Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_19-cv-02854/USCOURTS-cand-4_19-cv-02854-2/pdf.json

Parties Involved:
E-3 Systems
Defendant
Jose Franco
Plaintiff

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JOSE FRANCO,

Plaintiff,

v.

E-3 SYSTEMS,

Defendant.

Case No. 19-cv-01453-HSG 

ORDER DENYING PLAINTIFF’S

MOTION TO REMAND

Re: Dkt. No. 8

JOSE FRANCO,

Plaintiff,

v.

E-3 SYSTEMS,

Defendant.

Case No. 19-cv-02854-HSG 

Re: Dkt. No. 9

Plaintiff Jose Franco filed these putative class and representative actions in state court. 

Case No. 19-cv-1453-HSG, Dkt. No. 1, Ex. A (“Mot.”); Case No. 19-cv-2854-HSG, Dkt. No. 1, 

Ex. A.1 Defendant removed the actions to federal court based on federal preemption under § 301 

of the Labor Management Relations Act of 1974 (“LMRA”), 29 U.S.C. § 185. Dkt. No. 1; Case 

No. 19-cv-2854-HSG, Dkt. No. 1. Plaintiff now seeks to remand the actions back to state court. 

After carefully considering the parties’ arguments, the Court DENIES Plaintiff’s motion.

I. LEGAL STANDARD

“Except as otherwise expressly provided by Act of Congress, any civil action brought in a 

State court of which the district courts of the United States have original jurisdiction, may be 

 

1 All docket citations refer to the docket in Jose Franco v. E-3 Systems, Case No. 19-cv-1453-

HSG, unless otherwise indicated.

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removed” to federal court. 28 U.S.C. § 1441(a). Federal district courts are courts of limited 

jurisdiction, and “[n]o principle is more fundamental to the judiciary’s proper role in our system of 

government than the constitutional limitation of federal-court jurisdiction to actual cases or 

controversies.” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 341 (2006) (citation and 

quotations omitted and alterations in original). Consistent with this foundational principle, there is 

a “‘strong presumption’ against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 

Cir. 1992) (citation omitted).

If the district court lacks jurisdiction over an action, a plaintiff may seek remand to state 

court. See 28 U.S.C. § 1447(c). “Federal jurisdiction must be rejected if there is any doubt as to 

the right of removal in the first instance.” Gaus, 980 F.2d at 566. Accordingly, “[t]he strong 

presumption against removal jurisdiction means that the defendant always has the burden of 

establishing that removal is proper . . . .” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th 

Cir. 2009).

In the context of diversity jurisdiction, the Supreme Court has held that the defendant bears 

the burden of establishing jurisdiction by a preponderance of the evidence. Dart Cherokee Basin 

Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014); see also 28 U.S.C. § 1446. District courts 

in this circuit have applied this standard in the § 301 preemption context. See, e.g., Huffman v. 

Pac. Gateway Concessions LLC, No. 19-CV-01791-PJH, 2019 WL 2563133, at *2 (N.D. Cal. 

June 21, 2019); Van Bebber v. Dignity Health, No. 119CV00264DADEPG, 2019 WL 4127204, at 

*8 (E.D. Cal. Aug. 30, 2019).

II. DISCUSSION

Plaintiff is a citizen of California and worked as a non-exempt hourly employee for 

Defendant E-3 Systems from August 18, 2014 to May 15, 2018. Dkt. No. 1, Ex. A (“Compl.”); 

Dkt. No. 9-1, Ex. B, Declaration of Albert Gonzales (“Gonzales Decl.”) ¶ 3. E-3 Systems is a 

California corporation with its headquarters in Union City, California. Compl. ¶ 5. On February 

13, 2019, Plaintiff filed this putative labor class action alleging claims under the California Labor 

Code, including a claim for failure to pay overtime under § 510. Compl. ¶¶ 34–75. The putative 

class period is “any time within four (4) years of the filing of this lawsuit.” Id. ¶ 23. 

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After Defendant removed the putative class action on March 20, 2019, Plaintiff filed 

another action in state court, Case No. 19-cv-2854-HSG. The complaint is based on the same set 

of facts as those in his putative class action complaint, although Plaintiff asserts that the complaint 

is a representative and “PAGA-only” action. Case No. 19-cv-2854-HSG, Dkt. No. 1, Ex. A

(“PAGA Compl.”). That complaint only includes PAGA claims, but the predicate California 

Labor Code violations for which Plaintiff seeks penalties are the same as those in Case No. 19-cv1453-HSG. See generally id. Defendant removed that action on May 23, 2019. Case No. 19-cv2854-HSG, Dkt. No. 1. 

