Any lawyer will tell you that the proper venue can make or break a case. Some jurisdictions are extremely favorable to certain parties, while others can be downright hostile. California courts tend to be very protective of workers and employee rights, and they tend to be less sensitive to corporate interests. Employers sued in California will do anything in their power to have a case moved to a different state or, failing that, removed to federal court. The same inclination applies to class actions, when employers face claims from hundreds or thousands of employees. Recently, Amazon was able to successfully have a wage and hour class action removed to federal court based on the federal Class Action Fairness Act of 2005.

The case against Amazon, titled Gallardo v. Amazon.com Services LLC et al., involves allegations that the online retailer failed to properly pay overtime to employees. The named plaintiff and the putative class are “Area Managers,” whom Amazon designated as salaried employees exempt from California’s overtime laws. The plaintiffs allege that these Area Managers do not fit the legal definition of employees exempt from overtime pay under any of the established criteria, and thus at all times they were wrongfully denied overtime rates for overtime work. They also allege that Amazon made their pay stubs inscrutable by designating certain hours as paid “personal time” or “vacation pay,” obscuring when overtime should have been paid. The complaint includes claims concerning unpaid overtime, failure to pay minimum wage, inaccurate pay stubs, and other wage and hour claims.

Upon being sued, Amazon moved to have the case removed to federal court. Federal courts do not have original jurisdiction over claims based on state law. To have jurisdiction, there must be a specific law authorizing federal jurisdiction. Federal jurisdiction may be based on “diversity,” meaning the parties reside in different states, or based on jurisdiction established in a particular statute. In this case, Amazon relied on the Class Action Fairness Act of 2005 (CAFA) to assert federal jurisdiction.

CAFA greatly expanded federal diversity jurisdiction over class and mass tort collective actions. Classes need not already be certified to satisfy federal jurisdiction under CAFA, so long as the civil action is a class action. Pursuant to CAFA, federal diversity jurisdiction is satisfied so long as:

• The amount in controversy (i.e., the value of the claims in the case) exceeds $5 million;
• There are at least 100 potential class members; and
• There is at least one plaintiff diverse (resident of a different state) from at least one defendant.

CAFA expanded federal class action jurisdiction in two significant ways. First, CAFA allows the amount in controversy to be calculated by aggregating the plaintiffs’ claims, as opposed to requiring a single plaintiff’s claims to exceed the threshold (which was previously $75,000). Second, “diversity” no longer requires complete diversity between all plaintiffs and all defendants. When considering diversity, the court can consider the citizenship of all class members (including putative class members), both named and unnamed.

In this instance, Amazon argued that the case more than meets the CAFA requirements. There are more than 100 putative class members, there is at least minimal diversity, and the amount in controversy exceeds $5 million when taking the putative plaintiffs’ claims in aggregate. According to Amazon, even when looking only at the claims for unpaid overtime “calculated based on a mere twenty hours for each area manager during the relevant period,” the amount in controversy exceeds $5 million. Adding the request for attorney fees and other damages ups the amount in controversy to nearly $14 million.