The U.S. District Court for the Northern District of California denied plaintiff’s motion to remand, holding that plaintiff’s claim for unpaid wages and overtime satisfied CAFA’s amount-in-controversy requirement.  Plaintiff’s class action complaint alleged that Finish Line violated the California Labor Code and Business and Professions Code by, among other things, failing to pay its hourly employees regular and overtime wages on a “regular and consistent basis.”  Thus, plaintiff sought to certify a class of all current and former Finish Line hourly employees in the State of California who were employed within the four-year statute of limitations period.  After Finish Line removed the case to federal court, plaintiff moved to remand  based solely on the argument that the complaint did not satisfy CAFA’s $5 million amount-in-controversy requirement.  However, Finish Line calculated that the complaint put roughly $5.3 million in controversy based on two assumptions that were at the center of the court’s decision: “(1) that each putative class member would be entitled to at least one hour of overtime per week; and (2) that each class member would be entitled to overtime each week during the statute of limitations period.”

The court agreed with Finish Line and held that plaintiff’s complaint put at least $5 million in controversy.  According to the court, Finish Line’s assumptions were reasonable in light of the complaint’s allegations because the class included all Finish Line employees during the class period, and the complaint alleged that Finish Line harmed each class member by violating employment laws on a regular and consistent basis.  Although plaintiff presented a single pay stub that showed he was not entitled to overtime during one pay period and, therefore, argued that Finish Line’s assumptions were unreasonable, the court found this argument unpersuasive for several reasons.  First, the court found that the pay stub was not evidence of the frequency of Finish Line’s labor law violations because Finish Line could not be expected to issue pay stubs showing when an employee was entitled to overtime pay but not compensated for it.  Next, the court found that plaintiff contradicted his own allegations that Finish Line deprived him of overtime pay on a regular and consistent basis by arguing that there were periods where class members were not entitled to overtime.  Third, the court held that the pay stub did not contradict Finish Line’s assumptions because there was no indication that his single pay stub was representative of the entire class.  Fourth, the court found that, “[plaintiff’s] pay stub does not disprove Finish Line’s assumptions regarding how often Finish Line failed to pay overtime because [plaintiff] himself alleges that Finish Line’s pay statements were inaccurate.”

Finally, the court rejected plaintiff’s argument that Finish Line should not be able to rely on assumptions when it could determine liability by reviewing its records.  According to the court, a removing defendant is not required to prove the plaintiff’s damages and is justified in making reasonable assumptions of its liability based on the allegations in the complaint.

Arreola v. The Finish Line, No. 14-cv-0339 (N.D. Cal. Dec. 9, 2014).