No. 14-______

IN THE

CHASE INVESTMENT SERVICES CORP., JPMORGAN

CHASE BANK, N.A., & J.P. MORGAN CHASE & CO.,

Petitioners, v.

JOSEPH BAUMANN, Respondent.

_____________

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

_____________

PETITION FOR A WRIT OF CERTIORARI _____________

September 2014

ROBERT D. WICK MARK W. MOSIER COUNSEL OF RECORD DAVID M. ZIONTS MATTHEW J. BERNS COVINGTON & BURLING LLP 1201 PENNSYLVANIA AVE., NW WASHINGTON, DC 20004 (202) 662-6000 mmosier@cov.com Counsel for Petitioners

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QUESTIONS PRESENTED

California law authorizes an aggrieved em-ployee to file a representative action, on behalf of himself or herself and others similarly situated, to collect civil penalties for labor code violations. To-gether, this group of aggrieved employees is entitled to retain 25% of their recovery. Respondent filed such a lawsuit in state court against Petitioners, out-of-state defendants, seeking more than $16,000,000 in penalties and attorney’s fees. Petitioners removed to federal court, but the Ninth Circuit concluded that jurisdiction was lacking because the action was nei-ther a class action nor an individual action in which $75,000 was in controversy.

The questions presented are:

1. Whether a suit brought by a private party on behalf of himself and other similarly situated in-dividuals is a “class action” subject to the diversity jurisdiction provisions of the Class Action Fairness Act of 2005.

2. Whether aggrieved employees’ claims to statutory penalties and attorney’s fees may be ag-gregated for purposes of satisfying the amount-in-controversy requirement of the diversity jurisdiction statute.

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PARTIES TO THE PROCEEDING AND RULE 29.6 DISCLOSURE

Petitioner Chase Investment Services Corp. on October 1, 2012 merged into J.P. Morgan Securities, LLC, which is the successor in interest to Chase In-vestment Services Corp. and has assumed all of its rights and obligations. J.P. Morgan Securities, LLC is a wholly owned subsidiary of J.P. Morgan Broker-Dealer Holdings, Inc., which in turn is a wholly owned subsidiary of J.P. Morgan Chase & Co.

Petitioner JPMorgan Chase Bank, N.A. is not a publicly traded company. JPMorgan Chase Bank, N.A.’s sole parent company is J.P. Morgan Chase & Co.

Petitioner J.P. Morgan Chase & Co. is a pub-licly traded company listed on the NYSE under the symbol JPM. No publicly held company owns ten percent or more of J.P. Morgan Chase & Co.’s stock.

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TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ....................................... i

PARTIES TO THE PROCEEDING AND RULE 29.6 DISCLOSURE ................................. ii

TABLE OF CONTENTS ........................................... iii

TABLE OF AUTHORITIES ........................................ v

INTRODUCTION ........................................................ 1

OPINION BELOW ...................................................... 3

JURISDICTION .......................................................... 3

STATUTORY PROVISIONS INVOLVED ................. 3

STATEMENT OF THE CASE .................................... 4

A. Statutory Background ..................................4

1. The Class Action Fairness Act of 2005 ....................................................... 4

2. The California Labor Code Private Attorneys General Act of 2004 ....................................................... 5

B. Proceedings Below ........................................6

REASONS FOR GRANTING THE PETITION ......... 9

I. The Decision Below Cannot Be Reconciled with CAFA’s Text, Congress’s Intent, or the Decisions of Other Courts of Appeals. .......... 9

iv

A. The Ninth Circuit’s Decision Conflicts with Decisions of Other Courts of Appeals. ...................................... 10

B. The Ninth Circuit’s Interpretation Is Flawed and Contrary to CAFA’s Purpose. ...................................................... 16

II. The Decision Below Adds to the Confusion Regarding When Claimants’ “Common And Undivided” Interest Permits Aggregation for Purposes of the Amount-In-Controversy Requirement. ............................ 21

A. The Ninth Circuit’s Decision Highlights the “Mystifying” and “Unsatisfactory” State of the Law. ............ 22

B. The Ninth Circuit’s Decision Is Incorrect and Compounds the Problems Raised by the Ninth Circuit’s Misinterpretation of CAFA. ........ 25

III. This Case Presents an Ideal Vehicle for Resolving the Exceptionally Important Issues Presented. ............................................... 29

CONCLUSION .......................................................... 33

APPENDIX A: Court of appeals opinion.................. 1a APPENDIX B: Court of appeals order denying rehearing en banc............................................... 17a APPENDIX C: District court order......................... 18a

APPENDIX D: Complaint........................................ 24a APPENDIX E: Statutory Addendum...................... 43a

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TABLE OF AUTHORITIES

Page(s)

Cases

Addison Automatics, Inc. v. Hartford Cas. Ins. Co., 731 F.3d 740 (7th Cir. 2013) ........... 12, 13

Aetna U.S. Healthcare, Inc. v. Aktiengesellschaft, 48 F. Supp. 2d 37 (D.D.C. 1999) .......................... 24

Alakozai v. Chase Inv. Servs. Corp., No. CV 11-09178 SJO, 2012 WL 748584 (C.D. Cal. Mar. 1, 2012) .......................... 31

Allen v. R&H Oil & Gas Co., 63 F.3d 1326 (5th Cir. 1995) ................................ 25

Ard v. Transcontinental Gas Pipe Line Corp., 138 F.3d 596 (5th Cir. 1998) ..................... 25

Arias v. Superior Court, 209 P.3d 923 (Cal. 2009) ............................ 6, 10, 26

AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) .......................................... 29

Bond v. United States, 134 S. Ct. 2077 (2014) .......................................... 17

Brown v. Mortgage Electronic Registration Systems, Inc., 738 F.3d 926 (8th Cir. 2013) ........................ passim

vi

In re Cardizem CD Antitrust Litig., 90 F. Supp. 2d 819 (E.D. Mich. 1999) ................. 24

City of W. Helena v. Sullivan, 108 S.W.3d 615 (Ark. 2003) ................................. 11

College of Dental Surgeons of Puerto Rico v. Conn. Gen. Life Ins. Co., 585 F.3d 33 (1st Cir. 2009) .................................. 32

CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014) .......................................... 17

Everett v. Verizon Wireless, Inc., 460 F.3d 818 (6th Cir. 2006) ................................ 24

In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d 952 (9th Cir. 2001) ................................ 24

Gibson v. Chrysler Corp., 261 F.3d 927 (9th Cir. 2001) ................................ 23

Gilman v. BHC Securities, Inc., 104 F.3d 1418 (2d Cir. 1997) ......................... 23, 27

Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736 (2014) ................................... 4

LG Display Co. v. Madigan, 665 F.3d 768 (7th Cir. 2011) ................................ 13

West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169 (4th Cir. 2011) ........................ passim

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In re Microsoft Corp. Antitrust Litig., 127 F. Supp. 2d 702 (D. Md. 2001) ...................... 24

Mostofi v. Network Capital Funding Corp., 798 F. Supp. 2d 52 (D.D.C. 2011) ........................................................ 24

Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992) .............................................. 17

Purdue Pharma L.P. v. Kentucky, 704 F.3d 208 (2d Cir. 2013) ........................... 15, 17

Snyder v. Harris, 394 U.S. 332 (1969) ...................................... passim

Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013) .................................. passim

T&T Chem., Inc. v. Priest, 95 S.W.3d 750 (Ark. 2003) ................................... 12

In re U-Haul Int’l, Inc., No. 08-7122, 2009 WL 902414 (D.C. Cir. Apr. 6, 2009) ........................................ 31

Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118 (9th Cir. 2013) ...................... passim

Washington v. Chimei Innolux Corp., 659 F.3d 842 (9th Cir. 2011) .................... 11, 15, 21

Worth v. City of Rogers, 89 S.W.3d 875 (Ark. 2002) ................................... 12

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Statutes and Rule

California Labor Code Private Attorneys General Act of 2004, 2003 Cal. Stat. ch. 906 .......................................... passim

Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 ...................... passim

28 U.S.C. § 1254(1) ...................................................... 3

28 U.S.C. § 1292(b) ...................................................... 3

28 U.S.C. § 1332 ...................................................... 3, 4

28 U.S.C. § 1332(a) .................................................. 3, 7

28 U.S.C. § 1332(d) ............................................ 3, 5, 16

28 U.S.C. § 1447(d) .................................................... 31

28 U.S.C. § 1453 .............................................. 5, 31, 32

28 U.S.C. § 1711 .......................................................... 5

Cal. Labor Code § 2699(a) ..................................... 6, 18

Cal. Labor Code § 2699(g)(1) ........................... 6, 26, 30

Cal. Labor Code § 2699(i) ............................................ 6

Federal Rule of Civil Procedure 23 ................... passim

Other Authorities

American Heritage Dictionary of the English Language (William Morris, ed. 1978) ............................................................... 18

ix

Black’s Law Dictionary (8th ed. 2004)................ 17, 18

Black’s Law Dictionary (9th ed. 2009)...................... 15

Concise Oxford English Dictionary (10th ed. rev. 2002) .............................................. 18

Erin Coe, Iskanian Ruling to Unleash Flood of PAGA Claims, Law360 (June 24, 2014), http://www.law360.com/articles /551335/iskanian-ruling-to-unleash-flood-of-paga-claims ............................................. 29

Dictionary of Modern Legal Usage 160 (2d ed., Bryan A. Garner, ed. 1995) ..................... 18

David Mellinkoff, Mellinkoff’s Dictionary of American Legal Usage (1992) .................................................................... 18

1 New Shorter Oxford English Dictionary (1993) ................................................. 18

Martin H. Redish, Reassessing the Allocation of Judicial Business Between State and Federal Courts: Federal Jurisdiction and “The Martian Chronicles”, 78 Va. L. Rev. 1769 (1992) ........................................................... 23

14A Charles Alan Wright et al., Federal Practice & Procedure: Jurisdiction & Related Matters (4th ed. 2011) ................ 22, 23, 25

14C Charles Alan Wright et al., Federal Practice & Procedure: Jurisdiction & Related Matters (4th ed. 2009) ...................... 31

PETITION FOR A WRIT OF CERTIORARI _____________________

Petitioners Chase Investment Services Corp., JPMorgan Chase Bank, N.A., and J.P. Morgan Chase & Co. (“Chase”) respectfully submit this petition for a writ of certiorari to review the judgment of the Unit-ed States Court of Appeals for the Ninth Circuit.

INTRODUCTION

This case presents important questions about the scope of federal diversity jurisdiction. In enact-ing the Class Action Fairness Act of 2005 (“CAFA”), Congress expanded the jurisdiction of federal courts to ensure that parties have access to a federal forum for certain class actions “of national importance” brought solely under state law. Pub. L. No. 109-2, § 2(a)(4)(A), 119 Stat. 4, 5. Under CAFA, federal courts have diversity jurisdiction “to hear a class ac-tion if the class has more than 100 members, the parties are minimally diverse, and the matter in con-troversy exceeds the sum or value of $5,000,000.” Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 1348 (2013) (quotation marks and citations omitted).

The Ninth Circuit held that CAFA does not provide jurisdiction in this case, despite acknowledg-ing that the potential class has more than 100 members, the parties are diverse, and the amount in controversy exceeds $5,000,000. App. 6a-7a. The court reached this result by incorrectly interpreting CAFA’s definition of “class action” to include only those representative actions brought under state laws that “closely resemble” Federal Rule of Civil Procedure 23. Id. at 9a. Concluding that Respond-

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ent Joseph Baumann brought suit under a California law that does not closely resemble Rule 23, the court held that CAFA jurisdiction was lacking. Id. at 15a.

The Ninth Circuit compounded its error by holding that jurisdiction also was lacking under the general diversity statute. If the court of appeals were correct that Baumann’s suit was not a class ac-tion, then the typical requirements for diversity jurisdiction easily should have been satisfied: com-plete diversity exists (Baumann is a citizen of California, and Chase is not), and the suit seeks more than $16,000,000 in penalties and fees. Rely-ing on circuit precedent, the Ninth Circuit nevertheless held that the suit did not satisfy the amount-in-controversy requirement because less than $75,000 of the potential recovery would ulti-mately go to Baumann, and that the sums due to Baumann cannot be aggregated with the other em-ployees’ potential shares of the recovery. App. 6a n.1 (citing Urbino v. Orkin Servs. of Cal., Inc., 726 F.3d 1118, 1122 (9th Cir. 2013)). Judge Thomas, who dis-sented in the Urbino decision on which the majority relied, wrote separately in this case to note his con-tinuing disagreement with the decision. App. 16a.

This case warrants review because it creates an enormous loophole in the federal diversity stat-ute, frustrates Congress’s intent to provide a federal forum for out-of-state defendants facing suits on be-half of large classes of persons who seek millions of dollars in damages, and conflicts with decisions of other courts of appeals. The Court should grant the petition to resolve the conflict and to reaffirm that

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CAFA does not “exalt form over substance.” Stand-ard Fire, 133 S. Ct. at 1350.

OPINION BELOW

The opinion of the court of appeals (App. 1a-16a) is reported at 747 F.3d 1117. The order of the district court (App. 18a-23a) is unreported.

JURISDICTION

Chase removed this action to the United States District Court for the Central District of Cali-fornia under 28 U.S.C. §§ 1332(a) and 1332(d). Pursuant to 28 U.S.C. § 1292(b), the Ninth Circuit permitted Baumann to take an interlocutory appeal from the district court’s order denying his motion to remand the action to state court. The Ninth Circuit’s decision reversing that order and remanding with instructions to grant the motion to remand was en-tered on March 13, 2014. App. 1a. A petition for rehearing en banc was denied on May 6, 2014. App. 17a. On July 22, 2014, Justice Kennedy granted Chase’s application for an extension of time to file a petition for a writ of certiorari to September 3, 2014. This Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

Pertinent provisions of the federal diversity jurisdiction statute, 28 U.S.C. § 1332, and the Cali-fornia Labor Code Private Attorneys General Act of 2004, 2003 Cal. Stat. ch. 906, §§ 1–2 (codified at Cal. Labor Code § 2698 et seq.), are reproduced in the ap-pendix to the petition. App. 43a-63a.

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STATEMENT OF THE CASE

A. Statutory Background

1. The Class Action Fairness Act of 2005

“Congress enacted CAFA in order to ‘amend the procedures that apply to consideration of inter-state class actions.’” Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 739 (2014) (quoting 119 Stat. at 4). Congress expressly found that there have been “abuses of the class action device,” which “undermine the national judicial system, the free flow of interstate commerce, and the concept of di-versity jurisdiction as intended by the framers of the United States Constitution.” CAFA § 2(a)(2), (4). Specifically, Congress “was concerned . . . that cer-tain requirements of federal diversity jurisdiction, 28 U.S.C. § 1332, had functioned to ‘kee[p] cases of na-tional importance’ in state courts rather than federal courts.” Hood, 134 S. Ct. at 739 (quoting CAFA § 2(a)(4)(A)).

