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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

This memorandum is protected by the attorney-client privilege and the work product doctrine. It was prepared in anticipation of litigation and reflects the mental impressions, conclusions, opinions, and legal theories of counsel. It is not to be disclosed to any person or entity outside of Calderwood & Harkness LLP, Vantage Mobility Systems Corp., and authorized representatives of Ashgrove Equity Partners Industrial Partners, LP without the express written consent of counsel.

MEMORANDUM

TO: Renata Vasquez, Responsible Partner, Labor & Employment, Calderwood & Harkness LLP

FROM: James Underwood, Lead Associate, Labor & Employment, Calderwood & Harkness LLP

DATE: August 20, 2025

RE: Removal Analysis — Gloria Reyes, individually and on behalf of all others similarly situated, and on behalf of the State of California v. Vantage Mobility Systems Corp., Case No. CIVSB-2025-04781, Superior Court of California, County of San Bernardino

MATTER NO.: 1007-00004

CLIENT: Vantage Mobility Systems Corp.

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I. Executive Summary

The purpose of this memorandum is to analyze whether Vantage Mobility Systems Corp. ("VMS" or the "Company") should exercise its right to remove the above-captioned meal-and-rest-break putative class action from the Superior Court of California, County of San Bernardino, to the United States District Court for the Central District of California, Riverside Division, under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d). This memorandum addresses the jurisdictional prerequisites for CAFA removal, evaluates the strategic implications of removal versus remaining in state court, and provides a recommendation for the forum in which VMS should defend this action.

Bottom-line conclusion: Although all three CAFA jurisdictional prerequisites — amount in controversy exceeding $5,000,000, minimal diversity of citizenship, and a proposed class of at least 100 members — are satisfied, we recommend against removal at this time on strategic grounds. Specifically, the advantages of litigating in San Bernardino County Superior Court, including more favorable class certification standards, the avoidance of bifurcated PAGA proceedings, and alignment with Ashgrove Equity Partners Industrial Partners, LP's planned 2026 exit timeline, outweigh the marginal procedural benefits available in federal court.

We recommend that VMS file its answer and demurrer/motion to strike in San Bernardino County Superior Court by the September 11, 2025 responsive pleading deadline, while monitoring developments that could warrant revisiting this analysis at a later stage. We note, however, that as a practical matter, the opportunity to remove based on the initial complaint will lapse if a notice of removal is not filed by that same date.

Critical deadline: The 30-day removal window under 28 U.S.C. § 1446(b) runs from August 12, 2025, the date on which VMS was served via its California registered agent, CT Agents, Inc. This makes the removal deadline September 11, 2025 — the same date as the responsive pleading deadline in state court. A decision must be made and communicated to the litigation team before that date. We respectfully request Renata Vasquez's approval of this recommendation no later than September 5, 2025, to allow adequate time for the responsive pleading team to finalize the state court filings.

II. Procedural Posture and Relevant Background

A. The Complaint

On August 1, 2025, Gloria Reyes ("Plaintiff" or "Reyes"), a former Production Associate assigned to Trim Line B at the VMS Fontana Plant (located at 11780 Cherry Avenue, Fontana, California 92337), filed a putative class action complaint in the Superior Court of California, County of San Bernardino. The complaint was filed through Plaintiff's counsel at Nakamura Lozano & Pratt LLP, with Victor Lozano (partner) and Michelle Tran (associate) listed as attorneys of record. The case was assigned Case No. CIVSB-2025-04781.

B. Service on VMS

VMS was served with the summons and complaint on August 12, 2025 through its California registered agent for service of process, CT Agents, Inc., located at 818 West Seventh Street, Suite 930, Sacramento, California 95814. CT Agents forwarded the service package to VMS's General Counsel, Priya Nandakumar, on the same date, and our office was engaged shortly thereafter. The 30-day responsive pleading period under California Code of Civil Procedure § 412.20(a)(3) and the 30-day removal period under 28 U.S.C. § 1446(b)(1) both expire on September 11, 2025.

C. Causes of Action

The complaint asserts seven causes of action, all arising under California state law:

1. First Cause of Action — Meal Period Violations (Cal. Lab. Code §§ 226.7, 512): Plaintiff alleges that VMS maintained a company-wide policy and practice of failing to provide legally compliant uninterrupted thirty-minute meal periods to non-exempt hourly employees, including through the use of an automatic thirty-minute meal period deduction from timekeeping records regardless of whether employees actually received a full, uninterrupted meal break.

2. Second Cause of Action — Rest Period Violations (Cal. Lab. Code § 226.7): Plaintiff alleges that VMS failed to authorize and permit ten-minute rest periods for every four hours worked (or major fraction thereof), including by scheduling production runs and line-speed expectations that effectively precluded employees from taking rest breaks without falling behind on production quotas.

3. Third Cause of Action — Unpaid Wages (Cal. Lab. Code §§ 204, 1194): Plaintiff alleges that the meal and rest period violations resulted in unpaid compensation — specifically, premium wages owed under Labor Code § 226.7 — and that VMS failed to pay all wages owed in a timely manner as required by Labor Code § 204.

4. Fourth Cause of Action — Inaccurate Wage Statements (Cal. Lab. Code § 226): Plaintiff alleges that VMS issued wage statements that failed to accurately reflect total hours worked, gross wages earned, and applicable deductions, in part because the auto-deduction policy caused the wage statements to reflect thirty-minute meal period deductions even when employees worked through all or part of their meal periods.

5. Fifth Cause of Action — Waiting Time Penalties (Cal. Lab. Code § 203): Plaintiff alleges that VMS willfully failed to pay all wages due to former employees at the time of separation, entitling former employees to waiting time penalties of up to thirty days of wages at the employee's daily rate of pay.

6. Sixth Cause of Action — Unfair Competition Law Violations (Cal. Bus. & Prof. Code § 17200 et seq.): Plaintiff alleges that VMS's unlawful, unfair, and fraudulent business practices — including the meal and rest period violations, unpaid wages, and inaccurate wage statements — constitute violations of the UCL, entitling Plaintiff and the class to restitution of all wages and other amounts unlawfully withheld.

7. Seventh Cause of Action — PAGA Penalties (Cal. Lab. Code § 2698 et seq.): Plaintiff brings a representative action under the Private Attorneys General Act on behalf of the State of California, seeking civil penalties for the alleged Labor Code violations, to be distributed seventy-five percent to the Labor and Workforce Development Agency ("LWDA") and twenty-five percent to aggrieved employees.

D. Proposed Class Definition

The complaint defines the proposed class as:

All current and former non-exempt hourly employees who worked at Vantage Mobility Systems Corp.'s facility located at 11780 Cherry Avenue, Fontana, California 92337 (the "Fontana Plant") at any time during the period from August 4, 2021 through the date of trial.

Based on the Company's human resources records and payroll data — which Calderwood & Harkness has obtained and reviewed in connection with this engagement — the proposed class encompasses approximately 3,550 putative class members, consisting of approximately 1,450 current employees and approximately 2,100 former employees who were employed at the Fontana Plant during the class period. The class period runs from August 4, 2021 to the present, reflecting a four-year lookback period for the UCL claim (the longest applicable statute of limitations), and a one-year lookback period for the PAGA claim from the date of the PAGA notice.

E. PAGA Notice and Administrative Exhaustion

Plaintiff served the required PAGA notice on the LWDA and on Vantage on May 22, 2025 (LWDA Notice No. LWDA-CM-2025-831447). The notice identified the same meal and rest period violations, wage statement violations, and waiting time penalty claims that form the basis of the complaint. The sixty-five-day cure period prescribed by Labor Code § 2699.3(a)(2)(A) expired on July 26, 2025, without the LWDA commencing an investigation. Plaintiff filed the complaint six days later, on August 1, 2025. There is no dispute that Plaintiff has satisfied the administrative exhaustion prerequisite for the PAGA claim.

F. The Fontana Plant Operations

For context relevant to the class certification analysis and the strategic considerations discussed below, the Fontana Plant is a vehicle modification and specialty manufacturing facility where VMS converts standard chassis into wheelchair-accessible vehicles and other mobility-related products. The Plant operates across six production lines: Body Line A, Body Line B, Trim Line A, Trim Line B, Paint, and Final Assembly/Quality Control. The Plant runs two shifts: a first shift from 5:00 AM to 1:30 PM and a second shift from 2:00 PM to 10:30 PM. Each production line has its own supervisory team, production quotas, and operational characteristics, which will be central to VMS's argument that individualized inquiries are necessary to determine whether class-wide meal and rest break violations occurred.

G. The Auto-Deduction Policy

A critical factual issue in this case is VMS's former automatic meal period deduction policy, under which the Kronos timekeeping system was configured to automatically deduct thirty minutes from each employee's daily recorded hours to account for a meal period, regardless of whether the employee actually clocked out for a full, uninterrupted thirty-minute meal break. VMS discontinued this auto-deduction policy on March 15, 2024, and transitioned to a system requiring employees to affirmatively clock in and out for meal periods. This change creates two distinct sub-periods within the class period: (i) the auto-deduction period from August 4, 2021 through March 14, 2024, and (ii) the post-auto-deduction period from March 15, 2024 to the present, during which timekeeping records are presumptively more accurate. This bifurcation will be a significant factor in the class certification analysis.

III. CAFA Jurisdictional Analysis

We turn now to the substantive analysis of whether the three jurisdictional prerequisites for removal under CAFA are met. As discussed below, all three requirements are clearly satisfied.

A. Amount in Controversy — 28 U.S.C. § 1332(d)(2)

1. Legal Standard

CAFA grants federal courts original jurisdiction over any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which any member of a class of plaintiffs is a citizen of a state different from any defendant. 28 U.S.C. § 1332(d)(2). Unlike traditional diversity jurisdiction under § 1332(a), which requires each plaintiff's individual claim to exceed $75,000, CAFA permits aggregation of all class members' claims to meet the $5,000,000 threshold. See 28 U.S.C. § 1332(d)(6).

The party invoking CAFA jurisdiction — here, VMS as the removing defendant — bears the burden of establishing that the amount in controversy exceeds $5,000,000. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). However, under the Ninth Circuit's standard, the removing defendant need only show by a preponderance of the evidence that the amount in controversy is met. Id. at 1197; Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014). Where the complaint does not allege a specific dollar amount — as is the case here — the removing defendant may rely on reasonable assumptions and estimates, including the complaint's allegations, the defendant's own records, and other evidence. Ibarra, 775 F.3d at 1197–98.

2. Analysis. Plaintiff's complaint does not allege a specific aggregate amount in controversy. However, based on the complaint's allegations and Calderwood & Harkness's independent exposure analysis utilizing VMS payroll data, the amount in controversy far exceeds the $5,000,000 threshold. We have calculated the following exposure estimates:

Several methodological notes are warranted. The meal period violation rate assumption of 65% reflects Plaintiff's likely argument — supported by the auto-deduction policy — that VMS systematically failed to provide compliant meal breaks across the Fontana Plant during the pre-March 2024 sub-period. The rest period violation rate of 30% is lower because Plaintiff's complaint focuses primarily on the meal period auto-deduction but alleges rest break violations on a secondary basis. The waiting time penalty calculation assumes maximum exposure for all approximately 2,100 former employees at thirty days of wages, which represents the statutory maximum under Labor Code § 203. Actual exposure would likely be reduced by arguments regarding willfulness and good-faith dispute. The wage statement penalty estimate of approximately $7,100,000 assumes an average penalty of approximately $2,000 per employee, though the statutory framework permits up to $4,000 per employee (initial violation at $50 per violation per pay period, capped at $4,000 per employee) — yielding a theoretical maximum of $14,200,000 for the wage statement claim alone.

