Griselda Jauregui v. Roadrunner Transportation Serv

                     FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT


GRISELDA JAUREGUI, individually,                   No. 22-55058
and on behalf of other members of
the general public similarly situated,               D.C. No.
                    Plaintiff-Appellee,           2:21-cv-04657-
                                                     RGK-PD
                      v.

ROADRUNNER TRANSPORTATION                            OPINION
SERVICES, INC., an unknown business
entity,
                Defendant-Appellant.

        Appeal from the United States District Court
           for the Central District of California
        R. Gary Klausner, District Judge, Presiding

           Argued and Submitted February 7, 2022
                 San Francisco, California

                      Filed March 17, 2022

   Before: Andrew D. Hurwitz and Lawrence VanDyke,
   Circuit Judges, and Joan N. Ericksen, * District Judge.

                  Opinion by Judge VanDyke



    *
      The Honorable Joan N. Ericksen, United States District Judge for
the District of Minnesota, sitting by designation.
2         JAUREGUI V. ROADRUNNER TRANSP. SERV.

                           SUMMARY **


    Amount in Controversy / Class Action Fairness Act

    The panel reversed the district court’s order that
remanded a class action to California state court after it
determined that the $5 million amount in controversy
requirement of the Class Action Fairness Act (“CAFA”) was
not met.

    The plaintiff filed a putative class action against
Roadrunner Transportation Services on behalf of all
Roadrunner and former California hourly workers, alleging
violations of California labor law, primarily wage and hour
violations. Roadrunner removed the case to federal court,
invoking jurisdiction under CAFA. Plaintiff responded with
a motion to remand for lack of jurisdiction. The district court
found that Roadrunner failed to meet its burden to establish
the requisite $5 million minimum for the amount in
controversy, and remanded to state court.

    The panel held that the district court erred in imposing –
both explicitly and in its analysis – a presumption against
CAFA jurisdiction. Presumably because of this, latent
throughout the order was an inappropriate demand of
certitude from Roadrunner over its assumptions used in
calculating the amount in controversy.

    The panel also held that the district court erred in how it
approached the amount in controversy analysis. Because
plaintiff contested removal, Roadrunner was required to

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
         JAUREGUI V. ROADRUNNER TRANSP. SERV.               3

show the amount in controversy by a preponderance of the
evidence. Roadrunner offered substantial evidence and
identified assumptions to support its valuation of each of the
various claims in this case. The district court erred in
assigning a $0 value for the amount in controversy for each
of the five claims where it disagreed with Roadrunner’s
calculations. The panel held that nothing in CAFA or
caselaw compels such a draconian response when the district
court disagrees with a single assumption underlying the
claim valuation.

    The panel held that the CAFA amount in controversy
requirement was met. Using the lowest hourly wage rate
identified by the district court, the minimum wage claim was
reasonably valued at $4.5 million. Added to the $2.1 million
for the two other claims accepted by the district court, that
would be more than enough to establish jurisdiction under
CAFA, without even considering any of the other four
claims that the district court also zeroed-out. The panel
remanded to the district court for further proceedings.


                        COUNSEL

Jules S. Zeman (argued), Frederic W. Norris, and Jennifer N.
Hinds, Husch Blackwell LLP, Los Angeles, California, for
Defendant-Appellant.

Eileen B. Goldsmith (argued) and Michael Rubin, Altshuler
Berzon LLP, San Francisco, California; Arby Aiwazian,
Edwin Aiwazian, and Joanna Ghosh, Lawyers for Justice,
PC, Glendale, California; for Plaintiff-Appellee.
4           JAUREGUI V. ROADRUNNER TRANSP. SERV.

                                OPINION

VANDYKE, Circuit Judge:

                         I. INTRODUCTION

    We are asked in this case to review the district court’s
order remanding a class action to California state court after
it determined that the $5 million amount in controversy
requirement of the Class Action Fairness Act was not met.
Because the district court erred in its amount in controversy
analysis by assigning a $0 valuation to several claims, we
reverse and remand.

