Metcalf v. Yusen Logistics (Americas) Inc.

Michael Joseph Metcalf v. Yusen Logistics (Americas), Inc., et al.

No. CV 21-5912-GW-PVCx

United States District Court, C.D. California

August 31, 2021

Attorneys Present for Plaintiffs: Shoham J. Solouki.

Attorneys Present for Defendants: Daniel Chammas.

Present: The Honorable GEORGE H. WU, UNITED STATES DISTRICT JUDGE

CIVIL MINUTES - GENERAL

PROCEEDINGS TELEPHONIC HEARING ON: DEFENDANT YUSEN LOGISTICS (AMERICAS) INC.'S MOTION TO DISMISS COMPLAINT, OR IN THE ALTERNATIVE, STRIKE CLASS ALLEGATIONS [10]; YUSEN LOGISTICS CO. LTD.'S MOTION TO DISMISS ACTION AGAINST YUSEN LOGISTICS CO., LTD. PURSUANT TO RULE 11((4), AND (5), OR IN THE ALTERNATIVE, TO QUASH SERVICE OF SUMMONS AND COMPLAINT [11]; and PLAINTIFF'S MOTION TO REMAND ACTION TO SUPERIOR COURT [12]

Court and counsel confer. The Tentative circulated and attached hereto, is adopted as the Court's Final Ruling. The Court denies Plaintiff's motion to remand. The Court grants Yusen Japan's motion to dismiss on personal jurisdiction grounds and does not address the other issues raised therein. The Court grants YLA's motion to dismiss each of the claims asserted in the Complaint, with leave to amend, but denies that motion to the extent it seeks to either dismiss or strike Plaintiff's class-related allegations. Plaintiff will have until September 13, 2021 to file a First Amended Complaint.

The scheduling conference set for September 9, 2021, is continued to September 30, 2021 at 8:30 a.m. The parties are to file an updated joint Rule 26(f) report by noon on September 27, 2021.

Metcalf v. Yusen Logistics (Americas) Inc., et al., Case No. 2:21-cv-05912-GW-(PVCx) Tentative Rulings on: (1) Motion to Remand Action to Superior Court, (2) Motion to Dismiss Action against Yusen Logistics Co., Ltd. Pursuant to Rule 12(b)(2), (4), and (5), or in the Alternative, to Quash Service of Summons and Complaint, and (3) Motion to Dismiss Complaint, or in the Alternative, Strike Class Allegations

I. Background

Michael Joseph Metcalf (“Plaintiff”) sues Yusen Logistics (Americas) Inc. (“YLA”) and Yusen Logistics Co., Ltd dba Yusen Logistics Group (“Yusen Japan” and, together with YLA, “Defendants”)), asserting ten claims for relief: 1) failure to provide required meal periods; 2) failure to provide required rest periods; 3) failure to pay overtime wages; 4) failure to pay minimum wage; 5) failure to timely pay wages; 6) failure to pay all wages due to discharged and quitting employees; 7) failure to maintain required records; 8) failure to furnish accurate itemized statements; 9) failure to indemnify employees for necessary expenditures incurred in discharge of duties; and 10) unfair and unlawful business practices. Defendants allegedly employed Plaintiff as a non-exempt employee, and Plaintiff seeks to represent a class of other current and former non-exempt employees of Defendants who were employed by Defendants and worked at any locations in the State of California at any time during the four years preceding the filing of the lawsuit continuing through to the end of the suit. See Complaint ¶¶ 3-5.

According to Plaintiff, Defendants had a “systematic course of illegal payroll practices and policies” leading to not paying Plaintiff and putative class members all wages earned and due, including by failing to pay overtime premiums, failing to provide rest and meal periods, failing to properly maintain records, failing to provide accurate itemized statements for each pay period, failing to properly compensate for necessary expenditures (including expenses for uniforms, travel expenses, and cell phone usage), and requiring, permitting or suffering work off-the-clock. See Id. ¶¶ 12, 15(B), 17-19, 22-23, 27, 32, 36, 47, 50-51, 55. Defendants also failed to timely pay all accrued wages due to employees who were discharged or who quit. See Id. ¶ 43.

Yusen Japan removed the action to this Court on July 21, 2021. Plaintiff now moves to remand (“Motion One”). Yusen Japan, for its part, moves to dismiss (or to quash service) due to deficient process, insufficient service of process, and/or lack of personal jurisdiction (“Motion Two”). Finally, YLA moves to dismiss the Complaint or to strike the Complaint's class allegations (“Motion Three”).