To provide a federal forum for state-law class actions of national importance, Congress “expanded diversity jurisdiction” for class actions. Id. at 740. In addition to relaxing the requirement of complete diversity, Congress departed from the judicially es-tablished general rule against aggregating claims of multiple plaintiffs for purposes of establishing the amount in controversy. Under this Court’s decision in Snyder v. Harris, class members’ claims could not be aggregated unless they involved “a common and undivided interest.” 394 U.S. 332, 335 (1969). CA-FA, however, established a new $5,000,000 amount-

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in-controversy requirement applicable “in a class ac-tion,” and specified that “the claims of the individual class members shall be aggregated to determine” whether that requirement is satisfied. 28 U.S.C. § 1332(d)(2), (6).

If a plaintiff files in state court a “class action” that meets CAFA’s minimal diversity and aggregate amount-in-controversy requirements, the defendant may remove it to federal court. 28 U.S.C. § 1453. Thus, an important issue in such cases is whether the action qualifies as a “class action.” As the Senate Judiciary Committee Report reflects, Congress de-termined that “application [of CAFA] should not be confined solely to lawsuits that are labeled ‘class ac-tions,’” but instead the terms should be interpreted “liberally” to include “lawsuits that resemble a pur-ported class action.” S. Rep. No. 109-14, at 35 (2005). To implement this intent, Congress defined an action initiated in state court as a “class action” if it “was originally filed under a State statute or rule of judi-cial procedure authorizing an action to be brought by 1 or more representatives as a class action.” 28 U.S.C. § 1711(2).

2. The California Labor Code Private Attorneys General Act of 2004

The California Labor Code Private Attorneys General Act of 2004 (“PAGA”), 2003 Cal. Stat. ch. 906, §§ 1–2 (codified at Cal. Labor Code § 2698 et seq.), authorizes the recovery of civil penalties for certain Labor Code violations “through a civil action brought by an aggrieved employee on behalf of him-

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self or herself and other current or former employ-ees.” Cal. Labor Code § 2699(a). The Supreme Court of California has concluded that representative ac-tions under PAGA “may be brought as class actions,” Arias v. Superior Court, 209 P.3d 923, 930 n.5 (Cal. 2009), but a plaintiff suing under PAGA in state court is not required to seek or obtain class certifica-tion, id. at 929-34.

Any employee who prevails in such an action must remit a substantial portion of the recovery to the state, but the group of aggrieved employees is en-titled to the remainder. Specifically, PAGA provides that civil penalties collected from an employer “shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency . . .; and 25 per-cent to the aggrieved employees.” Cal. Labor Code § 2699(i).1 A judgment in favor of the employer bars any subsequent action under PAGA by any of the ag-grieved employees. See Arias, 209 P.3d at 934.

B. Proceedings Below

Baumann sued Chase, his former employer, in California court on behalf of himself “and on behalf of other members of the general public similarly sit-uated.” App. 24a; see also id. at 41a. The one-count complaint alleges that Chase had employed Bau-mann as a Financial Advisor, and that Chase’s treatment of Baumann “and other Financial Advi-

1 PAGA further provides that “[a]ny employee who prevails in any action shall be entitled to an award of reasonable attorney’s fees and costs.” Cal. Labor Code § 2699(g)(1).

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sors” had violated the California Labor Code. App. 29a. The complaint seeks an unspecified amount of civil penalties under PAGA, as well as costs and at-torneys’ fees. App. 41a-42a. The complaint asserts that “[t]he amount in controversy for Plaintiff, in-cluding claims for civil penalties and pro rata share of attorneys’ fees, is less than seventy five thousand dollars ($75,000).” App. 25a (emphasis added).

Chase removed the action to federal district court, invoking the court’s jurisdiction under the general diversity statute, 28 U.S.C. § 1332(a), and CAFA, id. § 1332(d). Chase presented evidence that it employed nearly 700 Financial Advisors in Cali-fornia during the relevant time period and paid them semi-monthly. App. 22a. Based on these facts and the allegations in the complaint, Chase calculated that the statutory penalties at issue exceeded $13,000,000. Id. Chase further contended that the amount in controversy includes over $3,000,000 in attorneys’ fees, for a total amount in controversy in excess of $16,000,000.

Baumann filed a motion to remand the case to state court, which the district court denied. App. 18a-23a. The district court held that the amount in controversy includes the aggregated total of the pen-alties sought by Baumann, not just his personal share of those penalties. App. 21a-22a. Because Chase had shown that the total amount in dispute “at the very least” exceeds $75,000 and that the par-ties are completely diverse, the court concluded that it had jurisdiction under 28 U.S.C. § 1332(a). Id. Given this holding, the court did not address wheth-

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er CAFA provided an alternative basis for removal. Id. at 23a n.2.

The Ninth Circuit reversed in a published de-cision, holding that neither the general diversity statute nor CAFA provided jurisdiction. The court of appeals interpreted CAFA’s definition of “class ac-tion” to require a suit to be filed under a state law that “‘closely resembles Rule 23 or is like Rule 23 in substance or in essentials.’” App. 9a (quoting West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169, 174 (4th Cir. 2011)). Baumann’s suit does not satisfy this test, in the Ninth Circuit’s view, be-cause PAGA “has no notice requirements for unnamed aggrieved employees”; does not allow un-named employees to “opt out of a PAGA action”; “contains no requirements of numerosity, commonal-ity, or typicality”; and does not require an inquiry into whether the named plaintiff and his or her counsel will adequately represent the absent em-ployees. App. 12a-13a.

The Ninth Circuit also held that the district court lacked general diversity jurisdiction based on the court’s decision in Urbino v. Orkin Services of California, Inc., 726 F.3d 1118 (9th Cir. 2013). App. 6a n.1. In Urbino, the same panel held that the civil penalties potentially recoverable under PAGA cannot be aggregated to meet Section 1332(a)’s amount-in-controversy requirement. Although the claims of numerous plaintiffs may be aggregated to meet the jurisdictional amount when the plaintiffs seek “to en-force a single title or right in which they have a common and undivided interest,” Snyder, 394 U.S. at 335, the divided panel concluded that PAGA actions

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do not involve such an interest, because each ag-grieved employee represented by the named plaintiff “suffers a unique injury . . . that can be redressed without the involvement of the other employees.” Urbino, 726 F.3d at 1122.

Judge Thomas dissented in Urbino, and con-curred in the judgment in this case while reiterating his view that Urbino was wrongly decided. App. 16a (citing Urbino, 726 F.3d at 1123 (Thomas, J., dissent-ing)). Judge Thomas would have held that PAGA claims can be aggregated because a representative action under PAGA “‘is fundamentally a law en-forcement action designed to protect the public and not to benefit private parties.’” Urbino, 726 F.3d at 1123 (Thomas, J., dissenting). Because a plaintiff suing under PAGA “pursues a common and undivid-ed claim in his role as proxy for the State,” the amount in controversy should be “based on the ag-gregate civil penalties sought.” Id. at 1124.

The Ninth Circuit denied Chase’s petition for rehearing en banc. Judge Thomas would have granted the petition. App. 17a.

REASONS FOR GRANTING THE PETITION

I. THE DECISION BELOW CANNOT BE RECONCILED WITH CAFA’S TEXT, CONGRESS’S INTENT, OR THE DECI-SIONS OF OTHER COURTS OF APPEALS.

Expanding diversity jurisdiction for class ac-tions was at the heart of Congress’s goal of achieving “class action fairness.” Central to that goal is the in-

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terpretation of the statutory term at the core of the statute: what is a “class action”? This fundamental question has divided the lower courts, and in the de-cision below, has now given rise to a large potential loophole that could substantially undermine Con-gress’s objectives.

In this case, the Ninth Circuit remanded to California court a $16,000,000 controversy between California employees and their out-of-state employer. It did so by deciding that PAGA actions, despite be-ing brought in a representative capacity by private plaintiffs on behalf of themselves and others similar-ly situated, are not class actions. That decision conflicts with decisions of other courts of appeals, has no support in the statutory text, and frustrates CAFA’s purpose.

A. The Ninth Circuit’s Decision Con-flicts with Decisions of Other Courts of Appeals.

Baumann filed suit under a California law that authorizes “a representative action brought by an aggrieved employee” on behalf of himself and oth-er similarly situated employees. Arias, 209 P.3d at 933. The Ninth Circuit held that jurisdiction was lacking under CAFA because the California law is “not sufficiently similar to Rule 23” for Baumann’s suit to be a “class action” under CAFA. App. 12a. Despite the fundamental similarity between a PAGA action and a Rule 23 class action – both are repre-sentative actions in which a member of a class litigates on behalf of others similarly situated – the court of appeals held that a PAGA suit is not a “class

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action” under CAFA because it lacks many of the procedural steps and protections of Rule 23. See su-pra p. 8.2

1. The Ninth Circuit’s decision conflicts with decisions of the Seventh and Eighth Circuits. Those courts have interpreted CAFA to provide jurisdiction over representative actions filed by a private plaintiff without requiring that the state statute or rule un-der which the action is filed “closely resemble[d]” Rule 23, as the Ninth Circuit did here. App. 9a.

In Brown v. Mortgage Electronic Registration Systems, Inc., 738 F.3d 926 (8th Cir. 2013), the Eighth Circuit held that a state-law representative action was properly removed as a “class action” un-der CAFA, even though it bore none of the hallmarks that the Ninth Circuit deemed the defining attrib-utes of Rule 23 class actions. The Arkansas procedure at issue allowed citizens to “collectively resist illegal taxation” using a procedure that “does not depend upon, or require, certification under the provisions of [Arkansas] Rule 23.” Id. at 931 (quot-ing City of W. Helena v. Sullivan, 108 S.W.3d 615, 617 (Ark. 2003)). Just like a PAGA action, an Ar-kansas illegal-exaction suit is brought by a representative on behalf of himself and “similarly 2 The panel considered the procedural differences between a PAGA suit and a class action under Rule 23 based on the court’s prior decision in Washington v. Chimei Innolux Corp., 659 F.3d 842 (9th Cir. 2011), which performed a similar inquiry in holding that a parens patriae action is not a “class action” under CAFA. App. 12a.

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situated” individuals. T&T Chem., Inc. v. Priest, 95 S.W.3d 750, 751 (Ark. 2003). Just like a PAGA ac-tion, procedural requirements akin to Rule 23(a) are not applicable. Brown, 738 F.3d at 931; see also Worth v. City of Rogers, 89 S.W.3d 875, 882 n.1 (Ark. 2002) (“Numerosity, superiority, typicality, and ade-quacy are not considered in an illegal-exaction suit.”).3 And also like a PAGA action, absent plain-tiffs have no right to opt out, even though they are “bound by the judgment.” Worth, 89 S.W.3d at 879-82.

In contrast to the decision below, the Eighth Circuit did not find the absence of procedures similar to those employed in Rule 23 dispositive. Instead, it held that the district court had properly exercised diversity jurisdiction because the illegal-exaction suit was a “class action” under CAFA. 738 F.3d at 931. In so doing, the court of appeals relied on CAFA’s legislative history in which “Congress emphasized that the term ‘class action’ should be ‘interpreted lib-erally.’” 738 F.3d at 931 n.6 (quoting S. Rep. No. 109-14, at 35 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 34).

The Seventh Circuit has also held that a state-law representative action was a “class action” under CAFA, even though it lacked the attributes deemed dispositive by the Ninth Circuit. See Addison Auto-

3 While the Eighth Circuit noted that Arkansas courts look to Arkansas Rule 23 “as a procedural guide,” it was equally clear that “an illegal-exaction claim does not require a ‘certification’ in Arkansas.” Brown, 738 F.3d at 931.

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matics, Inc. v. Hartford Cas. Ins. Co., 731 F.3d 740 (7th Cir. 2013). The declaratory judgment action in Addison Automatics was not filed under the state analog to Rule 23, and the individual plaintiff’s “complaint stated that it intended to proceed solely in its individual capacity.” Id. at 741. The court of appeals nevertheless held that the action was re-movable under CAFA because the plaintiff had been assigned an insured’s claims against an insurer as part of the settlement of a prior class action against the insured. See id. at 741-45. The Seventh Circuit held that the case was a “class action” under CAFA, even though the plaintiff did not seek class certifica-tion and would not be obligated to demonstrate that its declaratory judgment action satisfied any of the Rule 23(a) requirements. Id. In the court of appeals’ view, “‘[t]o hold otherwise would, for CAFA jurisdic-tional purposes, . . . exalt form over substance, and run directly counter to CAFA’s primary objective’ of expanding federal jurisdiction over national class ac-tions.” Id. at 744 (quoting Standard Fire, 133 S. Ct. at 1350) (ellipsis in original).4

4 In an earlier decision, the Seventh Circuit had held that a parens patrie suit was not a “class action” under CAFA. See, e.g., LG Display Co. v. Madigan, 665 F.3d 768 (7th Cir. 2011). The court reached this result based on the nature of a parens patrie suit, which is a suit by the sovereign, not a class action initiated by a representative of the class. Id. at 771-72. Alt-hough the court also noted that the statute at issue did not impose the same constraints as Rule 23, the court did not sug-gest that these differences were dispositive, and the court’s later decision in Addison Automatics demonstrates that they are not.

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2. The decision below is also in tension with the Fourth Circuit’s decision in West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169 (4th Cir. 2011). In CVS, the panel majority and dissent both recognized that CAFA’s definition of “class ac-tion” is “circular,” id. at 174; id. at 179 (Gilman, J., dissenting), but differed as to how that circularity should be resolved. Based on these different ap-proaches, the majority held that the parens patrie suit at issue was not a “class action” under CAFA, while the dissenting judge concluded that it was. But neither the majority nor the dissent interpreted “class action” as narrowly as the Ninth Circuit did in this case. And, importantly, a PAGA action would qualify as a “class action” under both the majority’s and the dissent’s interpretations.

Under the majority’s view, a suit is a “class ac-tion” if it was filed under a state law that “closely resembles Rule 23 or is like Rule 23 in substance or in essentials.” Id. at 174 (majority opinion). The ma-jority emphasized, however, that the state law “need not contain all of the . . . conditions and administra-tive aspects of Rule 23.” Id. at 175. Rather, it need only “provide a procedure by which a member of the class whose claim is typical of all members of the class can bring an action not only on his own behalf but also on behalf of all others in the class.” Id. The majority therefore read CAFA’s definition of “class action” to require “that the representative party be a member of the class whose claim is typical of the class members’ claims.” Id. at 175 n.1; see also id. at 176 (“A class action is an action filed by an individu-al as a member of a class and whose claim is typical of the class members’ claims.”). A parens patriae ac-

15

tion does not qualify, the majority held, because it “does not require the State to be a member of the class, to suffer the same injury as class members, or to have a claim typical of each class member’s claim.” Id. at 176.