                         II. BACKGROUND

    Plaintiff Griselda Jauregui filed a putative class action in
California Superior Court against Defendant Roadrunner
Transportation Services (Roadrunner) on behalf of all
Roadrunner current and former California hourly workers.
The complaint alleged numerous violations of California
labor law focused primarily on wage and hour violations.1


    1
        As listed by the district court, the alleged violations include:

           (1) Labor Code §§ 510 and 1198 (unpaid overtime);
           (2) Labor Code §§ 226.7 and 512(a) (unpaid meal
           premiums); (3) Labor Code § 226.7 (unpaid rest
           period premiums); (4) Labor Code §§ 1194, 1197, and
           1197.1 (unpaid minimum wages); (5) Labor Code
           §§ 201 and 202 (final wages not timely paid);
           (6) Labor Code § 204 (wages not timely paid during
           employment); (7) Labor Code § 226(a) (non-
           compliant wage statements); (8) Labor Code
           § 1174(d) (failure to keep requisite payroll records);
           (9) Labor Code §[§] 2800 and 2802 (unreimbursed
          JAUREGUI V. ROADRUNNER TRANSP. SERV.                        5

Roadrunner removed the case to federal court, invoking
Class Action Fairness Act (CAFA) jurisdiction. Plaintiff
responded with a motion to remand, arguing that the district
court lacked jurisdiction under CAFA because the requisite
$5 million minimum for the amount in controversy had not
been met. 2 As authorized under CAFA, Roadrunner
responded with “summary judgment style evidence” to
establish the amount in controversy. Roadrunner relied
primarily on the declaration of its senior payroll lead who
concluded that, based on the company’s payroll data and
Plaintiff’s allegations, the amount in controversy was
$14,780,377.06. 3

    The district court found that Roadrunner failed to meet
its burden and remanded the case to the state court. The
court reached this conclusion after independently evaluating

         business expenses); and (10) Business & Professions
         Code §§ 17200 et seq.
    2
      In addition to the $5 million amount in controversy requirement,
CAFA jurisdiction also requires a class of more than 100 members who
are minimally diverse. See Dart Cherokee Basin Operating Co. v.
Owens, 

574 U.S. 81

, 84–85 (2014). Neither party disputes that the latter
two criteria are met here.
    3
       This number is different than the $6,743,788.90 figure Roadrunner
initially offered as the amount in controversy when it removed the case.
Plaintiff opposes this change as an unfair and an improper amendment
to the removal notice. But Roadrunner’s removal notice was required
only to “contain[] a short and plain statement of the grounds for
removal.” 

28 U.S.C. § 1446

(a). Only after removal is challenged by the
plaintiff did “both sides submit proof” supporting their positions as to
the amount-in-controversy. Dart Cherokee, 574 U.S. at 88. The
difference in Roadrunner’s amount in controversy estimates was thus not
improper, but rather simply the result of Roadrunner appropriately
responding to the new standard and new method for supporting its claim
at a later point in the litigation.
6        JAUREGUI V. ROADRUNNER TRANSP. SERV.

Roadrunner’s amount in controversy calculations for each of
the seven alleged violations. The court found that
Roadrunner had sufficiently demonstrated the claimed
amount in controversy for only two of the claims (overtime
claims and meal and rest break claims). For the remaining
five claims, the court found that Roadrunner erred in its
calculation of the amount in controversy, mostly because of
reliance on incorrect variables or assumptions. Critical for
our purposes, the district court assigned a $0 value for the
amount in controversy for each of the five claims where it
disagreed with Roadrunner’s calculations. As a result, the
district court concluded that the amount in controversy was
only $2.1 million—the total for the two claims in which the
district court agreed with Roadrunner’s calculations.
Because this was less than the $5 million CAFA threshold,
the court granted Plaintiff’s motion to remand. Roadrunner
timely appealed. 4

                       III. ANALYSIS

    Remand orders in cases involving CAFA are reviewed
de novo. Fritsch v. Swift Transp. Co. of Ariz., 

899 F.3d 785, 792

 (9th Cir. 2018). A defendant’s amount in controversy
allegation is normally accepted when invoking CAFA
jurisdiction, unless it is “contested by the plaintiff or
questioned by the court.” See Dart Cherokee, 574 U.S. at
87. When a plaintiff contests the amount in controversy
allegation, “both sides submit proof and the court decides,
by a preponderance of the evidence, whether the amount-in-
controversy requirement has been satisfied.” Id. at 88.


    4
       While remand orders are generally not reviewable on appeal,
“[t]here is an exception … for cases invoking CAFA.” Dart Cherokee,
574 U.S. at 85–86.
         JAUREGUI V. ROADRUNNER TRANSP. SERV.                7

                              A.

