Urbino v. Orkin: PAGA Penalties Not Aggregated to Satisfy Amount In Controversy Requirement for Federal Diversity Jurisdiction

Urbino v. Orkin Services of California, Inc., ___ F.3d ___ (9th Cir. 8/13/13) addresses federal jurisdiction over claims under California's Labor Code Private Attorneys General Act (PAGA).

Urbino filed a PAGA representative action against Orkin for alleged meal period, overtime, and vacation pay violations. Orkin removed, and the district court denied Urbino's motion to remand, holding that the potential penalties could be aggregated to satisfy the $75,000 amount in controversy requirement of diversity jurisdiction. The Ninth Circuit reversed, holding that the penalties cannot be aggregated. 

The claims of class members can be aggregated to meet the jurisdictional amount requirement only when they “unite to enforce a single title or right in which they have a common and undivided interest.” Slip op. at 7. Employees' rights under the Labor Code are held individually, and their claims cannot be aggregated: "Each employee suffers a unique injury—an injury that can be redressed without the involvement of other employees." Slip op. at 8. 

The Court rejected Orkin's argument that Urbino asserted not his individual interest, but rather the state’s "collective interest" in enforcing its labor laws through PAGA.

To the extent Plaintiff can—and does—assert anything but his individual interest, however, we are unpersuaded that such a suit, the primary benefit of which will inure to the state, satisfies the requirements of federal diversity jurisdiction. The state, as the real party in interest, is not a “citizen” for diversity purposes. 

Slip op. at 9. 

The opinion is available here.