Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-02207/USCOURTS-cand-3_06-cv-02207-1/pdf.json

Parties Involved:
Arturo Avina
Plaintiff
Golden Gate Doughnuts, LLC
Defendant
Krispy Kreme Doughnut Corporation
Defendant

Document Text:

United States District Court

For the Northern District of California

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Krispy Kreme allegedly owns all shares in Golden Gate, but it is not clear what Golden Gate’s relation

to the Stockton store is.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ARTURO AVINA, on behalf of himself and all

others similarly situated,

Plaintiffs,

 v.

KRISPY KREME DOUGHNUT

CORPORATION; GOLDEN GATE

DOUGHNUTS, LLC; and DOES 1 to 50,

inclusive,

Defendants. /

No. C 06-02207 WHA

ORDER GRANTING 

MOTION TO REMAND

INTRODUCTION

In this putative class action, plaintiff Arturo Avina moves to remand to state court. This

order finds that defendants Krispy Kreme Doughnut Corporation and Golden Gate

Doughnuts, LLC have not shown that the amount in controversy exceeds $75,000 as required

for jurisdiction under 28 U.S.C. 1332. Plaintiff’s motion, therefore, is GRANTED.

STATEMENT

Between June 2001 and November 2005, Avina worked as an assistant general manager

at a doughnut shop owned by Krispy Kreme in Stockton, California.1

 The Stockton shop is one

of approximately ten Krispy Kreme shops in California. Plaintiff received a salary from Krispy

Kreme.

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United States District Court

For the Northern District of California

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Avina’s complaint was framed as a class action, but the complaint only offered details as

to Avina’s employment. Avina received a salary from Krispy Kreme. He was supposed to

work forty-five hours per week, but he purportedly often worked more hours, frequently

working six or seven days per week. He further alleged that given shortages in staffing, he was

not able to take rest breaks or meal breaks. Plaintiff alleged that he was forced to perform many

non-managerial duties despite his title of assistant general manager. Krispy Kreme purportedly

did not pay Avina for overtime wages, though, because they classified Avina as a manager,

thereby exempting him from several California regulations.

On February 17, 2006, Avina filed a putative class-action complaint in the Superior

Court of California for the County of Alameda in which Avina was the only named plaintiff. 

Plaintiff made six claims against defendants under the California Labor Code and the California

Business and Professions Code: (1) failure to pay overtime compensation; (2) failure to provide

an itemized wage statement; (3) failure to provide adequate meal periods; (4) failure to provide

adequate rest periods; (5) unfair business practices; and (6) failure to pay wages upon

termination. On March 27, defendants filed a notice of removal of this action on grounds of

diversity of citizenship.

Plaintiff now seeks remand, alleging that defendants failed to meet their burden to

demonstrate satisfaction of all jurisdictional requisites. It is uncontested that plaintiff and

defendants are citizens of different states. Plaintiff does dispute, however, whether the amount

in controversy exceeds $75,000 as required by 28 U.S.C. 1332. The notice of removal merely

alleged that “[m]ore than $75,000, exclusive of interest and costs, is in controversy in this

action” (Notice of Removal 2). In opposition to this motion, defendants have submitted the

declaration of Marla Baker, a human-resources representative for Krispy Kreme, to detail the

potential damages in this action. Plaintiff counters Baker’s calculations, and questions the

admissibility and sufficiency of her declaration. Defendants in turn seek leave to file a

supplemental declaration of Baker. Plaintiff seeks sanctions.

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United States District Court

For the Northern District of California

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ANALYSIS

Removal under 28 U.S.C. 1441(b) is permitted for actions over which the district court

could have exercised original jurisdiction pursuant to 28 U.S.C. 1332 “if none of the parties in

interest properly joined and served as defendants is a citizen of the State in which such action is

brought.” The removing party bears the burden of establishing that removal is proper.

Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1990). The removal statutes are

strictly construed such that any doubts are resolved in favor of remand. Gaus v. Miles, Inc.,

980 F.2d 564, 566 (9th Cir. 1992).

1. AMOUNT IN CONTROVERSY.

For a federal court to have diversity jurisdiction, Section 1332 requires that the amount

in controversy exceed $75,000 exclusive of interest and costs. A court examines “only the

claims of named class plaintiffs for purposes of the amount-in-controversy requirement in

diversity class actions.” Gibson v. Chrysler Corp., 261 F.3d 927, 941 (9th Cir. 2001). Where it

is “not facially evident from the complaint that more than $75,000 [is] in controversy,”

defendants must “prove[] by a preponderance of the evidence, that the amount in controversy

[meets] the jurisdictional threshold.” Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir.

2004) (internal citation omitted). It is insufficient to make a bald assertion in the notice of

removal that the amount in controversy exceeds $75,000. “To discharge its burden,

[defendants] need[] to ‘provide evidence establishing that it is more likely than not that the

amount in controversy exceeds that amount.’” Ibid. (internal citation omitted). The Ninth

Circuit has “endorsed the Fifth Circuit’s practice of considering facts presented in the removal

petition as well as any ‘summary-judgement-type [sic] evidence relevant to the amount in

controversy at the time of removal.’” Ibid. (emphasis added) (internal citation omitted).

