Chi-Fu Hsueh v. Bankers Life & Cas. Co.

421 F.Supp.3d 937

CHI-FU HSUEH, an individual, Plaintiff,

v.BANKERS LIFE AND CASUALTY COMPANY, an Illinois corporation, Maryam Habashi, an individual, and Does 1 through 20, inclusive, Defendants.

Case No.: 19-cv-985 DMS AHG

United States District Court, S.D. California.

Signed November 13, 2019

Gordon Wayne Renneisen, Harry Girard Lewis, Cornerstone Law Group, San Francisco, CA, for Plaintiff.

William Hays Weissman, Littler Mendelson, P.C., Walnut Creek, CA, for Defendants.

ORDER GRANTING PLAINTIFF'S MOTIONS TO REMAND AND FILE PREVIOUSLY FILED DOCUMENT UNDER SEAL AND DENYING PLAINTIFF'S AND DEFENDANTS' MOTIONS FOR SANCTIONS

Hon. Dana M. Sabraw, United States District Judge

Pending before the Court is Plaintiff Chi-Fu Hsueh's motion to remand this case to the Superior Court of California, County of San Diego and Plaintiff's motions to seal. Defendants Bankers Life and Casualty Company and Maryam Habashi filed an opposition, and Plaintiff filed a reply. The parties also moved for sanctions. For the reasons discussed below, the Court grants Plaintiff's motions to remand and file a previously filed document under seal. The motions for sanctions are denied.

I.BACKGROUND

This action arises from Plaintiff's individual claims for wrongful termination and representative claims for civil penalties under the Private Attorneys General Act, Labor Code § 2699 ("PAGA"), as well as numerous class claims for violations of wage and hour laws under the California Labor Code and unfair competition laws under California Business and Professions Code §§ 17200, et seq. (Not. of Rem., Exh. 2). The parties have litigated this case for more than five years in both state and federal court. The case has been removed from state court twice before, and is now before the Court on Plaintiff's third motion to remand.

Plaintiff filed the original complaint in this action in state court on July 23, 2014. (Id. ). Defendants removed the case, alleging diversity jurisdiction. (Not. of Rem., ¶ 5). Thereafter, Plaintiff moved to remand the case to state court. On December 17, 2014, the district court, Judge Michael Anello presiding, granted Plaintiff's motion. (Id. at ¶ 6).

On October 19, 2015, Defendants again removed the action to federal court—this time alleging the court had original jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). (Id. at ¶ 12). In response, Plaintiff moved to remand the case to state court. On June 15, 2016, Judge Anello granted Plaintiff's motion, finding Defendants failed to meet the amount in controversy requirement for CAFA. (Id. at ¶ 13). Defendants appealed the remand order to the Ninth Circuit, and their appeal was denied. (Id. ).

Following remand, Plaintiff filed a second amended complaint in state court and moved to certify the class. On November 18, 2019, the state court certified Plaintiff's class. (Id. at ¶ 26). Defendants filed a petition for writ of mandate with the California appellate court challenging the certification order.

While the writ was pending, the parties agreed to pursue settlement through mediation. They executed a stipulation and proposed order setting out the parameters of the mediation and prohibiting use of information exchanged during the mediation "for any purpose" unrelated to the mediation. On January 23, 2019, Judge Ronald Frazier of the superior court signed the stipulation and order. (Lewis Decl., Exh. K, hereinafter "Mediation Order"). The case did not settle.

After Defendants' petition for writ of mandate was denied by the state appellate court, Defendants once again removed the case to this Court. Defendants based their removal on information contained in Plaintiff's confidential mediation brief that clearly indicated CAFA's amount in controversy requirement was met and the case had become removable. (Not. of Rem., Dkt No. 1). In total, Defendants alleged an amount in controversy of $10,393,154.04, after adjusting the numbers provided by Plaintiff's mediation brief. (Id. at ¶ 47(n)). The subject motion followed.

II.MOTION TO REMAND

A. LEGAL STANDARD

Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over matters authorized by the Constitution and Congress. See Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). A defendant may remove a civil action from state court to federal court only if the district court could have original jurisdiction over the matter. 28 U.S.C. § 1441(a). A removed action must be remanded to state court if the federal court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c) ; Kelton Arms Condo. Owners Ass'n, Inc. v. Homestead Ins. Co. , 346 F.3d 1190, 1192 (9th Cir. 2003) ("Subject matter jurisdiction may not be waived, and, ... the district court must remand if it lacks jurisdiction.").