Even under Calderwood & Harkness's more conservative, internally discounted realistic settlement range — which accounts for litigation risk, the probability of class certification, likely success rates on individual claims, the impact of the discontinuation of the auto-deduction policy, and the erosion of damages during the post-March 2024 period — the estimated settlement value falls within a range of $8,500,000 to $18,700,000, with a midpoint of approximately $13,600,000. This midpoint is more than 2.7 times the CAFA threshold.

3. Conclusion. The amount-in-controversy requirement of 28 U.S.C. § 1332(d)(2) is satisfied by a wide margin. There is no plausible argument by Plaintiff to defeat CAFA jurisdiction on this ground. Whether we use maximum theoretical exposure, a discounted settlement-value analysis, or any reasonable intermediate methodology, the aggregate amount in controversy substantially exceeds $5,000,000.

B. Minimal Diversity — 28 U.S.C. § 1332(d)(2)(A)

1. Legal Standard

Unlike traditional diversity jurisdiction, which requires "complete" diversity between all plaintiffs and all defendants, CAFA requires only "minimal" diversity — that is, any member of the proposed plaintiff class must be a citizen of a state different from any defendant. 28 U.S.C. § 1332(d)(2)(A). For purposes of diversity analysis, an individual's citizenship is determined by domicile, while a corporation is deemed a citizen of both its state of incorporation and the state in which it has its principal place of business. 28 U.S.C. § 1332(c)(1).

2. Analysis. Named Plaintiff Gloria Reyes is a citizen of California. The complaint alleges that she resides in Rancho Cucamonga, California, and our investigation has confirmed that she is domiciled in San Bernardino County, California.

Defendant Vantage Mobility Systems Corp. is a Delaware corporation with its principal place of business at 4200 Industrial Parkway, Auburn Hills, Michigan 48326. For diversity purposes, VMS is a citizen of both Delaware and Michigan. VMS is not a citizen of California. Although VMS operates the Fontana Plant in California and is registered to do business in the state, a corporation's registration in a state and its operations there do not, without more, make it a citizen of that state for diversity purposes. See Hertz Corp. v. Friend, 559 U.S. 77, 92–93 (2010) (defining "principal place of business" as the corporation's "nerve center" — typically the location from which its officers direct, control, and coordinate the corporation's activities).

Minimal diversity is therefore clearly satisfied: the named plaintiff is a citizen of California, and the sole defendant is a citizen of Delaware and Michigan, but not California. Even if additional putative class members are citizens of states other than California (which is likely, given the nature of the workforce), CAFA requires only one class member to be diverse from one defendant.

3. CAFA Exceptions — Local Controversy and Home-State Exceptions

CAFA contains several mandatory and discretionary exceptions to federal jurisdiction that are designed to preserve state court jurisdiction over cases with a predominantly local character. Two exceptions warrant analysis here.

Local Controversy Exception — 28 U.S.C. § 1332(d)(4)(A). This mandatory exception requires a federal court to decline jurisdiction if: (i) greater than two-thirds of the members of the proposed plaintiff class are citizens of the state in which the action was originally filed; (ii) at least one defendant is a defendant from whom significant relief is sought, whose alleged conduct forms a significant basis for the claims, and who is a citizen of the state in which the action was originally filed; (iii) the principal injuries were incurred in the state in which the action was filed; and (iv) no other class action asserting similar factual allegations against any of the defendants was filed during the preceding three years.

This exception does not apply here. Although many putative class members likely reside in California (the Fontana Plant is located in San Bernardino County), and although the principal injuries were incurred in California, the local controversy exception requires that at least one defendant from whom significant relief is sought be a citizen of the state in which the action was originally filed. VMS is incorporated in Delaware and headquartered in Michigan. VMS is not a citizen of California. This requirement alone forecloses the local controversy exception.

Home-State Exception — 28 U.S.C. § 1332(d)(4)(B). The home-state exception requires a federal court to decline jurisdiction if two-thirds or more of the members of the proposed plaintiff class and the primary defendants are citizens of the state in which the action was originally filed. Again, because VMS is not a citizen of California, this exception is inapplicable.

4. Conclusion. The minimal diversity requirement of 28 U.S.C. § 1332(d)(2)(A) is met. The named plaintiff is a citizen of California, and the defendant is a citizen of Delaware and Michigan. No CAFA exception — including the local controversy exception under § 1332(d)(4)(A) and the home-state exception under § 1332(d)(4)(B) — applies, because VMS is not a citizen of California.

C. Numerosity — 28 U.S.C. § 1332(d)(5)(B)

1. Legal Standard

CAFA does not apply to any class action in which the number of members of the proposed plaintiff class is fewer than 100. 28 U.S.C. § 1332(d)(5)(B). This numerosity requirement is a threshold condition for CAFA jurisdiction.

2. Analysis. The complaint identifies approximately 3,550 putative class members, consisting of approximately 1,450 current non-exempt hourly employees and approximately 2,100 former non-exempt hourly employees who worked at the Fontana Plant during the proposed class period of August 4, 2021 through the date of trial. This figure is based on the class definition set forth in the complaint and is consistent with Calderwood & Harkness's review of VMS payroll and human resources records for the relevant period.

This figure exceeds the 100-member threshold by a factor of more than thirty-five.

3. Conclusion. The numerosity requirement of 28 U.S.C. § 1332(d)(5)(B) is satisfied by a substantial margin. There is no colorable argument to the contrary.

D. Timeliness of Removal — 28 U.S.C. § 1446(b)

1. Legal Standard

Under 28 U.S.C. § 1446(b)(1), a notice of removal of a civil action must be filed within thirty days after the defendant receives, through service or otherwise, a copy of the initial pleading setting forth the claim for relief upon which the action is based. The thirty-day clock begins to run upon service of process, not upon filing of the complaint. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 354 (1999).

Under § 1446(b)(3), if the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant 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. However, for cases removed under CAFA, § 1453(b) eliminates the one-year limitation on removal that otherwise applies under § 1446(c)(1), meaning that a CAFA case may be removed at any time if a later-received paper first reveals removability.

2. Analysis. VMS was served on August 12, 2025 through its California registered agent, CT Agents, Inc. The thirty-day removal period under § 1446(b)(1) therefore expires on September 11, 2025. This is the same date as the responsive pleading deadline in state court under California Code of Civil Procedure § 412.20(a)(3).

If VMS does not file a notice of removal by September 11, 2025, the right to remove based on the initial complaint will lapse. Under § 1446(b)(3), a later-received paper could theoretically trigger a new thirty-day removal window, but only if that paper first reveals that the case is removable. Because CAFA removability is apparent on the face of the complaint — the complaint identifies a putative class of approximately 3,550 members, alleges claims with an aggregate exposure well in excess of $5,000,000, and involves a named plaintiff who is a citizen of a different state than the defendant — it is unlikely that any subsequent filing would create a new basis for removal that was not already ascertainable from the complaint itself. Accordingly, September 11, 2025 should be treated as a hard deadline for any removal decision.

3. Conclusion. If VMS chooses to remove, the notice of removal must be filed in the United States District Court for the Central District of California, Riverside Division, on or before September 11, 2025. A decision is required before that date. As discussed in Section VI below, we recommend certain preservation strategies even though we do not recommend removal at this time.

IV. Strategic Analysis — Arguments Against Removal

While the jurisdictional prerequisites for CAFA removal are met, the question of whether to exercise the right of removal is a strategic one. After careful analysis, we recommend against removal for the following reasons.

A. State Court Advantages for Opposing Class Certification

The central battleground in this litigation will be class certification. VMS's principal defense strategy is to demonstrate that the question of whether individual employees received compliant meal and rest breaks requires individualized inquiries that predominate over any common questions, thereby defeating class certification. This argument is more likely to succeed in San Bernardino County Superior Court than in the Central District of California.

State court certification framework. California state courts apply the certification framework of California Code of Civil Procedure § 382 and the California Supreme Court's landmark decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004. Under Brinker, an employer's obligation with respect to meal periods is to "provide" meal periods — that is, to relieve employees of all duty and relinquish control over their activities for a thirty-minute period, without impeding, discouraging, or dissuading employees from taking breaks. Id. at 1040. Critically, Brinker held that an employer is not obligated to ensure that employees do not work during meal periods; the employer need only make the meal period available. Id. at 1040–41. This framework necessarily generates individualized inquiries into whether a given employee was actually prevented from taking a meal break versus voluntarily choosing to work through it — a distinction that can be fatal to class certification in state court where the judge focuses on the predominance of individual issues.

San Bernardino County Superior Court judges have historically been less inclined than federal judges in the Central District of California to certify expansive wage-and-hour class actions, particularly in cases involving these types of individualized meal and rest break compliance inquiries. While certification outcomes are always judge-specific, the overall tendency of San Bernardino County judges to scrutinize whether common questions truly predominate in the meal-and-rest-break context is well documented in the labor and employment bar's collective experience.

Federal court certification framework. By contrast, federal courts in the Central District have at times applied a more permissive approach to class certification in wage-and-hour cases under Federal Rule of Civil Procedure 23. Although Rule 23's requirements of commonality, typicality, and predominance are facially rigorous — particularly after the Supreme Court's decisions in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Granite Harbor Partners LLC v. Behrend, 569 U.S. 27 (2013) — federal courts in the Central District have in practice been receptive to plaintiffs' arguments that a uniform company policy (such as an auto-deduction policy) establishes a common question that predominates over individual variations. Statistical and sampling evidence is more readily accepted in federal court as a means of proving class-wide liability, which could allow Plaintiff's counsel to avoid the individualized-inquiry problem by relying on aggregate data and expert analysis.

The defense theme of operational variability. VMS's core defense theme is that the Fontana Plant's six production lines — Body Line A, Body Line B, Trim Line A, Trim Line B, Paint, and Final Assembly/Quality Control — each have distinct operational characteristics, production schedules, staffing levels, and supervisory practices. Furthermore, the two shifts (first shift, 5:00 AM to 1:30 PM; second shift, 2:00 PM to 10:30 PM) operate under different conditions, with different supervisors, and at different production volumes. The meal and rest break experiences of a Trim Line B employee on the first shift may be materially different from those of a Paint Line employee on the second shift. This argument — that individualized inquiries across twelve distinct line-shift combinations are necessary to determine whether class-wide violations occurred — may receive a more favorable hearing in state court, where the judge is more likely to view these variations as defeating predominance.

The auto-deduction policy discontinuation. The fact that VMS discontinued the auto-deduction policy on March 15, 2024 creates two distinct sub-periods within the class period. During the auto-deduction period (August 4, 2021 through March 14, 2024), Plaintiff's strongest argument is that the auto-deduction itself was a uniform policy that applied to all non-exempt employees, creating a common question of whether the policy resulted in systematic meal period violations. During the post-auto-deduction period (March 15, 2024 to present), the uniformity of practice is much weaker, and individual inquiries are more clearly required. A state court may be more receptive to finding that this temporal bifurcation breaks commonality and makes class treatment unmanageable, while a federal court might be more inclined to certify a class for the auto-deduction sub-period and address the post-March 2024 period separately or through sub-classing.

B. California-Specific Claims Favor State Court Expertise

All seven causes of action in the complaint arise exclusively under California law. No federal claims are asserted. The claims involve the California Labor Code's meal and rest period provisions (§§ 226.7, 512), wage payment timing requirements (§§ 204, 1194), wage statement accuracy mandates (§ 226), waiting time penalty provisions (§ 203), the Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.), and the Private Attorneys General Act (Cal. Lab. Code § 2698 et seq.).