II. Analysis

A. Motion One - Remand

Plaintiff's motion to remand is based on the assertion that: 1) Yusen Japan's removal of the case to this Court was untimely, 2) that CAFA's “Local Controversy” exception applies^[1] and 3) that Yusen Japan insufficiently-demonstrated the requisite amount-in-controversy for CAFA jurisdiction. In his Reply brief, however, while Plaintiff does not waive the other two assertions, he limits his argument to the timeliness issue. See Docket No. 18, at 3:22-4:25.

With respect to the timeliness issue, Plaintiff argues that he served Yusen Japan on June 8, 2021.^[2] He therefore contends that the July 21, 2021 removal of the case to this Court was outside the 30-day window in which to do so under 28 U.S.C. § 1446(b). Remand is therefore mandatory, if Plaintiff is correct about the foregoing.

Under 28 U.S.C. § 1446(b)(1), a notice of removal “shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.” Plaintiff argues that “the Summons and Complaint . . . clearly stated on their face that the instant action was proper for removal” and that “every basis for removal stated in [the] Notice of Removal was based solely on the contents of the Complaint itself.” Docket No. 12, at 8:24-9:4. The trouble with Plaintiff's argument here is that just because the second proposition is (or may be) true does not mean the first is true.

“[T]he first thirty-day period for removal in 28 U.S.C. § 1446(b) only applies if the case stated by the initial pleading is removable on its face.” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005). Thus, notice of removability is determined by the “four corners of the applicable pleadings, not through subjective knowledge or a duty to make further inquiry.” Id.; see also Phillips & Stevenson, RUTTER GROUP PRAC. GUIDE, FEDERAL CIV. PRO. BEFORE TRIAL (The Rutter Group 2020) (“Phillips & Stevenson”), ¶ 2:3231, at 2D-152. In fact, a leading practice guide indicates that the grounds for removal must be “unequivocally clear and certain” to start the 30-day period running. See Phillips & Stevenson ¶ 2:3232, at 2D-153. Uncertainty can concern either citizenship issues or amount-in-controversy issues. See Id. ¶¶ 2:3238-3245, at 2D-154; id. ¶ 2:3247.2, at 2D-156. What this means, among other things, is that a defendant has no duty to consult its own financial records - as opposed to the complaint's allegations - to identify a representative valuation of claims. See Kuxhausen v. BMW Fin'l Servs. NA LLC, 707 F.3d 1136, 1141 (9th Cir. 2013); see also Kenny v. Wal-Mart Stores, Inc., 881 F.3d 786, 790-91 (9th Cir. 2018). What this also can mean is that even if a removing-defendant successfully satisfies its preponderance-of-the-evidence burden of demonstrating removability, this does not necessarily mean that removability appeared on the face of a plaintiff's state-court complaint. See Phillips & Stevenson ¶ 2:3234, at 2D-153 (“If defendant knows such grounds [for removal] exist (e.g., existence of diversity of citizenship) [despite those grounds not being reflected on the face of the complaint], defendant may file a notice of removal at the outset setting forth a ground for removal.”); see also Kuxhausen, 707 F.3d at 1141 (“This principle helps avoid a ‘Catch-22' for defendants desirous of a federal forum. By leaving the window for removal open, it forces plaintiffs to assume the costs associated with their own indeterminate pleadings.”).

Here, Plaintiff's Complaint did not sufficiently allege the citizenship of any of the parties. It simply asserted that Plaintiff is a “resident” of California, see Complaint ¶¶ 1, 3, but residence is not the same as citizenship. See Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001); Kantor v. Wellesley Galleries, Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983). It also alleged that YLA was a “New Work” - presumably intending to signify New York - corporation and that Yusen Japan was a “California Company, ” without explaining what - state of incorporation or something else - makes it such (in Plaintiff's view, at least). See Complaint ¶¶ 1, 7-8. At best, this alleges only partial citizenship as to YLA, but does not clearly reflect either of the forms of dual citizenship of a corporation for Yusen Japan. These citizenship allegations, in sum, do not reflect even the minimal diversity necessary for CAFA jurisdiction. As a result, the Court need not even analyze whether or not the Complaint, on its face, reflected the minimum amount-in-controversy (although, presumably, even Plaintiff believes it did not in light of his argument - discussed further infra - that Yusen Japan had to resort to “flawed assumptions and speculative allegations” and “cursory and incomplete calculations” in order to demonstrate an amount sufficient for removal).

As a result, Plaintiff's argument that removal was untimely here is simply incorrect. The Court cannot grant his motion to remand on that basis.

With respect to the “Local Controversy” exception to CAFA, Plaintiff - who bears the burden on this issue, see Singh v. Am. Honda Fin. Corp., 925 F.3d 1053, 1067 (9th Cir. 2019) - would have to prove that:

(1) more than two-thirds of the proposed plaintiff class(es) are citizens of the state in which the action was originally filed, (2) there is at least one in-state defendant against whom ‘significant relief' is sought and ‘whose

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