As stated, defendants present Baker’s declaration to demonstrate that the amount-incontroversy requirement is met. According to Baker, if plaintiff succeeds on his overtime

claim, he will be entitled to at least $51,745.20 (Baker Decl. ¶ 4). Baker estimates that

plaintiff’s rest and meal claims are worth at least $17,249.70 (id. at ¶ 5). Baker estimates that

plaintiff may recover $3,538.40 in statutory damages for unpaid overtime (id. at ¶ 6). Finally,

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Baker contends that plaintiff may recover up to $4,000 in statutory damages for defendants’

alleged failure to provide accurate itemized wage statements (id. at ¶7). These figures yield

potential damages of $76,533.30.

As an initial matter, Baker’s declaration is “summary-judgment-type evidence” that may

be considered for purposes of determining whether the amount in controversy exceeds $75,000. 

Plaintiff protests that Baker’s declaration lacks foundation. This argument is not persuasive. 

Baker is a director in Krispy Kreme’s human-resources department with access to information

about plaintiff’s salary and employment history. Baker has foundation to testify as to the

purported underpayment of Avina.

Plaintiff, however, has successfully shown that certain assumptions in Baker’s

computation of damages are flawed. Put differently, defendants have not met their burden to

show that it is “more likely than not” that the amount in controversy exceeds $75,000 as

required by Ninth Circuit authority.

First, Baker bases her calculation of unpaid overtime on a period of an entire three years

of employment with Krispy Kreme, or 156 weeks. Because of the statute of limitations of three

years for violations of the California Labor Code, however, plaintiff is only able recover for

142 weeks. Cal. Civ. Proc. Code § 338. This figure is further reduced by the four weeks of

paid vacation that Avina took during his employment for which he was not entitled to overtime

pay. Accepting the salary figure and number of overtime hours estimated by Baker, this alone

would reduce potential recovery for the claim of unpaid overtime to $45,701.46 from

$51,745.20.

Second, Baker indicates that Avina’s pay is $22.115 per hour, but this apparently was

only the final hourly wage earned by Avina. Avina received several promotions and

accompanying raises during his tenure with Krispy Kreme (Avina Decl. ¶¶ 4–5). Based on

Avina’s starting salary, he would have only been earning $17.30 per hour at some point during

his employment. Thus even the estimate of $45,701.46 is overstated.

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 Plaintiff also notes that there are three cases pending before the California Supreme Court that will

decide the issue whether a plaintiff is limited to one year of reimbursement for meal and rest breaks under the

California Labor Code. Such a rule would mean that Baker’s declaration added two years too many for

purposes of break pay. Since the other calculation errors already bring the potential damages below $75,000,

this order accepts Baker’s assumption that break pay is available for the longer period. If defendants are wrong

about this point of law, however, the Baker estimate will be overstated by $11,278.65.

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Third, as with the overtime, Baker improperly calculates plaintiff as being entitled to

156 weeks of pay for meals and rest breaks rather than 138. This yields an overestimation of

damages by $1,990.35.2

Without these three mistaken assumptions, Baker’s estimate would be reduced to at

most $68,499.21. That is not sufficient to satisfy Section 1332.

Plaintiff concedes that if he later asserts damages over $75,000 then remand at that time

would be proper. But those are not the facts before us now.

2. SUPPLEMENTAL DECLARATION OF MARLA BAKER.

Defendants seek leave to file a “supplemental” declaration of Baker to support their

opposition to plaintiff’s motion. This order finds this request unjustified. Baker already

provided a declaration. The fact that plaintiff persuasively pointed out the defects in Baker’s

analysis is not a basis for Baker to revise the analysis with new facts and theories. Indeed,

defendants have already had two chances to provide sufficient evidence of the amount in

dispute in this action to justify jurisdiction. Defendants failed to provide any substantiating

evidence with their notice of removal. And again, Baker’s first declaration was inadequate. 

Defendants do not deserve yet a third bite at the apple. It is unfair to deprive plaintiff the right

to reply to the contents of the supplemental declaration by seeking to file this supplemental

declaration at the last moment.

3. SANCTIONS.

Plaintiff is not entitled to sanctions. “An order remanding the case may require payment

of just costs and any actual expenses, including attorney fees, incurred as a result of the

removal.” 28 U.S.C. 1447(c). “[A]bsent unusual circumstances, attorney’s fees should not be

awarded when the removing party has an objectively reasonable basis for removal.” Patel v.

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Del Taco, Inc., __ F.3d __, 2006 WL 1148735, at *2 (9th Cir. 2006) (quoting Martin v.

Franklin Capital Corp., __ U.S. __, 126 S. Ct. 704, 708 (2005)).

Defendants did present objective evidence in support of their argument, even though the

evidence ultimately turned out to be less persuasive than the evidence presented by plaintiff. As

stated above, it may turn out later that plaintiff will allege the requisite amount in controversy

even though he has not done so at this juncture. Under such circumstances, sanctions are not

warranted.

CONCLUSION

For the foregoing reasons, plaintiff’s motion to remand is GRANTED. Plaintiff is not

entitled to sanctions. The Clerk shall close the file and send it to the Superior Court of

California for the County of Alameda. 

IT IS SO ORDERED.

Dated: June 1, 2006 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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