Writing in dissent, Judge Gilman would have given “class action” a more expansive meaning based on “the first sentence of the term’s definition in Black’s Law Dictionary: ‘A lawsuit in which the court authorizes a single person or a small group of people to represent the interests of a larger group . . . .’” Id. at 179 (Gilman, J., dissenting) (quoting Black’s Law Dictionary 284 (9th ed. 2009)); see id. at 179-85. In Judge Gilman’s view, the other requirements found in Rule 23 are “‘bells and whistles’ whose absence in the pleadings do not prevent [a] suit from being con-sidered a class action under CAFA.” Id.5

A PAGA suit is a class action under the ap-proach of both the majority and the dissent. That is plainly true under Judge Gilman’s interpretation of CAFA, and the Fourth Circuit majority likewise re-jected a focus on the “administrative aspects of Rule 23” that the Ninth Circuit has now embraced. Id. at 175. In the CVS majority’s view, the key issue is

5 The Second Circuit has also held that a parens patrie suit is not a “class action” under CAFA. See, e.g., Purdue Pharma L.P. v. Kentucky, 704 F.3d 208 (2d Cir. 2013). This decision relies on the reasoning found in both Chimei and CVS. Id. 216-217. Ac-cordingly, it is unclear which interpretation the Second Circuit would apply in a case, like this one, where the representative action is brought by a member of the class whose claim is typi-cal of the claims of the class members.

16

whether the named plaintiff is a typical member of the group on whose behalf he brings a representative action. Id. at 175. Under this approach, too, a PAGA action brought by one employee on behalf of herself and similarly situated employees is a class action. The Ninth Circuit reached the opposite result only by focusing on the “administrative aspects” of class cer-tification that the Fourth Circuit found irrelevant.

In sum, the courts of appeals have adopted conflicting and inconsistent standards for determin-ing whether a state statute or law is “similar” to Rule 23 for purposes of CAFA’s definition of “class action.” These different standards have yielded incompatible results in the context of representative actions filed under statutes or rules that dispense with a formal certification process or that do not require explicit determinations of numerosity, superiority, typicality, and adequacy. This Court should grant the petition and resolve the split over the proper interpretation of the statutory term “class action” that lies at CAFA’s core.

B. The Ninth Circuit’s Interpretation Is Flawed and Contrary to CAFA’s Purpose.

1. CAFA provides that “the term ‘class action’ means any civil action filed under rule 23 of the Fed-eral 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). PAGA is plainly a “State statute” that is “similar” to Rule 23 in that it “authoriz[es] an action to be brought by 1

17

or more representative persons.” The only remaining question is whether PAGA is also similar to Rule 23 in that the representative action it authorizes is brought “as a class action.”

The statutory definition alone cannot resolve this question: it uses the term “class action” to de-fine “class action.” See Purdue Pharma, 704 F.3d at 214 (acknowledging that CAFA’s definition of “class action” is “circular”). When a statutory definition does not fully establish a term’s meaning, this Court relies on traditional tools of statutory interpretation to settle its meaning. Just last Term, the Court acknowledged that, in interpreting a defined term, “it is not unusual to consider the ordinary meaning” of that term. Bond v. United States, 134 S. Ct. 2077, 2091 (2014); see also CTS Corp. v. Waldburger, 134 S. Ct. 2175, 2187 (2014) (construing statutory defini-tions “[i]n light of the distinct purpose” of the statute). Likewise, when faced with a “completely circular” statutory definition, the Court has inter-preted the defined term according to its meaning at common law based on the presumption that Con-gress is aware of the law. See, e.g., Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323 (1992).

Based on its ordinary meaning, a “class action” is any representative action in which a plaintiff files suit on behalf of himself and other similarly situated individuals. When CAFA was enacted, Black’s Law Dictionary provided a general definition, which de-scribed a “class action” as “[a] lawsuit in which the court authorizes a single person or a small group of people to represent the interests of a larger group.” Black’s Law Dictionary 267 (8th ed. 2004). It also

18

stated, more specifically, that the named plaintiff and absent class members must be “similarly situat-ed.” Id. Neither the Black’s definition nor any other commonly accepted definition of which Chase is aware limited “class actions” to actions following a particular set of certification and notice procedures.6

As this straightforward definition indicates, a state statute authorizes a representative action to be brought “as a class action” whenever the plaintiff is asserting his or her own claims along with the claims of those “similarly situated.” Accord Brown, 738 F.3d at 931; CVS, 646 F.3d at 175-76. Representa-tive PAGA actions fit comfortably within this ordinary understanding. PAGA authorizes “an ag-grieved employee” to sue his employer “on behalf of himself or herself and other current or former em-ployees.” Cal. Labor Code § 2699(a). That is enough 6 Other dictionary definitions vary in their particulars, but re-flect the same essential meaning of “class action.” See, e.g., David Mellinkoff, Mellinkoff’s Dictionary of American Legal Usage 82 (1992) (“generally, a suit by (sometimes against) a representative of a class: a large number of people ‘similarly situated’ as to a claim that affects them all”); Dictionary of Modern Legal Usage 160 (2d ed., Bryan A. Garner, ed. 1995) (“a lawsuit instituted by one or more parties on behalf not only of themselves but also of many other parties, when common ques-tions of law and fact are involved”); 1 New Shorter Oxford English Dictionary 412 (1993) (“a single legal action brought on behalf of all the members of a group with a common interest or grievance”); Concise Oxford English Dictionary 263 (10th ed. rev. 2002) (“a law suit filed or defended by an individual acting on behalf of a group”); American Heritage Dictionary of the English Language (William Morris, ed. 1978) (“A lawsuit in which the plaintiff or plaintiffs bring suit on their own behalf and on behalf of many others who have the same claim against the defendant.”).

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to make it a “class action” as the term is commonly used. Nothing in the statutory text requires any fur-ther analysis of whether the specific procedural protections imposed by Rule 23, such as detailed no-tice and opt-out requirements, are also present. Such procedures reflect longstanding attempts to impose reasonable limits and safeguards on the use of class actions. The Ninth Circuit erred in conflat-ing these procedural protections with the fundamental attributes of a class action.

2. The Ninth Circuit’s interpretation also cannot be squared with “CAFA’s primary objective: ensuring Federal court consideration of interstate cases of national importance.” Standard Fire, 133 S. Ct. at 1350 (quotation marks and citation omitted). Congress enacted CAFA after finding that some state court judges too readily authorize class actions and approve class action settlements. See S. Rep. 109-14, at 13-23. Congress’s solution was to expand federal diversity jurisdiction so that more class actions are subject to “the strict requirements of Rule 23 . . . , which are intended to protect the due process rights of both unnamed class members and defendants.” Id. at 14.

To achieve Congress’s objectives, CAFA’s defi-nition of “class action” cannot be interpreted so narrowly as to exclude the representative actions that were the focus of Congress’s concern. To the contrary, as the Eighth Circuit noted in Brown, “[i]n passing CAFA, Congress emphasized that the term ‘class action’ should be ‘interpreted liberally.’” 738 F.3d at 931 n.6 (quoting S. Rep. No. 109-14, at 35 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 34). “‘Its

20

application should not be confined solely to lawsuits that are labeled ‘class actions’ by the named plaintiff or the state rulemaking authority. Generally speak-ing, lawsuits that resemble a purported class action should be considered class actions for the purpose of applying these provisions.’” Id.

The Ninth Circuit’s interpretation of CAFA turns this congressional purpose on its head. By lim-iting CAFA’s definition of “class action” to state-law actions that “closely resemble[]” class actions under Rule 23, App. 9a, the Ninth Circuit would relegate to state court the most abusive representative actions: those not governed by procedural protections of the kind that Rule 23 confers on defendants and un-named plaintiffs alike. Indeed, according to the decision below, state-law actions subject to the few-est procedural protections are the ones least likely to fall within CAFA’s reach.

Moreover, states seeking to offer their own cit-izens a favorable forum can readily thwart Congress’s objective of “ensuring Federal court con-sideration of interstate cases of national importance.” Under the loophole created by the Ninth Circuit, a state can simply strip away Rule 23-like procedures and thereby protect from removal what are, in substance, class actions. Congress could not have intended such ready circumvention of CA-FA’s expansion of diversity jurisdiction. And it certainly could not have meant to create such a seri-ous loophole simply by defining a class action as an action that is brought “as a class action.”

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The better interpretation of the term “class ac-tion” is that it includes any representative action in which one or more named plaintiffs file suit on behalf of themselves and others similarly situated. Nothing in the text or purpose of CAFA supports the Ninth Circuit’s contrary decisions that more “strictly con-strue[]” CAFA’s definition of “class action.” Chimei, 659 F.3d at 847.

II. THE DECISION BELOW ADDS TO THE CONFUSION REGARDING WHEN CLAIMANTS’ “COMMON AND UNDIVID-ED” INTEREST PERMITS AGGREGATION FOR PURPOSES OF THE AMOUNT-IN-CONTROVERSY RE-QUIREMENT.

The Ninth Circuit compounded its misinter-pretation of CAFA with a misinterpretation of the general diversity statute. If Baumann’s suit is not a class action serving as a procedural vehicle to unite a set of individualized claims, it can only be a single, “common and undivided” claim for $16 million. But for purposes of determining the amount in controver-sy, the court treated each employee’s “claim” separately.

Considered together, the Ninth Circuit’s com-panion holdings have a schizophrenic quality: the court characterized PAGA one way for purposes of CAFA, and another for purposes of calculating the amount in controversy. Perhaps more importantly, the two holdings work together to reduce dramatical-ly the scope of diversity jurisdiction over multi-million dollar representative actions, despite Con-

22

gress’s goal of expanding diversity jurisdiction in or-der to achieve national objectives. Both issues warrant review, and considering them together would allow the Court to assess the state of post-CAFA diversity jurisdiction in its broader context.

A. The Ninth Circuit’s Decision High-lights the “Mystifying” and “Unsatisfactory” State of the Law.

This Court’s most recent pronouncement on aggregation principles came nearly half a century ago in Snyder v. Harris, 394 U.S. 332 (1969). In that case, the Court announced the basic rule that aggre-gation is available when “two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.” Id. at 335. The Court did not, however, elaborate on how courts should determine whether claimants share a “com-mon and undivided interest.” Instead, it observed that “lower courts have developed largely workable standards for determining when claims are joint and common, and therefore entitled to be aggregated.” Id. at 341.

However true this was in 1969, it does not hold 45 years later. Decades of judicial attempts to apply this rule have revealed – in the words of the leading treatise on federal procedure – that “the dis-tinction between a common, undivided interest and several and distinct claims is far from clear.” 14A Charles Alan Wright et al., Federal Practice & Pro-cedure: Jurisdiction & Related Matters § 3704, at 600-01 (4th ed. 2011) [hereinafter “Wright & Miller”]. As a result, “[t]he rules relating to the aggregation of

23

multiple claims to satisfy the amount in controversy requirement have long been thought to be in an un-satisfactory state,” with “their application largely turn[ing] on a mystifying conceptual test.” Id.; see also Martin H. Redish, Reassessing the Allocation of Judicial Business Between State and Federal Courts: Federal Jurisdiction and “The Martian Chronicles”, 78 Va. L. Rev. 1769, 1808 (1992) (noting the “impos-sibility of deciphering the subtle differences between joint and several claims”).

The decision below exemplifies this confusion. Under the Ninth Circuit’s analysis, the only relevant factor was its view that the “[a]ggrieved employees” possess “rights [that] are held individually,” and thus petitioner’s “obligation to them is not ‘as a group.’” Urbino, 726 F.3d at 1122 (quoting Gibson v. Chrysler Corp., 261 F.3d 927, 944 (9th Cir. 2001)). But other courts have properly rejected this focus on the source of the claimants’ rights, and instead considered their unity of interest in a remedy, i.e., a “common fund” that could not be “adjudicated on an individual ba-sis.” Gilman v. BHC Securities, Inc., 104 F.3d 1418, 1423 (2d Cir. 1997). Had the Ninth Circuit followed the analysis of other circuits, it would not have been distracted by the various individual rights possessed by employees (for which they also have separate in-dividualized remedies), and instead would have focused on the unified nature of their remedy under PAGA. See Urbino, 726 F.3d at 1123-24 (Thomas, J., dissenting) (emphasizing that PAGA civil penalties do not “vindicate[] substantive rights of individual aggrieved employees,” that claims to such penalties are not assignable, and that any judgment binds ab-sent employees).

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Similar uncertainty prevails in related con-texts. For example, “[c]ourts disagree on whether claims for unjust enrichment, seeking disgorgement of amounts to which a defendant allegedly is not en-titled, create a collective right in a single fund so that the total disgorgement amounts can be used to satisfy the amount in controversy.” 1 Joseph M. McLaughlin, McLaughlin on Class Actions: Law & Practice § 2:6, at 48 (10th ed. 2013). Numerous courts have recognized that claims for disgorgement that (like the penalties here) are “separate from, and independent of, individual damage recovery” can be aggregated. In re Microsoft Corp. Antitrust Litig., 127 F. Supp. 2d 702, 720 (D. Md. 2001), aff’d sub nom., 444 F.3d 312 (4th Cir. 2006); see Everett v. Ver-izon Wireless, Inc., 460 F.3d 818, 826 (6th Cir. 2006) (discussing Microsoft at length, and distinguishing it based on differences in the underlying disgorgement regime).7 Other courts, meanwhile, have dismissive-ly rejected the “cloak of collectiveness” of disgorgement claims. E.g., In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d 952, 961 (9th Cir. 2001).

Courts have also had difficulty applying the “common and undivided” test to punitive damages. The Fifth Circuit has held that punitive damages claims under Mississippi law may be aggregated:

7 See also Mostofi v. Network Capital Funding Corp., 798 F. Supp. 2d 52, 55 (D.D.C. 2011); Aetna U.S. Healthcare, Inc. v. Aktiengesellschaft, 48 F. Supp. 2d 37, 40-43 (D.D.C. 1999); In re Cardizem CD Antitrust Litig., 90 F. Supp. 2d 819 (E.D. Mich. 1999).

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such claims are “fundamentally collective” because their purpose is “punishing and deterring wrongdo-ing.” Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1333 (5th Cir. 1995). That court, however, has viewed punitive damages in other states differently, while candidly recognizing the difficulty of rational-izing its decisions. See Ard v. Transcontinental Gas Pipe Line Corp., 138 F.3d 596, 602 (5th Cir. 1998) (concluding that Louisiana punitive damages claims cannot be aggregated, while conceding that “[i]t is unclear to us what Mississippi law regarding puni-tive damages drove the Allen panel”).8

In sum, the Snyder Court’s unadorned state-ment of the aggregation rule has led to widespread confusion and uncertainty. This case, in which the Ninth Circuit rejected aggregation for an indivisible, unassignable set of claims to a “common fund” of civil penalties, presents an ideal opportunity to supply needed guidance.

