Precedent Reinstates Federal Class Actions

     (CN) – Two new rulings from the 9th Circuit on separate labor class actions side with employers that say the litigation implicates at least $5 million in damages.
     Jose Ibarra filed the first of the complaints at issue in California state court on Dec. 22, 2011, claiming that Nevada-based Manheim Investments failed to pay minimum wage and overtime, among other issues.
     Claiming that the claims, involving a possible class of all current and former non-exempt hourly Manheim employees since Dec. 22, 2007, Manheim removed the case to federal court under the Class Action Fairness Act.
     U.S. District Judge Cathy Bencivengo remanded the case in 2013, however, based on Manheim’s failure to show that the amount in controversy exceeded $5 million.
     In the time since Manheim failed twice more to keep the case in Bencivengo’s court.
     The Supreme Court put this analysis into question last month with its ruling in Dart Basin Operating Co. v. Owens, which says a defendant seeking to remove a class action to federal court needs only to “plausibly” assert the amount of the controversy exceeds $5 million.
     Citing this case, the 9th Circuit vacated the latest remand order Thursday.
     “A ‘pattern and practice’ of doing something does not necessarily mean always doing something,” Judge Ronald Gould wrote for the three-judge panel (emphasis in original).
     The judge later added: “Because the complaint does not allege that Manheim universally, on each and every shift, violates labor laws by not giving rest and meal breaks, Manheim bears the burden to show that its estimated amount in controversy relied on reasonable assumptions.”
     Remand lets both sides submit evidence related to damages, the ruling states.
     “Here, Manheim relied on an assumption about the rate of its alleged labor law violations that was not grounded in real evidence,” Gould wrote. “Ibarra contested the assumption, but did not assert an alternative violation rate grounded in real evidence, such as an affidavit by Ibarra asserting how often he was denied meal and rest breaks. We remand on an open record for both sides to submit proof related to the disputed amount in controversy, and the district court must then determine if a preponderance of the evidence shows that the amount in controversy exceeds $5 million.”
     Citing its new holding in Manheim, the same panel vacated the remand of a different class action, in this case truck drivers suing Transportation Inc. and Knight Truck and Trailer Sales LLC.
     Knight estimates the amount in controversy, which would require reimbursing the drivers for lease-related and fuel costs, at more than $44 million.
     U.S. District Judge Jesus Bernal had remanded the case to California state court after finding that Knight’s calculations relied on a flawed assumption that all drivers worked 50 weeks a year.
     The 9th Circuit’s Thursday ruling sides with Knight.
     Because Knight “relied on a reasonable chain of logic and presented sufficient evidence to establish that the amount in controversy exceeds $5 million, defendants have met their burden of proof,” Gould wrote.

%d bloggers like this: