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# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 11

- 8001 ABM S EC URITY S ERVICES, I NC ., P etitio ner, v. T YRONE D AV IS, etal. , R espo nd ents.

Peti tionfor Pe r mi ss ionto App ea l fr om the United S t ates Di strictC our tfo r the NorthernDi stricto f Illino is, Eas tern Div isi on. No . 10 C5958

—Mi lt on I . Sh adur , Judge
.
S UBMIT TED F EB RU AR Y 28, 2011

— D ECI DE D J UNE 16, 2011

Befo re B AUER, K ANN E , an d S YKES, C ircu it Judges . S YKES, Cir cu i tJudg e . A B M Sec u rit y Se rv ice s, In c ., p et iti o ns t o a pp e a l the di s t r i c t c o ur t ’ s r e man d o f thi s ca se to sta te cour t pu rs uant to the Clas s Acti on F ai rnes s Act, 2 8 U
. S

. C. § 1 4 5 3 ( c ) ( 1 ) ( “ C AF A” )

. T h e p l a i n t i ff s , e mp loy ee s o f A B M , fi led th eir p r o p o s e d cla ss ac tio n in I l lino i s st at e co ur t, a l l eg i ngtha t AB M v i o l at ed th e I l l i noi s M i ni m um W age Law ( “IM W L ”) wh en i t f ai l ed to2 N o. 11

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com p en sate em p loyees fortim e s p e nt w orking before and a fter thei r shi fts. A BM re m ove d the case to fed er al cour t a sse rt i ng that the co urt had j uri sdic ti on under CA FA

. The di str i ct c ourtco ncl ud ed that A B M f ai l ed to show that the am ount i n contr ove rs y e xceeds $5 , 000, 000, a s r e qu i r e d t o e s t a b l i s h CAF A j uri sdi c t i o n. 2 8 U. S

. C. § 1332 (d)(2). Th e p a r ties do n ot d ispu te th at C A FA ’s o th erj ur isdi ct i o na l r equi r ement s ar e m et
. W e g r an t AB M ’ s pet i ti o n f or p er m i ss i o n t o a ppea l a nd r ev er se the dist ri ct c ourt ’ s o rderr em anding the c ase to st ate co urt. AB M t wi c e a me n d e d i t s n o t i c e o fr e mo v a l, e a c h t i me r es po ndi ngt o i ns truct i o ns fr o m the d i st r i ctc o ur t an d furtherr efi ni ng i ts cal cul ati on o fthe am oun t i n contr ov e r s y . I n c l u d e d i n th e a mo u n ti n c o n t r o v e r s y a r e c o mp en sa to ry d am ag es for t h e t h re e-y ea r p er iod im m ed ia t e l y p r e c e di ngthe fi l i ngo fthe o r i g i na l c o mp l ai nt, i nter esto n al l r egul arand ove rti m e co m pensati on due, and c ost s and a tto rney s’ fees . The I M W L a lso pro vi des f ora pu ni ti ve-dam age s a w ar d. Se e 8 20 I LL . C OM P . S T AT . 1 05 / 12 ( a) ( pr o vi di ngf or“ damag es o f2 % o fthe a m ou n t o f an y s u c h u n d er p ay m en ts for e ac h m on th follow ing the da te of p aym en t d ur in g w hich suc h u nd erp aym en ts rem ain un p aid” ). I n i ts i ni ti alnot i ce o fr em ova l, A BM cal cul ate d that the a m ount i n contr overs y c oul d be a s hi gh as $1 0 .7 m illion, ex c lu siv e o f at to rn ey s’ fe es . A B M es tim at ed th at h ou rly se c u rit y g u ar d s s p en t a p p ro x im at ely th ir t y m inu tes p er da y pe rform ing the du ties that are th e s u bj ec t o fp lain tiffs ’ alle ga tio n s; th is w ou ld res u lt in tw o-a n d -a-h alf h ou rs of u n p aid w or k p er w ee k for fu ll-N o. 11