B. The Ninth Circuit’s Decision Is In-correct and Compounds the Problems Raised by the Ninth Cir-cuit’s Misinterpretation of CAFA.

Reflecting the widespread confusion surround-ing Snyder’s “common and undivided interest” standard, the Ninth Circuit viewed employees’ indi- 8 The “common and undivided” test has proved difficult to ad-minister in other areas as well. See Wright & Miller § 3704, at 601 (noting that “federal courts have experienced some difficul-ty in applying this distinction in the insurance context,” and discussing cases).

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vidual labor law rights as dispositive, disregarding their collective interest in the distinct remedy creat-ed by PAGA. Properly understood, these employees’ interest in a fund of penalties recovered in a repre-sentative PAGA action is common and undivided, and must be aggregated for purposes of calculating the amount in controversy.

As Judge Thomas persuasively explained in Urbino, PAGA “neither creates nor vindicates sub-stantive rights of individual aggrieved employees.” 726 F.3d at 1123 (Thomas, J., dissenting). To the contrary, these employees have a separate set of in-dividualized remedies for their employers’ alleged labor law violations, and “a judgment in a repre-sentative action under the [PAGA] does not preclude aggrieved employees from later pursuing individual . . . claims founded on the same labor code viola-tions.” Id. at 1124. Representative PAGA actions supplement these individualized remedies with a re-gime that is “designed to protect the public and not to benefit private parties.” Id. at 1123 (quoting Ari-as, 209 P.3d at 934) (emphasis added).

The statute does so by authorizing “an ag-grieved employee” to “recover the civil penalty” owed by the employer. Cal. Labor Code § 2699(g)(1) (em-phasis added). In other words, a single employee is entitled to collect all of the penalties resulting from all of her employer’s labor law violations. PAGA then provides for the allocation of that lump sum col-lected by the employee; 75% to the Labor and Workforce Development Agency, and 25% “to the ag-grieved employees” – that is, to the named plaintiff and any other aggrieved employees, collectively. Id.

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§ 2699(i). Indeed, any number of factors could affect the ultimate distribution of these funds (e.g., if some former employees could not be located), but the stat-ute says nothing about this allocation; instead, its paramount concern is that the defendant pays the full amount to “the aggrieved employees” as an un-differentiated whole.

According to the panel, the fact that aggrieved employees’ labor law “rights are held individually” was dispositive. Urbino, 726 F.3d at 1122.9 But however individualized the employees’ underlying rights, the separate and supplemental remedy au-thorized by PAGA is “common and undivided,” shared by the named plaintiff and any other ag-grieved employees represented by the named plaintiff. The pool of civil penalties that any employ-ee is entitled to recover represents a “common fund,” and that employee cannot attempt to do so without “implicating the rights of everyone involved.” Gil-man, 104 F.3d at 1423 (quotation marks and citation omitted). Indeed, absent parties are bound by the results of the representative plaintiff’s attempt to “recover” this fund, a fact that would “raise serious due process concerns” if the interests at stake were 9 After issuing this holding on aggregation, the court separate-ly observed that “to the extent” the Urbino plaintiffs asserted only the interests of the state, the state would not be a “citizen” for purposes of diversity jurisdiction. Urbino, 726 F.3d at 1118. Whatever arguments were made in Urbino, in this action Peti-tioners have never contended that the plaintiffs seek only to benefit the state’s interests. Rather, the relevant point for pur-poses of the Ninth Circuit’s aggregation holding is that the aggrieved employees have a private, but unified, interest in a common fund of civil penalties.

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distinct and several, rather than common and undi-vided. Urbino, 726 F.3d at 1124 (Thomas, J., dissenting).

In addition to reflecting an endemic misunder-standing of Snyder’s “common and undivided interest” standard, the Ninth Circuit’s aggregation holding aggravates the consequences of its CAFA er-ror. As discussed above, the Ninth Circuit has construed CAFA’s definition of “class action” narrow-ly, leaving significant representative actions in state courts despite Congress’s clear intent. In justifying that result, the court emphasized that “PAGA ac-tions . . . primarily seek to vindicate the public interest,” and that subsequent allocations of any col-lective recovery to individual employees is “not restitution for wrongs done to members of the class.” App. 14a (emphasis added). Yet in its aggregation decision, the court’s reasoning was the exact oppo-site: PAGA claims cannot be aggregated because all of the rights at issue “are held individually.” Urbino, 726 F.3d at 1122.

Taken together, these holdings prevent the removal statutes from serving their purpose of providing a federal forum to out-of-state defendants in high-stakes matters of interstate importance. Congress enacted CAFA because “abuses” of this Court’s decision in Snyder left important federal in-terests unprotected. See S. Rep. No. 109-14, at 10-11. The decision below not only recognizes a sub-stantial loophole in CAFA, but it then eviscerates the federal jurisdiction left standing by Snyder itself. Both decisions are wrong; together, they leave feder-

29

al interests even more vulnerable than they were be-fore CAFA.

III. THIS CASE PRESENTS AN IDEAL VE-HICLE FOR RESOLVING THE EXCEPTIONALLY IMPORTANT ISSUES PRESENTED.

Confronted with a national problem of class action abuse, Congress acted to ensure “‘Federal court consideration of interstate cases of national importance.’” Standard Fire, 133 S. Ct. at 1350 (quoting CAFA § 2(b)(2)). This case, in which an out-of-state employer faces more than $16 million in po-tential liability, is the paradigmatic case of “national importance” for which diversity jurisdiction was meant to be available. And it is not unique – every out-of-state company with employees in California faces a “flood” of PAGA litigation with massive expo-sure.10 Even if they possess valid defenses, defendants in these cases confront “the risk of ‘in ter-rorem’ settlements that class actions entail.” AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1752 (2011). They do so, however, without the protection of a federal forum that CAFA contemplated.

Beyond PAGA, moreover, the Ninth Circuit’s decision provides a roadmap for protectionist legisla-tion designed to thwart CAFA’s goals. Under the potent loophole created by the decision, states can

10 Erin Coe, Iskanian Ruling to Unleash Flood of PAGA Claims, Law360 (June 24, 2014), http://www.law360.com/articles /551335/iskanian-ruling-to-unleash-flood-of-paga-claims.

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trap out-of-state defendants in state court in multi-million dollar class actions simply by removing the procedural protections normally present in class ac-tions. Indeed, the perverse lesson of the Ninth Circuit’s decision is that by stripping core fairness guarantees from class actions, states can effectively deprive out-of-state defendants from the further pro-tection of a federal forum. Left unreviewed, the decision below is likely to prompt further efforts to circumvent CAFA through “representative actions” that are class actions in all but name.

The decision below not only undermines Con-gress’s goal of fairness, but also its view that class action litigation should be “efficient.” CAFA § 2(a)(1). Because PAGA allows the employees to pursue other claims in separate litigation, Cal. Labor Code § 2699(g)(1), the decision below exposes em-ployers to separate representative actions brought on behalf of the same employees and involving the same facts: a PAGA action in state court and a Rule 23 class action raising other claims in federal court. If the PAGA action is a “class action” under CAFA, the case can be removed to federal court and the two representative actions can be consolidated. But giv-en the decision below, the PAGA action must remain in state court and proceed on an inefficient parallel track while closely related claims are litigated in federal court. This result frustrates a core objective of CAFA, which was intended to relieve courts and class-action defendants of the burdens associated with such “overlapping and ‘copycat’ cases.” S. Rep. 109-14, at 5; id. at 22 (discussing the problem of “du-

31

plicative class actions asserting similar claims on behalf of essentially the same people”).11

This case presents an ideal vehicle to resolve these important issues. Moreover, because of factors endemic to the statutory scheme itself, future oppor-tunities for this Court to review the issues presented may be rare. Ordinarily, a denial of remand to state court is not immediately reviewable, 14C Charles Alan Wright et al., Federal Practice & Procedure: Jurisdiction & Related Matters § 3740, at 931 (4th ed. 2009),12 and a grant of remand is not reviewable at all, 28 U.S.C. § 1447(d). CAFA enacted an excep-tion to this principle, but with significant limitations: the court of appeals is not obliged to accept an ap-peal, and if it does so, it is required to act within 60 days. 28 U.S.C. § 1453(c).

These constraints have already allowed signif-icant questions about CAFA’s application to “private attorney general” actions in the District of Columbia to evade review. See In re U-Haul Int’l, Inc., No. 08-7122, 2009 WL 902414 (D.C. Cir. Apr. 6, 2009); id. at 1 (Rogers, J., dissenting from denial of leave to ap- 11 This result is not simply a hypothetical outcome. Chase presently faces exactly this kind of duplicative litigation. While Baumann seeks to represent Chase’s employees in a PAGA case in state court, another allegedly aggrieved employee has filed a federal class action complaint seeking other relief for the same alleged conduct. See Alakozai v. Chase Inv. Servs. Corp., No. CV 11-09178 SJO (JEMx), 2012 WL 748584 (C.D. Cal. Mar. 1, 2012), aff’d, 557 F. App’x 658, 2014 WL 487075 (9th Cir. 2014). 12 Of course, cases that proceed to the merits are often settled, in which case the opportunity for the court of appeals to consid-er jurisdictional issues after final judgment will not exist.

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peal) (explaining that 60-day requirement prevented meaningful review). Tellingly, it required unusual circumstances to reach a ruling in both the Ninth Circuit’s decision below and the Eighth Circuit’s con-flicting decision. In this case, the Ninth Circuit was able to consider the CAFA question not under the constraints of 28 U.S.C. § 1453, but because the dis-trict court had separately certified the aggregation issue for interlocutory appeal. App. 5a-6a. And in Brown, the Eighth Circuit had jurisdiction only be-cause the district court simultaneously denied remand and dismissed the complaint at the outset.

Further opportunities for this Court to review the Ninth Circuit’s expansive CAFA loophole are un-likely. Now that the circuit court has relegated all PAGA actions to state court, it has no reason to ac-cept another case arising under that statute, or to consider other “non-class” representative actions that fail its test. Cf. College of Dental Surgeons of Puerto Rico v. Conn. Gen. Life Ins. Co., 585 F.3d 33, 38 (1st Cir. 2009) (“[T]o warrant immediate appeal [under CAFA], the question presented usually will be unset-tled.”).

This case cleanly presents important questions of the interpretation of CAFA and federal diversity jurisdiction that have divided the courts of appeals. The Court should grant review now, and not await a different vehicle that may not come – not because the issues are unimportant or non-recurring, but simply because they are unusually resistant to preservation for appeal.

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CONCLUSION

The petition for a writ of certiorari should be granted.

September 2014

Respectfully submitted, ROBERT D. WICK MARK W. MOSIER Counsel of Record David M. Zionts Matthew J. Berns COVINGTON & BURLING LLP 1201 Pennsylvania Ave., N.W. Washington, DC 20004 (202) 662-5435 mmosier@cov.com Counsel for Petitioners Chase Investment Services Corp., JP Morgan Chase Bank, N.A., and J.P. Morgan Chase & Co.

1a

APPENDIX A FOR PUBLICATION

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

JOSEPH BAUMANN, individually, and on behalf of other members of the general public

similarly situated, Plaintiff-Appellant,

v. CHASE INVESTMENT SERVICES CORP., a Delaware

corporation; JPMORGAN CHASE BANK NA; JPMORGAN CHASE & CO., a Delaware corporation,

Defendants-Appellees. No. 12-55644

D.C. No. 2:11-cv-06667-GHK-FMO OPINION

Appeal from the United States District Court for the Central District of California

George H. King, Chief District Judge, Presiding Argued and Submitted March 5, 2013 Submission Vacated August 13, 2013

Resubmitted March 6, 2014 Pasadena, California Filed March 13, 2014

Before: Michael Daly Hawkins, Sidney R. Thomas, and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Hurwitz; Concurrence by Judge Thomas

2a

SUMMARY*

Class Action Fairness Act The panel reversed the district court’s order

denying plaintiff’s motion to remand an action, brought in state court under the California Labor Code Private Attorneys General Act of 2004, and then removed by defendants on the basis of diversity jurisdiction and pursuant to the Class Action Fairness Act of 2005.

Plaintiff sued his employer, Chase Investment Services Corporation, under the Private Attorney General Act in California superior court, alleging that Chase had failed to pay him and other “aggrieved parties” (Chase financial advisors) for overtime, provide for meal breaks, allow rest periods, and timely reimburse expenses. The complaint sought statutory civil penalties for each alleged violation, and asserted that plaintiff’s potential share of any penalties recovered and attorneys’ fees would be less than $75,000.

The panel held that the district court could not exercise jurisdiction over this removed California Private Attorney General action under the Class Action Fairness Act. The panel conclude that California Private Attorney General Act actions are not sufficiently similar to Rule 23 class actions 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.

3a establish the original jurisdiction of a federal court under the Class Action Fairness Act. The panel also noted that because plaintiff’s portion of the recovery would be less than $75,000, there was also no diversity jurisdiction under 28 U.S.C. § 1332(a), and therefore plaintiff’s motion to remand should have been granted. The panel reversed with instructions to grant that motion.

Judge Thomas concurred in the majority opinion. He wrote separately only to note his prior disagreement on the question of whether claims under the Labor Code Private Attorney General Act of 2004 can be aggregated in determining whether diversity jurisdiction exists. Urbino v. Orkin Services of California, Inc., 726 F.3d 1118, 1123 (9th Cir. 2013) (Thomas, J., dissenting).

COUNSEL

Glenn A. Danas (argued), Marc Primo, and Ryan H. Wu, Initiative Legal Group APC, Los Angeles, California, for Plaintiff-Appellant. Carrie A. Gonell (argued) and John A. Hayashi, Morgan, Lewis & Bockius LLP, Irvine, California; Samuel S. Shaulson, New York, New York; and Alison B. Willard, San Francisco, California, for Defendants-Appellees. Allen Graves (argued) and Elizabeth Sullivan, The Graves Firm, Pasadena, California, for Amicus Curiae Stacy Thompson.

4a George W. Abele and Melinda A. Gordon, Paul Hastings LLP, Los Angeles, California; Robin S. Conrad, Kate Comerford Todd, and Shane B. Kawka, National Chamber Litigation Center, Washington, D.C., for Amicus Curiae California Employment Law Council and Chamber of Commerce of the United States of America.

OPINION

HURWITZ, Circuit Judge: This is a civil action filed in California state court

under the California Labor Code Private Attorneys General Act of 2004 (“PAGA”), Cal. Lab. Code §§ 2698–2699.5, and then removed to the United States District Court for the Central District of California. PAGA authorizes aggrieved employees, acting as private attorneys general, to recover civil penalties from their employers for violations of the Labor Code. See Arias v. Super. Ct., 209 P.3d 923, 929–30 (Cal. 2009). The sole question presented on appeal is whether the district court had subject matter jurisdiction over this removed action.

