Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-00275/USCOURTS-caed-2_08-cv-00275-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-(Citizenship)

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

ANTHONY J. PULERA, No. 2:08-cv-00275-MCE-DAD

Plaintiff,

v. MEMORANDUM AND ORDER

F&B, INC., MANCHESTER

ENTERPRISES, INC., CHARLENA

MANCHESTER, CHARLES

MANCHESTER, and DOES 1-10,

Defendants.

________________________________

F&B, INC., MANCHESTER

ENTERPRISES, INC.,

Third Party Plaintiffs,

v.

TW CONSTRUCTION CO., INC.,

and DOES 1-25, inclusive,

Third Party Defendants.

________________________________

----oo0oo----

Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 1 of 14
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 Unless otherwise stated, all further references to a Labor 1

Code are to the California Labor Code.

 Unless otherwise stated, all further references to a Rule 2

are to the Federal Rules of Civil Procedure.

2

Plaintiff Anthony J. Pulera (“Plaintiff” or “Pulera”) seeks

monetary relief against Defendants F&B, Inc. (“F&B”), Manchester

Enterprises, Inc. (“Manchester, Inc.”), Charlena Manchester

(“Charlena”), Charles Manchester (“Charles”), and DOES 1-10

(collectively “Defendants”), for failure to pay overtime and

minimum wages, breach of contract, failure to provide meal

periods, failure to provide accurate pay stubs, submitting false

and fraudulent certified payroll records, failure to pay wages

due at end of employment, violation of California Business and

Professions Code §§ 17200 and 17203, and civil penalties pursuant

to California Labor Code Private Attorneys General Act

(California Labor Code § 2698, et seq. ). 1

Defendants seek contractual and equitable indemnity as Third

Party Plaintiffs against TW Construction Co., Inc. and DOES 1-25,

(hereinafter collectively referred to as “TW”) for allegedly

misleading Defendants into believing the development project

(“Project”) for which Defendants hired Pulera was not subject to

the payment of prevailing wages. TW now moves to dismiss

Plaintiff’s complaint pursuant to Federal Rule of Civil

Procedure 12(b)(1) for lack of subject-matter jurisdiction, on 2

grounds that under Plaintiff’s theory of diversity jurisdiction,

Plaintiff’s claim fails to exceed the amount in controversy

requirement of $75,000.00. See 28 U.S.C. § 1332. Defendants

join in this motion. 

Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 2 of 14
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 Because oral argument will not be of material assistance, 3

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

 The factual assertions in this section are based on the 4

allegations in Plaintiff’s Complaint unless otherwise specified.

3

For the reasons stated below, the Motion to Dismiss is GRANTED

with leave to amend.3

BACKGROUND4

Plaintiff was hired by Defendants to work on the Project,

which comprises a convention center, hotels, condominiums, and

retail uses, on the California side of South Lake Tahoe. 

Plaintiff’s job duties included soft and hard demolition, and the

moving of materials. (Amended Joint Status Report 2:16-17.) The

Project was allegedly funded in whole or in part by public funds

from the City of South Lake Tahoe and South Tahoe Redevelopment

Agency. Plaintiff asserts that this use of public funds made the

Project subject to the payment of prevailing wages required by

California’s Department of Industrial Relations. 

On January 22, 2008, Plaintiff filed his Complaint for

Damages and Demand for Jury Trial in this Court under diversity

jurisdiction. Plaintiff alleges seven causes of action in his

Complaint: (1) Failure to Pay Overtime and Minimum Wages;

(2) Breach of Contract; (3) Failure to Provide Rest and Meal

Periods; (4) Failure to Provide Accurate Pay Stubs and Records

and Submitting False and Fraudulent Certified Payroll Records;

(5) Failure to Pay Wages Due at End of Employment and Waiting

Time Penalties; 

Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 3 of 14
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4

(6) Violation of California Business and Professions Code

§§ 17200 and 17203; and (7) Civil Penalties pursuant to Labor

Code Private Attorneys General Act (“PAGA”) (Labor Code § 2698,

et seq.). 

