Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-03810/USCOURTS-cand-3_16-cv-03810-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1441 Petition for Removal- Labor/Mgmnt. Relations

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

KAREN MACKALL,

Plaintiff,

v.

HEALTHSOURCE GLOBAL STAFFING, 

INC.,

Defendant.

Case No. 16-cv-03810-WHO 

ORDER DENYING MOTION TO 

REMAND

Re: Dkt. No. 15

INTRODUCTION

The issue in this motion to remand a wage and hour putative class action is whether 

defendant HealthSource Global Staffing, Inc.’s (“HSGI”) calculation of its potential damages as 

exceeding the Class Action Fairness Act, 28 U.S.C. § 1332 (“CAFA”) jurisdictional threshold of 

$5,000,000 is supported by a preponderance of the evidence. It is, and plaintiffs provide no 

alternative calculation or evidence to suggest a lower amount. The motion to remand is DENIED.

BACKGROUND

I. ALLEGATIONS IN THE COMPLAINT

Karen Mackall filed this class action in the Superior Court of the State of California, 

County of Alameda on behalf of a class of all non-exempt employees, currently employed or 

formerly employed by HSGI, a California corporation with its principal place of business in 

Fremont, California. First Amended Complaint (“FAC”) ¶ 1; Declaration of Lance Fanger in 

Support of Removal (Dkt. No. 1-2) ¶ 3. HSGI hires registered nurses from all over the United 

States for temporary positions in hospitals during labor disputes. Id. Plaintiff and the putative class 

members she seeks to represent were employed by HSGI as non-exempt hourly Registered Nurses 

at various times in the County of Los Angeles during the last four years. FAC ¶ 7.

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In the First Amended Complaint,

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plaintiffs allege causes of action for: (i) failure to pay 

minimum wages under Cal. Lab. Code § 1194(a); (ii) failure to pay overtime compensation 

pursuant to Cal. Lab. Code § 1194; (iii) failure to provide meal periods under Cal. Lab. Code §§ 

226.7 and 512; (iv) failure to provide rest periods under Cal. Lab. Code §§ 226.7 and 512; (v) 

failure to keep accurate payroll records under Cal. Lab. Code § 226; (vi) failure to pay wages of 

terminated or resigned employees under Cal. Labor Code §§ 203-203; (vii) failure to reimburse for 

necessary business expenditures under Cal. Lab. Code § 2802; (viii) unfair business practices 

under Business and Professions Code §§ 17200 et seq.; and (ix) violation of the California Private 

Attorneys General Act under Cal. Labor Code §§ 2698-2699. 

II. REMOVAL TO FEDERAL COURT

HSGI removed the action to this court pursuant to the Class Action Fairness Act, 28 U.S.C. 

§§ 1332(d)(2). Notice of Removal (“Not. of Removal”) at 1. It asserts that this class action is 

removable under CAFA jurisdiction because:

(1) the proposed class contains at least 100 members; (2) the 

defendant is not a state, state official or other governmental entity; 

(3) the total amount in controversy for all class members exceeds 

$5,000,000; and (4) there is diversity between at least one class 

member and one defendant. 

Not. of Removal ¶ 8.

HSGI alleges that minimal diversity exists because it is a citizen of California (as it is 

incorporated in and has its principal place of business in California), and the home mailing 

addresses for the putative class members establish that a large number of them are citizens of other 

states. Not. of Removal ¶¶ 12, 13; Fanger Removal Decl., ¶¶ 3, 6. It asserts that the class consists

of 1,242 putative class members. Fanger Removal Decl. ¶ 5. HSGI also contends that the amount 

in controversy exceeds $5,000,000, based on its evidentiary showing that all but four of the 1,242 

putative class members earned at least $45 per hour and earned a minimum of $630.00 per day

 

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Plaintiff amended her original complaint to include a defendant known as “Healthsource Global” 

or “HSG.” HSGI contends that HSG is not a separate legally-recognized entity, but simply a 

“shorthand abbreviation” of HGSI. Declaration of Lance Fanger in Opposition to Plaintiffs’ 

Motion to Remand (Dkt. No. 18-1) ¶3. Plaintiff also added a second named plaintiff, Shaliza 

Lacombe. FAC ¶ 1.