In Urbino v. Orkin Services, 726 F.3d 1118 (9th Cir. 2013), we held that potential PAGA penalties against an employer may not be aggregated to meet the minimum amount in controversy requirement of 28 U.S.C. § 1332(a). The remaining issue in this appeal is whether a district court may instead exercise original jurisdiction over a PAGA action under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §§ 1332(d), 1453, 1711–15. We

5a hold that CAFA provides no basis for federal jurisdiction.

I. Factual and Procedural Background

Joseph Baumann sued his employer, Chase Investment Services Corporation (“Chase”), under PAGA in California superior court, alleging that Chase had failed to pay him and other “Aggrieved Parties” (Chase financial advisors) for overtime, provide for meal breaks, allow rest periods, and timely reimburse expenses. The complaint sought PAGA statutory civil penalties for each alleged violation, and asserted that Baumann’s potential share of any penalties recovered and attorneys’ fees would be less than $75,000.

Chase filed a notice of removal, invoking diversity jurisdiction under § 1332(a) and alleging that the amount in controversy exceeded $75,000 if all potential statutory penalties and attorneys fee awards were aggregated. The notice of removal also invoked CAFA jurisdiction under § 1332(d)(2), alleging minimal diversity, a class of more than 100 members, and an amount in controversy exceeding $5,000,000. The district court denied Baumann’s motion to remand, aggregating the potential claims against Chase and finding subject matter jurisdiction under § 1332(a). The court accordingly declined to address CAFA jurisdiction.

The district court certified its order denying Baumann’s motion to remand, and we permitted an appeal to be taken from that order. See 28 U.S.C. § 1292(b). Section 1292(b) authorizes appeals from orders, not questions, so “our review of the present

6a controversy is not automatically limited solely to the question deemed controlling by the district court.” In re Cinematronics, Inc., 916 F.2d 1444, 1449 (9th Cir. 1990). And, because the sole question remaining in this appeal—whether a PAGA suit is a “class action” as defined in CAFA, 28 U.S.C. § 1332(d)(1)(B)—is a purely legal issue, which we review de novo, Washington v. Chimei Innolux Corp., 659 F.3d 842, 846–47 (9th Cir. 2011), we choose as a matter of judicial economy to address it in the first instance.1

II. CAFA Jurisdiction

CAFA confers original jurisdiction to the district courts “of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which – any member of the class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2)–(A). The claims of class members may be aggregated to determine whether the amount in controversy requirement has been satisfied. Id. § 1332(d)(6). The class also must have at least 100 members. Id. § 1332(d)(5)(B). There is no question that this PAGA action involves statutory violations allegedly suffered by more than 100 Chase employees, that the citizenship of one of those employees is different than Chase’s, or that the 1 Because it is undisputed that Baumann’s portion of any recovery (including fees) would be less than $75,000, we hold for the reasons explained in Urbino that the district court erred in finding the amount in controversy requirement in § 1332(a) satisfied.

7a aggregated statutory penalties sought exceed $5,000,000. Therefore, the only issue for decision is whether this is a “class action.”

A “class action” is defined by CAFA 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.” Id. § 1332(d)(1)(B). Because this action was commenced in California state court, it clearly was not filed pursuant to Federal Rule of Civil Procedure 23. The question before us thus boils down to “whether the suit was ‘filed under’ a state statute or rule of judicial procedure ‘similar’ to Rule 23 that authorizes a class action.” Purdue Pharma L.P. v. Kentucky, 704 F.3d 208, 214 (2d Cir. 2013). We therefore begin with an overview of PAGA, the state statute under which this suit was filed.

1. PAGA The California legislature enacted PAGA because

of inadequate financing and staffing to enforce state labor laws. 2003 Cal. Stat. Ch. 906, §§ 1–2. The legislature declared it “in the public interest to allow aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, with the understanding that labor law enforcement agencies were to retain primacy over private enforcement efforts.” Arias, 209 P.3d at 929–30. If the California Labor and Workforce Development Agency (“LWDA”) declines to investigate an alleged labor law violation or issue a citation, an aggrieved employee may commence a PAGA action against an employer “personally and on

8a behalf of other current or former employees to recover civil penalties for Labor Code violations.” Id. at 930. “[T]he civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.” Cal. Lab. Code § 2699(f)(2). An aggrieved employee is “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” Id. § 2699(c). The LWDA receives seventy-five percent of the penalties collected in a PAGA action, and the aggrieved employees the remaining twenty-five percent. Id. § 2699(i).

2. PAGA and Class Actions Section 382 of the California Code of Civil

Procedure authorizes a class action if “the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.” In addition, before a class may be certified

a party must establish the existence of both an ascertainable class and a well-defined community of interest among the class members. The community of interest requirement involves three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.

9a Linder v. Thrifty Oil Co., 2 P.3d 27, 31 (Cal. 2000) (internal quotation marks and citations omitted).

The complaint in this case did not invoke the California class action statute. The state Labor Code is silent as to whether a PAGA action is a “class action,” but the California Supreme Court has authoritatively addressed that issue, holding that PAGA actions are not class actions under state law. Arias, 209 P.3d at 926. The court found PAGA actions fundamentally different from class actions, chiefly because the statutory suits are essentially law enforcement actions. Id. at 933–34.

The state high court’s decision, however, does not end our inquiry. CAFA does not require that a suit be filed under a state class action statute or rule, but only that the action be brought under a “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). “A state statute or rule is ‘similar’ to Federal Rule of Civil Procedure 23 if it closely resembles Rule 23 or is like Rule 23 in substance or in essentials.” West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169, 174 (4th Cir. 2011).

The substance and essentials of Rule 23 are familiar. Rule 23 allows for class actions “only if”:

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class;

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(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). In addition, a class action cannot be maintained unless one of the three requirements of Rule 23(b) is also met. A class certification order is subject to the detailed requirements of Rule 23(c) both as to form and notice.2 2 (1) Certification Order.

(A) Time to Issue. At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action. (B) Defining the Class; Appointing Class Counsel. An order that certifies a class action must define the class and the class claims, issues, or defenses, and must appoint class counsel under Rule 23(g). (C) Altering or Amending the Order. An order that grants or denies class certification may be altered or amended before final judgment.

(2) Notice. (A) For (b)(1) or (b)(2) Classes. For any class certified under Rule 23(b)(1) or (b)(2), the court may direct appropriate notice to the class. (B) For (b)(3) Classes. For any class certified under Rule 23(b)(3), the court must direct to class members the best notice that is

(...continued)

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In determining whether PAGA is sufficiently “similar” to Rule 23 to qualify under CAFA as a statute “authorizing a[] [class] action,” we do not write on a blank analytical slate. In Chimei, we held that “parens patriae suits filed by state Attorneys General may not be removed to federal court because the suits are not ‘class actions’ within the plain meaning of CAFA.” 659 F.3d at 847; cf. Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 739 (2014) (holding that a parens patriae suit is also not a CAFA “mass action”). We noted that parens patriae suits “lack statutory requirements for numerosity, commonality, typicality, or adequacy of representation that would make them sufficiently

practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice must clearly and concisely state in plain, easily understood language:

(i) the nature of the action; (ii) the definition of the class certified; (iii) the class claims, issues, or defenses; (iv) that a class member may enter an appearance through an attorney if the member so desires; (v) that the court will exclude from the class any member who requests exclusion; (vi) the time and manner for requesting exclusion; and (vii) the binding effect of a class judgment on members under Rule 23(c)(3).

Fed. R. Civ. P. 23(c).

12a ‘similar’ to actions brought under Rule 23, and . . . do not contain certification procedures.” Chimei, 659 F.3d at 850. Accordingly, we concluded that parens patriae suits “lack the defining attributes of true class actions. As such, they only ‘resemble’ class actions in the sense that they are representative suits.” Id.; accord Purdue Pharma, 704 F.3d at 216–17.

Applying the Chimei rubric, we conclude that PAGA actions are also not sufficiently similar to Rule 23 class actions to trigger CAFA jurisdiction. Unlike Rule 23(c)(2), PAGA has no notice requirements for unnamed aggrieved employees, nor may such employees opt out of a PAGA action. In a PAGA action, the court does not inquire into the named plaintiff’s and class counsel’s ability to fairly and adequately represent unnamed employees—critical requirements in federal class actions under Rules 23(a)(4) and (g). See, e.g., Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985) (“[T]he Due Process Clause of course requires that the named plaintiff at all times adequately represent the interests of the absent class members.”); Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157, 1165–69 (9th Cir. 2013) (noting the importance of class counsel’s ability to adequately represent the class and absent class members). Moreover, unlike Rule 23(a), PAGA contains no requirements of numerosity, commonality, or typicality. Cf. Purdue Pharma, 704 F.3d at 216–17 (noting that parens patriae suits contain none of the “hallmarks of Rule 23 class actions; namely, adequacy of representation, numerosity, commonality, typicality, or the requirement of class certification” and thus “lack the

13a equivalency to Rule 23 that CAFA demands”); CVS Pharmacy, 646 F.3d at 175–76 (noting that the West Virginia law at issue does not “contain[] any numerosity, commonality, or typicality requirements, all of which are essential to a class action.”).

In addition, the finality of PAGA judgments differs distinctly from that of class action judgments. The Federal Rules ensure that members of the class receiving notice and declining to opt out are bound by a judgment. Fed. R. Civ. P. 23(c)(3). Class action judgments are also preclusive as to all claims the class could have brought. Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867, 874 (1984).

In contrast, PAGA expressly provides that employees retain all rights “to pursue or recover other remedies available under state or federal law, either separately or concurrently with an action taken under this part.” Cal. Lab. Code § 2699(g)(1). “[I]if the employer defeats a PAGA claim, the nonparty employees, because they were not given notice of the action or afforded an opportunity to be heard, are not bound by the judgment as to remedies other than civil penalties.” Ochoa-Hernandez v. Cjaders Foods, Inc., No. C 08-2073 MHP, 2010 WL 1340777, at *4 (N.D. Cal. Apr. 2, 2010); see Arias, 209 P.3d at 934.

In short, “a PAGA suit is fundamentally different than a class action.” McKenzie v. Fed. Express Corp., 765 F. Supp. 2d 1222, 1233 (C.D. Cal. 2011). These differences stem from the central nature of PAGA. PAGA plaintiffs are private attorneys general who, stepping into the shoes of the LWDA, bring claims on behalf of the state agency. See Arias, 209 P.3d at

14a 929–30. Because an identical suit brought by the state agency itself would plainly not qualify as a CAFA class action, no different result should obtain when a private attorney general is the nominal plaintiff.

The nature of PAGA penalties is also markedly different than damages sought in Rule 23 class actions. In class actions, damages are typically restitution for wrongs done to class members. But PAGA actions instead primarily seek to vindicate the public interest in enforcement of California’s labor law. See Sample v. Big Lots Stores, Inc., No. C 10- 03276 SBA, 2010 WL 4939992, at *3 (N.D. Cal. Nov. 30, 2010); Franco v. Athens Disposal Co., 90 Cal. Rptr. 3d 539, 556 (Ct. App. 2009). The bulk of any recovery goes to the LDWA, not to aggrieved employees. And, the twenty-five percent portion of the penalty awarded to the aggrieved employee does not reduce any other claim that the employee may have against the employer—in this case, for example, for withheld overtime pay. See Caliber Bodyworks, Inc. v. Super. Ct., 36 Cal. Rptr. 3d 31, 40 (Ct. App. 2005). The employee’s recovery is thus an incentive to perform a service to the state, not restitution for wrongs done to members of the class.

In the end, Rule 23 and PAGA are more dissimilar than alike. A PAGA action is at heart a civil enforcement action filed on behalf of and for the benefit of the state, not a claim for class relief.

Despite these fundamental differences, Chase argues that PAGA actions are “class actions” under CAFA because PAGA is a state procedural law that would be displaced by Rule 23 in federal court under

15a the rationale of Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393 (2010). But Shady Grove is of no help to Chase. In Shady Grove, the Supreme Court considered whether a New York law, which precluded suits seeking recovery of penalties from proceeding as class actions, deprived a federal district court of jurisdiction over a diversity suit proposed as a Rule 23 class action. Id. at 397. The issues were whether Rule 23 conflicted with the New York law, and if so, whether the Rule exceeded the authorization of the Rules Enabling Act or Congress’s rulemaking power. Id. at 398. The Supreme Court held that the New York law conflicted with Rule 23, and after applying the analysis mandated by Hanna v. Plumer, 380 U.S. 460 (1965), concluded that the Federal Rule was not ultra vires. Shady Grove, 559 U.S. at 398–410; id. at 429–36 (Stevens, J., concurring).

In contrast, the issue before us is simply one of statutory construction—whether the action sought to be removed was “filed under” a state statute “similar” to Rule 23. We do not today decide whether a federal court may allow a PAGA action otherwise within its original jurisdiction to proceed under Rule 23 as a class action. We hold only that PAGA is not sufficiently similar to Rule 23 to establish the original jurisdiction of a federal court under CAFA.

III. Conclusion

For the reasons above, we hold that the district court could not exercise jurisdiction over this removed PAGA action under CAFA. And because, in light of Urbino, there was also no federal subject

16a matter jurisdiction under § 1332(a), see supra n.1, Baumann’s motion to remand should have been granted. We reverse with instructions to grant that motion.

REVERSED AND REMANDED WITH INSTRUCTIONS.

THOMAS, Circuit Judge, concurring: I concur in the majority opinion. I write

separately only to note my prior disagreement on the question of whether claims under the Labor Code Private Attorney General Act of 2004, Cal. Lab.Code § 2698 et seq, can be aggregated in determining whether diversity jurisdiction exists. Urbino v. Orkin Services of California, Inc., 726 F.3d 1118, 1123 (9th Cir. 2013) (Thomas, J., dissenting). Urbino is law of the circuit, of course, and binds this panel. However, if I were writing on a clean slate, I would hold otherwise as to the question of aggregation.

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APPENDIX B UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT JOSEPH BAUMANN, individually, and on behalf of

other members of the general public similarly situated, Plaintiff-Appellant,

v. CHASE INVESTMENT SERVICES CORP., a Delaware

corporation; JPMORGAN CHASE BANK NA; JPMORGAN CHASE & CO., a Delaware corporation,

Defendants-Appellees. No. 12-55644

D.C. No. 2:11-cv-06667-GHK-FMO Central District of California, Los Angeles

ORDER Filed May 6, 2014

Before: HAWKINS, THOMAS, and HURWITZ, Circuit Judges.

Judge Thomas voted to grant the petition for rehearing en banc, Judge Hurwitz voted to deny the petition for rehearing en banc, and Judge Hawkins recommended denying the petition for rehearing en banc.

The full court has been advised of the petition for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.

The petition for rehearing en banc is DENIED.