A. Section 301 Preemption

Under § 301 of the LMRA, “[s]uits for violation of contracts between an employer and a 

labor organization ... may be brought in any district court of the United States.” 29 U.S.C. 

§ 185(a). As recently reaffirmed by the Ninth Circuit, the Supreme Court has interpreted the 

LMRA to authorize federal courts “to create a uniform body of federal common law to adjudicate 

disputes that arise out of labor contracts.” Curtis v. Irwin Indus., Inc., 913 F.3d 1146, 1155 (9th 

Cir. 2019) (citations omitted). “A state rule that purports to define the meaning or scope of a term 

in a contract suit therefore is pre-empted by federal labor law.” Id. at 1152 (quoting AllisChalmers Corp. v. Lueck, 471 U.S. 202, 210 (1985)). Although federal preemption is a defense 

that does not generally authorize removal to federal court, the Supreme Court has held that § 301 

has such “extraordinary pre-emptive power” that it “converts an ordinary state common law 

complaint into one stating a federal claim for purposes of the well-pleaded complaint 

rule.” Metro. Life Ins. v. Taylor, 481 U.S. 58, 65 (1987). 

However, § 301 “cannot be read broadly to pre-empt nonnegotiable rights conferred on 

individual employees as a matter of state law.” Curtis, 913 F.3d at 1152 (quoting Livadas v. 

Bradshaw, 512 U.S. 107, 123 (1994)). Further, “not every dispute concerning employment, or 

tangentially involving a provision of a collective-bargaining agreement, is preempted by § 301 or 

other provisions of federal labor law.” McCray v. Marriott Hotel Servs., Inc., 902 F.3d 1005, 

1009 (9th Cir. 2018) (quoting Lueck, 471 U.S. at 211). Claims which have no relationship to a 

collective-bargaining agreement “beyond the fact that they are asserted by an individual covered 

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by such an agreement are simply not pre-empted by § 301.” Id. (citation and quotations omitted).

The Ninth Circuit has employed a two-step test to ensure that § 301 preemption “extends 

only as far as necessary to protect the role of labor arbitration in resolving CBA disputes.” Curtis, 

913 F.3d at 1153 (citation and quotations omitted). First, the court asks whether the asserted cause 

of action involves a “right [that] exists solely as a result of the CBA.” Burnside v. Kiewit Pac. 

Corp., 491 F.3d 1053, 1059 (9th Cir. 2007). “If the right exists solely as a result of the CBA, then 

the claim is preempted, and our analysis ends there.” Id. (citing Lueck, 471 U.S. at 210). If not, 

the court proceeds to the second step and asks “‘whether a plaintiff’s state law right is 

substantially dependent on analysis of [the CBA],’ which turns on whether the claim cannot be 

resolved by simply ‘look[ing] to’ versus ‘interpreting’ the CBA.” Curtis, 913 F.3d at 1153 

(citations and quotations omitted and alterations in original). Interpretation is construed narrowly 

in this context. Id. If claims are dependent on interpretation of the CBA, then the claim is 

preempted by § 301; if not, the claim may proceed under state law. Burnside, 491 F.3d at 1059–

60.

i. Step 1: Whether Plaintiff’s Overtime Right Exists Solely as a Result of 

the CBA

The dispositive question in this case is whether Plaintiff’s § 510 overtime claim involves a 

“right [that] exists solely” as a result of the CBAs. See Curtis, 913 F.3d at 1152 (citations and 

quotations omitted and alterations in original). Defendant argues that the CBAs between it and 

Plaintiff’s union satisfy the “Labor Code exemption” in Cal. Lab. Code § 514, so as to preempt 

Plaintiff’s overtime claim under Curtis. Dkt. No. 9 (“Opp.”) at 4–5; Case No. 19-cv-2854-HSG, 

Dkt. No. 12. Plaintiff argues that his claims assert “independent state law rights” which do not 

require interpretation of the CBAs. Mot. at 5–10. 

Curtis is dispositive. In Curtis, the Ninth Circuit held that overtime claims under Cal. Lab. 