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t i me e mp l o y e e s a n d th i r t y m i n u t e s f o r p a r t
- t i me e mplo yee s. A BM m ult i pli ed the num bero fem plo yee s by th eir av er ag e w a ge rat e a n d th e n u m b er of u n p aid h ou rs for t h e re lev an t t im e p er iod . Th is re su l t e d in $6. 2 m i l l i on i n com pensato rydam age s. A dd i ng the 2% p en alt y ra ise d th e a m o u n t i n co n tr ov er sy to $1 0.7m ill i on. A BM no t e d tha tthi s fi g ur e di d n o ti nc l ud e any a dj us t men tf o r o v e r t i me r a t e s f o r a nyo fthe h o urs, whi chc o ul d r ai se the a m o untb y a no th er$ 1. 5 m i l l i o n. A t a hear i ng the di strict cour t instr ucted A BM to excl ud e a subse t o f p utati ve cl ass m em ber s who had opted i nto a r el ate d cl ass act i on pending i n Calif or ni a. The cour t a l so re quested addit i onali nfo rm at i on r el ati ng t o th e num bero fweeks w or ked bym em ber s o f the putati ve cl ass . A BM then fi l ed an am ended noti ce ofr em ova l with r evi sed cal cul ations. I fthe unp ai d w age s w er e s trai ght t i m e, A BM cal cul ate d, they w oul d tot al $3, 014, 812; i ftheywere ove rt i m e, theywould to tal $4, 55 2, 21 8. Addi ngthe 2 % s ta tu to r y p en al ty, ABM c al culat ed the am ount i n contr ove rs y using st ra i ght wages as $5, 185, 476. 64, and usi ng o ver ti m e wages as $7, 778, 214. 96. T h e d ist ric t c ou rtag ain d i r ec te d A B M to p ro vid e a d d iti onaldata re gar ding the pr eci se num bero fdays w or ked by the putat i ve c l ass m em ber s a nd to excl ud e v acat i on o r s i c kda y s fr o m t he a mou nt
- i n- c o nt r o v e r s y c a l cul ati o n. Aft e r r e v i e w o fi t s p r o du c t i o n r e c o r ds , ABM fi l ed a n o th e r a me n d e d n o t i c e o fr e mo v a l an d i n c l u d e d a s u mm ar y of t h e p ro d u c tio n rec or d s a s a n ex h ibit

. A B M ca lcul ate d the num bero fh olid ay and nonhol i day days em p loyees w orked f or e ach calend ar year and de ter-4 N o. 11

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m i ned the a ver age hol i day and n onhol i day wage r ate for each year. A B M again estim ated that plaintiffs w ere al l eging the y we re r eq uir ed to per f or m thi rty m i nutes o fu np a i d wo r ke a c h da y . Us i ng thes e fi g ur e s , ABM cal cul ate d that t he pote nti al back- pay dam age s w er e $ 3, 801, 204. 07. A dd i ng a 2% st atuto rypen altyo f $1 , 44 2, 87 8. 07, ABM c al cul at ed th e to ta l a m ou nt i n c o ntr ove rs y a s $ 5, 244, 082. 14. The di st r i ct co ur t di sa g r ee d an d he l d th at the am ou nt i n c o nt r o ve r sywas a ppr o xi m at ely $ 5, 500 shor t o fthe $5 mil l i o n j ur isdi ct i o na l r equi r ement
. I t ac ce pte d the cal cul ati on o fr el evantbac k- pay dam age s, but too k i ssue w i th the cal cul ati on o fthe 2% st atuto rypenal ty. The dis tr i ct c ourttho ught AB M m i sta kenl y double d the m ult i pli er f or each yea r’ s dam age s and a lso fail ed to proper l y a pp l y the date w hen the sta tutor y penalty be g i ns t o a cc um ul at e. The c o ur t m ade a n inde pen d ent c alc u lat ion of th e s ta tu to ry p en alt y a n d h eld th at it w as $1, 193, 244, m akin g the t ota l am ount i n contr ove rs y $4,994,448.07. W ith regard to attorne ys’ fees, the cou rt sai d that a s o f t h e d ate o fr em ova l, co unsel f orthe pu tative class had “sim p ly fi led t he Com p lai nt, l egal w ork th atdi d n o tp u s h th e t o t a l p a s tth e $ 5 mi l l i o n - p l us floo r p re sc rib ed by C A FA .” AB M a r g ue s th atthe di st r i ctc o ur t er r ed when i t ca l culat ed th e st atut o r y pe na l tya nd whe n i t he l d tha t pl ainti ff s’ r equest f or r ea sonabl e a tto rney s’ fees would not pu sh the am ount i n contr ove rs y o ver$5 m i l l ion. I n i ts p etition A B M attem p ts to recreate the d istri ct cou rt’s ca l cul at i o ns a nd a l so s ho ws i ts o wn ca l cul at i o ns i n theN o. 11