California Superior Court judges, particularly those assigned to complex litigation or civil unlimited departments, routinely adjudicate wage-and-hour class actions and are deeply familiar with the nuances of California's meal and rest break jurisprudence. They are well versed in the application of Brinker, the premium pay framework established by Labor Code § 226.7, the interplay between class claims and PAGA representative actions, and the procedural requirements for PAGA exhaustion and settlement approval. This familiarity extends to the frequently evolving landscape of California wage-and-hour law, including recent appellate and Supreme Court decisions that refine employers' and employees' respective obligations.

Federal judges, while fully competent to apply state law under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), and its progeny, may be less familiar with the intricacies of the California wage-and-hour regulatory scheme and may apply federal class action procedural norms — including the federal summary judgment standard, the Daubert expert testimony framework, and Rule 23 certification procedures — in ways that could be less favorable to the defense's position on specific California law issues. Additionally, certain California procedural mechanisms, such as the demurrer and motion to strike (Cal. Code Civ. Proc. §§ 430.10, 435), afford the defense targeted early-stage challenges to Plaintiff's pleading that have no precise federal counterpart (the closest analogue, a Federal Rule of Civil Procedure 12(b)(6) motion, applies a different standard and does not allow the same granularity of attack on specific allegations).

C. PAGA Claims Are Not Removable — Risk of Parallel Proceedings

This factor is, in our assessment, the single most significant strategic consideration counseling against removal.

1. Non-Removability of PAGA Claims

The Seventh Cause of Action is a representative PAGA claim brought under California Labor Code § 2698 et seq. PAGA claims are qualitatively different from class action claims. In a PAGA action, the plaintiff acts as a proxy or agent of the State of California, seeking civil penalties on behalf of the LWDA. The penalties collected are distributed seventy-five percent to the LWDA and twenty-five percent to the aggrieved employees. See Cal. Lab. Code § 2699(i). The real party in interest in a PAGA action is the State of California, not the individual plaintiff. See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 381–82.

Under established Ninth Circuit and California law, PAGA claims are generally not removable to federal court under CAFA for two independent reasons:

First, because the real party in interest is the State of California, which is not a "citizen" of any state for purposes of diversity jurisdiction, the minimal diversity requirement is not met with respect to the PAGA claim. See Baumann v. Chase Investment Services Corp., 747 F.3d 1117, 1122–24 (9th Cir. 2014).

Second, a PAGA representative action is not a "class action" within the meaning of CAFA, because PAGA actions do not require class certification, do not bind absent class members through principles of res judicata, and do not satisfy the definition of a "class action" under 28 U.S.C. § 1332(d)(1)(B). See id.; Yocupicio v. PAE Group, LLC, 795 F.3d 1057, 1059–60 (9th Cir. 2015).

2. The Parallel Proceedings Problem

If VMS removes the entire case to federal court, Plaintiff's counsel at Nakamura Lozano & Pratt LLP would almost certainly file a motion to remand the PAGA claim under 28 U.S.C. § 1447(c). Based on prevailing case law, the motion to remand the PAGA claim would likely be granted. The federal court would retain jurisdiction over the class action claims (Causes of Action 1 through 6) under CAFA but would remand the PAGA claim (Seventh Cause of Action) to San Bernardino County Superior Court.

This would result in parallel proceedings — the class action proceeding in the Central District of California (Riverside Division) and the PAGA action proceeding in the Superior Court of California, County of San Bernardino. Parallel proceedings would create significant problems:

• Increased litigation costs. Defending parallel proceedings in two courts would substantially increase litigation costs. Our current estimate of defense costs through trial in a single forum is $2,500,000 to $3,800,000. Parallel proceedings could increase this range by forty to sixty percent, to approximately $3,500,000 to $6,000,000, due to the need for separate motion practice, separate discovery coordination, separate case management conferences, and the retention of separate or overlapping local counsel.

• Duplicative discovery. The class action claims and the PAGA claim arise from the same underlying facts — the alleged meal and rest period violations at the Fontana Plant. Discovery in both proceedings would cover substantially the same ground, including depositions of supervisors and managers, production of payroll and timekeeping records, and expert analysis of damages. While some efficiencies might be achieved through coordination, the reality of two separate discovery tracks in two separate courts is inherently wasteful and burdensome.

• Inconsistent rulings. Two different judges applying California law to the same set of facts could reach inconsistent conclusions on key issues, such as whether VMS's auto-deduction policy constituted a "policy or practice" of denying meal breaks, whether individual supervisory variations are sufficient to preclude class treatment, and the appropriate measure of damages or penalties. Inconsistent rulings would complicate settlement discussions and could create estoppel and preclusion issues in either forum.

• PAGA penalty exposure. The estimated PAGA penalty exposure alone is approximately $5,500,000. This is a significant component of the overall case that cannot be resolved in federal court. Any settlement of the class action in federal court would need to be coordinated with the PAGA proceeding in state court, adding an additional layer of complexity to any global resolution.

3. Conclusion on PAGA

The non-removability of the PAGA claim creates an unacceptable risk of bifurcated proceedings that would increase costs, generate potential for inconsistent rulings, and complicate any path to a global settlement. This factor alone weighs heavily against removal.

D. Jury Pool and Venue Considerations

1. San Bernardino County Superior Court

If the case proceeds in San Bernardino County Superior Court and reaches trial, the jury pool would be drawn from the Inland Empire region, which includes many working-class communities with a significant manufacturing and warehouse employment base. Fontana, Ontario, Rancho Cucamonga, Rialto, and neighboring cities have large populations of hourly workers, some of whom may be sympathetic to Plaintiff's claims about missed meal and rest breaks in a production environment.

However, the Inland Empire jury pool also includes residents who are employed in management or supervisory roles in the logistics and manufacturing sector and who may understand the realities of production scheduling and break flexibility. These jurors may be sympathetic to VMS's argument that meal and rest breaks were made available but that some employees chose to work through them for personal reasons (e.g., to leave early, to earn overtime, or to keep up with co-workers on the production line).

2. Central District of California (Riverside Division)

If the case were removed to the Central District of California, Riverside Division (George E. Brown Jr. Federal Building and U.S. Courthouse, 3470 Twelfth Street, Riverside, California 92501), the jury pool would be drawn from a broader geographic area encompassing Riverside and San Bernardino Counties. Federal juries in wage-and-hour cases in the Central District have occasionally awarded significant damages, and the federal jury selection process, including the use of voir dire questionnaires and Daubert hearings on expert testimony, introduces different procedural considerations that cut both ways.

3. Assessment. On balance, the jury pool consideration is neutral to slightly favoring state court. This is particularly true given that the case is substantially more likely to settle than to proceed to a jury trial. Based on our assessment of comparable California wage-and-hour class actions, fewer than ten percent of such cases reach trial, with the vast majority resolving through settlement following class certification or in connection with mediation. The jury pool consideration, while relevant, should not be a primary driver of the forum selection decision.

E. Appellate Considerations

1. State Court Appellate Path

If the case is litigated in San Bernardino County Superior Court, interlocutory appeals on class certification orders or other significant rulings would be directed to the California Court of Appeal, Fourth Appellate District, Division Two, located in Riverside, California. The Fourth District, Division Two has a well-developed body of wage-and-hour class action jurisprudence and has issued decisions that are generally predictable and consistent with the California Supreme Court's Brinker framework. For purposes of strategic defense planning, the predictability of appellate outcomes in the Fourth District is an advantage, as it allows for more informed decision-making at the trial court level.

2. Federal Appellate Path

If the case were litigated in the Central District of California, appeals would go to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit has issued several decisions in recent years that have been characterized as plaintiff-favorable in the wage-and-hour class action context, including decisions that have taken an expansive view of the role of statistical evidence in establishing common questions for class certification purposes and that have construed California wage-and-hour provisions broadly in favor of employee protections. While the Ninth Circuit applies Rule 23 rigorously and has also issued decisions favorable to defendants, the overall appellate landscape in the Ninth Circuit introduces greater uncertainty for VMS's defense strategy than the more predictable Fourth District, Division Two.

3. Assessment. Appellate considerations modestly favor remaining in state court, primarily due to the greater predictability of the California appellate framework for wage-and-hour class actions.

F. Impact on Ashgrove Equity Partners's Planned 2026 Exit

VMS's majority equity holder is Ashgrove Equity Partners Industrial Partners, LP, which acquired VMS in 2019 for approximately $510,000,000. Ashgrove Equity Partners has a planned exit, expected to take the form of a secondary sale process, targeted for 2026. Catherine Hsu, Operating Partner and Board Representative for Ashgrove Equity Partners, has communicated to Calderwood & Harkness through VMS's General Counsel, Priya Nandakumar, that Ashgrove Equity Partners is interested in resolving the contingent liability presented by this litigation as efficiently and expeditiously as possible, in order to minimize the impact on VMS's valuation and due diligence process in connection with the anticipated exit.

Removal to federal court could extend the litigation timeline due to the generally busier federal docket in the Central District of California and the complexities of managing bifurcated PAGA proceedings. In our experience, wage-and-hour class actions in the Central District take an average of twelve to eighteen months longer to reach a dispositive stage (class certification, summary judgment, or settlement) compared to similar cases in San Bernardino County Superior Court. This delay could push the resolution of the case well beyond Ashgrove Equity Partners's 2026 exit window, leaving the litigation as an unresolved contingent liability that would need to be addressed through indemnification or escrow provisions in the sale transaction — both of which reduce deal certainty and could affect valuation.

Remaining in state court facilitates a more streamlined path to mediation and potential settlement, consistent with the phased defense strategy that Calderwood & Harkness has proposed: (i) defend aggressively through the class certification stage to narrow or defeat class certification; (ii) pursue early mediation following the class certification ruling (win or lose); and (iii) seek a global resolution that includes both the class claims and the PAGA claim. This approach is achievable within a twelve-to-eighteen-month timeline in state court, positioning VMS to resolve the litigation before or during the early stages of Ashgrove Equity Partners's exit process.

V. Arguments in Favor of Removal (Noted but Not Recommended)

For completeness and to ensure that the record reflects a balanced analysis, we note the following arguments in favor of removal, which we have considered but ultimately concluded are outweighed by the factors discussed in Section IV.

A. Federal Procedural Advantages

Federal Rule of Civil Procedure 23 imposes rigorous certification requirements, as interpreted by the Supreme Court in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Granite Harbor Partners LLC v. Behrend, 569 U.S. 27 (2013). Under Dukes, commonality requires the plaintiff to demonstrate that the class members "have suffered the same injury," and the claims must depend upon a "common contention" that is "capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." 564 U.S. at 350. Under Northgate Enterprises, the damages model must be consistent with the class-wide theory of liability. These standards could provide VMS with additional ammunition to oppose class certification.

Federal discovery rules, including the proportionality requirements of Federal Rule of Civil Procedure 26(b)(1) (as amended in 2015), may provide greater control over the scope and cost of discovery. California's broader discovery standard under Code of Civil Procedure § 2017.010 — which permits discovery of any matter "relevant to the subject matter" — could expose VMS to more expansive and costly discovery obligations in state court.

The Daubert standard for expert testimony, which applies in federal court under Federal Rule of Evidence 702, could be used to challenge the methodology of Plaintiff's damages expert, Dr. Anita Bhargava of Lakeshore Economic Consulting Group, at the class certification stage. Dr. Bhargava has been identified in Plaintiff's initial disclosures as the expert who will opine on class-wide damages. Under Daubert, the court serves as a gatekeeper to ensure that expert testimony is both relevant and reliable, and VMS could challenge Dr. Bhargava's assumptions regarding violation rates, the use of statistical sampling, and the reliability of her damages model. California state courts apply the more permissive Kelly/Frye standard (or, for certain categories of expert testimony, the Sargon Enterprises, Inc. v. University of Southern California standard), which may provide less robust grounds for excluding Plaintiff's expert testimony.