Code § 510 are controlled by the CBA if the CBA satisfies the requirements of Cal. Lab. Code

§ 514. Curtis, 913 F.3d at 1155. Section 510 provides a default rule for overtime, but does not 

apply if there is an “alternative workweek schedule adopted pursuant to a collective bargaining 

agreement pursuant to Section 514.” Cal. Lab. Code § 510(a)(2). Section 514 provides that:

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Section 510 and 511 do not apply to an employee covered by a valid 

collective bargaining agreement if the agreement expressly provides 

for the wages, hours of work, and working conditions of the 

employees, and if the agreement provides premium wage rates for 

all overtime hours worked and a regular hourly rate of pay for those 

employees of not less than 30 percent more than the state minimum 

wage.

Cal. Lab. Code § 514. Based on the language in §§ 510 and 514, the Ninth Circuit held that where 

a CBA meets the requirements of § 514, a plaintiff’s § 510 claim for overtime is “controlled” by a 

CBA and therefore preempted by § 301 of the LMRA. Curtis, 913 F.3d at 1155. The Curtis court 

noted that any other interpretation would make §§ 510(a)(2) and 514 superfluous. Id. In reaching 

this conclusion, Curtis overruled Gregory v. SCIE, LLC, 317 F.3d 1050 (9th Cir. 2003), which had 

held that § 510, rather than a CBA, defined what hours constituted “overtime hours.” Id.

(concluding that Gregory was overruled by intervening California case law). 

Under Curtis, the Court must determine whether the applicable CBAs satisfy the 

requirements of § 514. The applicable CBAs during the putative class period were: (1) the April 

1, 2005 CBA, Dkt. No. 9-1, Gonzales Decl., Ex. 1 (“2005 CBA”); and (2) the October 1, 2018 

CBA, Dkt. No. 26, Declaration of John F. McIntyre, Jr., Ex. 1 (“2018 CBA”). Gonzales Decl. ¶ 4. 

Having reviewed the CBAs and Defendant’s supplemental declaration, the Court finds that the 

CBAs satisfy the requirements of § 514, meaning that Plaintiff’s overtime claim is preempted by 

§ 301 of the LMRA. 2 The CBAs provide for the hours of work and premium wage rates for all 

overtime hours worked. 2005 CBA at 5–6 (Article 19 specifying that an employee shall be paid 

1.5 times his/her hourly rate for hours worked in excess of forty hours; normal hours of work shall 

be eight hours per day and forty hours per week, consisting of five eight-hour days; an employee 

shall be paid 1.5 times his/her hourly rate for all hours worked on Sunday; and Defendant may 

decide to establish a four-day schedule as a “normal workweek.”); 2018 CBA at 5–6 (same). 

Further, the CBAs provide a regular hourly rate of pay of at least 30 percent higher than 

 

2 During oral argument, the Court directed Defendant to submit a supplemental declaration 

detailing how the CBAs satisfy the requirement that all covered employees were paid at a regular 

hourly rate of pay of not less than 30 percent more than the California minimum wage. Dkt. No. 

27. The Court provided Plaintiff an opportunity to respond to Defendant’s supplemental filing, 

but Plaintiff did not do so.

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California’s minimum wage. See 2005 CBA, Appendix 1; 2018 CBA, Appendix 1; Dkt. No. 28, 

Supplemental Declaration of John F. McIntyre (“Supp. McIntyre Decl.”), Ex. 4.3 

Plaintiff does not challenge the substance of the CBAs, but instead argues that Curtis is 

distinguishable because “in that matter plaintiff conceded that the CBA is applicable to plaintiff.” 

Dkt. No. 16 (“Reply”) at 3. But Plaintiff does not (and apparently cannot) dispute that his 

employment is governed by the CBAs, so the absence of an express concession is of no 

consequence. Further, Plaintiff’s entire motion relies on cases decided years before Curtis. See 

generally Mot. The Court thus finds that Defendant has met its burden of proving that the CBAs 

here satisfy the requirements of § 514. Accordingly, Plaintiff’s claim for overtime is controlled by 

the CBAs, “exists solely as a result of the CBA[s],” and is therefore preempted by the LMRA. See 

Curtis, 913 F.3d at 1155. The Court has federal question jurisdiction over the overtime claim.

