Bey v. Solarworld Industries America, Inc.

Citations: 904 F. Supp. 2d 1096; 2012 WL 5817023; 2012 U.S. Dist. LEXIS 166182Docket: Case No. 3:11-cv-1555-SI

Court: District Court, D. Oregon; November 12, 2012; Federal District Court

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A putative class action has been initiated in federal court by Plaintiff Fred Bey, asserting minimal diversity jurisdiction under the Class Action Fairness Act (CAFA). The Court has ordered the parties to demonstrate why the action should not be dismissed without prejudice based on either the 'local controversy' or 'home-state controversy' exceptions to CAFA jurisdiction. Parties must submit legal memoranda and supporting materials by December 6, 2012, and may engage in expedited discovery related to jurisdictional issues, with the Court ready to assist in any discovery disputes or extension requests.

The case was filed on December 28, 2011, with an Amended Complaint submitted on June 18, 2012. The allegations primarily reference the original Complaint, which names four Defendants: SolarWorld Industries America, Inc., SolarWorld Industries America, LP, SolarWorld Industries Services, LLC, and SolarWorld Power Projects, Inc., collectively referred to as 'SolarWorld.' The Court will take judicial notice of certain facts regarding the Defendants' business statuses and locations as recorded by the Oregon Secretary of State.

Plaintiff Bey claims that he worked for SolarWorld in Oregon and seeks recovery under Oregon law for unpaid wages, unpaid overtime, and late payment of wages, on behalf of himself and other current and former employees who worked for SolarWorld in Oregon during the applicable period.

Plaintiff cites several Oregon statutes (Or.Rev. Stat. 652.120, 652.140, 652.150, 652.200, 653.010, 653.055, 653.261) and associated administrative regulations, claiming no federal law violations. For federal jurisdiction, Plaintiff asserts that the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d)(2), applies due to the class action nature of the case, an amount in controversy exceeding $5,000,000, and a class size greater than 100 members, with diversity of citizenship between the named Plaintiff and at least one of the four SolarWorld Defendants. Defendants have not contested jurisdiction, instead filing a motion for partial summary judgment, arguing that SolarWorld’s time-keeping “five-minute rule” complies with the de minimis doctrine recognized under federal Fair Labor Standards Act (FLSA) case law, which they claim also applies under Oregon law. They note that Plaintiff was only an employee of SolarWorld Industries America, Inc. but seek judgment on behalf of all Defendants. In response, Plaintiff contends that federal law is irrelevant, Oregon law differs significantly from the FLSA, and the court must apply Oregon's statutory interpretation standards, asserting that the de minimis doctrine does not supersede Oregon wage and hour statutes. The discussion outlines the legal standard for establishing jurisdiction in federal courts, emphasizing that the burden lies with the asserting party and that the court must dismiss actions lacking subject-matter jurisdiction, which it may raise sua sponte at any stage of the proceedings.

The Class Action Fairness Act of 2005 (CAFA), as interpreted by the Ninth Circuit, modifies diversity jurisdiction requirements for class actions involving over $5,000,000 in controversy, allowing federal jurisdiction with minimal diversity rather than complete diversity. CAFA aims to facilitate federal court involvement in significant interstate cases. To establish original diversity jurisdiction under CAFA, four criteria must be met: 1) the amount in controversy exceeds $5,000,000, exclusive of interest and costs; 2) minimal diversity exists between at least one plaintiff and one defendant; 3) the primary defendants are not governmental entities that may be immune from relief; and 4) the total number of proposed class members is at least 100. 

CAFA also outlines discretionary and mandatory exceptions to its jurisdiction. Specifically, under 28 U.S.C. 1332(d)(3), courts may decline jurisdiction in the interests of justice, while under 28 U.S.C. 1332(d)(4), they must decline in cases meeting the 'local controversy' and 'home-state controversy' exceptions. For a class action to fall under the 'local controversy' exception, the following must be satisfied: 1) over two-thirds of the proposed class members are citizens of the state where the action was filed; 2) at least one significant defendant is a citizen of that state and is a key figure in the claims; 3) the main injuries occurred in that state; and 4) no similar class actions have been filed against the defendants in the past three years.

