Guglielmino v. Mckee Foods Corporation

506 F.3d 696 (9th Cir. 2007)

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Nature of the Case

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Facts

Ds are distributors of McKee Foods' (D) bakery products to retail stores. Ps purchase bakery products (such as Little Debbie snack cakes) from McKee; they deliver the purchased products to local retail stores; they stock the retail shelves and are responsible for arranging, displaying, and advertising the products; and they must remove from the shelves damaged goods or goods that are beyond their sell-by date. D requires them to buy a specific quantity of product and further makes them financially responsible for any damaged, stale, or old product. Ps sued Ds on behalf of a putative class of persons who entered into 'Distributorship Agreements' with D. Ps alleged violations of various wage and hour laws by treating its distributors as independent contractors instead of employees. It is alleged that 'the damages to each Plaintiff are less than $75,000. In addition, the sum of such damages and the value of injunctive relief sought by Ps in this action is less than $75,000.' The prayer for relief sought, among other things, damages under statutory and common law, punitive and exemplary damages (as to the fraud count), an accounting of other money due to plaintiffs, attorneys' fees, payments of back taxes and benefits, a declaration of the respective rights and obligations of the distributors and of D, an injunction prohibiting D's unfair business practices, and such other relief as the Court deems proper. D removed to the United District Court pursuant to 28 U.S.C. §§ 1441 and 1332. The notice stated that 'although the Complaint affirmatively attempts to allege that the damages suffered by each Plaintiff are less than $ 75,000.00 . . ., the categories of damages actually claimed by Plaintiffs, if recoverable, would be significantly in excess of the $ 75,000.00 minimum amount in controversy (exclusive of interest and costs) required to invoke diversity jurisdiction.' D's calculations purported to show an amount in controversy sufficient to invoke federal jurisdiction. Ps moved under 28 U.S.C. § 1447 for remand. The judge denied the motion. The order explained that there were three possible standards for the removing defendant's burden of proof: (1) that the plaintiff 'might recover' in excess of the jurisdictional amount; (2) that the plaintiff is 'more likely than not to recover' in excess of the jurisdictional amount (the 'preponderance of the evidence standard'); and (3) that the plaintiff is 'legally certain to recover' in excess of the jurisdictional amount. The district court decided that the 'preponderance of the evidence' standard should be applied. The defendant has the burden to show that the allegations in the complaint set forth an amount in controversy that is 'more likely than not' greater than $ 75,000. When all damages were added the district court determined that the amount in controversy for Ps was in excess of the jurisdictional threshold. Ps appealed.