Baumann v. Chase Investment Services

The district court does not have jurisdiction over cases brought initially under the California Labor Code Private Attorney General Act of 2004 ("PAGA") and then removed to federal district court under the Class Action Fairness Act of 2005 because the PAGA is not sufficiently similar to Federal Rule of Civil Procedure 23 class actions.

Joseph Baumann ("Baumann") sued his employer Chase Investment Services ("Chase") alleging that Chase "failed to pay him and others . . . for overtime, provide for meal breaks, allow rest periods, and timely reimburse expenses" and sought damages under the California Labor Code Private Attorney General Act of 2004 ("PAGA"). Chase filed a notice of removal to federal district court "alleging that the amount in controversy exceeded $75,000 if all potential statutory penalties and attorney fee awards were aggregated. The notice of removal also invoked Class Action Fairness Act (CAFA) jurisdiction under [28 U.S.C.] § 1332(d) (2), alleging minimal diversity, a class of more than 100 members, and an amount in controversy exceeding $5,000,000. Baumann's motion to remand was denied and the district court found subject matter jurisdiction under §1332(a) of CAFA, therefore declining to address jurisdiction under CAFA. The district court certified its order to the court of appeals. The Ninth Circuit determined that PAGA is not sufficiently similar enough to Rule 23 to establish jurisdiction under CAFA. Therefore, the panel held that the district court could not exercise jurisdiction under CAFA. The panel also concluded there was no diversity jurisdiction under CAFA because Baumann’s’ portion of recovery would be less than $75,000. REVERSED AND REMANDED WITH INSTRUCTIONS.