Unreported / Non-Citable
Background
Nancy Kline filed a class action complaint in Los Angeles Superior Court on February 3, 2026, alleging eight causes of action against Soleo Health Inc. and unnamed Doe defendants for California Labor Code violations. The claims included failure to pay minimum and overtime wages, meal and rest period violations, failure to indemnify business expenses, waiting time penalties, inaccurate wage statements, and unfair business practices. Kline brought the claims individually and on behalf of a class of current and former hourly, non-exempt California employees.
Soleo removed the case to the Central District of California on March 13, 2026, asserting diversity jurisdiction under 28 U.S.C. § 1332. Kline moved to remand on June 2, 2026, but the motion was stricken for failing to comply with the court's standing order. Kline refiled on June 11, and Soleo opposed on June 24. Kline did not file a reply. The court vacated the scheduled November 5, 2026 hearing and resolved the motion on the papers.
The Court’s Holding
The court first determined that jurisdiction did not exist under the Class Action Fairness Act because Soleo employed only 94 non-exempt hourly employees during the relevant period, below CAFA's 100-member threshold. Turning to diversity jurisdiction, the court found the parties were diverse and addressed whether Soleo had established the amount in controversy exceeded $75,000 by a preponderance of the evidence. Because the complaint did not specify damages, Soleo could rely on reasonable assumptions drawn from the complaint's allegations to calculate the amount in controversy.
Soleo proposed a total of $90,427.50, based on assumptions including 2.5 hours of unpaid wages per week, two meal period violations and one rest period violation per week, unreimbursed phone and automobile expenses, 30 days of waiting time penalties, wage statement penalties, and attorneys' fees calculated as 25% of total damages. The court found most of Soleo's assumptions reasonable because they were tethered to the complaint's language, including allegations that violations occurred 'regularly' and as a matter of 'policy and practice.' However, the court adjusted the attorneys' fees calculation to exclude meal and rest period violations, which are not subject to fee-shifting under California Labor Code §§ 218.5 or 1194. This reduced the fees to $12,685.50 and the total amount in controversy to $85,027.50.
Because the adjusted amount still exceeded the $75,000 jurisdictional threshold, the court denied Kline's motion to remand. The court noted that Kline's failure to file a reply meant she did not directly oppose several of Soleo's recalculations presented in its opposition brief.
Key Takeaways
- A defendant removing a wage-and-hour case to federal court may establish the amount in controversy through reasonable assumptions drawn from the complaint's allegations, without independent evidentiary support for violation rates.
- When calculating attorneys' fees for purposes of the amount in controversy, courts must exclude claims that are not subject to fee-shifting statutes, such as meal and rest period violations under California law.
- A plaintiff's failure to file a reply brief may be treated as conceding arguments and calculations presented in the defendant's opposition.
- Even if a complaint alleges a plaintiff is a current employee, a defendant may rely on the complaint's express allegations of entitlement to waiting time penalties to calculate the amount in controversy.
- The Class Action Fairness Act's 100-member class threshold is a strict requirement that cannot be satisfied by a putative class of 94 employees.
Why It Matters
This decision illustrates how federal courts in the Ninth Circuit apply the preponderance-of-the-evidence standard for amount in controversy in removed wage-and-hour cases, particularly after Perez v. Rose Hills Co. clarified that defendants may rely on chains of reasoning and assumptions grounded in complaint allegations. The ruling confirms that violation rate assumptions need not be proven but must have some reasonable basis in the pleaded facts.
The decision also underscores the importance of properly calculating attorneys' fees in the amount-in-controversy analysis by excluding non-fee-shifting claims. Practitioners should note that failing to file a reply brief can result in concessions that undermine remand arguments, and that courts will scrutinize each component of the amount-in-controversy calculation to ensure compliance with statutory limits on recoverable fees.