No Need for Federal Eye on California Labor Case

(CN) - A California worker's wage lawsuit against Orkin belongs in state court because of a unique law in the Golden State, the 9th Circuit ruled Tuesday.

Orkin employee John Urbino sued the pest-control giant in state court for failing to pay him for meal breaks, overtime and vacations from 2005 to 2010. Urbino filed his civil action under the Private Attorneys General Act of 2004 (PAGA), a California law that allows employees to sue on their own behalf if the state's Workforce Development Agency fails to investigate alleged violations of labor laws.

Orkin removed the lawsuit to federal court, arguing that Urbino's allegations would likely involve 811 other employees and some $9 million in combined penalties, while Urbino's claims alone amounted to just $11,602. Urbino moved to return the case to state court, contending that the claims could not be combined to meet the minimum $75,000 threshold for federal diversity jurisdiction.

A federal judge in Santa Ana ultimately found that claims under the PAGA are "common and undivided and therefore capable of aggregation."

The 9th Circuit reversed, 2-1, Tuesday, sending the "quintessential California dispute" back to state court.

"The traditional rule is that multiple plaintiffs who assert separate and distinct claims are precluded from aggregating them to satisfy the amount in controversy requirement," Judge Michael Daly Hawkins wrote for the majority.

Orkin failed to show that California has a "collective interest" in claims made under the PAGA, according to the ruling

"To the extent plaintiff can - and does - assert anything but his individual interest ... we are unpersuaded that such a suit, the primary benefit of which will inure to the state, satisfies the requirements of federal diversity jurisdiction," Hawkins wrote. "The state, as the real party in interest, is not a 'citizen' for diversity purposes."

Judge Sidney Thomas disagreed in a short dissent, arguing that the PAGA "deputizes aggrieved employees to vindicate the state's interest in labor code enforcement."

"Because Urbino pursues a common and undivided claim in his role as proxy for the state, the district court correctly calculated the amount in controversy based on the aggregate civil penalties sought in this action, and properly determined that the total exceeded $75,000," he wrote. "Therefore, in my view, the district court properly exercised diversity jurisdiction."

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