    Much of the district court’s analysis underlying the order
granting the remand consists of granular evaluations of
Defendant’s evidence, assumptions, and arguments. That
evaluation was appropriate, but in the end the district court
lost sight of the ultimate question: whether Roadrunner met
its burden of showing the amount in controversy exceeded
$5 million. The two primary errors affecting the remand
order were putting a thumb on the scale against removal and
assigning a $0 amount to most of the claims simply because
the court disagreed with one or more of the assumptions
underlying Roadrunner’s amount in controversy estimates.

   In both its “Judicial Standard” section and subsequent
analysis, the district court imposed a heavy burden on
Defendant to prove that the case belongs in federal court.
This threshold posture contravenes the text and
understanding of CAFA and ignores precedent.

    CAFA “significantly expanded federal jurisdiction in
diversity class actions.” Lewis v. Verizon Commc’ns, Inc.,

627 F.3d 395, 398

 (9th Cir. 2010); see also Dart Cherokee,
574 U.S. at 89 (“Congress enacted [CAFA] to facilitate
adjudication of certain class actions in federal court.”).
Congress expressly noted in CAFA’s “Findings and
Purposes” that the statute was designed to “restore the intent
of the framers of the United States Constitution by providing
for Federal court consideration of interstate cases of national
importance under diversity jurisdiction.” Class Action
Fairness Act of 2005, 

28 U.S.C. § 1711

 (2005).

    Given this statutory background, the Supreme Court has
advised “that no antiremoval presumption attends cases
invoking CAFA,” in part because the statute was enacted “to
facilitate adjudication of certain class actions in federal
8        JAUREGUI V. ROADRUNNER TRANSP. SERV.

court.” Dart Cherokee, 574 U.S. at 89. The Court has
explained that “CAFA’s provisions should be read broadly,
with a strong preference that interstate class actions should
be heard in a federal court if properly removed by any
defendant.” Id. (cleaned up); see also Ibarra v. Manheim
Invs., Inc., 

775 F.3d 1193, 1197

 (9th Cir. 2015) (“Congress
intended CAFA to be interpreted expansively.”).

    Here, the district court imposed—both explicitly and in
its analysis—a presumption against CAFA’s jurisdiction.
The district court’s “Judicial Standard” section, which
explained the legal framework for the case, states that

       courts “strictly construe the removal statute
       against removal jurisdiction” and “[f]ederal
       jurisdiction must be rejected if there is any
       doubt as to the right of removal in the first
       instance.” Gaus v. Miles, Inc., 

980 F.2d 564, 566

 (9th Cir. 1992). The defendant always
       bears the burden of establishing that removal
       is proper. 

Id.

 The enactment of CAFA does
       not alter this rule. Serrano v. 180 Connect,
       Inc., 

478 F.3d 1018, 1021

 (9th Cir. 2007)
       (“[When enacting CAFA] Congress intended
       to maintain the historical rule that it is the
       proponent’s burden to establish a prima facie
       case of removal jurisdiction.”).

This threshold explanation does not square with the
numerous statements quoted above insisting on an expansive
understanding of CAFA. While the district court went on to
cite Dart Cherokee for the proposition that “no antiremoval
presumption attends cases invoking CAFA,” it is difficult to
reconcile that citation with the court’s earlier statements in
the “Judicial Standard” section. Regardless of how one
         JAUREGUI V. ROADRUNNER TRANSP. SERV.                   9

interprets these competing statements, it appears the district
court had some notion that removal under CAFA should be
met with a level of skepticism and resistance. That was
incorrect.

     Presumably because of this, latent throughout the order
was an inappropriate demand of certitude from Roadrunner
over its assumptions used in calculating the amount in
controversy. The problem with that approach is that a CAFA
defendant’s amount in controversy assumptions in support
of removal will always be just that: assumptions. At that
stage of the litigation, the defendant is being asked to use the
plaintiff’s complaint—much of which it presumably
disagrees with—to estimate an amount in controversy. This
is also at a stage of the litigation before any of the disputes
over key facts have been resolved. We have therefore made
it clear that when calculating the amount in controversy, “the
parties need not predict the trier of fact’s eventual award
with one hundred percent accuracy.” Valdez v. Allstate Ins.
Co., 

372 F.3d 1115, 1117

 (9th Cir. 2004). As is inescapable
at this early stage of the litigation, the removing party must
be able to rely “on a chain of reasoning that includes
assumptions to satisfy its burden to prove by a
preponderance of the evidence that the amount in
controversy exceeds $5 million,” as long as the reasoning
and underlying assumptions are reasonable. 5 LaCross v.
Knight Transp. Inc., 

775 F.3d 1200, 1201

 (9th Cir. 2015).