B. Federal Court Efficiency

Federal case management orders tend to impose strict scheduling, including firm trial dates, discovery cutoffs, and expert disclosure deadlines. This rigorous case management could discipline Plaintiff's counsel and prevent dilatory tactics that are sometimes more easily pursued in state court, where continuances may be granted more liberally.

Summary judgment standards in federal court may also be marginally more favorable to the defense. Federal courts apply the standard articulated in Celotex Corp. v. Catrett, 477 U.S. 317 (1986), and Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), which may be applied with slightly more rigor than the California state court standard in some circumstances, though the substantive standards are similar.

C. Potential Litigation Leverage

Removal to federal court could signal to Plaintiff's counsel at Nakamura Lozano & Pratt LLP that VMS is prepared to litigate aggressively, which may influence Plaintiff's settlement posture. The added complexity and expense of litigating in federal court, including the need for Plaintiff's counsel to navigate federal procedural rules and the Daubert framework, could marginally increase Plaintiff's perceived litigation risk and incentivize earlier settlement discussions.

However, we assess this leverage effect as modest. Nakamura Lozano & Pratt LLP is an experienced plaintiff-side wage-and-hour firm with substantial federal court experience, including multiple CAFA removals in prior matters. The deterrent effect of removal is unlikely to be significant.

VI. Preservation of Removal Right

Even though we recommend against removal at this time, it is prudent to consider strategies for preserving the removal right to the extent possible.

A. Lapse of the Initial 30-Day Window

If VMS does not file a notice of removal by September 11, 2025, the initial thirty-day removal window under 28 U.S.C. § 1446(b)(1) will lapse. This is a consequence of the statutory framework and cannot be extended by agreement of the parties or unilateral action by the defendant.

B. Possibility of a Subsequent Removal Window

Under 28 U.S.C. § 1446(b)(3), a new thirty-day removal window can be triggered by receipt 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." However, because CAFA removability is apparent on the face of the original complaint — the complaint identifies a putative class of approximately 3,550 members, alleges claims with an aggregate exposure well in excess of $5,000,000, and involves diverse parties — it is unlikely that any subsequent filing would constitute a "paper from which it may first be ascertained" that the case is removable. The § 1446(b)(3) provision is designed to address situations where initial removability is not apparent, not situations where the defendant has voluntarily chosen not to remove a case that is clearly removable from the outset.

We note, however, that CAFA's elimination of the one-year limitation on removal under § 1453(b) leaves open a narrow theoretical possibility that some future development — such as a significant amendment to the complaint that expands the class definition, adds new defendants, or otherwise materially alters the jurisdictional calculus — could provide an arguable basis for removal at a later date. We assess this possibility as remote but worth monitoring.

C. Reservation of Rights in the Answer

We recommend that the answer filed in San Bernardino County Superior Court include a general reservation of VMS's right to seek removal at a future date should circumstances warrant. While we acknowledge that such a reservation has limited legal effect once the initial removal window closes — courts generally do not treat boilerplate reservations of removal rights as extending the statutory deadline — it creates a record of VMS's awareness of its removal rights and its considered decision to remain in state court at this time.

D. Monitoring for Changed Circumstances

We recommend that the litigation team continue to monitor the case for developments that could warrant revisiting the removal analysis, including:

• An amended complaint that materially alters the class definition, adds new claims, or adds new defendants;

• discovery revealing that the putative class is substantially larger than currently estimated or that class members are more geographically dispersed than anticipated;

• Any change in the assigned judge or the court's class certification practices that materially alters the strategic calculus;

• Any legislative or judicial developments affecting PAGA removability.

VII. Coordination with Insurance Carrier

VMS's employment practices liability coverage is provided under a policy issued by Ridgeway National Insurance Company (Policy No. EPL-VMS-2024-07821). The claims adjuster assigned to this matter is Neil Pemberton, AVP — Complex Claims. Ridgeway issued a Reservation of Rights letter on August 18, 2025, in which it acknowledged receipt of the tender, agreed to provide a defense subject to the terms and conditions of the policy and the reservation of rights, and reserved the right to deny coverage or limit its indemnity obligations in the event that certain exclusions apply.

Under the policy terms, VMS is subject to a $500,000 self-insured retention ("SIR") that must be fully eroded before Ridgeway's defense obligation attaches. Defense costs incurred to date and projected through the responsive pleading stage are estimated at approximately $85,000 to $120,000, meaning that a substantial portion of the SIR remains.

The removal decision should be communicated to Ridgeway, as the choice of forum may affect defense cost projections and Ridgeway's litigation management guidelines. Specifically:

• Ridgeway's litigation management guidelines generally require insured counsel to consult with the carrier before making significant strategic decisions that materially affect defense costs, including forum selection decisions.

• If VMS remains in state court, the projected defense costs of $2,500,000 to $3,800,000 through trial are within the range that Ridgeway has indicated it considers reasonable for a wage-and-hour class action of this magnitude.

• If removal were pursued, the potential for parallel PAGA proceedings and the associated cost increase (to an estimated $3,500,000 to $6,000,000) would likely trigger additional scrutiny from Ridgeway, including a potential request for a formal litigation plan and budget. Ridgeway would need to be consulted regarding any pre-approval requirements for these additional costs.

We will prepare a memorandum to Ridgeway summarizing the forum selection decision and its rationale, for delivery upon receipt of Renata Vasquez's approval of this recommendation.

VIII. Coordination with Local Counsel

Whitfield Garza LLP has been identified and provisionally engaged as local counsel for the San Bernardino County Superior Court proceedings. The primary contact is Elena Garza, Contact Partner, at the firm's San Bernardino office (290 North D Street, Suite 510, San Bernardino, California 92401). Whitfield Garza has extensive experience in wage-and-hour class action defense in the Inland Empire and has appeared before several of the judges in the San Bernardino County Superior Court's civil unlimited departments.

If the case remains in state court, Whitfield Garza will assist Calderwood & Harkness with local filings, court appearances, procedural requirements specific to the San Bernardino County Superior Court, and liaison functions with the court clerk's office and judicial staff. Their role will be particularly important during the initial case management conference, which we anticipate will be calendared for late October 2025.

If removal were pursued, the local counsel needs would change. Calderwood & Harkness's Los Angeles office, located at 633 West Fifth Street, Suite 4400, Los Angeles, California 90071, can appear in the United States District Court for the Central District of California without the need for separate local counsel, as Calderwood & Harkness is a firm registered with the Central District. However, if the PAGA claim were remanded to San Bernardino County Superior Court as anticipated, coordination with Whitfield Garza for the state court PAGA proceedings would still be necessary, adding a layer of complexity to the multi-forum litigation management.

By remaining in state court, the engagement of Whitfield Garza can proceed on a unified basis, with a single court, a single set of procedural rules, and a single point of coordination.

IX. Recommendation

Based on the foregoing analysis, our recommendation is as follows:

Do not remove. VMS should not exercise its right to remove this action to the United States District Court for the Central District of California. Instead, VMS should file its answer, demurrer, and motion to strike in San Bernardino County Superior Court on or before September 11, 2025.

This recommendation rests on four primary considerations:

1. State court certification standards and judicial familiarity with California wage-and-hour law favor the defense. San Bernardino County Superior Court judges are well versed in the Brinker framework and have historically been less inclined than federal judges in the Central District to certify expansive wage-and-hour class actions, particularly in cases — like this one — where the defense can demonstrate that individualized inquiries across multiple production lines, shifts, and supervisory practices are necessary to determine whether class-wide meal and rest break violations occurred.

2. PAGA claims cannot be removed, creating an unacceptable risk of costly parallel proceedings. The Seventh Cause of Action is a representative PAGA claim that, under established Ninth Circuit authority, is not removable to federal court. Removal of the class action claims would result in bifurcated proceedings — a class action in federal court and a PAGA action in state court — which would substantially increase defense costs, create duplicative discovery, and risk inconsistent rulings on overlapping factual and legal issues. This factor alone is dispositive.

3. State court litigation aligns with the phased defense strategy and supports a more efficient timeline for potential early mediation. Remaining in state court facilitates a streamlined path to mediation and potential settlement, consistent with VMS's phased defense strategy and Ashgrove Equity Partners Industrial Partners, LP's planned 2026 exit. Federal court litigation would likely extend the case timeline by twelve to eighteen months and complicate the exit process.

4. The strategic advantages of remaining in state court outweigh the marginal procedural benefits of federal court. While federal court offers certain procedural advantages — including rigorous Rule 23 certification standards, Daubert gatekeeping, and proportionality-based discovery limits — these advantages are marginal in context and are outweighed by the substantial strategic disadvantages of removal, particularly the parallel proceedings problem and the impact on litigation cost and timeline.

We respectfully note that the removal deadline is September 11, 2025, and request Renata Vasquez's approval of this recommendation no later than September 5, 2025, to allow adequate time for the responsive pleading team to finalize filings.

We confirm that the responsive pleading team — consisting of James Underwood (lead associate) and Devon Archer (senior associate) — is preparing the answer and demurrer/motion to strike for filing in San Bernardino County Superior Court on or before September 11, 2025. Drafts of the responsive pleadings will be circulated for review by September 3, 2025.

X. Action Items

The following action items require attention in connection with this recommendation:

• [ ] Renata Vasquez to approve recommendation against removal by September 5, 2025.

• [ ] Communicate forum decision to Priya Nandakumar (VMS General Counsel) for client confirmation and authorization to file the answer and demurrer in state court. Target communication date: upon receipt of Renata Vasquez's approval.

• [ ] Notify Ridgeway National Insurance Company (Neil Pemberton, AVP — Complex Claims) of forum decision and confirm that defense cost reporting will reflect state court proceedings only. Prepare and transmit a brief memorandum summarizing the forum decision and its rationale.

• [ ] Finalize and file the answer and demurrer/motion to strike in San Bernardino County Superior Court by September 11, 2025. Circulate drafts for partner review by September 3, 2025.

• [ ] Engage Whitfield Garza LLP (Elena Garza, Contact Partner) for local counsel support, including local filing, service, and appearance at the anticipated case management conference.

• [ ] Calendar the anticipated Case Management Conference (estimated late October 2025) and begin preparation, including drafting the Case Management Statement in coordination with Whitfield Garza.

• [ ] Continue monitoring for any developments that could warrant revisiting the removal analysis, including amended complaints, new discovery, or changes in PAGA removability law.

Please do not hesitate to contact me at (213) 847-6200 or james.underwood@calderwoodharkness.com if you have any questions or wish to discuss any aspect of this memorandum. I am available to meet at your convenience prior to the September 5 decision deadline.