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during an average period of employment lasting five days. Not. of Removal ¶¶ 17-18. Its 

calculation in support of the Notice of Removal regarding the amount in controversy under 

specific causes of action follows.

A. Overtime Cause of Action

With respect to overtime, HSGI initially assumed a 100% violation rate for overtime 

compensation, presuming that each putative class member worked on average one hour of 

combined excess time per workday as a result of staffing issues2and travel time to and from the 

worksite on defendant’s bus. Not. of Removal ¶ 21. Based on the hourly rate of $45 per hour, 

HSGI calculated that alleged overtime would result in an amount of controversy of $818,100 

($90/hour unpaid double time premium x 5 average workdays x 1,818 separate employments). Id. 

B. Missed Meal Periods Cause of Action

HSGI assumed an average missed meal rate of 2.5 meal periods during each separate five 

day employment period. Not. of Removal ¶ 22. It calculated that missed meal premiums would 

result in $204,525 ($45/hour meal period premium x 2.5 missed meal periods x 1,818 separate 

employments). Id.

C. Missed Rest Periods Cause of Action

HSGI assumed the same formula for missed rest periods as missed meal premiums. See 

Not. of Removal ¶ 23. HSGI calculated the missed rest premiums would result in $204,525 

($45/hour rest period premium x 2.5 missed rest periods x 1,818 separate employments). Not. of 

Removal ¶ 23. 

D. Waiting Time Penalties 

Most significantly, HSGI alleged that the amount in controversy for waiting time penalties 

would be $26,932,500. Not. of Removal ¶ 25. Plaintiffs contend that defendant failed to pay 

wages upon separation of employment, making HSGI potentially liable for waiting time penalties 

equal to one workday’s wages for each day the wages were not paid with a maximum penalty 30 

 

2 HSGI relies on plaintiffs’ allegation that class members were not relieved on their shifts 

immediately and “regularly work[ed] over 12 hours per day without being paid double-time 

premium pay.” Not. of Removal ¶ 21 (emphasis added). 

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days of wages. Not. of Removal ¶ 24; FAC ¶¶ 60-62. For the three-year limitations period for 

waiting time penalties, defendant estimated 1,425 terminations, rather than the number of class 

members,3due to the temporary nature of the class members’ employment with HSGI. Not. of 

Removal ¶ 24. HSGI reached its estimate by multiplying the daily wage ($630) by 30 (penalty 

days) and then again by 1425 (the number of terminations).

The sum of these calculations is $28,159.650, well above the $5,000,000 statutory 

requirement under CAFA. Not. of Removal ¶ 25. Plaintiffs seek to remand, challenging 

defendant’s showing on the amount in controversy.

LEGAL STANDARD

The Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d), gives federal courts 

original jurisdiction over class actions where there are at least 100 class members, at least one 

plaintiff is diverse in citizenship from any defendant, and the amount in controversy exceeds 

$5,000,000, exclusive of interest and costs. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 

1195 (9th Cir. 2015). A class action that meets CAFA standards may be removed to federal court. 

28 U.S.C. § 1441(a). Unlike the general presumption against removal, “no antiremoval 

presumption attends cases invoking CAFA.” Dart Cherokee Basin Operating Co., LLC v. Owens, 

135 S. Ct. 547, 554 (2014). In fact, Congress intended CAFA jurisdiction to be “interpreted 

expansively.” Ibarra, 775 F.3d at 1197. 

Under CAFA, a defendant removing a case must provide “a short and plain statement of 

the grounds for removal....” Id. A defendant’s notice of removal needs only a “plausible allegation 

that the amount in controversy exceeds the jurisdictional threshold” and does not need evidentiary 

submissions. Id. (quoting Dart Cherokee Basin Operating Company v. Owens, 135 S. Ct. 547, 554 

(2014)). 

