                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JOHN URBINO , for himself and on           No. 11-56944
behalf of other current and former
employees,                                    D.C. No.
          Plaintiff-Counter-Defendant-     2:11-cv-06456-
                               Appellee,      CJC-PJW

                   v.

ORKIN SERVICES OF CALIFORNIA , INC.,
a Delaware corporation, and ROLLINS,
INC., a Delaware corporation,
        Defendants-Counter-Claimants-
                           Appellants.



JOHN URBINO , for himself and on           No. 11-57002
behalf of other current and former
employees,                                    D.C. No.
          Plaintiff-Counter-Defendant-     2:11-cv-06456-
                              Appellant,      CJC-PJW

                   v.

ORKIN SERVICES OF CALIFORNIA , INC.,
a Delaware corporation, and ROLLINS,
INC., a Delaware corporation,
        Defendants-Counter-Claimants-
                            Appellees.
2     URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.

JOHN URBINO , for himself and on           No. 12-55064
behalf of other current and former
employees,                                    D.C. No.
                    Plaintiff-Appellant,   2:11-cv-06456-
                                              CJC-PJW
                   v.

ORKIN SERVICES OF CALIFORNIA , INC.,         OPINION
a Delaware corporation, and ROLLINS,
INC., a Delaware corporation,
                Defendants-Appellees.


       Appeal from the United States District Court
          for the Central District of California
       Cormac J. Carney, District Judge, Presiding

                Argued and Submitted
          March 5, 2013—Pasadena, California

                  Filed August 13, 2013

    Before: Michael Daly Hawkins, Sidney R. Thomas,
         and Andrew D. Hurwitz, Circuit Judges.

               Opinion by Judge Hawkins;
                Dissent by Judge Thomas
        URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.                  3

                           SUMMARY*


                      Diversity Jurisdiction

    The panel held that the federal courts lacked subject mater
jurisdiction over this California dispute, vacated the district
court’s order denying plaintiff’s motion to remand, and
directed the district court to return the matter to state court for
resolution.

    Under California’s Private Attorneys General Act of 2004
(“PAGA”), if the state agency declines to investigate labor
code violations, an aggrieved employee may commence an
action against the employer. Plaintiff filed a representative
PAGA action, and defendants removed the matter to federal
court on the basis of diversity, based on evidence that the
aggregated claims of the individual employees could result in
liability in excess of the minimum jurisdictional requirements
under 28 U.S.C. § 1332(a)(1). The panel held that the
recoveries at issue cannot be aggregated to meet the amount
in controversy requirement, and therefore there was no
federal diversity jurisdiction.

    Judge Thomas dissented because he would conclude that
claims under PAGA can be aggregated in determining
whether diversity jurisdiction exists, and therefore the district
court properly exercised diversity jurisdiction.




  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4     URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.

                        COUNSEL

Theodore R. Scarborough (argued), Robert N. Hochman, and
Tacy F. Flint, Sidley Austin LLP, Chicago, Illinois; John E.
Lattin, Fisher & Phillips LLP, Irvine, California; Christopher
C. Hoffman, Fisher & Phillips LLP, San Diego, California,
for Defendants-Appellants/Cross-Appellees (No. 11-56944,
11-57002), Defendants-Appellees (12-55064).

Kenneth H. Yoon (argued) and Stephanie E. Yasuda, Law
Offices of Kenneth H. Yoon, Los Angeles, California; Peter
M. Hart and Amber S. Healy, Law Offices of Peter M. Hart,
Los Angeles, California, for Plaintiff-Appellee/Cross-
Appellant (No. 11-56944, 11-57002), Plaintiff-Appellant (12-
55064).


