Court Opinion

ID: 3049688
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:28:13.22557+00
Date Added: 2024-06-11T12:46:39.727112
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

PATRICK BABASA; ROBERT                  
BREDENSTEINER, individually, as
private attorneys general, and on
behalf of all employees similarly             No. 07-55880
situated,
                Plaintiffs-Appellees,          D.C. No.
                                            CV-06-01144-DOC
                 v.                            OPINION
LENSCRAFTERS, INC., an Ohio
Corporation,
               Defendant-Appellant.
                                        
        Appeal from the United States District Court
           for the Central District of California
         David O. Carter, District Judge, Presiding

                   Argued and Submitted
            August 9, 2007—Pasadena, California

                    Filed August 16, 2007

      Before: Marsha S. Berzon and Sandra S. Ikuta,
  Circuit Judges, and James K. Singleton,* District Judge.

                   Opinion by Judge Berzon

  *The Honorable James K. Singleton, Senior United States District
Judge for the District of Alaska, sitting by designation.

                             10291
                   BABASA v. LENSCRAFTERS                 10293

                         COUNSEL

Elizabeth Staggs Wilson and Lauren T. Howard, Littler Men-
delson, Los Angeles, California, for the appellant.

Jeffrey Spencer and Dirk Bruinsma, San Clemente, Califor-
nia, for the appellees.

                          OPINION

BERZON, Circuit Judge:

  Appellant LensCrafters appeals the district court’s order
remanding the case to state court for failure to timely file for
removal. We affirm.
10294               BABASA v. LENSCRAFTERS
   On April 4, 2005, appellees filed a putative class action in
state court, alleging various labor code violations. They filed
an amended complaint in September. Shortly thereafter, the
parties agreed to enter mediation.

   On December 5, 2005, prior to the mediation, counsel for
appellees sent a letter to counsel for LensCrafters, the
“Bruinsma letter,” which “confirm[ed] some issues discussed
in [a] recent telephone conversation regarding the size of the
class and the number of incidents of violation.” The letter
noted that it was sent “[i]n preparation for the mediation,” and
that it concerned “what it would take to make mediation
meaningful.” In it, appellees’ counsel estimated that their alle-
gation of 300,000 missed meal periods, compensable at an
average $15 hourly rate of pay, would amount to $4.5 million.
Additionally, he noted that civil penalties under Sections 2699
and 210 of the California Labor Code would exceed an addi-
tional $5 million.

   After attempts to settle the case through mediation proved
fruitless, the parties conducted discovery in state court. In a
telephone call during the course of discovery, on November
1, 2006, appellees’ counsel reiterated to LensCrafters that the
damages at issue exceeded $5 million. Later that month, on
November 27, 2006, LensCrafters filed a notice of removal to
federal court, alleging that the November 1 conversation first
put it on notice that the amount in controversy exceeded the
jurisdictional amount.

    The Class Action Fairness Act of 2005, Pub. L. No. 109-2,
119 Stat. 4 (2005) (codified in scattered sections of 28
U.S.C.), eliminated the one-year statute of limitations for
removal in 28 U.S.C. § 1446(b), see 28 U.S.C. § 1453(b). It
did not, however, alter the requirement that defendants must
file a “notice of removal . . . within thirty days after receipt
. . . of a copy of an amended pleading, motion, order or other
paper from which it may first be ascertained that the case is
one which is or has become removable.” § 1446(b). If a notice
                    BABASA v. LENSCRAFTERS                 10295
of removal is filed after this thirty-day window, it is untimely
and remand to state court is therefore appropriate. Id.; see
Eyak Native Village v. Exxon Corp., 25 F.3d 773, 783 (9th
Cir. 1994) (holding untimely a company’s notice of removal
when it came more than a year after the company became
aware of the nature of plaintiffs’ claims).

   [1] Here, the district court held that LensCrafters received
§ 1446(b) notice in the form of the Bruinsma letter, making
its subsequent removal effort untimely. LensCrafters argues
that the Bruinsma letter could not serve as proper notice of the
amount in controversy for removal purposes, because the let-
ter is privileged under state law. In California, certain docu-
ments and communications pertaining to mediation are
generally inadmissible in civil litigation. See CAL. EVID. CODE
§ 1119 (2006). LensCrafters asserts that the Bruinsma letter
falls within the scope of this privilege and, as a result, state-
ments in the letter relating to the amount in controversy could
not be used to support removal to federal court.

   [2] It is far from clear that the Bruinsma letter falls within
the scope of the California mediation privilege. But we need
not decide whether it does or not, because California privilege
law does not directly apply in the present context.