   The district court did not afford Roadrunner this latitude
when analyzing the amount in controversy. As one example,
the court rejected Roadrunner’s assumption that each

    5
        Given this understanding, we conclude that Roadrunner’s
assumptions regarding the number of affected class members and the
violation rate were reasonable for the various relevant claims.
10       JAUREGUI V. ROADRUNNER TRANSP. SERV.

terminated employee would have been entitled to the
maximum 30-day waiting time penalty because Roadrunner
“provides no evidence” supporting that fact. But it was not
unreasonable for Roadrunner to assume that the vast
majority (if not all) of the alleged violations over the four
years at issue in this case would have happened more than
30 days before the suit was filed, which would entitle the
employees to the 30-day penalty. The fact that a very small
percentage of employees might possibly not be entitled to
the maximum penalty is not an appropriate reason to dismiss
altogether Defendant’s estimate for this claim.

                                B.

   The district court also erred in how it approached the
amount in controversy analysis. Because Plaintiff contested
removal, Roadrunner was required to show the amount in
controversy by a preponderance of the evidence. Dart
Cherokee, 574 U.S. at 88.

    Our court has defined the amount in controversy as
simply “the amount at stake in the underlying litigation ….”
Theis Rsch., Inc. v. Brown & Bain, 

400 F.3d 659

, 662 (9th
Cir. 2005). Importantly, that “‘[a]mount at stake’ does not
mean likely or probable liability; rather, it refers to possible
liability.” Greene v. Harley-Davidson, Inc., 

965 F.3d 767, 772

 (9th Cir. 2020) (emphasis added); see also Lewis, 

627 F.3d at 400

 (noting that the amount in controversy is “an
estimate of the amount that will be put at issue in the course
of the litigation” (citing McPhail v. Deere & Co., 

529 F.3d 947, 956

 (10th Cir. 2008))). 6


     6
       This understanding undermines Plaintiff’s reliance on various
statutes of limitation to challenge Roadrunner’s calculations. This
           JAUREGUI V. ROADRUNNER TRANSP. SERV.                         11

    Recognizing that the amount in controversy is supposed
to be an estimate of the entire potential amount at stake in
the litigation demonstrates the unrealistic nature of assigning
$0 to five out of seven of Plaintiff’s claims. Of course, if a
defendant provided no evidence or clearly inadequate
evidence supporting its valuation for a claim, then it might
be appropriate for a district court to assign that claim a $0
value. But that is not what happened here. Roadrunner
offered substantial evidence and identified assumptions to
support its valuation of each of the various claims in this
case. In analyzing each of the claims, the court disagreed
with some of Roadrunner’s assumptions, identifying other
assumptions that it concluded were better. In a circumstance
like this, merely preferring an alternative assumption is not
an appropriate basis to zero-out a claim; at most, it only
justifies reducing the claim to the amount resulting from the
alternative assumption. The approach used by the district
court turns the CAFA removal process into an unrealistic all-
or-nothing exercise of guess-the-precise-assumption-the-
court-will-pick—even where, as here, the defendant
provided substantial evidence and analysis supporting its
amount in controversy estimate.

    Plaintiff’s minimum wage claim—one of her higher
value claims in this case—illustrates our point. In its
opposition to the remand motion, Roadrunner calculated the
amount in controversy for the minimum wage claim by
assuming that one hour of work a week went unpaid.
Roadrunner then took the 63,431 workweeks in question and


confuses the amount in controversy with the amount that will ultimately
be recovered. “[T]he strength of any defenses indicates the likelihood of
the plaintiff prevailing; it is irrelevant to determining the amount that is
at stake in the litigation.” Arias v. Residence Inn by Marriott, 

936 F.3d 920, 928

 (9th Cir. 2019).
12        JAUREGUI V. ROADRUNNER TRANSP. SERV.

multiplied that by an average wage of $16.22, for a total of
about $1 million. That amount was doubled according to the
statutorily imposed liquidated damages, and an additional
$3.1 million in potential penalties was added. In total,
Roadrunner estimated the amount in controversy for this
claim at $5.2 million, alone enough to confer CAFA
jurisdiction.