TW filed this Motion to Dismiss under Rule 12(b)(1) for lack

of subject-matter jurisdiction on the grounds that Plaintiff’s

claim fails to exceed the amount in controversy threshold of

$75,000.00. 28 U.S.C. § 1332. TW alleges that because some of

Plaintiff’s claims are subject to a 75% apportionment to the

California Labor & Workforce Development Agency (“LWDA”) under

PAGA, Plaintiff’s possible recovery, less the apportionment to

LWDA, does not meet the statutory threshold requirement, and

therefore his Complaint must be dismissed. Defendants join in

this motion.

STANDARD

Where the parties in an action are citizens of different

states, a district court “shall have original jurisdiction ...

where the matter in controversy exceeds the sum or value of

$75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a).

This amount includes claims for general and special damages

(excluding costs and interests), attorneys fees if recoverable by

statute or contract, and punitive damages, if recoverable as a

matter of law. Conrad Assocs. v. Hartford Accident & Indem. Co.,

994 F. Supp. 1196, 1198 (N.D. Cal. 1998). 

///

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Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 4 of 14
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5

The amount is “determined at the time the action commences, and a

federal court is not divested of jurisdiction ... if the amount

in controversy subsequently drops below the minimum

jurisdictional level.” Hill v. Blind Industries and Services of

Maryland, 179 F.3d 754, 757 (9th Cir. 1999).

The Supreme Court has stated that in diversity cases where

the amount in controversy is in doubt, “[i]t must appear to a

legal certainty that the [plaintiff’s] claim is really for less

than the jurisdictional amount to justify dismissal.” St. Paul

Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). 

Federal courts are courts of limited jurisdiction, and thus when

faced with a motion to dismiss, the party seeking the federal

court jurisdiction bears the burden of proving that jurisdiction

is proper. McNutt v. General Motors Acceptance Corp. of Indiana,

298 U.S. 178, 189, 56 S. Ct. 780, 785 (1936). 

ANALYSIS

TW claims that Plaintiff’s Complaint appears to a legal

certainty to fall below the amount in controversy requirement

under 28 U.S.C. § 1332, and thus Plaintiff’s claims must be

dismissed. St. Paul Mercury, 303 U.S. at 289. The Ninth Circuit

stated that such “legal certainty” exists “when a rule of law or

limitation of damages would make it virtually impossible for a

plaintiff to meet the amount-in-controversy requirement.” 

Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362, 364

(9th Cir. 1986). 

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Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 5 of 14
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 TW calculates Plaintiff’s claims as follows: Count 1, 5

$2,800 in overtime (non-PAGA); Count 2, $1,540 for non-payment of

prevailing wage (non-PAGA); Count 3, $3,937.50 for failure to

provide meal periods ($15,750 with 75% to LWDA); Count 4, $14,000

for wage stub violations ($56,000 with 75% to LWDA); Count 5,

$4,500 ($18,000 with 75% to LWDA); Count 6, inapplicable to

damage calculation; and Count 7, $27,125 in additional penalties

($108,000 with 75% to LWDA) and $4,340.50 (non-PAGA). 

6

TW asserts that under PAGA, California law limits the

damages available to Plaintiff, so that it is impossible for him

to reach the jurisdictional threshold. See Labor Code § 2699(i)

(requiring 75% of civil penalties recovered under PAGA to be

remitted to LWDA). TW has provided calculations based on

Plaintiff’s claims, concluding that after PAGA remittance,

Plaintiff’s total possible recovery is only $54,988.13, which is

far below this Court’s jurisdictional requirement. TW also 5

argues that the filing of a similar action in California State

Court (“State Action”), by four of Plaintiff’s former co-workers

and by Plaintiff’s counsel, evidences that Plaintiff’s claims

were alleged to obtain federal jurisdiction.