The 'home-state controversy' exception under 28 U.S.C. 1332(d)(4)(B) mandates that a district court decline jurisdiction over a class action if: (1) two-thirds or more of the proposed plaintiff class members are citizens of the state where the action was filed, and (2) the primary defendants are also citizens of that state. This exception is part of the broader CAFA provisions aimed at balancing access to federal courts for national cases while preserving state court jurisdiction for matters closely connected to the state. The pending case meets the criteria for both local and home-state controversy mandatory abstention, indicating a strong link to a specific state rather than a national issue. Notably, several circuits, including the Ninth Circuit, affirm that these mandatory abstention provisions require federal courts to decline jurisdiction despite having subject-matter jurisdiction. The provisions of 28 U.S.C. 1332(d)(4)(A) and (B) function as exceptions to jurisdiction rather than elements of establishing minimal diversity under CAFA. Consequently, even though federal jurisdiction is technically present, Congress requires federal courts to abstain from exercising that jurisdiction unless extraordinary circumstances exist.

Courts may use common sense and reasonable inferences when assessing if the 'local controversy' or 'home-state controversy' exceptions are met. In the case of a closed-end class involving individuals with a domicile-related asset, detailed proof of citizenship may not be necessary. For instance, in Bennett v. Bd. of Comm’rs, it was deemed reasonable to infer that two-thirds of class members were Louisiana citizens based on their residency in a specific parish. To establish citizenship for diversity jurisdiction, a natural person must be both a U.S. citizen and domiciled in one state at the lawsuit's filing time. Domicile is defined as a person's residence with the intention to stay or return, while residence serves as prima facie evidence of domicile, which continues unless proven otherwise.

In the related case, the plaintiff asserts a class action under Oregon wage and hour laws for himself and former employees of SolarWorld in Oregon. While the plaintiff does not specify which SolarWorld entity employed him, defendants indicate it was SolarWorld Industries America, Inc., an Oregon corporation. The plaintiff can identify his employer through IRS Form W-2 statements and may conduct discovery to ascertain the identity of his employer and others in the proposed class. The court anticipates that a majority of the class members worked in Hillsboro, Oregon, thus likely being Oregonians by residence and citizenship. Defendants are instructed to review their records and permit the plaintiff to conduct discovery regarding the residency of employees from that period.

The parties must report to the Court on the citizenship status of more than two-thirds of employees and former employees, determining if they are U.S. citizens residing in Oregon, which would classify them as presumptive Oregon citizens. During the November 6, 2012 oral argument on Defendants' motion for partial summary judgment, it was agreed that no other class actions with similar allegations were filed against the defendants within three years prior to this lawsuit. The Plaintiff's class is limited to individuals who worked at 'SolarWorld' in Hillsboro, Oregon, and seeks relief under Oregon wage and hour laws, suggesting that the injuries claimed arose in Oregon. However, the parties may submit evidence to the contrary by December 6, 2012.

The Court ordered the parties to demonstrate by this deadline why the action should not be dismissed without prejudice under 28 U.S.C. 1332(d)(4), with failure to respond resulting in automatic dismissal consent. The Plaintiff's claims hinge on two aspects of Defendants’ electronic timekeeping system in Hillsboro, which allegedly shortchanged employees on wages and overtime. The specific issues involve a 'five minute rule' and lunch break tracking, with Defendants indicating these systems were implemented in 2009. Limited jurisdictional discovery is permitted regarding these matters.

The Ninth Circuit's ruling in Coleman v. Estes Exp. Lines, Inc. is referenced, emphasizing that the district court should base its decision solely on the complaint for jurisdictional criteria under CAFA. This may not extend beyond the removal context, but a wage and hour class action cannot avoid the requirements of Fed. R. Civ. P. 8(a)(1) by generically naming multiple citizenship entities without specifying the actual employer.