                         OPINION

HAWKINS, Senior Circuit Judge:

    This interlocutory appeal deals with a unique statute
concerning the claims of California residents against the
owners and operators of California-based enterprises.
Brought originally in state court, it has been removed to
federal court on the theory that the individual claims, when
aggregated, meet the minimum requirements of diversity
jurisdiction. We have jurisdiction to review the district
court’s refusal to remand the dispute back to state court.
Because we determine that the recoveries at issue cannot be
aggregated to meet the amount in controversy requirement,
we vacate the district court order and remand with
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instructions to return the dispute to the California courts for
resolution.1

                        I. BACKGROUND

    With passage of the Private Attorneys General Act of
2004 (“PAGA”), the California Legislature fundamentally
altered the state’s approach to collecting civil penalties for
labor code violations. Though the Labor and Workforce
Development Agency (“LWDA”) retained primacy over
private enforcement efforts, under PAGA, if the LWDA
declines to investigate or issue a citation for an alleged labor
code violation, an aggrieved employee may commence a civil
action “on behalf of himself or herself and other current or
former employees” against his or her employer. Cal. Lab.
Code § 2699(a); Arias v. Super. Ct., 209 P.3d 923, 930 (Cal.
2009). If the representative plaintiff prevails, the aggrieved
employees are statutorily entitled to 25% of the civil penalties
recovered while the LWDA is entitled to 75%. Cal. Lab.
Code § 2699(i).

     From 2005 to 2010, Plaintiff John Urbino, a California
citizen, worked in a nonexempt, hourly paid position for
Defendants, each of whom is a corporate citizen of another
state, in California. Alleging that Defendants illegally
deprived him and other nonexempt employees of meal
periods, overtime and vacation wages, and accurate itemized
wage statements, Urbino filed a representative PAGA action.

    Defendants removed the matter to federal court on the
basis of diversity, presenting evidence that the labor code

 1
   The parties do not suggest any alternative basis for federal jurisdiction
apart from diversity jurisdiction.
6       URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.

violations identified by Urbino would give rise to claims
involving 811 other employees who were issued at least
17,182 paychecks and that the claims could result in liability
in excess of the minimum jurisdictional requirements under
28 U.S.C. § 1332(a)(1).2 Plaintiff responded by moving the
district court to remand the case to state court.

     The district court thus had to decide whether the potential
penalties could be combined or aggregated to satisfy the
amount in controversy requirement. If they could, federal
diversity jurisdiction would lie because statutory penalties for
initial violations of California’s Labor Code would total
$405,500 and penalties for subsequent violations would
aggregate to $9,004,050. If not, the $75,000 threshold would
not be met because penalties arising from Urbino’s claims
would be limited to $11,602.40.             Acknowledging a
divergence of opinion among the district courts on the issue
and noting that this court has yet to address it, the district
court found PAGA claims to be common and undivided and
therefore capable of aggregation.

 II. JURISDICTION AND STANDARD OF REVIEW

   We have interlocutory appellate jurisdiction pursuant to
28 U.S.C. § 1292(b) to review the district court’s denial of
Urbino’s motion to remand.3 “We review de novo a district


    2
   At the time Defendants removed the case to federal court, they also
moved to compel arbitration in accordance with the parties’ arbitration
agreement.

    3
   Because this court has jurisdiction pursuant to § 1292(b), it need not
address Urbino’s alternative contention that the court should exercise
pendent appellate jurisdiction.
       URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.             7

court’s denial of a motion to remand to state court for lack of
federal subject matter jurisdiction.” Chapman v. Deutsche
Bank Nat’l Trust Co., 651 F.3d 1039, 1043 (9th Cir. 2011).

                     III. DISCUSSION

    To invoke federal diversity jurisdiction under 28 U.S.C.
§ 1332(a), a matter must “exceed[] the sum or value of
$75,000.” Where, as here, “it is unclear or ambiguous from
the face of a state-court complaint whether the requisite
amount in controversy is pled,” Guglielmino v. McKee Foods
Corp., 506 F.3d 696, 699 (9th Cir. 2007), the “removing
defendant bears the burden of establishing, by a
preponderance of the evidence, that the amount in
controversy exceeds” the jurisdictional threshold, Sanchez v.
Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996).