Plaintiff offers multiple arguments to counter TW’s

assertions. First, Plaintiff distinguishes the instant case from

the State Action, noting that the State Action does not include

PAGA claims, and given this dissimilarity it is improper to give

evidentiary weight to the parties’ different jurisdictional

approaches. Plaintiff asserts that his claims under PAGA may

impose serious California law-based civil penalties on Nevadan

Defendants, and thus federal jurisdiction is preferred to prevent

potential prejudice against Defendants by a California court. 

While this assertion may evidence Plaintiff’s magnanimous

attitude toward Defendants, it is less than persuasive. 

Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 6 of 14
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 The Court notes that where Plaintiff’s and TW’s PAGA 6

allocations differ, based on their respective understandings of

PAGA’s application to violations of the Labor Code, the Court

will use Plaintiff’s allocations for the purpose of this Motion

without deciding this issue on the merits. The Court further

notes that Plaintiff’s calculations include interest, which is

statutorily excluded from the amount in controversy calculation

except under certain limited circumstances. See, e.g., 14

Wright, et al., supra § 3712. Plaintiff has failed to show the

presence of one of these exceptions, and thus Plaintiff’s

possible recovery of $50,673.64 is reduced by his claimed

interest. 

7

However, Plaintiff is correct that his choice of jurisdiction in

this case, compared to the State Action, is not, on its own, an

obvious abuse of federal jurisdiction, and thus TW’s State Action

assertion fails. See 14 Charles Alan Wright, Arthur R. Miller &

Edward H. Cooper, Federal Practice & Procedure, § 3702 at 102 (2d

ed. 1996) (noting that to show that the damage amount was claimed

merely to obtain federal court jurisdiction, the flagrant abuse

of federal court jurisdiction must be obvious).

Second, Plaintiff asserts that under the audit provided to

this Court in the Margain Declaration, Defendants may have to pay

over $90,000 as a result of Plaintiff’s claims. (Pl’s Opp. to

the Mot. to Dis. 5:1-7.) Following Plaintiff’s remittance under

PAGA to LWDA, Plaintiff’s measurement of his possible recovery is

$48,707.67. Plaintiff argues that the amount in controversy in 6

this matter should be measured by the amount Defendants may have

to pay to all parties, and not what Plaintiff may personally

recover, and thus the estimate of $90,000 well exceeds the

jurisdictional requirement. To support this assertion, Plaintiff

cites numerous cases, including those rendered by the United

States Supreme Court and the Ninth Circuit. 

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Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 7 of 14
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8

See Hunt v. Washington State Apple Advertising Comm’n, 432 U.S.

333, 347 (1977); In re Ford Motor Co./Citibank (South Dakota),

N.A., 264 F.3d 952, 958 (9th Cir. 2001) Sanchez v. Monumental

Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996); Ridder Bros.

Inc., v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944); Simmons v.

PVR Tech., 209 F.Supp.2d 1029, 1033 (N.D. Cal. 2002). 

Specifically, under In re Ford and Ridder Bros., Plaintiff

asserts that this Court should apply the “either viewpoint rule,”

which states that “the test for determining the amount in

controversy is the pecuniary result to either party which the

judgment would directly produce.” In re Ford, 264 F.3d at 958;

See also Ridder Bros., 142 F.2d at 399. 

However, the instant case is distinguishable from these

precedents. The cases cited by Plaintiff, including In re Ford

and Ridder Bros., all dealt with the measurement of injunctive

relief in relation to an amount in controversy challenge. 

Plaintiff seeks monetary relief, coupled with a claim for

restitution of Defendant’s violations of the prevailing wage,

overtime, and meal periods requirements under the California

Business and Professions Code. These amounts are readily

calculable for jurisdictional purposes, as shown by Plaintiff’s

own measurements, unlike the injunctive relief sought in Ridder

Bros. and In re Ford. Ridder Bros., 142 F.2d at 396 (seeking

specific performance of a contract); In re Ford, 264 F.3d at 958

(seeking specific performance of a rebate program). 