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APPENDIX C UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL

Case No.: CV 11-6667-GHK (FMOx) Date: October 26, 2011 Title: Joseph Baumann v. Chase Investment Services Corp., et al. Presiding: The Honorable George H. King, U.S. District Judge Deputy Clerk: Beatrice Herrera Court Reporter / Recorder: N/A Tape No.: N/A Attorneys Present for Plaintiffs: None Attorneys Present for Defendants: None Proceedings: (In Chambers) Order re: Plaintiffs’ Motion to Remand for Lack of Subject Matter Jurisdiction

This matter is before the Court on Plaintiff Joseph Baumann’s (“Plaintiff”) Motion to Remand for Lack of Subject Matter Jurisdiction (“Motion”). We have considered the papers filed in support of and in opposition to this Motion, and deem this matter appropriate for resolution without oral argument. L.R. 7-15. Because the Parties are familiar with the facts in this case, they will be repeated only as necessary. Accordingly, we rule as follows.

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On July 8, 2011, Plaintiff filed this action, which asserts only one claim – violation of the California Labor Code under the Private Attorneys General Act (“PAGA”) – against Defendants Chase Investment Services Corp., JPMorgan Chase Bank, and JPMorgan Chase & Co. (collectively, “Defendants”). Plaintiff’s Complaint alleges that Defendants systematically misclassified Financial Advisors as exempt employees to avoid paying overtime wages. Plaintiff’s Complaint only pursues penalties under PAGA and attorneys’ fees. The Complaint attempts to limit the amount in controversy, stating: “The amount in controversy for Plaintiff, including claims for civil penalties and pro rata share of attorneys’ fees, is less than seventy five thousand dollars ($75,000).” (Compl. ¶ 2).

On August 12, 2011, Defendants removed this action. Defendants’ Notice of Removal (“Notice”) states that we have subject matter jurisdiction over the action under the Class Action Fairness Act (“CAFA”), as Plaintiff’s action is asserted on behalf of Plaintiff individually “and on behalf of all other aggrieved employees” and thus, even though not pleaded as a class action, the case sufficiently “resembles” a class action to be governed by CAFA. The Notice additionally states that we have diversity jurisdiction over this case because the Parties are diverse and, in the aggregate, the statutory penalties sought exceed the $75,000 amount in controversy threshold of 28 U.S.C. § 1332(a).

Thereafter, Plaintiff filed this Motion. Plaintiff argues that this action is a representative action, not a class action under CAFA. Plaintiff further argues that we do not have diversity jurisdiction because the

20a Complaint limited Plaintiff’s possible recovery to $75,000, and Defendant has not demonstrated “to a legal certainty” that the amount in controversy exceeds $75,000 as required by Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994, 998-99 (9th Cir. 2007).

Although Lowdermilk recognized that a plaintiff can plead an amount in controversy so as to avoid federal jurisdiction, id., such pleading must be done in good faith. In this case, we conclude that Plaintiff does not have the ability to limit the amount of controversy to that owed only to him, due to the unique nature of PAGA claims, and thus, Lowerdermilk’s legal certainty standard does not apply.

PAGA permits aggrieved employees to recover civil penalties against an employer for any violation of a provision of the Labor Code that authorizes the Labor and Workforce Development Agency (“LWDA”) to assess a civil penalty. Cal. Labor Code § 2699(a). An aggrieved employee who brings a PAGA claim asserts such claim not only on behalf of himself but “does so as the proxy or agent of the state’s labor law enforcement agencies.” Arias v. Superior Court, 46 Cal. 4th 923, 933 (2009). PAGA claims brought by aggrieved employees are thus brought on behalf of any Plaintiff(s) named in the action, the state, and “other current or former employees.” Id.

When an aggrieved employee, or group of aggrieved employees, prevails on a PAGA claim, 75% of the total penalties are awarded to the LWDA, and 25% of the total penalties are distributed to aggrieved employees. § 2699(i). Moreover, although

21a PAGA claims need not be brought as class actions, a judgment in an action brought by an aggrieved employee “binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government.” Arias, 46 Cal. 4th at 933.

Because of the unique nature of a PAGA claim, an aggrieved employee who brings a PAGA suit has no right to seek solely individual recovery. Urbino v. Orkin Servs. of Cal., ___ F. Supp. 2d ___, 2011 WL 4595249, at *5 (C.D. Cal. Oct. 5, 2011). Although Plaintiff may in the end recover only his pro rata share of the 25% of penalties distributed to aggrieved employees, the amount recoverable in the action is “common and undivided” for purposes of 28 U.S.C. § 1332(a)’s amount in controversy requirement. See Urbino, 2011 WL 4595249, at *8. Given that Plaintiff cannot seek only his own recovery, he also cannot in good faith plead that the amount in controversy is limited to the amount owed only to him. Even if, as Plaintiff contends, “the amount in controversy for Plaintiff” is less than $75,000, the amount in controversy at issue under 28 U.S.C. § 1332(a) is the amount in controversy in the action.

The Complaint did not allege the total civil penalties at issue in this action – the aggregated penalties potentially payable to LWDA and all employees on whose behalf the PAGA claim is asserted. Instead, it only alleges the amount that Plaintiff himself would recover if successful. Because of this, the full amount in controversy is ambiguous from the face of Plaintiff’s complaint. Accordingly, Defendants need only show by a preponderance of the evidence that the amount in

22a controversy exceeds $75,000. See Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007).

Defendants submitted a Declaration by Trese C. Cintron, a Vice President in the Human Resources Department for Defendant JPMorgan Chase Bank, N.A., attesting that Defendants employed 699 individuals as Financial Advisors during the time period at issue in Plaintiff’s Complaint and that Defendants pay such employees semi-monthly. Applying Plaintiff’s allegations of systematic misclassification of Financial Advisors to this number of aggrieved employees results in an amount in controversy in excess of $13 million. Plaintiff argues that Defendants cannot assume a 100% violation rate, and thus Defendant’s calculation of the total penalties in controversy is highly inflated. But, given the large number of Financial Advisors employed by Defendant during the period at issue (699), and the $100-$200 default civil penalty for each violation,1 we conclude that Defendants have, at the very least, demonstrated by a preponderance of the evidence that the amount in controversy exceeds $75,000. See Urbino, 2011 WL 4595249, at *9 (finding the amount in controversy to be established by similar calculations).

Accordingly, we conclude that we have subject matter jurisdiction over this action under 28 U.S.C.

1 Each pay period forms the basis for a separate violation under PAGA. Cal. Labor Code § 2699(f)(2).

23a § 1332(a).2 Plaintiff’s Motion to Remand is DENIED.

IT IS SO ORDERED. Initials of Deputy Clerk: ljw for Bea

2 In light of our conclusion, we do not decide if subject matter jurisdiction also exists under CAFA. However, we note that Defendant’s argument – that a representative action that is not brought as a class action is still considered a class action under CAFA – appears to be foreclosed by Arias, 46 Cal. 4th 969, which held that federal class action requirements need not be met when an employee brings a representative action under PAGA. See also Sample v. Big Lots Stores, Inc., No. C 10-3276 SBA, 2010 WL 4939992 (N.D. Cal. Nov. 30, 2010) (holding that a representative action under PAGA that is not pleaded as a class action is not removable under CAFA).

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APPENDIX D SUPERIOR COURT

OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES

JOSEPH BAUMANN, individually, and on behalf of other members of the general public

similarly situated, Plaintiff,

v. CHASE INVESTMENT SERVICES CORP., a Delaware

corporation; JPMORGAN CHASE BANK, a New York corporation; JPMORGAN CHASE & CO., a Delaware

corporation; and DOES 1 through 10, inclusive, Defendants.

Case No.: BC464979 COMPLAINT FOR ENFORCEMENT OF THE

PRIVATE ATTORNEYS GENERAL ACT, CALIFORNIA LABOR CODE §§ 2698 ET SEQ.

(1) Violation of Labor Code §§ 2698, et seq. (“PAGA”) Jury Trial Demanded

Filed: July 8, 2011

Plaintiff, individually and on behalf of all other

aggrieved employees alleges as follows: JURISDICTION AND VENUE

1. This Court has jurisdiction over this action pursuant to the California Constitution, Article VI, section 10. The statues under which this action is

25a brought do not specify any other basis for jurisdiction.

2. The amount in controversy for Plaintiff, including claims for civil penalties and pro rata share of attorneys’ fees, is less than seventy five thousand dollars ($75,000).

3. This Court has jurisdiction over all Defendants because, upon information and belief, Defendants are either citizens of California, have sufficient minimum contacts in California, or otherwise intentionally avail itself of the California market so as to render the exercise of jurisdiction over them by the California courts consistent with traditional notions of fair play and substantial justice.

4. Venue is proper in this Court because, upon information and belief, Defendants reside, transact business, or have offices in this county and the acts and omissions alleged herein took place in this county.

5. California Labor Code sections 2699 et seq., the “Labor Code Private Attorneys Generals Act” (“PAGA”), authorizes aggrieved employees to sue directly for various civil penalties under the California Labor Code.

6. Plaintiff timely provided notice on July 6, 2011 to the California Labor and Workforce Development Agency (“LWDA”) and to Defendants, pursuant to California Labor Code section 2699.3(a).

THE PARTIES 7. Plaintiff JOSEPH BAUMANN is a resident

of Riverside County, California.

26a

8. Defendant CHASE INVESTMENT SERVICES CORP. was and is, upon information and belief, a Delaware corporation, doing business in California, and at all times hereinafter mentioned, an employer whose employees are engaged throughout this county, the State of California, or the various states of the United States of America.

9. Defendant JPMORGAN CHASE BANK was and is, upon information and belief, a New York corporation, doing business in California, and at all times hereinafter mentioned, an employer whose employees are engaged throughout this county, the State of California, or the various states of the United States of America.

10. Defendant JPMORGAN CHASE & CO. was and is, upon information and belief, a Delaware corporation, doing business in California, and at all times hereinafter mentioned, an employer whose employees are engaged throughout this county, the State of California, or the various states of the United States of America.

11. Plaintiff is unaware of the true names or capacities of the Defendants sued herein under the fictitious names DOES 1 through 10, but will seek leave of this Court to amend the complaint and serve such fictitiously named Defendants once their names and capacities become known.

12. Plaintiff is informed and believes, and thereon alleges, that DOES 1 through 10 are the partners, agents, owners, shareholders, managers or employees of CHASE INVESTMENT SERVICES CORP., JPMORGAN CHASE BANK, and/or JPMORGAN CHASE & CO. at all relevant times.

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13. Plaintiff is informed and believes, and thereon alleges, that each and all of the acts and omissions alleged herein was performed by, or is attributable to, CHASE INVESTMENT SERVICES CORP., JPMORGAN CHASE BANK, JPMORGAN CHASE & CO., and/or DOES 1 through 10 (collectively “Defendants”), each acting as the agent for the other, with legal authority to act on the other’s behalf. The acts of any and all Defendants were in accordance with, and represent, the official policy of Defendants.

14. At all relevant times, Defendants, and each of them, ratified each and every act or omission complained of herein. At all relevant times, Defendants, and each of them, aided and abetted the acts and omissions of each and all the other Defendants in proximately causing the damages herein alleged.

15. Plaintiff is informed and believes, and thereon alleges, that each of said Defendants is in some manner intentionally, negligently, or otherwise responsible for the acts, omissions, occurrences, and transactions alleged herein.

GENERAL ALLEGATIONS 16. At all relevant times set forth, Defendants

employed Plaintiff and other persons as exempt or salaried employees.

17. Defendants employed Plaintiff from June 2010 to January 2011. Defendants classified Plaintiff as an exempt, salaried “Financial Advisor Associate” at Defendants’ Los Angeles, California business location. Plaintiff typically worked fifty-two (52) to fifty-eight (58) hours per week.

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18. As a Financial Advisor Associate, Plaintiff spent the vast majority of his time trying to sell Defendants’ standardized investment products to customers. Specifically, Defendants created and implemented a highly detailed script for Plaintiff and other Financial Advisors to follow when attempting to sell Defendants’ investment products to customers. Defendants scripted every part of Financial Advisors’ job duties, including what they were to say to customers and which investment products they were to recommend to customers. As such, Plaintiff and other Financial Advisors had little to no discretion in the performance of their job duties. In fact, Defendants reprimanded Plaintiff and other Financial Advisors when they did not follow Defendants’ script. Defendants also required Plaintiff and other Financial Advisors to make cold calls to existing bank customers and make appointments for the customers to come into Defendants’ banks. Moreover, Defendants regularly required Plaintiff and other Financial Advisors to attend meetings to review their scripted sales pitches and discuss their sales targets. Plaintiff did not have authority to hire or fire Defendants’ employees.

19. Defendants continue to employ exempt or salaried Financial Advisors within California.

20. Plaintiff is informed and believes, and thereon alleges, that at all times herein mentioned, Defendants were advised by skilled lawyers and other professionals, employees and advisors knowledgeable about California labor and wage law, employment and personnel practices, and about the requirements of California law.

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21. Plaintiff is informed and believes, and thereon alleges, that at all times herein mentioned, Defendants engaged in a systematic business practice and policy of misclassifying Plaintiff and other Financial Advisors as exempt from the requirements of the California Labor Code and the applicable IWC Wage Orders. Plaintiff, while employed by Defendants as a Financial Advisor Associate, worked long hours, in excess of eight (8) hours in a day or forty (40) hours in a week. Plaintiff worked over ten (10) hours per day and approximately fifty-two (52) to fifty-eight (58) hours per week. Moreover, the majority of Plaintiff’s work for Defendants was non-managerial in nature and Plaintiff did not possess the authority to hire or fire Defendants’ employees. Defendants willfully, knowingly and intentionally misclassified Plaintiff and other aggrieved employees and falsely represented to Plaintiff that he was properly classified all in order to avoid paying overtime wages and increase Defendants’ profits.

22. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to receive certain wages for overtime compensation and that they were not receiving certain wages for overtime compensation.

23. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to receive all meal periods or payment of one (1) additional hour of pay at Plaintiff’s and other aggrieved employees’ regular rate of pay each day they did not receive a timely

30a uninterrupted meal period, and that they did not receive all meal periods or payment of one (1) additional hour of pay at Plaintiff’s and other aggrieved employees’ regular rate of pay each day they did not receive a timely uninterrupted meal period.

24. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to receive all rest periods or payment of one (1) additional hour of pay at Plaintiff’s and other aggrieved employees’ regular rate of pay each day a rest period was missed, and that they did not receive all rest periods or payment of one (1) additional hour of pay at Plaintiff’s and other aggrieved employees’ regular rate of pay each day a rest period was missed.

25. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to timely payment of wages during their employment. In violation of the California Labor Code, Plaintiff and other aggrieved employees did not receive payment of all wages, including, but not limited to, overtime wages and missed meal and rest period premiums, within permissible time periods.

26. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to timely payment of all wages upon termination. In violation of the California Labor Code, Plaintiff and other aggrieved

31a employees did not receive payment of all wages, including, but not limited to, overtime wages and missed meal and rest period premiums, within permissible time periods.

27. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to receive complete and accurate wage statements in accordance with California law. In violation of the California Labor Code, Plaintiff and other aggrieved employees were not provided complete and accurate wage statements.

28. Plaintiff is informed and believes, and thereon alleges, that Defendants knew or should have known that Plaintiff and other aggrieved employees were entitled to receive full reimbursement for all business-related expenses and costs they incurred during the course and scope of their employment, and that they did not receive full reimbursement of applicable business-related expenses and costs they incurred.

29. Plaintiff is informed and believes, and thereon alleges, that at all times herein mentioned, Defendants knew or should have known that they had a duty to compensate Plaintiff and other aggrieved employees, and that Defendants had the financial ability to pay such compensation, but willfully, knowingly and intentionally failed to do so, and falsely represented to Plaintiff and other aggrieved employees that they were properly denied wages, all in order to increase Defendants’ profits.

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30. At all times herein set forth, PAGA was applicable to Plaintiff’s employment by Defendants.

31. At all times herein set forth, PAGA provides that any civil penalty which may be assessed and collected by the LWDA for violations of the California Labor Code may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself and other current or former employees pursuant to procedures outlined in California Labor Code section 2699.3.

32. Pursuant to PAGA, a civil action under PAGA may be brought by an “aggrieved employee,” who is any person that was employed by the alleged violator and against whom one or more of the alleged violations was committed.

33. Plaintiff was employed by Defendants and the alleged violations were committed against him during his time of employment and he is, therefore, an aggrieved employee. Plaintiff and other employees are “aggrieved employees” as defined by California Labor Code section 2699(c) in that they are all current or former employees of Defendants, and one or more of the alleged violations were committed against them.

34. Pursuant to California Labor Code sections 2699.3 and 2699.5, an aggrieved employee, including Plaintiff, may pursue a civil action arising under PAGA after the following requirements have been met:

a) The aggrieved employee shall give written notice by certified mail (hereinafter “Employee’s Notice”) to the LWDA and the employer of the specific provisions of the

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California Labor Code alleged to have been violated, including the facts and theories to support the alleged violations.

b) The LWDA shall provide notice (hereinafter “LWDA Notice”) to the employer and the aggrieved employee by certified mail that it does not intend to investigate the alleged violation within thirty (30) calendar days of the postmark date of the Employee’s Notice. Upon receipt of the LWDA Notice; or if the LWDA Notice is not provided within thirty-three (33) calendar days of the postmark date of the Employee’s Notice, the aggrieved employee may commence a civil action pursuant to California Labor Code section 2699 to recover civil penalties in addition to any other penalties to which the employee may be entitled. 35. On July 6, 2011, Plaintiff provided written

notice by certified mail to the LWDA and to Defendants of the specific provisions of the California Labor Code alleged to have been violated, including the facts and theories to support the alleged violations, pursuant to California Labor Code section 2699.3.

36. Therefore, as of July 6, 2011, the administrative prerequisites under California Labor Code section 2699.3(a) are satisfied and Plaintiff has authorization to recover civil penalties against Defendants, in addition to other remedies, for violations of California Labor Code sections 201, 202, 203, 204, 226(a), 226.7, 510, 512(a), 1198, 2800, and 2802, unless the LWDA provides timely notice of its intent to investigate Plaintiff’s Labor Code claims.

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FIRST CAUSE OF ACTION Violation of California Labor Code §§ 2698, et

seq. (Against All Defendants)

37. Plaintiff incorporates by reference and re-alleges as if fully stated herein the material allegations set out in paragraphs 1 through 36.

38. California Labor Code sections 2698, et seq. (“PAGA”) permits Plaintiff to recover civil penalties for the violation(s) of the Labor Code sections enumerated in Labor Code section 2699.5.

39. PAGA provides as follows, “[n]otwithstanding any other provision of law, a plaintiff may as a matter of right amend an existing complaint to add a cause of action arising under this part at any time within 60 days of the time periods specified in this part.”

40. Defendants’ conduct, as alleged herein, violates numerous sections of the California Labor Code, including, but not limited to, the following:

a) Violation of Labor Code sections 510 and 1198 for Defendants’ failure to compensate Plaintiff and other aggrieved employees with all required overtime pay;

b) Violation of Labor Code sections 226.7 and 512 for failure to provide all meal and rest breaks to Plaintiff and other aggrieved employees;

c) Violation of Labor Code sections 2800 and 2802 for failure to reimburse Plaintiff and

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other aggrieved employees for necessary business-related expenses incurred;

d) Violation of Labor Code section 226 for failure to provide accurate wage statements;

e) Violation of Labor Code sections 201 and 202 for failure to timely pay all earned wages to Plaintiff and other aggrieved employees upon discharge; and

f) Violation of Labor Code section 204 for failure to timely pay all earned wages to Plaintiff and other aggrieved employees during employment; 41. California Labor Code section 510 codifies

the right to overtime compensation at one-and-one-half times the regular hourly rate for hours worked in excess of eight (8) hours in a day or forty (40) hours in a week or for the first eight (8) hours worked on the seventh day of work, and to overtime compensation at twice the regular hourly rate for hours worked in excess of twelve (12) hours in a day or in excess of eight (8) hours in a day on the seventh day of work. Specifically, California Labor Code section 1198 and the applicable IWC Wage Order provide that Defendants are and were required to pay Plaintiff and other aggrieved employees working more than eight (8) hours in a day or more than forty (40) hours in a workweek at the rate of time-and-one-half for all hours worked in excess of eight (8) hours in a day or more than forty (40) hours in a workweek; Plaintiff and other aggrieved employees working more than twelve (12) hours in a day are and were entitled to be paid at a rate of two times their regular rate of pay. During the relevant time period,

36a Plaintiff and other aggrieved employees worked in excess of eight (8) hours in a day, in excess of twelve (12) hours in a day, and/or in excess of forty (40) hours in a week. For example, Plaintiff and other aggrieved employees worked over ten (10) hours per day and approximately fifty-two (52) to fifty-eight (58) hours a week, without receiving overtime wages for hours worked in excess of eight (8) hours in a day or forty (40) hours in a week. Defendants’ failure to pay Plaintiff and other aggrieved employees the unpaid balance of overtime compensation, as required by California law, violates the provisions of California Labor Code sections 510 and 1198, and is therefore unlawful.

42. California Labor Code section 226.7 provides that no employer shall require an employee to work during any meal period mandated by an applicable order of the California IWC. The applicable IWC Wage Order and California Labor Code section 512(a) provide that an employer may not require, cause or permit an employee to work for a period of more than five (5) hours per day without providing the employee with an uninterrupted meal period of not less than thirty (30) minutes, except that if the total work period per day of the employee is not more than six (6) hours, the meal period may be waived by mutual consent of both the employer and the employee. California Labor Code section 512(a) also provides that an employer may not employ an employee for a work period of more than ten (10) hours per day without providing the employee with a second meal period of not less than thirty (30) minutes, except that if the total hours worked is no more than twelve (12) hours, the second

37a meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived. During the relevant time period, Plaintiff and other aggrieved employees did not receive timely, uninterrupted meal periods of at least thirty (30) minutes. For example, Plaintiff and other aggrieved employees could not take meal periods due to the flow of customers and high volume of work they had to complete at Defendants’ banks. Defendants failed to pay Plaintiff and other aggrieved employees the full meal period premium due pursuant to California Labor Code section 226.7.

43. California Labor Code section 226.7 also provides that no employer shall require an employee to work during any rest period mandated by an applicable order of the California IWC. The applicable IWC Wage Order provides that “[e]very employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period” and that the “rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof” unless the total daily work time is less than three and one-half (3½) hours. During the relevant time period, Plaintiff and other aggrieved employees did not receive a ten (10) minute rest period for every four (4) hours worked due to the flow of customers and high volume of work they had to complete at Defendants’ banks. Defendants failed to pay Plaintiff and other aggrieved employees the full rest period premium due pursuant to California Labor Code section 226.7.

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44. California Labor Code sections 2800 and 2802 provide that an employer must reimburse employees for all necessary expenditures. During the relevant time period, Plaintiff and other aggrieved employees incurred necessary business-related expenses and costs that were not fully reimbursed by Defendants. Defendants had, and continue to have, a policy of not reimbursing employees, including Plaintiff, for mileage expenses necessarily incurred during the performance of their job duties. For example, Plaintiff and other aggrieved employees had to drive from his bank branch to attend mandatory meetings at other locations, but was not reimbursed for his mileage expenses.

45. California Labor Code section 226(a) provides that every employer shall furnish each of his or her employees an accurate itemized wage statement in writing, including the name and address of the legal entity that is the employer, total hours worked and all applicable hourly rates, among other things. Defendants have intentionally and willfully failed to provide employees with complete and accurate wage statements. The deficiencies include, among other things, the failure to accurately list the total hours worked by Plaintiff and other aggrieved employees. As a result of Defendants’ violation of California Labor Code section 226(a), Plaintiff and other aggrieved employees have suffered injury and damage to their statutorily protected rights. Specifically, Plaintiff and other aggrieved employees have been injured by Defendants’ intentional violation of California Labor Code section 226(a) because they were denied both

39a their legal right to receive, and their protected interest in receiving, accurate, itemized wage statements under California Labor Code section 226(a). In addition, because Defendants failed to provide the accurate number of total hours worked on wage statements, Plaintiff has been prevented by Defendants from determining if all hours worked were paid and the extent of the underpayment. Plaintiff has had to file this lawsuit, conduct discovery, reconstruct time records, and perform computations in order to analyze whether in fact Plaintiff was paid correctly and the extent of the underpayment, thereby causing Plaintiff to incur expenses and lost time. Plaintiff would not have had to engage in these efforts and incur these costs had Defendants provided the accurate number of total hours worked. This has also delayed Plaintiff’s ability to demand and recover the underpayment of wages from Defendants.

46. California Labor Code sections 201 and 202 provide that if an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately, and that if an employee voluntarily leaves his or her employment, his or her wages shall become due and payable not later than seventy-two (72) hours thereafter, unless the employee has given seventy-two (72) hours previous notice of his or her intention to quit, in which case the employee is entitled to his or her wages at the time of quitting. During the relevant time period, Defendants wilfully failed to pay Plaintiff and other aggrieved employees who are no longer employed by Defendants all their earned wages, including overtime and missed meal and rest

40a period premiums, either at the time of discharge, or within seventy-two (72) hours of their leaving Defendants’ employ. Defendants’ failure to pay Plaintiff and other aggrieved employees who are no longer employed by Defendants all their earned wages, including, but not limited to, overtime and missed meal and rest period premiums, at the time of discharge, or within seventy-two (72) hours of their leaving Defendants’ employ, is in violation of California Labor Code sections 201 and 202.

47. California Labor Code section 204 requires that all wages earned by any person in any employment between the 1st and the 15th days, inclusive, of any calendar month, other than those wages due upon termination of an employee, are due and payable between the 16th and the 26th day of the month during which the labor was performed, and that all wages earned by any person in any employment between the 16th and the last day, inclusive, of any calendar month, other than those wages due upon termination of an employee, are due and payable between the 1st and the 10th day of the following month. California Labor Code section 204 also requires that all wages earned for labor in excess of the normal work period shall be paid no later than the payday for the next regular payroll period. During the relevant time period, Defendants failed to pay Plaintiff and other aggrieved employees all wages due to them within any time period specified by California Labor Code section 204 including, but not limited to, overtime and premium wages for meal and rest breaks that were not provided.

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48. Pursuant to California Labor Code sections 2699(a), 2699.3, and 2699.5, Plaintiff and all other aggrieved employees are entitled to recover civil penalties against Defendants, in addition to other remedies, for violations or California Labor Code sections 201, 202, 203, 204, 226(a), 226.7, 510, 512(a), 1198, 2800, and 2802.

REQUEST FOR JURY TRIAL Plaintiff requests a trial by jury.

PRAYER FOR RELIEF Plaintiff, and on behalf of all others similarly

situated, prays for relief and judgment against Defendants, jointly and severally, as follows:

1. For penalties and attorneys’ fees in excess of twenty-five thousand dollars ($25,000).

As to the First Cause of Action 2. That the Court declare, adjudge and

decree that Defendants violated the following California Labor Code sections: 510 and 1198 (by failing to provide Plaintiff and other aggrieved employees all overtime compensation), 226.7 and 512 (by failing to provide all meal and rest periods and failing to pay for all missed meal and rest periods), 226(a) (by failing to provide accurate wage statements), 201, 202, 203, 204 (by failing to pay all earned wages during employment and upon termination), and 2800 and 2802 (by failing to reimburse for all business expenses necessarily incurred).

3. For civil penalties pursuant to California Labor Code sections 2699(a) and/or 2699(f)

42a and (g), plus costs and attorneys’ fees, for violations of California Labor Code sections 201, 202, 203, 204, 226(a), 226.7, 510, 512(a), 1198, 2800, and 2802; and

4. For such other and further relief as the Court may deem equitable and appropriate. DATED: July 7, 2011

Respectfully submitted, Initiative Legal Group APC Miriam Schimmel Andrew Sokolowski Joshua Carlon Attorneys for Plaintiff Joseph Baumann

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APPENDIX E

28 U.S.C. § 1332

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between—

(1) citizens of different States;

(2) citizens of a State and citizens or subjects of a foreign state, except that the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State;

(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and

(4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States.

* * *

(d)(1) In this subsection—

(A) the term “class” means all of the class members in a class action;

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(B) the term “class action” means 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;

(C) the term “class certification order” means an order issued by a court approving the treatment of some or all aspects of a civil action as a class action; and

(D) the term “class members” means the persons (named or unnamed) who fall within the definition of the proposed or certified class in a class action.

(2) The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which—

(A) any member of a class of plaintiffs is a citizen of a State different from any defendant;

(B) any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or

(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.

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(3) A district court may, in the interests of justice and looking at the totality of the circumstances, decline to exercise jurisdiction under paragraph (2) over a class action in which greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed based on consideration of—

(A) whether the claims asserted involve matters of national or interstate interest;

(B) whether the claims asserted will be governed by laws of the State in which the action was originally filed or by the laws of other States;

(C) whether the class action has been pleaded in a manner that seeks to avoid Federal jurisdiction;

(D) whether the action was brought in a forum with a distinct nexus with the class members, the alleged harm, or the defendants;

(E) whether the number of citizens of the State in which the action was originally filed in all proposed plaintiff classes in the aggregate is substantially larger than the number of citizens from any other State, and the citizenship of the other members of the proposed class is dispersed among a substantial number of States; and

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(F) whether, during the 3-year period preceding the filing of that class action, 1 or more other class actions asserting the same or similar claims on behalf of the same or other persons have been filed.

(4) A district court shall decline to exercise jurisdiction under paragraph (2)—

(A)(i) over a class action in which—

(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;

(II) at least 1 defendant is a defendant—

(aa) from whom significant relief is sought by members of the plaintiff class;

(bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and

(cc) who is a citizen of the State in which the action was originally filed; and

(III) principal injuries resulting from the alleged conduct or any related

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conduct of each defendant were incurred in the State in which the action was originally filed; and

(ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons; or

(B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed.