    There is no dispute that Urbino’s individual potential
recovery would not meet the $75,000 threshold. Rather, the
issue is whether the penalties recoverable on behalf of all
aggrieved employees may be considered in their totality to
clear the jurisdictional hurdle.

    The traditional rule is that multiple plaintiffs who assert
separate and distinct claims are precluded from aggregating
them to satisfy the amount in controversy requirement. Troy
Bank v. G.A. Whitehead & Co., 222 U.S. 39, 40 (1911). In
Snyder v. Harris, the Supreme Court applied that rule to
representative actions, holding that the claims of class
members can be aggregated to meet the jurisdictional amount
requirement only when they “unite to enforce a single title or
right in which they have a common and undivided interest.”
394 U.S. 332, 335 (1969). To determine the character of that
interest, courts look to “the source of plaintiffs’ claims. If the
8     URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.

claims are derived from rights that they hold in group status,
then the claims are common and undivided. If not, the claims
are separate and distinct.” Eagle v. Am. Tel. & Tel. Co.,
769 F.2d 541, 546 (9th Cir. 1985).

    But simply because claims may have “questions of fact
and law common to the group” does not mean they have a
common and undivided interest. Potrero Hill Cmty. Action
Comm. v. Hous. Auth., 410 F.2d 974, 977 (9th Cir. 1969).
Only where the claims can strictly “be asserted by pluralistic
entities as such,” id., or, stated differently, the defendant
“owes an obligation to the group of plaintiffs as a group and
not to the individuals severally,” will a common and
undivided interest exist, Gibson v. Chrysler Corp., 261 F.3d
927, 944 (9th Cir. 2001) (quoting Morrison v. Allstate Indem.
Co., 228 F.3d 1255, 1262 (11th Cir. 2000)).

    Aggrieved employees have a host of claims available to
them—e.g., wage and hour, discrimination, interference with
pension and health coverage—to vindicate their employers’
breaches of California’s Labor Code. But all of these rights
are held individually. Each employee suffers a unique
injury—an injury that can be redressed without the
involvement of other employees. Troy Bank, 222 U.S. at 41
(explaining that an interest is common and undivided when
“neither [party] can enforce [the claim] in the absence of the
other”). Defendants’ obligation to them is not “as a group,”
but as “individuals severally.” Gibson, 261 F.3d at 944
(quotation omitted). Thus, diversity jurisdiction does not lie
because their claims cannot be aggregated.

    Defendants contend however that the interest Urbino
asserts is not his individual interest but rather the state’s
collective interest in enforcing its labor laws through PAGA.
        URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.                    9

See, e.g., Arias, 209 P.3d at 934; Amalgamated Transit
Union, Local 1756, AFL-CIO v. Super. Ct., 209 P.3d 937, 943
(Cal. 2009). Accordingly, they argue this is effectively a
“case[] in which a single plaintiff seeks to aggregate two or
more of his own claims against a single defendant,” Snyder,
394 U.S. at 335, and that those claims can be combined to
satisfy the minimum amount in controversy requirement of
the diversity statute, id. To the extent Plaintiff can—and
does—assert anything but his individual interest, however,
we are unpersuaded that such a suit, the primary benefit of
which will inure to the state, satisfies the requirements of
federal diversity jurisdiction. The state, as the real party in
interest, is not a “citizen” for diversity purposes. See Navarro
Sav. Ass’n v. Lee, 446 U.S. 458, 461 (1980) (courts “must
disregard nominal or formal parties and rest jurisdiction only
upon the citizenship of real parties to the controversy.”); Mo.,
Kan. & Tex. Ry. Co. v. Hickman, 183 U.S. 53, 59 (1901); see
also Moor v. Cnty. of Alameda, 411 U.S. 693, 717 (1973)
(explaining that “a State is not a ‘citizen’ for purposes of the
diversity jurisdiction”).

    Accordingly, the federal courts lack subject matter
jurisdiction over this quintessential California dispute. We
therefore vacate the district court order denying the Plaintiff’s
motion to remand and direct the district court to return the
matter to state court for resolution.4

   VACATED AND REMANDED. Costs on appeal to
Urbino.