- 8001 5 form of seve ral ch arts. A B M argu es th at th e d istri ct c o u rt er re d w h en it calc u lat ed th at n o p en alt y ac c ru e d u n til October20 07. Th e I M W L provi des f or“dam age s o f2% o f the a m ou nt o fany such und er paym ents f orea ch m onth fo ll ow ing the da te of p aym en t d uring w hich suc h u nd erpaym ents re m ai n und er pai d.” 82 0 I LL . C OM P . S T AT . 105/ 12( a)

. Pl ai nti ff s fi l ed thei r l aw sui t o n A ugust 1 3, 20 07. A BM sa ys that i n acco rdance w i th t h e I l l i noi s W age Paym ent a nd Col lec tion A ct, 82 0 I LL . C OM P . S T AT . 11 5/3, i t pays wages b i w eek l y with one w eeki n ar re ar s; wages th at w er e d u e b et w ee n A u gu st 13 an d 1 7 w e re p aid on Au gust 24, 20 07. They a rgue thatthe “m onth f o l l o win gth e d a t e o fp a y me n t, ” A ug us t 2 4 , i s S e p t e mber, so th e pe na lty w ou ld start to acc rue i n Sep tem ber, in st ea d of O c to b er as th e d i s t ric t c ou rtca lcu lat ed . Th is r es ul ts i n a pe na l tyo f$ 1, 32 3, 97 1. 92 , f or a tot ala m o unt i n c o nt r o v e r s y o f$ 5 , 1 2 5 , 2 3 5
. 9 7
. Al t e r na t i vel y ABM ar g ue s th ate ve n i fthe p en al tydo es no t be g i n a cc r ui ng unti l S eptem ber24 , o ne fullm onth a fterthe date o fpaym ent, i t would s ti l l r esul t in a penal ty of $ 1, 248, 485. 11 and an am ount i n contr ove rs y o f$5 , 049, 749. 18. I n o urr ec en t dec i si o n in Back D oc t ors Lt d. v. M e t r opol i t an Pro p e r ty & Ca s u a l ty In s u r a n ceCo. , 63 7 F
. 3d 827, 83 0 ( 7th Cir

. 20 11) , we re i ter ate d t h e l ega l st andard to be used w hen deter m i ni ng i fthe am ount i n contr ove rs y i s m et. W hen r em oving a sui t, the defe nd ant a s pro ponent o f fe d e r a l j u r i s d i c t i o n i s e n t i t l ed t o p r e s e n ti t s o wn es ti m at e o fthe st akes; i t i s no t bo und b y the pl aint i f f ’ s e s t i ma t e . . . . O n c e th i s h a s b e e n d o n e , a n d s u pport ed by proo fo fany conte ste d j uri sdic tio n al f acts,6 N o. 11

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th e p r e s u mpt i o n i s th e o n e s t a t e d i n S t . P a ul M ercury : the e stim ate o fthe dispute’ s s tak es advanced by the pr oponent offedera l j u ris d i cti on co ntro l s unl ess a re c ov er y t h at larg e is lega lly im p os sib le. Id. ( ci tingSt. P a ul M ercury Ind em . Co . v. Re d C a b C o ., 303 U. S

