Removal of class action timely, 1st Circuit determines

A class action seeking more than $5 million for wage and hour violations should not have been remanded following removal from state to federal court, the 1st U.S. Circuit Court of Appeals has decided.

The plaintiffs, shift supervisors for defendant CVS Pharmacy, argued that the defendant’s removal request was untimely under the Class Action Fairness Act of 2005, 28 U.S.C. §1446(b).

The 1st Circuit disagreed.

“In line with the other circuits that have adopted a bright-line approach, we hold that the time limits in Section 1446(b) apply when the plaintiffs’ pleadings or the plaintiffs’ other papers provide the defendant with a clear statement of the damages sought or with sufficient facts from which damages can be readily calculated,” Chief Judge Sandra L. Lynch wrote for the unanimous court. “In addition, we hold that CVS carried its substantive burden of demonstrating a reasonable probability that the amount in controversy exceeds $5 million, as required for federal jurisdiction under CAFA.”

The 34-page decision is Romulus, et al. v. CVS Pharmacy, Inc.

Boston attorney Thomas V. Urmy Jr. represented the plaintiffs. James Norman Boudreau of Philadelphia argued the appeal on behalf of the defendant.

Wage and hour claims

The plaintiffs — David Romulus, Cassandra Beale, Nicholas Harris, Ashley Hilario and Robert Bourassa — filed a putative class action in state court. The suit was over a company policy under which shift supervisors must remain on store premises while taking rest or meal breaks when there are no other managerial employees on duty or when there is only one other employee on duty.

The plaintiffs did not provide information on the number of breaks at issue or the total amount of damages sought. During discovery, the defendant provided the plaintiffs with electronic time and attendance data from August 2010 through June 2012.

Analyzing that data, the plaintiffs found 116,499 meal breaks. They informed the defendant of that number by email on Jan. 18, 2013. Within 30 days of receipt of the email, the defendant filed a notice of removal on Feb. 15, 2013.

The defendant extrapolated the plaintiffs’ number of violations over the entire class period and argued that there was “a reasonable probability that the amount in controversy exceeds $5,000,000.”

The defendant argued that the notice of removal was “timely under 28 U.S.C. §1446(b)(3) because it was filed within 30 days of the date that CVS ascertained that this case became removable” based on the email provided by the plaintiffs.

U.S. District Court Judge Rya W. Zobel ordered a remand to state court, finding that the defendant’s notice of removal was untimely. Zobel noted that the estimate contained in the Jan. 18, 2013, email came from data that the defendant had possessed from the beginning of litigation and had provided to the plaintiffs. She found that CVS had violated a duty to make a reasonable inquiry into its own records at the time of the complaint.

Zobel also concluded on the merits that the defendant had failed to show “a reasonable probability” that more than $5 million was at stake in the case.

Timeliness of removal request

CAFA specifies two time periods within which a defendant must remove a class action that satisfies the act’s jurisdictional requirements from state court to federal court.

“If the case as stated by the initial pleading is removable, Section 1446(b)(1) requires the defendant to remove within thirty days of its receipt,” Lynch said. “Section 1446(b)(3) requires the defendant to remove within thirty days of receiving a subsequent paper from which it may first be ascertained that the class action is or has become removable.”

The statute’s 30-day clocks are triggered “only when the plaintiffs’ complaint or plaintiffs’ subsequent paper provides the defendant with sufficient information to easily determine that the matter is removable,” Lynch wrote. “[A] plaintiff’s pleading or later paper will trigger the deadlines in Section 1446(b) if the plaintiff’s paper includes a clear statement of the damages sought or if the plaintiff’s paper sets forth sufficient facts from which the amount in controversy can easily be ascertained by the defendant by simple calculation.”

The trial judge erred in imposing too great a duty of inquiry on the defendant, who had no duty “to investigate or to supply facts outside of those provided by the plaintiff,” Lynch said.

The 1st Circuit found that the plaintiffs’ Jan. 18, 2013, email triggered the statute’s 30-day deadline by providing sufficient information from which to easily ascertain the amount in controversy for the first time.

“The interpretation of the phrase ‘other paper’ in Section 1446(b)(3) is another issue of first impression for this circuit,” Lynch said.

“We hold that correspondence from the plaintiff to the defendant concerning damages can constitute an ‘other paper’ for purposes of Section 1446(b)(3),” she continued. “Under Section 1446(b)(3), the correspondence triggers the thirty-day clock if it is the first document in which the plaintiff puts the defendant on notice that the criteria for removal are met.”

The court concluded that the plaintiffs’ email qualified as an “other paper from which it may first be ascertained that the case is one which is … removable,” and required the defendant to remove within thirty days.

Thus, the panel found, CVS’s notice of removal, filed within 30 days of the email, was timely.