When testing the amount in controversy alleged, courts look first to the allegations of the 

complaint. Id. If the damages are understated or if the defendant argues the damages are 

 

3 Due to the temporary nature of the class members’ employment, some class members had several 

periods of employment, leading to several terminations that would trigger the waiting time 

penalty. Not. of Removal ¶ 24.

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understated, the defendant must show by a preponderance of evidence that the aggregate amount 

exceeds the $5,000,000 threshold. Id. The defendant in a jurisdictional dispute has the “burden to 

put forward evidence showing that the amount in controversy exceeds $5 million, to satisfy other 

requirements of CAFA, and to persuade the court that the estimate of damages in controversy is a 

reasonable one.” Id. at 1197. 

When the plaintiff contests the defendant’s amount-in-controversy allegations, both sides 

submit proof, and the court decides whether the jurisdictional threshold has been met. Id. (quoting 

Dart, 135 S. Ct. at 554). The parties may submit evidence beyond the complaint such as affidavits, 

declarations, or other “summary-judgment type evidence relevant to the amount in controversy...” 

Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). 

“Mere speculation and conjecture, with unreasonable assumptions” is not sufficient to 

establish removal jurisdiction. Ibarra, 775 F.3d at 1197; see also Fong v. Regis Corp., No. 13-cv04497-RS, 2014 WL 26996, at *2 (N.D. Cal. Jan. 2, 2014). However, the burden to establish the 

amount in controversy by a preponderance of the evidence does not require the defendant to 

“research, state, and prove the plaintiff’s claims for damages.” Donald v. Xanitos, Inc., No. 14-

CV-05416-WHO, 2015 WL 1774870, at *4 (N.D. Cal. 2015) (quoting Korn v. Polo Ralph Lauren 

Corp., 536 F. Supp. 2d 1199, 1204 (E.D. Cal. 2008)). “CAFA’s requirements are to be tested by 

consideration of real evidence and the reality of what is at stake in the litigation, using reasonable 

assumptions underlying the defendant’s theory of damages exposure.” Ibarra, 775 F.3d at 1198.

“When measuring the amount in controversy, a court must assume that the allegations of 

the complaint are true and that a jury will return a verdict for the plaintiff on all claims made in the 

complaints.” Fong 2014 WL 26996 at *2. “[CAFA] tells the district court to determine whether it 

has jurisdiction by adding up the value of the claim[s] of each person who falls within the 

definition of [the] proposed class and determin[ing] whether the resulting sum exceeds $5 

million.” Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1348 (2013).

DISCUSSION

Plaintiffs contend that this case must be remanded because HSGI has not proved the 

amount in controversy exceeds CAFA’s statutory requirement of $5,000,000. Mot. at 3. The 

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amount in controversy is the only dispute between the parties. Plaintiffs do not dispute that 

minimal diversity exists, that there are more than 100 class members, and that none of the CAFA 

exceptions apply. 

Plaintiffs do challenge the size of the class assumed by HSGI for purposes of its damages 

calculation. HSGI, using plaintiffs’ statement that they seek to represent a class of persons “who 

are employed or have been employed by Defendants in the State of California,” includes within 

the putative class all persons who worked in California during the relevant timeframe, regardless 

of the citizenship of those persons. See Not. of Removal ¶ 15; FAC ¶¶ 14, 22. In their motion to 

remand, plaintiffs accuse HSGI of characterizing the putative class as a nationwide class. Mot. 2, 

4. However, the specific allegations of the FAC provide an adequate basis for HSGI to count as 

putative class members each person who worked for it in California during the relevant time 

period, as long as only those persons’ work in California is counted. Considering the class to 

include persons who do not reside in California is consistent with plaintiffs’ addition of Shaliza 

Lacombe as a named plaintiff in the FAC. FAC ¶ 1. Defendant asserts and plaintiffs do not 

contest that Lacombe is a Florida resident. Fanger Remand Decl. ¶ 4.

As such, I find that defendant has presented adequate evidence that the putative class size 

is at least 1,242 persons.