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9

While this Court’s binding authorities have not specifically

ruled out the application of the either viewpoint rule in a case

such as this, which seeks neither specific performance nor

injunction, other jurisdictions have done just that. See Smith

v. Pfizer, Inc., WL 3618319, at *2-3 (S.D. Ill. 2005) (discussing

Uhl v. Thoroughbred Tech. and Telecomms., Inc., 309 F.3d 978,

983-84 (7th Cir. 2002)) (indicating that the either viewpoint

rule should only be used where the plaintiff seeks injunctive

relief). In this case, due to the ease of measurement of

Plaintiff’s prayed for relief, this Court declines to apply the

either viewpoint rule as suggested by Plaintiff. 

Third, Plaintiff claims that LWDA’s possible recovery under

PAGA should not be separated from Plaintiff’s recovery, as

Plaintiff and LWDA are not separate litigants. In the PAGA

portions of this action, Plaintiff claims that he “simply steps

into the shoes of the State of California to prosecute the

penalty claims.” (Pl’s Mem. of Pts. & Auths. in Opp. to Mot. to

Dis. 7:13-14.) Historically, aggregated claims of multiple

claimants cannot form the basis of the amount in controversy. 

Troy Bank of Troy, Ind., v. G.A. Whitehead & Co., 222 U.S. 39,

40, 32 S. Ct. 9, 9 (1911) (“[w]hen two or more plaintiffs, having

separate and distinct demands, unite for convenience and economy

in a single suit, it is essential that the demand of each be of

the requisite jurisdictional amount....”). 

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10

Plaintiff correctly notes that the Supreme Court in Troy Bank

further stated that “when several plaintiffs unite to enforce a

single title or right, in which they have a common and undivided

interest, it is enough if their interests collectively equal the

jurisdictional amount.” Id. at 41 (emphasis added). This common

and undivided interest arises when “neither [party] can enforce

[the claim] in the absence of the other.” Id. Plaintiff argues

that the instant case is not based on aggregated claims, stating

that Plaintiff and the State of California, via the LWDA, have a

common and undivided interest in the outcome of Plaintiff’s PAGA

claims, and that neither can enforce the claims without the

other. 

Under PAGA, aggrieved employees may, if approved by the

LWDA, adjudicate their own claims in lieu of direct enforcement

by the LWDA. Dunlap v. Superior Court, 142 Cal. App.4 th 330,

337 (Cal. Ct. App. 2006). However, the LWDA can choose to

enforce those claims itself, regardless of the employee’s

involvement. Therefore, instead of “neither party” being able to

enforce the claim without the other, “either party” may enforce

the claim at the option of the LWDA. The amounts recoverable by

Plaintiff based on his PAGA claims are separate and distinct from

the amounts recoverable by the State of California via the LWDA,

and therefore these amounts may not be aggregated. 

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11

TW asserts a further reduction of Plaintiff’s claim amount

based on this issue, stating that Plaintiff’s possible recovery

under PAGA is a “fee” or an “incentive” paid to employees by the

LWDA in order to motivate them to enforce employment rights

without burdening the understaffed and underfunded LWDA, and as

such is not part of Plaintiff’s recovery. (Third Pty. Def’s Rep.

to Pl’s Opp. to Mot. to Dis. 6-7.) However, the plain language

of the statute itself belies this claim. See Labor Code

§ 2699(g)(1) (“an aggrieved employee may recover the civil

penalty ... in a civil action....”) (emphasis added). Further,

courts in this Circuit have included plaintiff claims under PAGA

in calculations of the amount in controversy requirement. See,

e.g., Moore v. Genesco, Inc., 2006 WL 2691390, at *2 (N.D. Cal.

2006). Thus, TW’s attempt at further reducing the amount in

controversy by Plaintiff’s possible recovery under PAGA fails. 