    The district court did not disagree with most of
Roadrunner’s assumptions for the minimum wage claim
estimate. But it noted that Roadrunner erred in using a
$16.22 hourly wage figure for these calculations, because
California’s minimum wage for the time in question ranged
from $10.50 in 2017 to $14.00 in 2021—all lower than the
$16.22 amount used. Because this resulted in Defendant’s
calculations being a “gross over-calculation,” the district
court assigned a $0 valuation for the minimum wage claim.

    Assigning a $0 value was improper. Neither party, nor
the district court, believed the amount in controversy for this
claim to be anywhere near $0. Even using the lowest hourly
wage rate offered by the district court ($10.50), the amount
in controversy for this claim alone would still come out to
over $4.5 million. 7


     7
       This figure was calculated by using the same formula relied on by
the district court: multiplying the hourly wage ($10.50) with the number
of workweeks (63,431) for a total of $666,025.50. That number is then
doubled for the liquidated damages, for a total of $1,332,051. The
$3,171,550 penalty is then added in (the same figure used by the district
court), for a grand total of $4,503,601. The purpose of this calculation
is simply to show that the amount in controversy for these claims will
exceed $5 million when all the claims are properly evaluated even if the
lowest plausible figures are used, not to provide any definitive
calculation for the value of the minimum wage claim.
          JAUREGUI V. ROADRUNNER TRANSP. SERV.                      13

     Nothing in CAFA or our caselaw compels such a
draconian response when the district court disagrees with a
single assumption underlying the claim valuation. To the
contrary, in LaCross we reversed a district court that had
remanded the case after disagreeing with Knight
Transportation’s $44 million amount in controversy
calculation. See 775 F.3d at 1201. The district court found
Knight had not met its burden to establish the $5 million
amount in controversy because it concluded that Knight had
“relied on a flawed assumption” critical to the case. Id. We
disagreed with the district court’s ruling for multiple
reasons, but one is especially relevant for our purposes. In
addressing fuel costs—a central claim in the case—we noted
that “while the number of drivers varied during the class
period, even using the lowest number of drivers in 2010 for
all 16 quarters during the class period,” the fuel costs would
still exceed $5 million. Id. at 1203 (emphasis added).
Instead of attempting to determine which assumption would
best calculate the amount in controversy for the fuel costs
claim, we concluded that the amount in controversy would
be met using any of the plausible figures.

    So too here. Using the lowest hourly wage rate identified
by the district court, the minimum wage claim is reasonably
valued at $4.5 million. Added to the $2.1 million for the two
other claims accepted by the district court, that would be
more than enough to establish jurisdiction under CAFA,
without even considering any of the other four claims that
the district court also zeroed-out. 8



    8
      Because the amount in controversy is met just looking at three of
the seven claims, we need not further address the district court’s
treatment of any of the remaining claims.
14       JAUREGUI V. ROADRUNNER TRANSP. SERV.

    Plaintiff argues that the district court did not err in
assigning a $0 value to some of Roadrunner’s claims
because the “district court should weigh the reasonableness
of the removing party’s assumptions, not supply further
assumptions of its own.” Harris v. KM Indus., Inc., 

980 F.3d 694, 701

 (9th Cir. 2020). LaCross demonstrates that there is
an important distinction between a court offering entirely
new or different assumptions itself versus modifying one or
more assumptions in the removing party’s analysis. Where
a defendant’s assumption is unreasonable on its face without
comparison to a better alternative, a district court may be
justified in simply rejecting that assumption and concluding
that the defendant failed to meet its burden. But often, as
illustrated here, the reason a defendant’s assumption is
rejected is because a different, better assumption is
identified. Where that’s the case, the district court should
consider the claim under the better assumption—not just
zero-out the claim. The latter approach creates a perverse
incentive for plaintiffs seeking a CAFA remand to simply
nit-pick assumptions by providing “better” ones, even when,
as our Court observed in LaCross, remand would still be
inappropriate even under the better assumption. Rewarding
that “focus on the trees, not the forest” approach would
subvert the purposes of CAFA, because it would result in
remanding cases where the real amount in controversy is
clearly over the $5 million threshold.

                    IV. CONCLUSION

   For the reasons stated herein, the district court’s order to
remand the case is reversed and remanded for further
proceedings consistent with this opinion.

     REVERSED and REMANDED.