Unreported / Non-Citable
Background
Manuel Espinoza filed a class action complaint in San Bernardino County Superior Court on May 7, 2026, against Worldpac, LLC, Worldpac, Inc., and Doe defendants. The complaint asserted nine claims for relief under California law, including failure to pay minimum and overtime wages, failure to provide meal and rest periods, failure to timely pay final wages, and unfair business practices. Espinoza brought these claims on behalf of himself and a putative class of hourly-paid or non-exempt employees who worked for the defendants in California during the four years preceding the complaint.
On August 17, 2026, the defendants removed the action to the U.S. District Court for the Central District of California, asserting federal jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332(a) and the Class Action Fairness Act (CAFA) under 28 U.S.C. § 1332(d). Espinoza subsequently filed a motion to remand the action to state court, arguing that the defendants failed to establish that the amount in controversy met the jurisdictional thresholds for either CAFA or diversity jurisdiction. The defendants opposed the motion, relying on a declaration from their Director of HR Corporate, Christina Pishko, to support their calculations of the amount in controversy.
The Court’s Holding
The court granted the plaintiff's motion to remand, concluding that the defendants failed to meet their burden of establishing federal subject matter jurisdiction. Regarding CAFA jurisdiction, the court found that while the parties did not dispute minimal diversity or the class size, the defendants failed to prove by a preponderance of the evidence that the amount in controversy exceeded $5 million. The court rejected the defendants' assumptions regarding violation rates for meal and rest period claims as unreasonable because they failed to account for the number of qualifying shifts worked by class members, data that was easily accessible to the defendants. The court also found the defendants' calculation of waiting time penalties unreasonable because it assumed all discharged employees were entitled to eight hours of penalties for the maximum 30-day period without supporting data. Furthermore, the court rejected the defendants' use of a 25% benchmark for attorneys' fees, noting that this benchmark applies to common-fund settlements, whereas this case involves fee-shifting statutes requiring a lodestar calculation.
The court also found that the defendants failed to establish diversity jurisdiction under 28 U.S.C. § 1332(a). The defendants calculated the amount in controversy for the plaintiff's individual claims at $78,648.80, which included $54,000 in attorneys' fees. The court found this attorneys' fees calculation unsubstantiated because the defendants relied on an unrelated case, Novoselac v. Vuzem, that was not sufficiently analogous to the instant matter. Without the $54,000 in attorneys' fees, the defendants could not demonstrate that the plaintiff's individual claims exceeded the $75,000 jurisdictional threshold. The court also noted that under a pro rata approach to attorneys' fees in class actions, the defendants would need to show over $120 million in total fees to meet the threshold, which was far beyond their original calculation.
Key Takeaways
- Removing defendants bear the burden of proving the amount in controversy by a preponderance of the evidence when the complaint is silent on the amount.
- Assumptions regarding violation rates for meal and rest periods must be grounded in data regarding the number of qualifying shifts worked by employees.
- Employers cannot ignore easily accessible employment records when making assumptions to calculate the amount in controversy.
- The 25% benchmark for attorneys' fees in common-fund class action settlements is generally inapplicable to fee-shifting wage-and-hour cases, which require a lodestar calculation.
- Reliance on attorneys' fees awards from unrelated cases is insufficient to establish the amount in controversy unless the cases are adequately analogized.
Why It Matters
This decision reinforces the strict evidentiary burden placed on defendants seeking to remove wage-and-hour class actions to federal court under CAFA. It highlights that conclusory assumptions about violation rates and shift lengths are insufficient when the employer possesses the actual data needed to make accurate calculations. The ruling also clarifies the distinction between common-fund and fee-shifting cases for the purpose of calculating attorneys' fees in the amount in controversy, preventing defendants from inflating jurisdictional amounts by using inapplicable benchmarks.