By Gerald L. Maatman, Jr., Tiffany E. Alberti, and Bernadette Coyle
Duane Morris Takeaways: On October 10, 2024, the Tenth Circuit declined to overturn a district court order that remanded a Colorado wage & hour class action back to state court after it found that Wendy’s International (“Wendy’s”) failed to file its removal request within the 30-day removal provision of the Class Action Fairness Act (“CAFA”) after Plaintiffs provided a demand that triggered the CAFA factors. The ruling in Little v. Wendy’s International, LLC, Case No. 24-1232, 2024 WL 4455858 (10th Cir. Oct. 10, 2024), is a lesson for corporate defendants on fundamental time deadlines for removals of class actions under the CAFA.
Case Background
The CAFA expands federal subject-matter jurisdiction over class action lawsuits in the United States by providing a way for defendants to remove these cases from state courts to federal courts. To bring remove a case to federal court through the CAFA, there must be: (1) minimal diversity; (2) 100 or more putative class members; and (3) more than $5 million in controversy. 28 U.S.C § 1332(d)(2). A defendant must generally remove the case either within 30 days of receipt of the initial complaint showing that the CAFA’s jurisdictional requirements are met or within 30 days of receipt of “a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” Id. at § 1446(b)(3) (emphasis added).
In October 2020, Jeffrey Little (“Plaintiff”) filed a putative class against Wendy’s in Colorado state court, accusing the fast food chain of violating the Colorado Wage Claim Act, Colo. Rev. Stat. §§ 8-4-101–125, and the Colorado Minimum Wage Act, Colo. Rev. Stat. §§ 8-6-101–120, by failing to ensure workers took meal and rest breaks.
In January 2023, as the state court considered certifying a class of Wendy’s workers in Colorado, Plaintiff’s counsel sent two demand letters to Wendy’s. The first letter stated in part, “Pursuant to C.R.S. § 8-4-109, demand is made for payment of wages in the amount of $5,930,118.70.” 2024 WL 4455858, at *1. The second letter, sent one and a half weeks later, stated in part, “Pursuant to C.R.S. § 8-4-109, Jeffrey Little, and designated representative attorneys Alexander Hood and Brian D. Gonzales, hereby demand payment of wages in the amount of $5,100,000.00.” Id.
The state court granted the Plaintiff’s class certification motion on October 31, 2023. Relying on the removal provisions of the CAFA, under §§ 1332(d), 1453(b), 1446, Wendy’s removed the action to federal court in November 2023, arguing that the 30-day deadline was not triggered by the Plaintiff’s original and amended state court complaints because the complaints did not address the size of the proposed class and the amount of damages. Wendy’s also contended that the demand letters did not trigger the 30-day deadline because there was no explanation for the amount sought and the demand letters did not claim to be settlement offers. The district court disagreed and granted Little’s motion to remand the action to state court after finding that Wendy’s removal motion was untimely.
Wendy’s appealed the remand order to the Tenth Circuit.
The Tenth Circuit’s Ruling
On appeal, Wendy’s made three arguments. First, Wendy’s argued that the figures in the demand letters merely stated an amount without adequately explaining the basis for the amount sought, and thus did not trigger the 30-day removal period under § 1446 of the CAFA. Second, Wendy’s claimed that the demand did not reflect a reasonable estimate of the claims because they did not purport to be settlement offers. Finally, Wendy’s contended that the district court’s remand order incorrectly went beyond the four corners of the Plaintiff’s initial complaints and the demand letters in determining that Wendy’s was late in filing its removal request.
On the issue regarding whether the demand letters provided Wendy’s with adequate notice of the amount of monetary damages sought, the Tenth Circuit explained that in invoking C.R.S. § 8-4-109, which is intended to supply notice to a potential defendant of an employee’s intention to seek unpaid wages, the demand letters went beyond an ambiguous statement by making “specific demands that had statutory significance.” Id. at *6. It noted that while other circuits (specifically the Eighth Circuit) have required more than unproven statements to trigger the 30-day deadline, the Tenth Circuit had previously ruled that a Colorado state court civil cover sheet (that indicates a box stating the amount in controversy) provided adequate notice to the defendant. Thus, the Tenth Circuit held that each of the demand letters was sufficient to put Wendy’s on notice that the amount in controversy exceeded $5 million, thereby triggering the third CAFA factor, and ultimately determining Wendy’s filing of the removal untimely.
On the issue regarding whether the district erred in relying on “other paper” received through discovery to adequately put Wendy’s on notice of the $5 million in controversy, the Tenth Circuit held that the district court was allowed to rely on limited discovery that revealed extent of Wendy’s workforce and operations in Colorado that would support the amount in controversy. It explained that, “[t]he evidence developed in discovery helped to show that the demand letters at least appeared to reflect a reasonable estimate of the plaintiff’s claim, even if they did not provide a precise mathematical calculation underlying the estimate.” Id. For this reason, the Tenth Circuit concluded that the district court did not err in its evaluation of “other paper” for the purposes of the CAFA.
Implications For Corporations
The Tenth Circuit’s ruling underscores the importance of a global consideration of all documents exchanged throughout litigation that can effectively determine the best strategy for corporations facing potential class action lawsuits. Because the CAFA is a powerful tool to combat against state court class actions, where federal courts are less attractive forums for plaintiffs, it is crucial for employers to prioritize initial complaints, demand letters, and other papers (such as discovery documents) to recognize whether they are put on notice of the CAFA factors ensuring they meet the 30-day deadline for removal to federal court.