. 2 8 3 , 2 9 3 ( 1 9 3 8 ) )

. A n d e v e n m o r e r e c e n t l y w e e mphasi zed that“[ o] nce the pro ponent o ffedera l j uri sdic

ti on has expl ai ned plausibl y ho w the st akes e xceed $5 ,00 0,0 00 , th e c as e b elo n gs in fe d er al c ou rtu n les s it i s l ega l l y i m possibl e forthe pla in tiff t o re cove r that m u ch. ” B lom be rg v. Se rv. Co rp. Int’l, 63 9 F
. 3d 761, 76 4 (7th C ir. 2011) (int erna l citation om itted ). AB M ’ s cal cul at i o ns r eg ar di ngthe a cc r ua l o fthe s ta tu
to r y pe na l tya r e a r ea son ab l e i nt er pr et at i o n o fthe I MW L ’ s s t a t u t o r y l a n g u a g e . I n i t s r e ma n d o r d e r, the di st r i ctc o ur t g av e two the or i es f o r why i t th o ug ht A B M ’ s c alc u lat ion s w er e w ro n g, th ou gh it ac kn ow ledg ed th atc o uns el had di spu te d a ny mis ta k e ata r ec en t sta tus hea ring. The di str i ct c ourtthen ass er ted that i ts i nde pen den t ca l cul at i o ns a voi d ed the e r r o r s th e cour t a ttr ibuted to A BM
. But the court d i d not sh ow its ow n ca lcu lat ion s in th e o rd er or ex p lain h o w it cal cul ate d the s tatutor y penal ty. H ad A BM pro vi ded th e di st r i ctc o ur t wi ththe c ha rts an d c o m pr eh en si ve e xpla nati on i nclu ded i n i ts peti ti on, thi s a pp ealm ay h av e b ee n a v o id ed . E ve n so , on c e A B M laid ou t it s c alcul at i o n s s h o wi n gth a tth e a mo u n ti n c o n t r o v e r s y e xceeded $5 m i l l i on, the dist ri ct c ourtneed ed to fi nd that it was l ega l l y i m possibl e forpl ai nti ff s t o re cove r that m uc h

. See B a ckD o cto rs , 63 7 F
. 3d at 830. The di str i ctN o. 11

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co ur t’ s o r derdo es no t es tabl i shthat AB M ’ s ca l cul at i o ns r e g a rd in g t h e p lain tiffs ’ p ot en tia l rec ov er y w er e le ga lly i m possibl e. T h e d ist ric t c ou rtals o f a i led to sa tis fac to rily e x p lain w hy i t was l ega l l y i m possibl e forther e t o be a t l ea st $5, 552 i n attorneys’ fees i n contr ove rs y a t the ti m e o f rem oval. Th e d istri ct cou rt correctly held that only attorneys’ fe es in c urr ed up to the ti m e o fr em ova l co uld be in c lu d ed in t h e a m o u n t in co n tr ov er sy . Se eO s hana v. Co c a- Cola Co. , 4 72 F
. 3d 50 6, 5 12 ( 7th Ci r . 2 00 6)

. Butthe c ou rtsa id th at be c au se p lain tiffs ’ co u n se l ha d “s im p ly filed th e C om p lain t,” i t d id n otp u sh th e a m ou n t in con troversy p ast th e j urisd ictional requ irem en t. A ttorneys’ fees ar e a vai l abl e forwork perform ed pri orto fi l i nga c o m pl aint, a nd i t i s qui te pl au sibl e th atthe v al ue of p re lim in ar y leg al w or k in a c las s-a c tio n law su it exceeds $5, 552. Forthes e r eas ons, we G RANTthe peti ti on f orper m i ssio n to ap p ea l, R EV ERSE the di st r i ctc o ur t’ s dec i si o n, a nd R EMA ND the case f orfurtherpro ceedi ngs.

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