CALDERWOOD & HARKNESS LLP

By: ________

James Underwood Lead Associate, Labor & Employment 633 West Fifth Street, Suite 4400 Los Angeles, California 90071 Tel: (213) 847-6200

Email: james.underwood@calderwoodharkness.com

cc: File (Matter No. 1007-00004)

Category	Calculation Methodology	Estimated Exposure
Meal period premiums (§§ 226.7, 512)	3,550 class members × 480 avg. Workdays in class period × 65% assumed violation rate × $21.40 avg. hourly rate × 1 hr. premium	$23,819,760
Rest period premiums (§ 226.7)	3,550 × 480 × 30% assumed violation rate × $21.40 × 1 hr. premium	$10,993,440
Waiting time penalties (§ 203)	~2,100 former employees × 30 days × 8 hrs./day × $21.40	$10,814,400
Wage statement penalties (§ 226)	Up to $4,000 per employee statutory cap; est. ~$2,000 avg. × 3,550	~$7,100,000
PAGA penalties (§ 2698 et seq.)	$100 initial / $200 subsequent per pay period per employee; 26 bi-weekly pay periods × est. violation frequency	~$5,500,000
Maximum theoretical aggregate	~$65,000,000+

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and the work product doctrine. It was prepared in anticipation of litigation and reflects the mental impressions, conclusions, opinions, and legal theories of counsel. It is not to be disclosed to any person or entity outside of Calderwood & Harkness LLP, Vantage Mobility Systems Corp., and authorized representatives of Ashgrove Equity Partners Industrial Partners, LP without the express written consent of counsel.
MEMORANDUM
TO: Renata Vasquez, Responsible Partner, Labor & Employment, Calderwood & Harkness LLP
FROM: James Underwood, Lead Associate, Labor & Employment, Calderwood & Harkness LLP
DATE: August 20, 2025
RE: Removal Analysis — Gloria Reyes, individually and on behalf of all others similarly situated, and on behalf of the State of California v. Vantage Mobility Systems Corp., Case No. CIVSB-2025-04781, Superior Court of California, County of San Bernardino
MATTER NO.: 1007-00004
CLIENT: Vantage Mobility Systems Corp.
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I. Executive Summary
The purpose of this memorandum is to analyze whether Vantage Mobility Systems Corp. ("VMS" or the "Company") should exercise its right to remove the above-captioned meal-and-rest-break putative class action from the Superior Court of California, County of San Bernardino, to the United States District Court for the Central District of California, Riverside Division, under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d). This memorandum addresses the jurisdictional prerequisites for CAFA removal, evaluates the strategic implications of removal versus remaining in state court, and provides a recommendation for the forum in which VMS should defend this action.
Bottom-line conclusion: Although all three CAFA jurisdictional prerequisites — amount in controversy exceeding $5,000,000, minimal diversity of citizenship, and a proposed class of at least 100 members — are satisfied, we recommend against removal at this time on strategic grounds. Specifically, the advantages of litigating in San Bernardino County Superior Court, including more favorable class certification standards, the avoidance of bifurcated PAGA proceedings, and alignment with Ashgrove Equity Partners Industrial Partners, LP's planned 2026 exit timeline, outweigh the marginal procedural benefits available in federal court.
We recommend that VMS file its answer and demurrer/motion to strike in San Bernardino County Superior Court by the September 11, 2025 responsive pleading deadline, while monitoring developments that could warrant revisiting this analysis at a later stage. We note, however, that as a practical matter, the opportunity to remove based on the initial complaint will lapse if a notice of removal is not filed by that same date.
Critical deadline: The 30-day removal window under 28 U.S.C. § 1446(b) runs from August 12, 2025, the date on which VMS was served via its California registered agent, CT Agents, Inc. This makes the removal deadline September 11, 2025 — the same date as the responsive pleading deadline in state court. A decision must be made and communicated to the litigation team before that date. We respectfully request Renata Vasquez's approval of this recommendation no later than September 5, 2025, to allow adequate time for the responsive pleading team to finalize the state court filings.
II. Procedural Posture and Relevant Background
A. The Complaint
On August 1, 2025, Gloria Reyes ("Plaintiff" or "Reyes"), a former Production Associate assigned to Trim Line B at the VMS Fontana Plant (located at 11780 Cherry Avenue, Fontana, California 92337), filed a putative class action complaint in the Superior Court of California, County of San Bernardino. The complaint was filed through Plaintiff's counsel at Nakamura Lozano & Pratt LLP, with Victor Lozano (partner) and Michelle Tran (associate) listed as attorneys of record. The case was assigned Case No. CIVSB-2025-04781.
B. Service on VMS
VMS was served with the summons and complaint on August 12, 2025 through its California registered agent for service of process, CT Agents, Inc., located at 818 West Seventh Street, Suite 930, Sacramento, California 95814. CT Agents forwarded the service package to VMS's General Counsel, Priya Nandakumar, on the same date, and our office was engaged shortly thereafter. The 30-day responsive pleading period under California Code of Civil Procedure § 412.20(a)(3) and the 30-day removal period under 28 U.S.C. § 1446(b)(1) both expire on September 11, 2025.
C. Causes of Action
The complaint asserts seven causes of action, all arising under California state law:
1.  First Cause of Action — Meal Period Violations (Cal. Lab. Code §§ 226.7, 512): Plaintiff alleges that VMS maintained a company-wide policy and practice of failing to provide legally compliant uninterrupted thirty-minute meal periods to non-exempt hourly employees, including through the use of an automatic thirty-minute meal period deduction from timekeeping records regardless of whether employees actually received a full, uninterrupted meal break.
2.  Second Cause of Action — Rest Period Violations (Cal. Lab. Code § 226.7): Plaintiff alleges that VMS failed to authorize and permit ten-minute rest periods for every four hours worked (or major fraction thereof), including by scheduling production runs and line-speed expectations that effectively precluded employees from taking rest breaks without falling behind on production quotas.
3.  Third Cause of Action — Unpaid Wages (Cal. Lab. Code §§ 204, 1194): Plaintiff alleges that the meal and rest period violations resulted in unpaid compensation — specifically, premium wages owed under Labor Code § 226.7 — and that VMS failed to pay all wages owed in a timely manner as required by Labor Code § 204.
4.  Fourth Cause of Action — Inaccurate Wage Statements (Cal. Lab. Code § 226): Plaintiff alleges that VMS issued wage statements that failed to accurately reflect total hours worked, gross wages earned, and applicable deductions, in part because the auto-deduction policy caused the wage statements to reflect thirty-minute meal period deductions even when employees worked through all or part of their meal periods.
5.  Fifth Cause of Action — Waiting Time Penalties (Cal. Lab. Code § 203): Plaintiff alleges that VMS willfully failed to pay all wages due to former employees at the time of separation, entitling former employees to waiting time penalties of up to thirty days of wages at the employee's daily rate of pay.
6.  Sixth Cause of Action — Unfair Competition Law Violations (Cal. Bus. & Prof. Code § 17200 et seq.): Plaintiff alleges that VMS's unlawful, unfair, and fraudulent business practices — including the meal and rest period violations, unpaid wages, and inaccurate wage statements — constitute violations of the UCL, entitling Plaintiff and the class to restitution of all wages and other amounts unlawfully withheld.
7.  Seventh Cause of Action — PAGA Penalties (Cal. Lab. Code § 2698 et seq.): Plaintiff brings a representative action under the Private Attorneys General Act on behalf of the State of California, seeking civil penalties for the alleged Labor Code violations, to be distributed seventy-five percent to the Labor and Workforce Development Agency ("LWDA") and twenty-five percent to aggrieved employees.
D. Proposed Class Definition
The complaint defines the proposed class as:
All current and former non-exempt hourly employees who worked at Vantage Mobility Systems Corp.'s facility located at 11780 Cherry Avenue, Fontana, California 92337 (the "Fontana Plant") at any time during the period from August 4, 2021 through the date of trial.
Based on the Company's human resources records and payroll data — which Calderwood & Harkness has obtained and reviewed in connection with this engagement — the proposed class encompasses approximately 3,550 putative class members, consisting of approximately 1,450 current employees and approximately 2,100 former employees who were employed at the Fontana Plant during the class period. The class period runs from August 4, 2021 to the present, reflecting a four-year lookback period for the UCL claim (the longest applicable statute of limitations), and a one-year lookback period for the PAGA claim from the date of the PAGA notice.
E. PAGA Notice and Administrative Exhaustion
Plaintiff served the required PAGA notice on the LWDA and on Vantage on May 22, 2025 (LWDA Notice No. LWDA-CM-2025-831447). The notice identified the same meal and rest period violations, wage statement violations, and waiting time penalty claims that form the basis of the complaint. The sixty-five-day cure period prescribed by Labor Code § 2699.3(a)(2)(A) expired on July 26, 2025, without the LWDA commencing an investigation. Plaintiff filed the complaint six days later, on August 1, 2025. There is no dispute that Plaintiff has satisfied the administrative exhaustion prerequisite for the PAGA claim.
F. The Fontana Plant Operations
For context relevant to the class certification analysis and the strategic considerations discussed below, the Fontana Plant is a vehicle modification and specialty manufacturing facility where VMS converts standard chassis into wheelchair-accessible vehicles and other mobility-related products. The Plant operates across six production lines: Body Line A, Body Line B, Trim Line A, Trim Line B, Paint, and Final Assembly/Quality Control. The Plant runs two shifts: a first shift from 5:00 AM to 1:30 PM and a second shift from 2:00 PM to 10:30 PM. Each production line has its own supervisory team, production quotas, and operational characteristics, which will be central to VMS's argument that individualized inquiries are necessary to determine whether class-wide meal and rest break violations occurred.
G. The Auto-Deduction Policy
A critical factual issue in this case is VMS's former automatic meal period deduction policy, under which the Kronos timekeeping system was configured to automatically deduct thirty minutes from each employee's daily recorded hours to account for a meal period, regardless of whether the employee actually clocked out for a full, uninterrupted thirty-minute meal break. VMS discontinued this auto-deduction policy on March 15, 2024, and transitioned to a system requiring employees to affirmatively clock in and out for meal periods. This change creates two distinct sub-periods within the class period: (i) the auto-deduction period from August 4, 2021 through March 14, 2024, and (ii) the post-auto-deduction period from March 15, 2024 to the present, during which timekeeping records are presumptively more accurate. This bifurcation will be a significant factor in the class certification analysis.
III. CAFA Jurisdictional Analysis
We turn now to the substantive analysis of whether the three jurisdictional prerequisites for removal under CAFA are met. As discussed below, all three requirements are clearly satisfied.
A. Amount in Controversy — 28 U.S.C. § 1332(d)(2)
1. Legal Standard
CAFA grants federal courts original jurisdiction over any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which any member of a class of plaintiffs is a citizen of a state different from any defendant. 28 U.S.C. § 1332(d)(2). Unlike traditional diversity jurisdiction under § 1332(a), which requires each plaintiff's individual claim to exceed $75,000, CAFA permits aggregation of all class members' claims to meet the $5,000,000 threshold. See 28 U.S.C. § 1332(d)(6).
The party invoking CAFA jurisdiction — here, VMS as the removing defendant — bears the burden of establishing that the amount in controversy exceeds $5,000,000. Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). However, under the Ninth Circuit's standard, the removing defendant need only show by a preponderance of the evidence that the amount in controversy is met. Id. at 1197; Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 88 (2014). Where the complaint does not allege a specific dollar amount — as is the case here — the removing defendant may rely on reasonable assumptions and estimates, including the complaint's allegations, the defendant's own records, and other evidence. Ibarra, 775 F.3d at 1197–98.
2. Analysis.  Plaintiff's complaint does not allege a specific aggregate amount in controversy. However, based on the complaint's allegations and Calderwood & Harkness's independent exposure analysis utilizing VMS payroll data, the amount in controversy far exceeds the $5,000,000 threshold. We have calculated the following exposure estimates:
Several methodological notes are warranted. The meal period violation rate assumption of 65% reflects Plaintiff's likely argument — supported by the auto-deduction policy — that VMS systematically failed to provide compliant meal breaks across the Fontana Plant during the pre-March 2024 sub-period. The rest period violation rate of 30% is lower because Plaintiff's complaint focuses primarily on the meal period auto-deduction but alleges rest break violations on a secondary basis. The waiting time penalty calculation assumes maximum exposure for all approximately 2,100 former employees at thirty days of wages, which represents the statutory maximum under Labor Code § 203. Actual exposure would likely be reduced by arguments regarding willfulness and good-faith dispute. The wage statement penalty estimate of approximately $7,100,000 assumes an average penalty of approximately $2,000 per employee, though the statutory framework permits up to $4,000 per employee (initial violation at $50 per violation per pay period, capped at $4,000 per employee) — yielding a theoretical maximum of $14,200,000 for the wage statement claim alone.
