federal court, with an initial scheduling conference set for December 28, 2026 at 1:30 p.m. by Zoom.
Why It Matters
The order separates jurisdictional valuation from the ultimate merits of a wage-and-hour class action. A defendant need not prove that every class member can recover despite a settlement or other defense; the question is the amount reasonably placed in dispute by the pleaded claims. The court also would not resolve a new full-faith-and-credit theory raised only in reply.
The decision also illustrates the different evidentiary treatment of workforce figures and alleged violation rates. Payroll records can establish employees, workweeks, and pay, while a complaint alleging a broad overtime policy can supply a reasonable ground for estimating unpaid time. Here, that combination independently satisfied CAFA's monetary requirement without valuations of the remaining claims or fees.