B. Supplemental Jurisdiction

Defendant asserts that because the Court has exclusive federal jurisdiction over Plaintiff’s 

overtime claim, the Court should exercise supplemental jurisdiction over the remaining state law 

claims. Opp. at 7. Plaintiff’s remaining claims under California law arise from the same working 

conditions and relationship with Defendant during the same period as Plaintiff’s overtime claim. 

See Compl. ¶¶ 34–85 (failure to pay minimum wages, failure to provide meal and rest breaks, 

failure to provide accurate itemized wage statements, unlawful collection of wages, and violation 

of Cal. Bus. & Prof. Code §§ 17200 et seq.). Therefore, the Court finds that the claims derive 

from a “common nucleus of operative fact” and asserts supplemental jurisdiction over the 

remaining claims. Kuba v. 1-A Agr. Ass’n, 387 F.3d 850, 855 (9th Cir. 2004) (“Nonfederal claims 

 

3 Appendix 1 of the 2005 CBA provides that effective April 4, 2006, the regular hourly rate of pay 

for a Step 1 employee, the lowest-paid employee, is $10.58, with a “2.25% increase plus .70X the 

increase in the CPI-W in excess of 2.25% year to year effective April 1, 2007.” 2005 CBA, 

Appendix 1. The CPI-W is the Consumer Price Index for Urban Wage Earners and Clerical 

Workers. Supp. McIntyre Decl. ¶ 7; see id., Ex. 6. Factoring in the baseline increase of 2.25%

each year, plus any increase in CPI-W in excess of 2.25% multiplied by 0.70, the hourly rate of 

pay is more than 30% of California’s minimum wage for each respective year. Supp. McIntyre 

Decl., Ex. 4; see also id., Exs. 6, 7; Cal. Lab. Code § 1192.12(a) (setting California’s minimum 

wages). The 2018 CBA provides for minimum hourly rates for a Step 1 employee in 2018 (after 

September 30, 2018) and 2019 of $15.50 and $15.89, respectively, also satisfying the condition

that the wages provided are not less than 30% more than California’s minimum wage. 2018 CBA, 

Appendix 1; see Cal. Lab. Code § 1192.12(a).

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are part of the same ‘case’ as federal claims when they derive from a common nucleus of 

operative fact and are such that a plaintiff would ordinarily be expected to try them in one judicial 

proceeding.” (citation and quotations omitted)).

C. PAGA Claims

California enacted PAGA, Cal. Lab. Code § 2698 et seq., to allow “aggrieved employees, 

acting as private attorneys general, to recover civil penalties for Labor Code violations, with the 

understanding that labor law enforcement agencies were to retain primacy over private 

enforcement efforts.” Arias v. Superior Court, 46 Cal. 4th 969, 980 (2009). PAGA claims are 

derivative of the predicate California Labor Code violations, and therefore rise and fall with those 

underlying claims. See Curtis, 913 F.3d at 1150 n.3 (noting that the PAGA claim was derivative 

of the § 510 claim and could only succeed if the plaintiff prevailed on his § 510 claim).

Plaintiff, without citing any supporting authority, argues that his PAGA claims cannot be 

preempted because “an employee who brings an action pursuant to § 2699 stands in the shoes of 

the LWDA [Labor Workforce Development Agency],” so “it is immaterial if said employee is 

subject to any collective bargaining agreement during his or her employment.” Case No. 19-cv2854-HSG, Dkt. No. 9, at 7. According to Plaintiff, “if the LWDA is not a party to the CBA, then 

the CBA cannot affect or impact in any way an employee’s § 2699 claims.” Id. Plaintiff’s

argument misunderstands the nature of PAGA claims. That Plaintiff demands civil penalties 

under PAGA does not change the underlying nature of the predicate California Labor Code

violations, which in this case include the same claims asserted in his putative class action 

complaint. Compare Compl. ¶¶ 43–47 (alleging that Defendant failed to pay overtime under 

§ 510) with PAGA Compl. ¶¶ 60–91 (seeking penalties under PAGA for Defendant’s failure to 

pay overtime under § 510). Thus, for the reasons already discussed, the Court finds it has 

jurisdiction over the PAGA claims. 

//

//

//

//

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III. CONCLUSION

Plaintiff’s motion to remand is DENIED. The Court SETS a case management 

conference for November 26, 2019. The parties need not submit a further joint case management 

statement.

IT IS SO ORDERED.

Dated: 11/8/2019

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

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