Even under Calderwood & Harkness's more conservative, internally discounted realistic settlement range — which accounts for litigation risk, the probability of class certification, likely success rates on individual claims, the impact of the discontinuation of the auto-deduction policy, and the erosion of damages during the post-March 2024 period — the estimated settlement value falls within a range of $8,500,000 to $18,700,000, with a midpoint of approximately $13,600,000. This midpoint is more than 2.7 times the CAFA threshold.
3. Conclusion.  The amount-in-controversy requirement of 28 U.S.C. § 1332(d)(2) is satisfied by a wide margin. There is no plausible argument by Plaintiff to defeat CAFA jurisdiction on this ground. Whether we use maximum theoretical exposure, a discounted settlement-value analysis, or any reasonable intermediate methodology, the aggregate amount in controversy substantially exceeds $5,000,000.
B. Minimal Diversity — 28 U.S.C. § 1332(d)(2)(A)
1. Legal Standard
Unlike traditional diversity jurisdiction, which requires "complete" diversity between all plaintiffs and all defendants, CAFA requires only "minimal" diversity — that is, any member of the proposed plaintiff class must be a citizen of a state different from any defendant. 28 U.S.C. § 1332(d)(2)(A). For purposes of diversity analysis, an individual's citizenship is determined by domicile, while a corporation is deemed a citizen of both its state of incorporation and the state in which it has its principal place of business. 28 U.S.C. § 1332(c)(1).
2. Analysis.  Named Plaintiff Gloria Reyes is a citizen of California. The complaint alleges that she resides in Rancho Cucamonga, California, and our investigation has confirmed that she is domiciled in San Bernardino County, California.
Defendant Vantage Mobility Systems Corp. is a Delaware corporation with its principal place of business at 4200 Industrial Parkway, Auburn Hills, Michigan 48326. For diversity purposes, VMS is a citizen of both Delaware and Michigan. VMS is not a citizen of California. Although VMS operates the Fontana Plant in California and is registered to do business in the state, a corporation's registration in a state and its operations there do not, without more, make it a citizen of that state for diversity purposes. See Hertz Corp. v. Friend, 559 U.S. 77, 92–93 (2010) (defining "principal place of business" as the corporation's "nerve center" — typically the location from which its officers direct, control, and coordinate the corporation's activities).
Minimal diversity is therefore clearly satisfied: the named plaintiff is a citizen of California, and the sole defendant is a citizen of Delaware and Michigan, but not California. Even if additional putative class members are citizens of states other than California (which is likely, given the nature of the workforce), CAFA requires only one class member to be diverse from one defendant.
3. CAFA Exceptions — Local Controversy and Home-State Exceptions
CAFA contains several mandatory and discretionary exceptions to federal jurisdiction that are designed to preserve state court jurisdiction over cases with a predominantly local character. Two exceptions warrant analysis here.
Local Controversy Exception — 28 U.S.C. § 1332(d)(4)(A). This mandatory exception requires a federal court to decline jurisdiction if: (i) greater than two-thirds of the members of the proposed plaintiff class are citizens of the state in which the action was originally filed; (ii) at least one defendant is a defendant from whom significant relief is sought, whose alleged conduct forms a significant basis for the claims, and who is a citizen of the state in which the action was originally filed; (iii) the principal injuries were incurred in the state in which the action was filed; and (iv) no other class action asserting similar factual allegations against any of the defendants was filed during the preceding three years.
This exception does not apply here. Although many putative class members likely reside in California (the Fontana Plant is located in San Bernardino County), and although the principal injuries were incurred in California, the local controversy exception requires that at least one defendant from whom significant relief is sought be a citizen of the state in which the action was originally filed. VMS is incorporated in Delaware and headquartered in Michigan. VMS is not a citizen of California. This requirement alone forecloses the local controversy exception.
Home-State Exception — 28 U.S.C. § 1332(d)(4)(B). The home-state exception requires a federal court to decline jurisdiction if two-thirds or more of the members of the proposed plaintiff class and the primary defendants are citizens of the state in which the action was originally filed. Again, because VMS is not a citizen of California, this exception is inapplicable.
4. Conclusion.  The minimal diversity requirement of 28 U.S.C. § 1332(d)(2)(A) is met. The named plaintiff is a citizen of California, and the defendant is a citizen of Delaware and Michigan. No CAFA exception — including the local controversy exception under § 1332(d)(4)(A) and the home-state exception under § 1332(d)(4)(B) — applies, because VMS is not a citizen of California.
C. Numerosity — 28 U.S.C. § 1332(d)(5)(B)
1. Legal Standard
CAFA does not apply to any class action in which the number of members of the proposed plaintiff class is fewer than 100. 28 U.S.C. § 1332(d)(5)(B). This numerosity requirement is a threshold condition for CAFA jurisdiction.
2. Analysis.  The complaint identifies approximately 3,550 putative class members, consisting of approximately 1,450 current non-exempt hourly employees and approximately 2,100 former non-exempt hourly employees who worked at the Fontana Plant during the proposed class period of August 4, 2021 through the date of trial. This figure is based on the class definition set forth in the complaint and is consistent with Calderwood & Harkness's review of VMS payroll and human resources records for the relevant period.
This figure exceeds the 100-member threshold by a factor of more than thirty-five.
3. Conclusion.  The numerosity requirement of 28 U.S.C. § 1332(d)(5)(B) is satisfied by a substantial margin. There is no colorable argument to the contrary.
D. Timeliness of Removal — 28 U.S.C. § 1446(b)
1. Legal Standard
Under 28 U.S.C. § 1446(b)(1), a notice of removal of a civil action must be filed within thirty days after the defendant receives, through service or otherwise, a copy of the initial pleading setting forth the claim for relief upon which the action is based. The thirty-day clock begins to run upon service of process, not upon filing of the complaint. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 354 (1999).
Under § 1446(b)(3), if the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant 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. However, for cases removed under CAFA, § 1453(b) eliminates the one-year limitation on removal that otherwise applies under § 1446(c)(1), meaning that a CAFA case may be removed at any time if a later-received paper first reveals removability.
2. Analysis.  VMS was served on August 12, 2025 through its California registered agent, CT Agents, Inc. The thirty-day removal period under § 1446(b)(1) therefore expires on September 11, 2025. This is the same date as the responsive pleading deadline in state court under California Code of Civil Procedure § 412.20(a)(3).
If VMS does not file a notice of removal by September 11, 2025, the right to remove based on the initial complaint will lapse. Under § 1446(b)(3), a later-received paper could theoretically trigger a new thirty-day removal window, but only if that paper first reveals that the case is removable. Because CAFA removability is apparent on the face of the complaint — the complaint identifies a putative class of approximately 3,550 members, alleges claims with an aggregate exposure well in excess of $5,000,000, and involves a named plaintiff who is a citizen of a different state than the defendant — it is unlikely that any subsequent filing would create a new basis for removal that was not already ascertainable from the complaint itself. Accordingly, September 11, 2025 should be treated as a hard deadline for any removal decision.
3. Conclusion.  If VMS chooses to remove, the notice of removal must be filed in the United States District Court for the Central District of California, Riverside Division, on or before September 11, 2025. A decision is required before that date. As discussed in Section VI below, we recommend certain preservation strategies even though we do not recommend removal at this time.
IV. Strategic Analysis — Arguments Against Removal
While the jurisdictional prerequisites for CAFA removal are met, the question of whether to exercise the right of removal is a strategic one. After careful analysis, we recommend against removal for the following reasons.
A. State Court Advantages for Opposing Class Certification
The central battleground in this litigation will be class certification. VMS's principal defense strategy is to demonstrate that the question of whether individual employees received compliant meal and rest breaks requires individualized inquiries that predominate over any common questions, thereby defeating class certification. This argument is more likely to succeed in San Bernardino County Superior Court than in the Central District of California.
State court certification framework. California state courts apply the certification framework of California Code of Civil Procedure § 382 and the California Supreme Court's landmark decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004. Under Brinker, an employer's obligation with respect to meal periods is to "provide" meal periods — that is, to relieve employees of all duty and relinquish control over their activities for a thirty-minute period, without impeding, discouraging, or dissuading employees from taking breaks. Id. at 1040. Critically, Brinker held that an employer is not obligated to ensure that employees do not work during meal periods; the employer need only make the meal period available. Id. at 1040–41. This framework necessarily generates individualized inquiries into whether a given employee was actually prevented from taking a meal break versus voluntarily choosing to work through it — a distinction that can be fatal to class certification in state court where the judge focuses on the predominance of individual issues.
San Bernardino County Superior Court judges have historically been less inclined than federal judges in the Central District of California to certify expansive wage-and-hour class actions, particularly in cases involving these types of individualized meal and rest break compliance inquiries. While certification outcomes are always judge-specific, the overall tendency of San Bernardino County judges to scrutinize whether common questions truly predominate in the meal-and-rest-break context is well documented in the labor and employment bar's collective experience.
Federal court certification framework. By contrast, federal courts in the Central District have at times applied a more permissive approach to class certification in wage-and-hour cases under Federal Rule of Civil Procedure 23. Although Rule 23's requirements of commonality, typicality, and predominance are facially rigorous — particularly after the Supreme Court's decisions in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Granite Harbor Partners LLC v. Behrend, 569 U.S. 27 (2013) — federal courts in the Central District have in practice been receptive to plaintiffs' arguments that a uniform company policy (such as an auto-deduction policy) establishes a common question that predominates over individual variations. Statistical and sampling evidence is more readily accepted in federal court as a means of proving class-wide liability, which could allow Plaintiff's counsel to avoid the individualized-inquiry problem by relying on aggregate data and expert analysis.
The defense theme of operational variability. VMS's core defense theme is that the Fontana Plant's six production lines — Body Line A, Body Line B, Trim Line A, Trim Line B, Paint, and Final Assembly/Quality Control — each have distinct operational characteristics, production schedules, staffing levels, and supervisory practices. Furthermore, the two shifts (first shift, 5:00 AM to 1:30 PM; second shift, 2:00 PM to 10:30 PM) operate under different conditions, with different supervisors, and at different production volumes. The meal and rest break experiences of a Trim Line B employee on the first shift may be materially different from those of a Paint Line employee on the second shift. This argument — that individualized inquiries across twelve distinct line-shift combinations are necessary to determine whether class-wide violations occurred — may receive a more favorable hearing in state court, where the judge is more likely to view these variations as defeating predominance.
The auto-deduction policy discontinuation. The fact that VMS discontinued the auto-deduction policy on March 15, 2024 creates two distinct sub-periods within the class period. During the auto-deduction period (August 4, 2021 through March 14, 2024), Plaintiff's strongest argument is that the auto-deduction itself was a uniform policy that applied to all non-exempt employees, creating a common question of whether the policy resulted in systematic meal period violations. During the post-auto-deduction period (March 15, 2024 to present), the uniformity of practice is much weaker, and individual inquiries are more clearly required. A state court may be more receptive to finding that this temporal bifurcation breaks commonality and makes class treatment unmanageable, while a federal court might be more inclined to certify a class for the auto-deduction sub-period and address the post-March 2024 period separately or through sub-classing.
B. California-Specific Claims Favor State Court Expertise
All seven causes of action in the complaint arise exclusively under California law. No federal claims are asserted. The claims involve the California Labor Code's meal and rest period provisions (§§ 226.7, 512), wage payment timing requirements (§§ 204, 1194), wage statement accuracy mandates (§ 226), waiting time penalty provisions (§ 203), the Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.), and the Private Attorneys General Act (Cal. Lab. Code § 2698 et seq.).
