Guglielmino v. McKee Foods Corp.

Carlo Guglielmino and Briant Chun-Hoon (the distributors) (plaintiffs) distributed bakery products for McKee Foods Corporation (defendant). The distributors sued McKee in California state court on behalf of a putative class of McKee distributors, alleging that McKee’s treatment of the distributors violated wage-and-hour laws. The complaint’s Jurisdiction and Venue section alleged that the damages to each plaintiff were less than $75,000. However, the complaint’s Prayer for Relief section requested no specific dollar amount and sought relief including compensatory damages, punitive damages, attorney fees, payment of back taxes and benefits, an accounting of money due to the distributors, and injunctive and declaratory relief. McKee removed the action to federal district court, asserting that the damages sought by the distributors, if recoverable, would significantly exceed the $75,000 amount-in-controversy requirement for federal diversity-jurisdiction purposes (the so-called jurisdictional amount). The distributors sought remand to the state court. The distributors conceded that they were diverse from McKee, but they argued that McKee had improperly calculated the amount in controversy. The district court denied the distributors’ motion to remand. The court applied a preponderance-of-the-evidence standard under which McKee had the burden of showing that the amount in controversy more likely than not exceeded the jurisdictional amount. The court found that removal was proper under that standard after considering the potential economic damages, attorney fees, and punitive damages at stake in the action and determining that both Guglielmino’s and Hoon’s allegations met the amount-in-controversy requirement. The Ninth Circuit granted Guglielmino’s petition for an interlocutory appeal.