   [3] Under Federal Rule of Evidence 501, privileges pro-
vided by state law apply in civil actions only “with respect to
an element of a claim or defense as to which State law sup-
plies the rule of decision.” FED. R. EVID. 501; see Breed v.
U.S. Dist. Court for the N. Dist. of Cal., 542 F.2d 1114, 1115
(9th Cir. 1976) (holding that, when a question of federal law
is at issue, “[s]tate law [as to privileges] may provide a useful
referent, but it is not controlling”). State law does not supply
the rule of decision here. Federal law governs the determina-
tion whether a case exceeds the amount in controversy neces-
sary for a diversity action to proceed in federal court. See 28
U.S.C. § 1332; see also Horton v. Liberty Mutual Ins. Co.,
367 U.S. 348, 352 (1961) (“[D]etermination of the value of
10296                   BABASA v. LENSCRAFTERS
the matter in controversy for purposes of federal jurisdiction
is a federal question to be decided under federal standards
. . . .”). Thus, even if the California mediation privilege
applied to the Bruinsma letter, which we do not decide, it
would not preclude a determination that the Bruinsma letter
constituted § 1446(b) notice for purposes of removal to fed-
eral court.1

   [4] We have no doubt that LensCrafters could have ascer-
tained, upon receiving the Bruinsma letter, that the case was
removable. We previously have held that “[a] settlement letter
is relevant evidence of the amount in controversy if it appears
to reflect a reasonable estimate of the plaintiff’s claim.” Cohn
v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (citing
Wilson v. Belin, 20 F.3d 644, 651 n.8 (5th Cir. 1994)
(“Because the record contains a letter, which plaintiff’s coun-
sel sent to defendants stating that the amount in controversy
exceeded $50,000, it is ‘apparent’ that removal was prop-
er.”)). Like the letter in Cohn, the Bruinsma letter put Lens-
Crafters on notice as to the amount in controversy. Its esti-
mate of $4.5 million in unpaid wages, based on missed meal
periods, plus an additional $5 million in civil penalties,
exceeded the amount in controversy required for federal juris-
   1
     LensCrafters waived any argument that the letter falls within the scope
of a federal evidentiary privilege by failing to raise this argument before
the district court or in its briefs in this court. See United States v. Ander-
son, 472 F.3d 662, 668 (9th Cir. 2006). Likewise, LensCrafters did not
assert that we should incorporate the California mediation privilege into
the federal common law of privileges. We thus need not consider whether
a federal mediation privilege exists to bar use of the letter for purposes of
demonstrating the removability of the case. Nor need we decide whether
it may be appropriate in some cases concerning the amount in controversy
for federal jurisdiction purposes, pursuant to Rule 501, to defer to state
law evidentiary privileges out of comity and respect for state policies. See
Conference Report on Rule 501 of the Federal Rules of Evidence, H.R.
Rep. No. 93-1597, at 7-8 (1974) (Conf. Rep.), quoting D’Oench, Duhme
& Co. v. FDIC, 315 U.S. 447, 471 (1942) (Jackson, J., concurring) (“In
some cases [federal courts] may see fit for special reasons to give the law
of a particular state highly persuasive or even controlling effect . . . .”).
                        BABASA v. LENSCRAFTERS                       10297
diction. See 28 U.S.C. § 1332(d)(2) (setting the jurisdictional
bar above “$5,000,000, exclusive of interest and costs”).

   [5] Appellant does not appeal the district court’s determina-
tion that this estimate was reasonable. Were we to consider
the question, however, we would agree with the district court
that the letter’s estimate of $9.5 million in damages, even if
imprecise, was sufficiently supported by details of the injuries
claimed and clearly indicated that the amount in controversy
exceeded the jurisdictional amount.2

  [6] Because LensCrafters filed its notice of removal on
November 27, 2006, well over thirty days after it first could
have ascertained that the case was removable, the district
court properly remanded the case to state court.

   AFFIRMED.

  2
    Indeed, quite aside from the Bruinsma letter, a fair reading of the com-
plaint alone is probably enough to establish that more than $5 million is
at stake. Plaintiffs alleged seven causes of action, including failure to pay
overtime compensation. LensCrafters’ lowest estimate of the number of
class members was 4,500. If each employee worked just one hour of over-
time per week without receiving overtime compensation at $10 per hour,
another low estimate, damages would run to almost $10 million over the
four years covered by the complaint for that single claim, without consid-
ering civil penalties.