California Superior Court judges, particularly those assigned to complex litigation or civil unlimited departments, routinely adjudicate wage-and-hour class actions and are deeply familiar with the nuances of California's meal and rest break jurisprudence. They are well versed in the application of Brinker, the premium pay framework established by Labor Code § 226.7, the interplay between class claims and PAGA representative actions, and the procedural requirements for PAGA exhaustion and settlement approval. This familiarity extends to the frequently evolving landscape of California wage-and-hour law, including recent appellate and Supreme Court decisions that refine employers' and employees' respective obligations.
Federal judges, while fully competent to apply state law under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), and its progeny, may be less familiar with the intricacies of the California wage-and-hour regulatory scheme and may apply federal class action procedural norms — including the federal summary judgment standard, the Daubert expert testimony framework, and Rule 23 certification procedures — in ways that could be less favorable to the defense's position on specific California law issues. Additionally, certain California procedural mechanisms, such as the demurrer and motion to strike (Cal. Code Civ. Proc. §§ 430.10, 435), afford the defense targeted early-stage challenges to Plaintiff's pleading that have no precise federal counterpart (the closest analogue, a Federal Rule of Civil Procedure 12(b)(6) motion, applies a different standard and does not allow the same granularity of attack on specific allegations).
C. PAGA Claims Are Not Removable — Risk of Parallel Proceedings
This factor is, in our assessment, the single most significant strategic consideration counseling against removal.
1. Non-Removability of PAGA Claims
The Seventh Cause of Action is a representative PAGA claim brought under California Labor Code § 2698 et seq. PAGA claims are qualitatively different from class action claims. In a PAGA action, the plaintiff acts as a proxy or agent of the State of California, seeking civil penalties on behalf of the LWDA. The penalties collected are distributed seventy-five percent to the LWDA and twenty-five percent to the aggrieved employees. See Cal. Lab. Code § 2699(i). The real party in interest in a PAGA action is the State of California, not the individual plaintiff. See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 381–82.
Under established Ninth Circuit and California law, PAGA claims are generally not removable to federal court under CAFA for two independent reasons:
First, because the real party in interest is the State of California, which is not a "citizen" of any state for purposes of diversity jurisdiction, the minimal diversity requirement is not met with respect to the PAGA claim. See Baumann v. Chase Investment Services Corp., 747 F.3d 1117, 1122–24 (9th Cir. 2014).
Second, a PAGA representative action is not a "class action" within the meaning of CAFA, because PAGA actions do not require class certification, do not bind absent class members through principles of res judicata, and do not satisfy the definition of a "class action" under 28 U.S.C. § 1332(d)(1)(B). See id.; Yocupicio v. PAE Group, LLC, 795 F.3d 1057, 1059–60 (9th Cir. 2015).
2. The Parallel Proceedings Problem
If VMS removes the entire case to federal court, Plaintiff's counsel at Nakamura Lozano & Pratt LLP would almost certainly file a motion to remand the PAGA claim under 28 U.S.C. § 1447(c). Based on prevailing case law, the motion to remand the PAGA claim would likely be granted. The federal court would retain jurisdiction over the class action claims (Causes of Action 1 through 6) under CAFA but would remand the PAGA claim (Seventh Cause of Action) to San Bernardino County Superior Court.
This would result in parallel proceedings — the class action proceeding in the Central District of California (Riverside Division) and the PAGA action proceeding in the Superior Court of California, County of San Bernardino. Parallel proceedings would create significant problems:
•  Increased litigation costs. Defending parallel proceedings in two courts would substantially increase litigation costs. Our current estimate of defense costs through trial in a single forum is $2,500,000 to $3,800,000. Parallel proceedings could increase this range by forty to sixty percent, to approximately $3,500,000 to $6,000,000, due to the need for separate motion practice, separate discovery coordination, separate case management conferences, and the retention of separate or overlapping local counsel.
•  Duplicative discovery. The class action claims and the PAGA claim arise from the same underlying facts — the alleged meal and rest period violations at the Fontana Plant. Discovery in both proceedings would cover substantially the same ground, including depositions of supervisors and managers, production of payroll and timekeeping records, and expert analysis of damages. While some efficiencies might be achieved through coordination, the reality of two separate discovery tracks in two separate courts is inherently wasteful and burdensome.
•  Inconsistent rulings. Two different judges applying California law to the same set of facts could reach inconsistent conclusions on key issues, such as whether VMS's auto-deduction policy constituted a "policy or practice" of denying meal breaks, whether individual supervisory variations are sufficient to preclude class treatment, and the appropriate measure of damages or penalties. Inconsistent rulings would complicate settlement discussions and could create estoppel and preclusion issues in either forum.
•  PAGA penalty exposure. The estimated PAGA penalty exposure alone is approximately $5,500,000. This is a significant component of the overall case that cannot be resolved in federal court. Any settlement of the class action in federal court would need to be coordinated with the PAGA proceeding in state court, adding an additional layer of complexity to any global resolution.
3. Conclusion on PAGA
The non-removability of the PAGA claim creates an unacceptable risk of bifurcated proceedings that would increase costs, generate potential for inconsistent rulings, and complicate any path to a global settlement. This factor alone weighs heavily against removal.
D. Jury Pool and Venue Considerations
1. San Bernardino County Superior Court
If the case proceeds in San Bernardino County Superior Court and reaches trial, the jury pool would be drawn from the Inland Empire region, which includes many working-class communities with a significant manufacturing and warehouse employment base. Fontana, Ontario, Rancho Cucamonga, Rialto, and neighboring cities have large populations of hourly workers, some of whom may be sympathetic to Plaintiff's claims about missed meal and rest breaks in a production environment.
However, the Inland Empire jury pool also includes residents who are employed in management or supervisory roles in the logistics and manufacturing sector and who may understand the realities of production scheduling and break flexibility. These jurors may be sympathetic to VMS's argument that meal and rest breaks were made available but that some employees chose to work through them for personal reasons (e.g., to leave early, to earn overtime, or to keep up with co-workers on the production line).
2. Central District of California (Riverside Division)
If the case were removed to the Central District of California, Riverside Division (George E. Brown Jr. Federal Building and U.S. Courthouse, 3470 Twelfth Street, Riverside, California 92501), the jury pool would be drawn from a broader geographic area encompassing Riverside and San Bernardino Counties. Federal juries in wage-and-hour cases in the Central District have occasionally awarded significant damages, and the federal jury selection process, including the use of voir dire questionnaires and Daubert hearings on expert testimony, introduces different procedural considerations that cut both ways.
3. Assessment.  On balance, the jury pool consideration is neutral to slightly favoring state court. This is particularly true given that the case is substantially more likely to settle than to proceed to a jury trial. Based on our assessment of comparable California wage-and-hour class actions, fewer than ten percent of such cases reach trial, with the vast majority resolving through settlement following class certification or in connection with mediation. The jury pool consideration, while relevant, should not be a primary driver of the forum selection decision.
E. Appellate Considerations
1. State Court Appellate Path
If the case is litigated in San Bernardino County Superior Court, interlocutory appeals on class certification orders or other significant rulings would be directed to the California Court of Appeal, Fourth Appellate District, Division Two, located in Riverside, California. The Fourth District, Division Two has a well-developed body of wage-and-hour class action jurisprudence and has issued decisions that are generally predictable and consistent with the California Supreme Court's Brinker framework. For purposes of strategic defense planning, the predictability of appellate outcomes in the Fourth District is an advantage, as it allows for more informed decision-making at the trial court level.
2. Federal Appellate Path
If the case were litigated in the Central District of California, appeals would go to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit has issued several decisions in recent years that have been characterized as plaintiff-favorable in the wage-and-hour class action context, including decisions that have taken an expansive view of the role of statistical evidence in establishing common questions for class certification purposes and that have construed California wage-and-hour provisions broadly in favor of employee protections. While the Ninth Circuit applies Rule 23 rigorously and has also issued decisions favorable to defendants, the overall appellate landscape in the Ninth Circuit introduces greater uncertainty for VMS's defense strategy than the more predictable Fourth District, Division Two.
3. Assessment.  Appellate considerations modestly favor remaining in state court, primarily due to the greater predictability of the California appellate framework for wage-and-hour class actions.
F. Impact on Ashgrove Equity Partners's Planned 2026 Exit
VMS's majority equity holder is Ashgrove Equity Partners Industrial Partners, LP, which acquired VMS in 2019 for approximately $510,000,000. Ashgrove Equity Partners has a planned exit, expected to take the form of a secondary sale process, targeted for 2026. Catherine Hsu, Operating Partner and Board Representative for Ashgrove Equity Partners, has communicated to Calderwood & Harkness through VMS's General Counsel, Priya Nandakumar, that Ashgrove Equity Partners is interested in resolving the contingent liability presented by this litigation as efficiently and expeditiously as possible, in order to minimize the impact on VMS's valuation and due diligence process in connection with the anticipated exit.
Removal to federal court could extend the litigation timeline due to the generally busier federal docket in the Central District of California and the complexities of managing bifurcated PAGA proceedings. In our experience, wage-and-hour class actions in the Central District take an average of twelve to eighteen months longer to reach a dispositive stage (class certification, summary judgment, or settlement) compared to similar cases in San Bernardino County Superior Court. This delay could push the resolution of the case well beyond Ashgrove Equity Partners's 2026 exit window, leaving the litigation as an unresolved contingent liability that would need to be addressed through indemnification or escrow provisions in the sale transaction — both of which reduce deal certainty and could affect valuation.
Remaining in state court facilitates a more streamlined path to mediation and potential settlement, consistent with the phased defense strategy that Calderwood & Harkness has proposed: (i) defend aggressively through the class certification stage to narrow or defeat class certification; (ii) pursue early mediation following the class certification ruling (win or lose); and (iii) seek a global resolution that includes both the class claims and the PAGA claim. This approach is achievable within a twelve-to-eighteen-month timeline in state court, positioning VMS to resolve the litigation before or during the early stages of Ashgrove Equity Partners's exit process.
V. Arguments in Favor of Removal (Noted but Not Recommended)
For completeness and to ensure that the record reflects a balanced analysis, we note the following arguments in favor of removal, which we have considered but ultimately concluded are outweighed by the factors discussed in Section IV.
A. Federal Procedural Advantages
Federal Rule of Civil Procedure 23 imposes rigorous certification requirements, as interpreted by the Supreme Court in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Granite Harbor Partners LLC v. Behrend, 569 U.S. 27 (2013). Under Dukes, commonality requires the plaintiff to demonstrate that the class members "have suffered the same injury," and the claims must depend upon a "common contention" that is "capable of classwide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." 564 U.S. at 350. Under Northgate Enterprises, the damages model must be consistent with the class-wide theory of liability. These standards could provide VMS with additional ammunition to oppose class certification.
Federal discovery rules, including the proportionality requirements of Federal Rule of Civil Procedure 26(b)(1) (as amended in 2015), may provide greater control over the scope and cost of discovery. California's broader discovery standard under Code of Civil Procedure § 2017.010 — which permits discovery of any matter "relevant to the subject matter" — could expose VMS to more expansive and costly discovery obligations in state court.
The Daubert standard for expert testimony, which applies in federal court under Federal Rule of Evidence 702, could be used to challenge the methodology of Plaintiff's damages expert, Dr. Anita Bhargava of Lakeshore Economic Consulting Group, at the class certification stage. Dr. Bhargava has been identified in Plaintiff's initial disclosures as the expert who will opine on class-wide damages. Under Daubert, the court serves as a gatekeeper to ensure that expert testimony is both relevant and reliable, and VMS could challenge Dr. Bhargava's assumptions regarding violation rates, the use of statistical sampling, and the reliability of her damages model. California state courts apply the more permissive Kelly/Frye standard (or, for certain categories of expert testimony, the Sargon Enterprises, Inc. v. University of Southern California standard), which may provide less robust grounds for excluding Plaintiff's expert testimony.