I. OVERTIME VIOLATIONS

HSGI argues that its use of a 100% violation rate for failure to pay overtime (calculated as 

one hour of overtime due per shift worked) is appropriate based on plaintiffs’ allegations that 

HSGI “consistently maintained and enforced... unlawful policies...,” that plaintiffs “regularly 

worked” over 8 or 12 hours a day and forty hours per week, and that defendant failed to pay 

plaintiffs for that overtime. Oppo. 7; FAC ¶¶ 4, 35. Plaintiffs respond that their allegations of 

“consistent” and “regular” violations of the Labor Code are an insufficient basis to allow HSGI to 

use a 100% violation rate. Instead, plaintiffs argue that HSGI should have come forward with 

“summary judgment” type evidence to show an evidentiary basis for using the 100% violation 

rate. 

In Garza v. Brinderson Constructors, Inc., No. 15-CV-02661-RMW, 2016 WL 1298390, 

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at *3 (N.D. Cal. Apr. 4, 2016), the Hon. Ronald Whyte found the defendant could not rely on 

allegations that plaintiffs “regularly worked shifts” in excess of eight hours and defendant 

“maintained a policy or practice” of Labor Code violations to support their use of a 100% 

violation rate with respect to missed break claims. There was no “reasonable basis for a 100% 

violation rate” where the complaint did not allege a 100% violation rate and the defendant failed to 

show that its assumption was “reasonable.” Id. “[A] ‘pattern and practice’ of doing something 

does not necessarily mean always doing something.” Id. (quoting Ibarra, 775 F.3d at 1198-99); 

but see Ibarra, 775 F.3d at 1199 (an allegation that defendant “universally, on each and every 

shift” violated the Labor Code would be sufficient to support an assumed 100% violation rate). 

Similarly, while the plaintiffs’ allegations here can plausibly be read to allege that HSGI 

failed to pay overtime for putative class members “regularly” and “consistently,” there is nothing 

in the complaint that suggests HSGI failed to do so every time for every shift. HSGI fails to 

submit any evidence to back up its calculation or otherwise explain why a 100% violation rate is a 

reasonable assumption, besides pointing to plaintiffs’ allegations relating to consistent and regular 

unlawful practices. Oppo. at 7:15-20. HSGI cannot rely on its estimation of overtime liability as 

$818,100 to support its estimate as to the amount in controversy.

In its opposition to the Motion to Remand, HSGI presents a more conservative calculation

– each class member may have missed one hour of overtime for each period of employment, 

resulting in $163,620 in damages for the overtime claim. Oppo. 8. In support of this more 

conservative calculation, defendant relies on cases where assumptions of one hour of missed 

overtime per pay period were found to be reasonable, based on plaintiffs’ allegations of “regular” 

or “pattern and practice” violations. See, e.g., Blevins v. Republic Refrigeration, Inc., No. CV 15-

04019 MMM (MRWx), 2015 U.S. Dist. LEXIS 130521, at *32 (C.D. Cal. Sep. 28, 2015) (one 

hour of unpaid overtime per week “reasonable” based on plaintiffs’ allegations that defendant 

“regularly” miscalculated overtime); see also Garza v. Brinderson Constructors, Inc., No. 15-CV02661-RMW, 2016 WL 1298390, at *3 (N.D. Cal. Apr. 4, 2016) (defendant’s “assumption of one 

violation per week is reasonable based on the allegations of the SAC” that defendant regularly 

failed to provide rest breaks and had a “pattern and practice” of failing to provide those breaks).

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Given the allegations by plaintiffs here, HSGI’s assumption of one hour of overtime 

violation per term of employment is reasonable and the $163,620 estimate is appropriately 

considered towards the amount in controversy.

II. MEAL AND REST BREAK VIOLATIONS

HSGI based its calculations in the Notice of Removal for meal and rest break violations on 

the assumption that putative class members missed on average 2.5 meal periods and 2.5 rest 

periods for each term of employment, resulting in damages of $204,525 for the missed meal 

periods and $204,525 for the missed break periods. Not. of Removal ¶¶ 22-23; Oppo. 9. It did so 

because plaintiffs alleged that its policies “consistently” violated the Labor Code, it “willfully 

refused” to permit putative class members from taking breaks, and plaintiffs were “often” forced 

to forego these breaks. FAC ¶¶ 4, 40. 

