Appeal from the United States District Court for the Central District of California Audrey B. Collins, Chief District Judge, Presiding D.C. No. 2:10-cv-02242-ABCAJW
The opinion of the court was delivered by: Judge William A. Fletcher
Argued and Submitted January 10, 2011
Before: O'SCANNLAIN, W. FLETCHER, and CLIFTON, Circuit Judges.
Opinion by Judge William A. Fletcher W. FLETCHER, Circuit Judge:
Under the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4 (2005), defendants may remove a diversity class action from state to federal court when, among other conditions, the parties are minimally diverse and the amount in controversy exceeds $5,000,000. 28 U.S.C. §§ 1332(d)(2), 1453(b). However, plaintiffs may obtain a remand to state court if the suit involves a local controversy. Id. § 1332(d)(4)(A)(i). The question before us is whether a federal district court is limited to the complaint in deciding whether two of the criteria for the local controversy exception are satisfied. We hold that the district court is so limited.
Estes Express is a Virginia corporation. It acquired G.I. Trucking, a California corporation, in 2005. After the acquisition, G.I. Trucking was renamed Estes West (d/b/a G.I. Trucking) but remained a California corporation. Bradford Coleman, who was employed as a pickup and delivery driver by G.I. Trucking and then by Estes West from 2004 to 2009, brought a putative class action against Estes West and Estes Express (collectively, "Estes") in Los Angeles County Superior Court based on multiple alleged violations of California law.
Coleman alleged in his complaint that Estes West and Estes Express (1) failed to pay overtime, (2) failed to provide meal and rest periods, (3) failed to timely pay earned wages after discharging employees, (4) failed to pay earned wages to current employees, (5) failed to provide wage statements, and (6) engaged in unlawful business practices, all in violation of California law. On behalf of the proposed class, Coleman requested that Estes West and Estes Express pay unpaid overtime and other wages, pay one hour of wages for each day that a meal break was not provided and an additional hour for each day that rest breaks were not provided, and pay miscellaneous civil penalties. Coleman also requested injunctive relief against Estes West and Estes Express.
Coleman alleged that both Estes West and Estes Express violated California law. He alleged that each and all of the acts and omissions alleged herein was [sic] performed by, or is attributable to [Estes Express Lines, Inc. and/or Estes West and Doe Defendants], each acting as the agent for the other, with legal authority to act on the other's behalf. . . . At all relevant times herein mentioned, Defendants, and each of them, ratified each and every act or omission complained of herein. At all times herein mentioned, Defendants, and each of them, aided and abetted the acts and omissions of each and all the other Defendants in proximately causing the damages herein alleged.
The remainder of the complaint referred to actions taken by "Defendants," rather than actions taken separately by Estes Express or Estes West.
Estes removed to federal court under CAFA. 28 U.S.C. §§ 1332(d), 1453(b). Coleman moved to remand to state court, arguing that the case was a local controversy under CAFA.
A plaintiff whose putative class action has been removed can obtain a remand to state court under any of three exceptions to the district court's subject matter jurisdiction under CAFA. Id. § 1332(d)(3), (d)(4)(A), (d)(4)(B). The local controversy exception, upon which Coleman relies, provides that a federal district court "shall decline to exercise [removal] jurisdiction . . . over a class action in which -- "
(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed; (II) at least 1 defendant is a defendant --
(aa) from whom significant relief is sought by members of the plaintiff class; (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally filed; and (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed[.]
28 U.S.C. § 1332(d)(4)(A)(i). A plaintiff seeking remand has the burden of showing that the local controversy exception applies. Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).
Estes opposed remand, arguing that two of the criteria for the local controversy exception were not satisfied. First, Estes argued that Estes West had insufficient funds to satisfy a judgment, and that "significant relief" therefore had not been "sought" from it. See 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa). Second, Estes argued that Estes Express had almost complete control over the operations of Estes West, and that Estes West's "alleged conduct" therefore did not "form a significant basis for the claims asserted by the proposed plaintiff class." Id. § 1332(d)(4)(A)(i)(II)(bb). If either of Estes's arguments is correct, Coleman is not entitled to a remand under the local controversy exception.
In support of its arguments, Estes filed a declaration by Brenda Gerczak, Director of Human Resources for Estes Express. With respect to funds from which Estes West ...