B. Federal Court Efficiency
Federal case management orders tend to impose strict scheduling, including firm trial dates, discovery cutoffs, and expert disclosure deadlines. This rigorous case management could discipline Plaintiff's counsel and prevent dilatory tactics that are sometimes more easily pursued in state court, where continuances may be granted more liberally.
Summary judgment standards in federal court may also be marginally more favorable to the defense. Federal courts apply the standard articulated in Celotex Corp. v. Catrett, 477 U.S. 317 (1986), and Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), which may be applied with slightly more rigor than the California state court standard in some circumstances, though the substantive standards are similar.
C. Potential Litigation Leverage
Removal to federal court could signal to Plaintiff's counsel at Nakamura Lozano & Pratt LLP that VMS is prepared to litigate aggressively, which may influence Plaintiff's settlement posture. The added complexity and expense of litigating in federal court, including the need for Plaintiff's counsel to navigate federal procedural rules and the Daubert framework, could marginally increase Plaintiff's perceived litigation risk and incentivize earlier settlement discussions.
However, we assess this leverage effect as modest. Nakamura Lozano & Pratt LLP is an experienced plaintiff-side wage-and-hour firm with substantial federal court experience, including multiple CAFA removals in prior matters. The deterrent effect of removal is unlikely to be significant.
VI. Preservation of Removal Right
Even though we recommend against removal at this time, it is prudent to consider strategies for preserving the removal right to the extent possible.
A. Lapse of the Initial 30-Day Window
If VMS does not file a notice of removal by September 11, 2025, the initial thirty-day removal window under 28 U.S.C. § 1446(b)(1) will lapse. This is a consequence of the statutory framework and cannot be extended by agreement of the parties or unilateral action by the defendant.
B. Possibility of a Subsequent Removal Window
Under 28 U.S.C. § 1446(b)(3), a new thirty-day removal window can be triggered by receipt 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." However, because CAFA removability is apparent on the face of the original complaint — the complaint identifies a putative class of approximately 3,550 members, alleges claims with an aggregate exposure well in excess of $5,000,000, and involves diverse parties — it is unlikely that any subsequent filing would constitute a "paper from which it may first be ascertained" that the case is removable. The § 1446(b)(3) provision is designed to address situations where initial removability is not apparent, not situations where the defendant has voluntarily chosen not to remove a case that is clearly removable from the outset.
We note, however, that CAFA's elimination of the one-year limitation on removal under § 1453(b) leaves open a narrow theoretical possibility that some future development — such as a significant amendment to the complaint that expands the class definition, adds new defendants, or otherwise materially alters the jurisdictional calculus — could provide an arguable basis for removal at a later date. We assess this possibility as remote but worth monitoring.
C. Reservation of Rights in the Answer
We recommend that the answer filed in San Bernardino County Superior Court include a general reservation of VMS's right to seek removal at a future date should circumstances warrant. While we acknowledge that such a reservation has limited legal effect once the initial removal window closes — courts generally do not treat boilerplate reservations of removal rights as extending the statutory deadline — it creates a record of VMS's awareness of its removal rights and its considered decision to remain in state court at this time.
D. Monitoring for Changed Circumstances
We recommend that the litigation team continue to monitor the case for developments that could warrant revisiting the removal analysis, including:
•  An amended complaint that materially alters the class definition, adds new claims, or adds new defendants;
•  discovery revealing that the putative class is substantially larger than currently estimated or that class members are more geographically dispersed than anticipated;
•  Any change in the assigned judge or the court's class certification practices that materially alters the strategic calculus;
•  Any legislative or judicial developments affecting PAGA removability.
VII. Coordination with Insurance Carrier
VMS's employment practices liability coverage is provided under a policy issued by Ridgeway National Insurance Company (Policy No. EPL-VMS-2024-07821). The claims adjuster assigned to this matter is Neil Pemberton, AVP — Complex Claims. Ridgeway issued a Reservation of Rights letter on August 18, 2025, in which it acknowledged receipt of the tender, agreed to provide a defense subject to the terms and conditions of the policy and the reservation of rights, and reserved the right to deny coverage or limit its indemnity obligations in the event that certain exclusions apply.
Under the policy terms, VMS is subject to a $500,000 self-insured retention ("SIR") that must be fully eroded before Ridgeway's defense obligation attaches. Defense costs incurred to date and projected through the responsive pleading stage are estimated at approximately $85,000 to $120,000, meaning that a substantial portion of the SIR remains.
The removal decision should be communicated to Ridgeway, as the choice of forum may affect defense cost projections and Ridgeway's litigation management guidelines. Specifically:
•  Ridgeway's litigation management guidelines generally require insured counsel to consult with the carrier before making significant strategic decisions that materially affect defense costs, including forum selection decisions.
•  If VMS remains in state court, the projected defense costs of $2,500,000 to $3,800,000 through trial are within the range that Ridgeway has indicated it considers reasonable for a wage-and-hour class action of this magnitude.
•  If removal were pursued, the potential for parallel PAGA proceedings and the associated cost increase (to an estimated $3,500,000 to $6,000,000) would likely trigger additional scrutiny from Ridgeway, including a potential request for a formal litigation plan and budget. Ridgeway would need to be consulted regarding any pre-approval requirements for these additional costs.
We will prepare a memorandum to Ridgeway summarizing the forum selection decision and its rationale, for delivery upon receipt of Renata Vasquez's approval of this recommendation.
VIII. Coordination with Local Counsel
Whitfield Garza LLP has been identified and provisionally engaged as local counsel for the San Bernardino County Superior Court proceedings. The primary contact is Elena Garza, Contact Partner, at the firm's San Bernardino office (290 North D Street, Suite 510, San Bernardino, California 92401). Whitfield Garza has extensive experience in wage-and-hour class action defense in the Inland Empire and has appeared before several of the judges in the San Bernardino County Superior Court's civil unlimited departments.
If the case remains in state court, Whitfield Garza will assist Calderwood & Harkness with local filings, court appearances, procedural requirements specific to the San Bernardino County Superior Court, and liaison functions with the court clerk's office and judicial staff. Their role will be particularly important during the initial case management conference, which we anticipate will be calendared for late October 2025.
If removal were pursued, the local counsel needs would change. Calderwood & Harkness's Los Angeles office, located at 633 West Fifth Street, Suite 4400, Los Angeles, California 90071, can appear in the United States District Court for the Central District of California without the need for separate local counsel, as Calderwood & Harkness is a firm registered with the Central District. However, if the PAGA claim were remanded to San Bernardino County Superior Court as anticipated, coordination with Whitfield Garza for the state court PAGA proceedings would still be necessary, adding a layer of complexity to the multi-forum litigation management.
By remaining in state court, the engagement of Whitfield Garza can proceed on a unified basis, with a single court, a single set of procedural rules, and a single point of coordination.
IX. Recommendation
Based on the foregoing analysis, our recommendation is as follows:
Do not remove. VMS should not exercise its right to remove this action to the United States District Court for the Central District of California. Instead, VMS should file its answer, demurrer, and motion to strike in San Bernardino County Superior Court on or before September 11, 2025.
This recommendation rests on four primary considerations:
1.  State court certification standards and judicial familiarity with California wage-and-hour law favor the defense. San Bernardino County Superior Court judges are well versed in the Brinker framework and have historically been less inclined than federal judges in the Central District to certify expansive wage-and-hour class actions, particularly in cases — like this one — where the defense can demonstrate that individualized inquiries across multiple production lines, shifts, and supervisory practices are necessary to determine whether class-wide meal and rest break violations occurred.
2.  PAGA claims cannot be removed, creating an unacceptable risk of costly parallel proceedings. The Seventh Cause of Action is a representative PAGA claim that, under established Ninth Circuit authority, is not removable to federal court. Removal of the class action claims would result in bifurcated proceedings — a class action in federal court and a PAGA action in state court — which would substantially increase defense costs, create duplicative discovery, and risk inconsistent rulings on overlapping factual and legal issues. This factor alone is dispositive.
3.  State court litigation aligns with the phased defense strategy and supports a more efficient timeline for potential early mediation. Remaining in state court facilitates a streamlined path to mediation and potential settlement, consistent with VMS's phased defense strategy and Ashgrove Equity Partners Industrial Partners, LP's planned 2026 exit. Federal court litigation would likely extend the case timeline by twelve to eighteen months and complicate the exit process.
4.  The strategic advantages of remaining in state court outweigh the marginal procedural benefits of federal court. While federal court offers certain procedural advantages — including rigorous Rule 23 certification standards, Daubert gatekeeping, and proportionality-based discovery limits — these advantages are marginal in context and are outweighed by the substantial strategic disadvantages of removal, particularly the parallel proceedings problem and the impact on litigation cost and timeline.
We respectfully note that the removal deadline is September 11, 2025, and request Renata Vasquez's approval of this recommendation no later than September 5, 2025, to allow adequate time for the responsive pleading team to finalize filings.
We confirm that the responsive pleading team — consisting of James Underwood (lead associate) and Devon Archer (senior associate) — is preparing the answer and demurrer/motion to strike for filing in San Bernardino County Superior Court on or before September 11, 2025. Drafts of the responsive pleadings will be circulated for review by September 3, 2025.
X. Action Items
The following action items require attention in connection with this recommendation:
•  [ ] Renata Vasquez to approve recommendation against removal by September 5, 2025.
•  [ ] Communicate forum decision to Priya Nandakumar (VMS General Counsel) for client confirmation and authorization to file the answer and demurrer in state court. Target communication date: upon receipt of Renata Vasquez's approval.
•  [ ] Notify Ridgeway National Insurance Company (Neil Pemberton, AVP — Complex Claims) of forum decision and confirm that defense cost reporting will reflect state court proceedings only. Prepare and transmit a brief memorandum summarizing the forum decision and its rationale.
•  [ ] Finalize and file the answer and demurrer/motion to strike in San Bernardino County Superior Court by September 11, 2025. Circulate drafts for partner review by September 3, 2025.
•  [ ] Engage Whitfield Garza LLP (Elena Garza, Contact Partner) for local counsel support, including local filing, service, and appearance at the anticipated case management conference.
•  [ ] Calendar the anticipated Case Management Conference (estimated late October 2025) and begin preparation, including drafting the Case Management Statement in coordination with Whitfield Garza.
•  [ ] Continue monitoring for any developments that could warrant revisiting the removal analysis, including amended complaints, new discovery, or changes in PAGA removability law.
Please do not hesitate to contact me at (213) 847-6200 or james.underwood@calderwoodharkness.com if you have any questions or wish to discuss any aspect of this memorandum. I am available to meet at your convenience prior to the September 5 decision deadline.
CALDERWOOD & HARKNESS LLP
By: ________
James Underwood Lead Associate, Labor & Employment 633 West Fifth Street, Suite 4400 Los Angeles, California 90071 Tel: (213) 847-6200
Email: james.underwood@calderwoodharkness.com
cc: File (Matter No. 1007-00004)
Category | Calculation Methodology | Estimated Exposure
Meal period premiums (§§ 226.7, 512) | 3,550 class members × 480 avg. Workdays in class period × 65% assumed violation rate × $21.40 avg. hourly rate × 1 hr. premium | $23,819,760
Rest period premiums (§ 226.7) | 3,550 × 480 × 30% assumed violation rate × $21.40 × 1 hr. premium | $10,993,440
Waiting time penalties (§ 203) | ~2,100 former employees × 30 days × 8 hrs./day × $21.40 | $10,814,400
Wage statement penalties (§ 226) | Up to $4,000 per employee statutory cap; est. ~$2,000 avg. × 3,550 | ~$7,100,000
PAGA penalties (§ 2698 et seq.) | $100 initial / $200 subsequent per pay period per employee; 26 bi-weekly pay periods × est. violation frequency | ~$5,500,000
Maximum theoretical aggregate | ~$65,000,000+

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1007-00004

CALDERWOOD & HARKNESS LLP

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