Plaintiffs mistakenly argued that HSGI again improperly calculated the amount in 

controversy resulting from missed meal and rest periods based on an unsupported 100% violation 

rate. Mot. 5. As with overtime calculations, the Ninth Circuit has rejected 100% violation rate 

assumptions where defendants’ calculations assumed that a meal or rest violation occurred each 

workday. See Ibarra, F.3d at 1198-99 (“rejecting method of calculation assum[ing] that 

[defendant] denied each class member one meal break in each of their... 5-hour shifts and one rest 

break in each of their... 3.5-hour breaks”) (emphasis added). Similarly, Judge Whyte rejected a 

defendant’s assumption that a “meal break violation occurred during every shift” where the “court 

[found] nothing in the complaint demonstrating that plaintiff alleges a 100% rate.” Garza, 2016 

WL 1298390, at *3. But HSGI never alleged a 100% rate for each shift. See Not. of Removal ¶¶ 

22, 23. Instead, it assumed a 50% violation rate (2.5 missed meal and 2.5 missed rest breaks in 

each 5 day term of employment). Oppo. 10. In reply, plaintiffs point out that in Garibay v. 

Archstone Cmtys. LLC, 539 F. App’x 763, 764 (9th Cir. 2013), an unpublished decision, the court

found that defendant’s failure to “provide any evidence regarding why the assumption that each 

employee missed two rest periods per week was more appropriate than ‘one missed rest period per 

paycheck or one missed rest period per month’” meant there was no basis for its amount in 

controversy calculation. 

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HSGI relies on a Central District case4 which allowed a 50% violation rate estimate based 

on “policy or practice” allegations, but concedes that several Northern District cases have held that 

assumptions of one missed meal and break per pay period are reasonable in light of policy and 

practice allegations and allegations that defendants’ “regularly” denied class member breaks. 

Oppo. 9. Accordingly, it offered a more conservative estimate based on one missed break and one 

missed meal period per pay period. Id. at 10. Under that more conservative estimate, it calculates

$81,810 for the missed meal breaks and $81,810 for the missed rest breaks as part of the amount 

in controversy. That calculation is reasonable and supported by the evidence. See, e.g., Garza v. 

Brinderson Constructors, Inc., No. 15-CV-02661-RMW, 2016 WL 1298390, at *3 (N.D. Cal. 

Apr. 4, 2016); Tripp v. Crossmark, Inc., No. 13-cv-03480-WHO, 2013 U.S. Dist. LEXIS 144154, 

at *5 n.2 (N.D. Cal. Oct. 3, 2013).

III. WAITING TIME PENALTIES 

The main issue is whether HSGI’s calculation of waiting time penalties as placing 

$26,932,500 at issue is sufficiently supported. Plaintiffs allege that HSGI is liable for waiting 

time penalties under Cal. Labor Code §§ 201-203 for its failure to pay all wages due including 

overtime compensation and meal and rest premiums. FAC ¶¶ 60-62. HSGI relies on plaintiffs’ 

allegations that it “failed to pay” all wages due and owing on termination, and defendants 

“willfully failed and refused, and continue to fail and refuse” to pay wages upon termination. 

FAC ¶¶ 8, 20. It then assumes that “each putative class member would be entitled equal to one 

workday’s wages for up to a maximum 30 days of waiting time penalties if Plaintiffs were to 

prevail.” Oppo. 11:19-21. With approximately 1,425 separate terminations, the HSGI estimates an 

amount in controversy equal to $26,932,500. Not. of Removal ¶ 24. 

Plaintiffs point out that HSGI again invokes a 100% violation rate in calculating the 

waiting time penalties, which as discussed above is routinely rejected in absence of language in 

the complaint that defendants “uniformly” or “always” violated the Labor Code. See also Garibay 

v. Archstone Cmtys. LLC, 539 F. App’x 763, 764 (9th Cir. 2013) (“Archstone assumes that each 

 

4 Oda v. Gucci Am., Inc., No. 2:14-cv-7468-SVW (JPRx), 2015 U.S. Dist. LEXIS 1672, at *11 

(C.D. Cal. Jan. 7, 2015).