(5) Paragraphs (2) through (4) shall not apply to any class action in which—

(A) the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief; or

(B) the number of members of all proposed plaintiff classes in the aggregate is less than 100.

(6) In any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs.

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(7) Citizenship of the members of the proposed plaintiff classes shall be determined for purposes of paragraphs (2) through (6) as of the date of filing of the complaint or amended complaint, or, if the case stated by the initial pleading is not subject to Federal jurisdiction, as of the date of service by plaintiffs of an amended pleading, motion, or other paper, indicating the existence of Federal jurisdiction.

(8) This subsection shall apply to any class action before or after the entry of a class certification order by the court with respect to that action.

(9) Paragraph (2) shall not apply to any class action that solely involves a claim—

(A) concerning a covered security as defined under 16(f)(3) of the Securities Act of 1933 (15 U.S.C. 78p (f)(3)) and section 28(f)(5)(E) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb (f)(5)(E));

(B) that relates to the internal affairs or governance of a corporation or other form of business enterprise and that arises under or by virtue of the laws of the State in which such corporation or business enterprise is incorporated or organized; or

(C) that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security (as defined under section 2(a)(1) of the Securities

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Act of 1933 (15 U.S.C. 77b (a)(1)) and the regulations issued thereunder).

(10) For purposes of this subsection and section 1453, an unincorporated association shall be deemed to be a citizen of the State where it has its principal place of business and the State under whose laws it is organized.

(11)(A) For purposes of this subsection and section 1453, a mass action shall be deemed to be a class action removable under paragraphs (2) through (10) if it otherwise meets the provisions of those paragraphs.

(B)(i) As used in subparagraph (A), the term “mass action” means any civil action (except a civil action within the scope of section 1711(2)) in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a).

(ii) As used in subparagraph (A), the term “mass action” shall not include any civil action in which—

(I) all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that

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State or in States contiguous to that State;

(II) the claims are joined upon motion of a defendant;

(III) all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such action; or

(IV) the claims have been consolidated or coordinated solely for pretrial proceedings.

(C)(i) Any action(s) removed to Federal court pursuant to this subsection shall not thereafter be transferred to any other court pursuant to section 1407, or the rules promulgated thereunder, unless a majority of the plaintiffs in the action request transfer pursuant to section 1407.

(ii) This subparagraph will not apply—

(I) to cases certified pursuant to rule 23 of the Federal Rules of Civil Procedure; or

(II) if plaintiffs propose that the action proceed as a class action pursuant to rule 23 of the Federal Rules of Civil Procedure.

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(D) The limitations periods on any claims asserted in a mass action that is removed to Federal court pursuant to this subsection shall be deemed tolled during the period that the action is pending in Federal court.

Cal. Labor Code § 2698 Short title

This part shall be known and may be cited as the Labor Code Private Attorneys General Act of 2004.

Cal. Labor Code § 2699 Actions brought by an aggrieved employee or

on behalf of self or other current or former employees; authority; gap-filler penalties; attorneys fees; exclusion; distribution of

recovered penalties

(a) Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.

(b) For purposes of this part, “person” has the same meaning as defined in Section 18.

52a (c) For purposes of this part, “aggrieved employee” means any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.

(d) For purposes of this part, “cure” means that the employer abates each violation alleged by any aggrieved employee, the employer is in compliance with the underlying statutes as specified in the notice required by this part, and any aggrieved employee is made whole.

(e)(1) For purposes of this part, whenever the Labor and Workforce Development Agency, or any of its departments, divisions, commissions, boards, agencies, or employees, has discretion to assess a civil penalty, a court is authorized to exercise the same discretion, subject to the same limitations and conditions, to assess a civil penalty.

(2) In any action by an aggrieved employee seeking recovery of a civil penalty available under subdivision (a) or (f), a court may award a lesser amount than the maximum civil penalty amount specified by this part if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory.

(f) For all provisions of this code except those for which a civil penalty is specifically provided, there is established a civil penalty for a violation of these provisions, as follows:

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(1) If, at the time of the alleged violation, the person does not employ one or more employees, the civil penalty is five hundred dollars ($500).

(2) If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.

(3) If the alleged violation is a failure to act by the Labor and Workplace Development Agency, or any of its departments, divisions, commissions, boards, agencies, or employees, there shall be no civil penalty.

(g)(1) Except as provided in paragraph (2), an aggrieved employee may recover the civil penalty described in subdivision (f) in a civil action pursuant to the procedures specified in Section 2699.3 filed on behalf of himself or herself and other current or former employees against whom one or more of the alleged violations was committed. Any employee who prevails in any action shall be entitled to an award of reasonable attorney's fees and costs. Nothing in this part shall operate to limit an employee's right to pursue or recover other remedies available under state or federal law, either separately or concurrently with an action taken under this part.

(2) No action shall be brought under this part for any violation of a posting, notice, agency reporting, or filing requirement of this code,

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except where the filing or reporting requirement involves mandatory payroll or workplace injury reporting.

(h) No action may be brought under this section by an aggrieved employee if the agency or any of its departments, divisions, commissions, boards, agencies, or employees, on the same facts and theories, cites a person within the timeframes set forth in Section 2699.3 for a violation of the same section or sections of the Labor Code under which the aggrieved employee is attempting to recover a civil penalty on behalf of himself or herself or others or initiates a proceeding pursuant to Section 98.3.

(i) Except as provided in subdivision (j), civil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws and education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes; and 25 percent to the aggrieved employees.

(j) Civil penalties recovered under paragraph (1) of subdivision (f) shall be distributed to the Labor and Workforce Development Agency for enforcement of labor laws and education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes.

55a (k) Nothing contained in this part is intended to alter or otherwise affect the exclusive remedy provided by the workers' compensation provisions of this code for liability against an employer for the compensation for any injury to or death of an employee arising out of and in the course of employment.

(l) The superior court shall review and approve any penalties sought as part of a proposed settlement agreement pursuant to this part.

(m) This section shall not apply to the recovery of administrative and civil penalties in connection with the workers' compensation law as contained in Division 1 (commencing with Section 50) and Division 4 (commencing with Section 3200), including, but not limited to, Sections 129.5 and 132a.

(n) The agency or any of its departments, divisions, commissions, boards, or agencies may promulgate regulations to implement the provisions of this part.

Cal. Labor Code § 2699.3 Requirements for aggrieved employee to

commence a civil action

(a) A civil action by an aggrieved employee pursuant to subdivision (a) or (f) of Section 2699 alleging a violation of any provision listed in Section 2699.5 shall commence only after the following requirements have been met:

(1) The aggrieved employee or representative shall give written notice by certified mail to the

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Labor and Workforce Development Agency and the employer of the specific provisions of this code alleged to have been violated, including the facts and theories to support the alleged violation.

(2)(A) The agency shall notify the employer and the aggrieved employee or representative by certified mail that it does not intend to investigate the alleged violation within 30 calendar days of the postmark date of the notice received pursuant to paragraph (1). Upon receipt of that notice or if no notice is provided within 33 calendar days of the postmark date of the notice given pursuant to paragraph (1), the aggrieved employee may commence a civil action pursuant to Section 2699.

(B) If the agency intends to investigate the alleged violation, it shall notify the employer and the aggrieved employee or representative by certified mail of its decision within 33 calendar days of the postmark date of the notice received pursuant to paragraph (1). Within 120 calendar days of that decision, the agency may investigate the alleged violation and issue any appropriate citation. If the agency determines that no citation will be issued, it shall notify the employer and aggrieved employee of that decision within five business days thereof by certified mail. Upon receipt of that notice or if no citation is issued by the agency within the 158-day period prescribed by subparagraph (A) and this subparagraph or if the agency fails to provide timely or any notification, the aggrieved

57a

employee may commence a civil action pursuant to Section 2699.

(C) Notwithstanding any other provision of law, a plaintiff may as a matter of right amend an existing complaint to add a cause of action arising under this part at any time within 60 days of the time periods specified in this part.

(b) A civil action by an aggrieved employee pursuant to subdivision (a) or (f) of Section 2699 alleging a violation of any provision of Division 5 (commencing with Section 6300) other than those listed in Section 2699.5 shall commence only after the following requirements have been met:

(1) The aggrieved employee or representative shall give notice by certified mail to the Division of Occupational Safety and Health and the employer, with a copy to the Labor and Workforce Development Agency, of the specific provisions of Division 5 (commencing with Section 6300) alleged to have been violated, including the facts and theories to support the alleged violation.

(2)(A) The division shall inspect or investigate the alleged violation pursuant to the procedures specified in Division 5 (commencing with Section 6300).

(i) If the division issues a citation, the employee may not commence an action pursuant to Section 2699. The division shall notify the aggrieved employee and employer in writing within 14 calendar

58a

days of certifying that the employer has corrected the violation.

(ii) If by the end of the period for inspection or investigation provided for in Section 6317, the division fails to issue a citation and the aggrieved employee disputes that decision, the employee may challenge that decision in the superior court. In such an action, the superior court shall follow precedents of the Occupational Safety and Health Appeals Board. If the court finds that the division should have issued a citation and orders the division to issue a citation, then the aggrieved employee may not commence a civil action pursuant to Section 2699.

(iii) A complaint in superior court alleging a violation of Division 5 (commencing with Section 6300) other than those listed in Section 2699.5 shall include therewith a copy of the notice of violation provided to the division and employer pursuant to paragraph (1).

(iv) The superior court shall not dismiss the action for nonmaterial differences in facts or theories between those contained in the notice of violation provided to the division and employer pursuant to paragraph (1) and the complaint filed with the court.

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(B) If the division fails to inspect or investigate the alleged violation as provided by Section 6309, the provisions of subdivision (c) shall apply to the determination of the alleged violation.

(3)(A) Nothing in this subdivision shall be construed to alter the authority of the division to permit long-term abatement periods or to enter into memoranda of understanding or joint agreements with employers in the case of long-term abatement issues.

(B) Nothing in this subdivision shall be construed to authorize an employee to file a notice or to commence a civil action pursuant to Section 2699 during the period that an employer has voluntarily entered into consultation with the division to ameliorate a condition in that particular worksite.

(C) An employer who has been provided notice pursuant to this section may not then enter into consultation with the division in order to avoid an action under this section.

(4) The superior court shall review and approve any proposed settlement of alleged violations of the provisions of Division 5 (commencing with Section 6300) to ensure that the settlement provisions are at least as effective as the protections or remedies provided by state and federal law or regulation for the alleged violation. The provisions of the settlement relating to health and safety laws shall be submitted to the

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division at the same time that they are submitted to the court. This requirement shall be construed to authorize and permit the division to comment on those settlement provisions, and the court shall grant the division's commentary the appropriate weight.

(c) A civil action by an aggrieved employee pursuant to subdivision (a) or (f) of Section 2699 alleging a violation of any provision other than those listed in Section 2699.5 or Division 5 (commencing with Section 6300) shall commence only after the following requirements have been met:

(1) The aggrieved employee or representative shall give written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific provisions of this code alleged to have been violated, including the facts and theories to support the alleged violation.

(2)(A) The employer may cure the alleged violation within 33 calendar days of the postmark date of the notice. The employer shall give written notice by certified mail within that period of time to the aggrieved employee or representative and the agency if the alleged violation is cured, including a description of actions taken, and no civil action pursuant to Section 2699 may commence. If the alleged violation is not cured within the 33-day period, the employee may commence a civil action pursuant to Section 2699.

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(B) No employer may avail himself or herself of the notice and cure provisions of this subdivision more than three times in a 12-month period for the same violation or violations contained in the notice, regardless of the location of the worksite.

(3) If the aggrieved employee disputes that the alleged violation has been cured, the aggrieved employee or representative shall provide written notice by certified mail, including specified grounds to support that dispute, to the employer and the agency. Within 17 calendar days of the postmark date of that notice, the agency shall review the actions taken by the employer to cure the alleged violation, and provide written notice of its decision by certified mail to the aggrieved employee and the employer. The agency may grant the employer three additional business days to cure the alleged violation. If the agency determines that the alleged violation has not been cured or if the agency fails to provide timely or any notification, the employee may proceed with the civil action pursuant to Section 2699. If the agency determines that the alleged violation has been cured, but the employee still disagrees, the employee may appeal that determination to the superior court.

(d) The periods specified in this section are not counted as part of the time limited for the commencement of the civil action to recover penalties under this part.

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Cal. Labor Code § 2699.5 Application of subd. (a) of § 2699.3

The provisions of subdivision (a) of Section 2699.3 apply to any alleged violation of the following provisions: subdivision (k) of Section 96, Sections 98.6, 201, 201.3, 201.5, 201.7, 202, 203, 203.1, 203.5, 204, 204a, 204b, 204.1, 204.2, 205, 205.5, 206, 206.5, 208, 209, and 212, subdivision (d) of Section 213, Sections 221, 222, 222.5, 223, and 224, subdivision (a) of Section 226, Sections 226.7, 227, 227.3, 230, 230.1, 230.2, 230.3, 230.4, 230.7, 230.8, and 231, subdivision (c) of Section 232, subdivision (c) of Section 232.5, Sections 233, 234, 351, 353, and 403, subdivision (b) of Section 404, Sections 432.2, 432.5, 432.7, 435, 450, 510, 511, 512, 513, 551, 552, 601, 602, 603, 604, 750, 751.8, 800, 850, 851, 851.5, 852, 921, 922, 923, 970, 973, 976, 1021, 1021.5, 1025, 1026, 1101, 1102, 1102.5, and 1153, subdivisions (c) and (d) of Section 1174, Sections 1194, 1197, 1197.1, 1197.5, and 1198, subdivision (b) of Section 1198.3, Sections 1199, 1199.5, 1290, 1292, 1293, 1293.1, 1294, 1294.1, 1294.5, 1296, 1297, 1298, 1301, 1308, 1308.1, 1308.7, 1309, 1309.5, 1391, 1391.1, 1391.2, 1392, 1683, and 1695, subdivision (a) of Section 1695.5, Sections 1695.55, 1695.6, 1695.7, 1695.8, 1695.9, 1696, 1696.5, 1696.6, 1697.1, 1700.25, 1700.26, 1700.31, 1700.32, 1700.40, and 1700.47, paragraphs (1), (2), and (3) of subdivision (a) of, and subdivision (e) of, Section 1701.4, subdivision (a) of Section 1701.5, Sections 1701.8, 1701.10, 1701.12, 1735, 1771, 1774, 1776, 1777.5, 1811, 1815, 2651, and 2673, subdivision (a) of Section 2673.1, Sections 2695.2, 2800, 2801, 2802, 2806, and 2810,

63a subdivision (b) of Section 2929, and Sections 3095, 6310, 6311, and 6399.7.