Pursuant to CAFA, this Court has original jurisdiction over class actions in which there are at least 100 class members, at least one of which is diverse in citizenship from any defendant, "and for which the aggregate amount in controversy exceeds the sum of $5 million, exclusive of costs and interest." Ibarra v. Manheim Invs., Inc. , 775 F. 3d 1193, 1196 (9th Cir. 2015) ; 28 U.S.C. § 1332(d). A "class action" is defined as "any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action." 28 U.S.C. § 1332(d)(1)(B). To "determine whether the matter in controversy" exceeds the sum of $5 million, "the claims of the individual class members shall be aggregated." Id. § 1332(d)(6). And those "class members" include "persons (named or unnamed) who fall within the definition of the proposed or certified class." Id. § 1332(d)(1)(D).

The Ninth Circuit has directed courts to "strictly construe the removal statute against removal jurisdiction[,]" so that "any doubt as to the right of removal" is resolved in favor of remanding the case to state court. Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992). However, this presumption does not apply to cases removed under CAFA. See Dart Cherokee Basin Operating Co., LLC. v. Owens , 574 U.S. 81, 88, 135 S. Ct. 547, 190 L.Ed.2d 495 (2014) ("It suffices to point out that no antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.") (internal quotation marks and citations omitted). Thus, when dealing with cases arising under CAFA, its provisions must be "read broadly, with a strong preference that interstate class actions should be heard in a federal court if properly removed by any defendant." See id. (internal quotation marks and citations omitted). Nevertheless, "under CAFA the burden of establishing removal jurisdiction remains, as before, on the proponent of federal jurisdiction." Abrego Abrego v. The Dow Chem. Co. , 443 F.3d 676, 695 (9th Cir. 2006) (per curiam).

B. DISCUSSION

There is no dispute this action is subject to CAFA and meets the requirements of a class action with more than 100 members, minimum diversity, and an amount in controversy in excess of $5 million. However, Plaintiff argues the Court lacks subject matter jurisdiction and the case must be remanded because Defendants' notice of removal is untimely. Plaintiff contends Defendants had thirty days after receiving the state court class certification order to remove because information in that order put Defendants on notice that the amount in controversy exceeded $5 million and had become removable, thereby triggering CAFA's thirty-day removal clock. Plaintiff also argues Defendants' removal based on information contained in Plaintiff's confidential mediation brief was improper. Each issue is addressed in turn.

1. Timeliness of Removal

CAFA provides two timelines for removal: (1) "during the first thirty days after the defendant receives the initial pleading"; or (2) "during the first thirty days after the defendant receives an amended pleading, motion, order or other paper from which it may be first ascertained that the case is one which is or has become removable." Reyes v. Dollar Tree Stores, Inc. , 781 F. 3d 1185, 1189 (9th Cir. 2015) (quoting 28 U.S.C. § 1446(b)(1) and (b)(3) ) (internal quotation marks omitted). The first time period under § 1446(b)(1) is "triggered if the case stated by the initial pleading is removable on its face," and the second time period under § 1446(b)(3) is "triggered if the initial pleading does not indicate that the case is removable, and the defendant receives a copy of an amended pleading, motion, order or other paper from which removability may first be ascertained." Carvalho v. Equifax Info. Servs., LLC. , 629 F. 3d 876, 885 (9th Cir. 2010) (internal quotation marks and citations omitted). Plaintiff argues Defendants' removal is untimely under the second thirty-day time period set out in § 1446(b)(3).

Specifically, Plaintiff contends Defendants' removal was untimely because it occurred on May 24, 2019—over six months after the state court class certification order was issued on November 19, 2018. Plaintiff argues the class certification order provided Defendants with constructive notice that CAFA's amount in controversy requirement was met and the case had become removable. Plaintiff points out that the earlier motion to remand before Judge Anello was granted based on an amount in controversy of $3.4 million and a class period of July 23, 2010 through 2015, and the class certification order both significantly extended the class period from July 23, 2010 through November 19, 2018, and enlarged the class from 530 to 822 members, representing a 55 percent increase in class size. (P's Mem. Re: Mot. to Rem. at 9).

In response, Defendants argue they did not receive adequate notice of a jurisdictional basis for removal under CAFA because the class certification order was "indeterminate" or...