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employee would be entitled to the maximum statutory penalty, but provides no evidence 

supporting that assertion.).5 However, as discussed above, I have concluded that defendant 

adequately supports violations of the Labor Code for at least one hour of unpaid overtime per five 

day work period, as well as at least one unpaid rest and one unpaid meal break. These reasonably 

assumed violations would support waiting time penalties in the amount defendant calculates. 

In similar circumstances, Judge Whyte concluded that allegations of willful failure to 

timely pay final wages (based on alleged overtime and meal and rest break violations) were 

sufficient to support estimations of waiting time penalties at a 100% rate. Garza v. Brinderson 

Constructors, Inc., No. 15-CV-02661-RMW, 2016 WL 1298390, at *4 (N.D. Cal. Apr. 4, 2016); 

see also Ford v. CEC Entm’t, Inc., No. CV 14-01420 RS, 2014 WL 3377990 (N.D. Cal. July 10, 

2014) (CAFA amount in controversy satisfied in part by waiting time penalties; “Assuming a 

100% violation rate is thus reasonably grounded in the complaint. . . . Because no averment in the 

complaint supports an inference that these sums were ever paid, Ford cannot now claim class 

members may be awarded less than the statutory maximum.”). 

Plaintiffs failed to offer any alternative calculation in a lower amount for waiting time 

penalties. While the burden of proof rests with the defendant, “if [the] defendant’s asserted 

amount in controversy is challenged, ‘both sides submit proof and the court decides, by a 

preponderance of the evidence, whether the amount-in-controversy requirement has been 

satisfied.” Id. at *4 (quoting Ibarra, 775 F.3d at 1197). Because premiums for missed meal 

periods and rest periods are wages, the employer’s failure to pay these wages triggers penalties 

under Cal. Lab. Code § 203. See, e.g., Mejia v. DHL Express (USA), Inc., No. CV 15–890–GHK, 

2015 WL 2452755, at *6 (C.D. Cal. May 21, 2015) (finding that unlawful wage holding would 

result in waiting time penalties); see also Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 

1094, 1114 (Cal. 2007) (stating the “amount of payment” as “linked to an employee’s rate of 

compensation, rather than a prescribed fixed amount, further supports the position that § 226.7 

 

5 Defendant notes that Garibay does not hold precedential weight. Mejia v. DHL Express (USA), 

Inc., No. CV 15–890–GHK, 2015 WL 2452755, at *4; see also 9th Cir. R. 36–3 (“Unpublished 

dispositions and orders of this Court are not precedent, except when relevant under the doctrine of 

law of the case or rules of claim preclusion or issue preclusion”).

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payments are... wages”). Plaintiffs failed to respond to HSGI’s calculation of $26,932,500 with 

any evidence or arguments that support an amount in controversy lower than the statutory 

requirement of $5,000,000.

Therefore, while HSGI’s calculations for overtime violations and missed meal and rest 

breaks are not sufficient in themselves to establish the statutory requirement of $5,000,000, the 

potential amount in controversy resulting from waiting time penalties well exceeds the CAFA 

requirement. Even reducing its assumed violation rate of 100% to account for the possibility that 

the maximum 30 day statutory fine would not be assessed (which is questionable given that 

plaintiffs also allege that defendant still has not paid all wages due), the resulting waiting time 

penalties would still support an amount in controversy that far exceeds the CAFA statutory 

requirement of $5,000,000. I find that HSGI’s calculation of waiting time penalties, based on 

reasonable assumptions from the evidence HSGI submits and the allegations in plaintiffs’ FAC, 

satisfies the amount in controversy requirement.

CONCLUSION

HSGI has shown by a preponderance of the evidence that the amount in controversy of 

$5,000,000 is satisfied. I have subject matter jurisdiction under CAFA. Plaintiffs’ Motion to 

Remand for Lack of Subject Matter Jurisdiction is DENIED.

IT IS SO ORDERED.

Dated: September 2, 2016

______________________________________

WILLIAM H. ORRICK

United States District Judge

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