Finally, Plaintiff argues that even without the interests of

the State of California under PAGA, the inclusion of reasonable

attorney fees, as allowed by California law, would also reach the

requisite jurisdictional amount. Galt G/S v. JSS Scandinavia,

142 F.3d 1150, 1156 (9th Cir. 1998) (holding that statutorily

imposed attorney’s fees may be included in the amount in

controversy whether mandatory or discretionary in nature); 

Conrad Assocs., 994 F. Supp. at 1198 (stating amount includes

attorneys fees if recoverable by statute or contract). While the

amount in controversy is determined at the time an action

commences, where attorney’s fees are recoverable by statute, this

determination includes a reasonable estimate of the attorney’s

fees likely to be incurred. 

Case 2:08-cv-00275-MCE-DAD Document 30 Filed 08/19/08 Page 11 of 14
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Brady v. Mercedes-Benz, 243 F. Supp. 2d 1004, 1010-11 (N.D. Cal.

2002). The Brady court noted that other jurisdictions have

disagreed with the inclusion of future attorney’s fees, but found

their arguments to be unpersuasive. Id. (noting that the Seventh

Circuit’s holding in Gardynski-Leschuck v. Ford Motor Co., 142

F.3d 955, 958 (7th Cir. 1998), which stated that the inclusion of

prospective attorney’s fees in the amount in controversy is

improper because the defendant may capitulate to the plaintiff’s

demands, thus eliminating prospective attorney’s fees, “does not

comport with the reality of litigation”). While the Ninth

Circuit has not yet ruled on this issue, the preponderance of

courts in this Circuit have agreed with the Brady approach. See,

e.g., Tompkins v. Basic Research LL, 2008 WL 1808316, at *4 (E.D.

Cal. 2008); Celestino v. Renal Advantage Inc., 2007 WL 1223699,

at *4 (N.D. Cal. 2007); Johnson v. America Online, Inc., 280

F.Supp.2d 1018, 1025 (N.D. Cal. 2003).

Here, Labor Code §§ 1194(a) and 2699(g)(1) both provide for

Plaintiff’s recovery of attorney’s fees, and Plaintiff prayed for

attorney’s fees in his Complaint. See Cal. Lab. Code §§ 1194(a)

and 2699(g)(1) (both noting that any employee in an action under

those Labor Code sections shall be entitled to an award of

reasonable attorney’s fees and costs). Plaintiff’s counsel has

declared that the attorney’s fees to date are well over the

amount needed to reach the jurisdictional limit. These fees

include the work of three attorneys, including 52.5 hours at

$350.00, 17.5 hours at $200.00, and 25 hours at $345.00, which

alone equal more than $30,000.00. (Margain Decl. 2:11-15.) 

///

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13

Plaintiff claims that anticipated fees and costs in this action

will be over $50,000.00 following depositions and trial, but

claim only $25,000.00 in attorney’s fees. (Pl’s Opp. to the Mot.

to Dis. 10:9-11.) Plaintiff’s counsel supports his attorney’s

fees calculation by noting that “since 1999, [he has] exclusively

litigated wage and hour disputes.” (Margain Decl. 2:19.) 

However, as held by the Ninth Circuit in Gaus v. Miles, a

speculative argument regarding the anticipated value of the award

is insufficient to support diversity jurisdiction. 980 F.2d 564,

567 (9th Cir. 1992). Without this support for Plaintiff’s

reasonably anticipated fees, the amount in controversy claimed by

Plaintiff falls short of the jurisdictional minimum. 

Because Plaintiff failed to properly plead sufficient facts

to meet or exceed the amount in controversy requirement for

diversity jurisdiction under 28 U.S.C. § 1332, diversity

jurisdiction is not properly laid with this Court. Accordingly

the Motion to Dismiss Plaintiff’s Complaint for lack of

jurisdiction is GRANTED. 

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CONCLUSION

Defendant’s Motion to Dismiss Plaintiff’s Complaint is

GRANTED. Plaintiff’s Complaint is dismissed without prejudice. 

Plaintiff will be granted twenty (20) days from the date

this order is filed to file an amended complaint which will meet

the jurisdictional requirements of this court.

IT IS SO ORDERED.

Dated: August 18, 2008

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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