 4
  Because we find that the district court lacked jurisdiction, we need not
address Defendants’ contention that the lower court erred in denying their
motion to compel arbitration.
10    URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.

THOMAS, Circuit Judge, dissenting:

    Because I conclude that claims under the Labor Code
Private Attorney General Act of 2004 (“Private Attorney
General Act,” “the Act,” or “PAGA”), Cal. Lab. Code § 2698
et seq., can be aggregated in determining whether diversity
jurisdiction exists, I respectfully dissent.

    “Our starting point for determining the amount in
controversy is to characterize the [aggrieved employees’]
claims under California state law.” Eagle v. Am. Tel. & Tel.
Co., 769 F.2d 541, 545 (9th Cir. 1985) (citing Horton v.
Liberty Mut. Ins. Co., 367 U.S. 348, 352–53 (1961)). Thus,
we look to “the source” of plaintiffs’ claims to determine
whether they are subject to aggregation. Id. at 546.

    Under California law, a representative action under the
Private Attorney General Act “is fundamentally a law
enforcement action designed to protect the public and not to
benefit private parties.” Arias v. Superior Court, 209 P.3d
923, 934 (Cal. 2009) (internal quotation marks and citation
omitted). The Act neither creates nor vindicates substantive
rights of individual aggrieved employees. Amalgamated
Transit Union, Local 1756, AFL-CIO v. Superior Court,
209 P.3d 937, 943 (Cal. 2009). Rather, it deputizes aggrieved
employees to vindicate the State’s interest in labor code
enforcement. Arias, 209 P.3d at 933–34. PAGA plaintiffs
such as Urbino sue “as the proxy or agent of the state’s labor
law enforcement agencies,” id. at 933, and do not enjoy
“property rights or any other substantive rights” under the
statute they enforce, Amalgamated Transit, 209 P.3d at 943.
A successful PAGA plaintiff is not entitled to “damages.”
Rather, he receives a twenty-five percent share of the civil
penalties recovered on behalf of the State as an incentive
       URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.           11

payment for bringing suit in the public interest. As such,
PAGA plaintiffs do not represent “separate and distinct”
claims subject to the anti-aggregation rule. Troy Bank of
Troy, Ind., v. G.A. Whitehead & Co., 222 U.S. 39, 40 (1911).
Instead, they “represent[] the same legal right and interest as
state labor law enforcement agencies—namely, recovery of
civil penalties that otherwise would have been assessed and
collected by the [State].” Arias, 209 P.3d at 933 (citations
omitted). Looking, as we must, to “the source” of Urbino’s
claim, Eagle, 769 F.2d at 546, the amount in controversy
equals the total civil penalties sought in the action.

     In this regard, a PAGA plaintiff stands in a position
comparable to a plaintiff in a shareholder derivative suit, who
likewise lacks a direct proprietary interest in the subject of
the litigation and sues as a proxy for the injured corporation.
Id. at 546–47. Notwithstanding the individual recovery
secured by successful shareholder derivative plaintiffs, we
have long held their claims subject to aggregation, relying on
the rationale that derivative suits vindicate corporate interests
and benefit the shareholders only indirectly. Id. at 546–47 &
n.4.

    That Private Attorney General Act plaintiffs do not
vindicate “separate and distinct” claims is further evidenced
by the fact that their claims under the Act are not assignable,
Amalgamated Transit, 209 P.3d at 943–44, and may be
pursued by individual aggrieved employees only if the State
elects not to take enforcement action, Cal. Lab. Code
§ 2699.3; Arias, 209 P.3d at 930. More importantly,
“[b]ecause an aggrieved employee’s action under the [Act]
functions as a substitute for an action brought by the
government itself, a judgment in that action binds all those,
including nonparty aggrieved employees, who would be
12     URBINO V . ORKIN SERVS. OF CALIFORNIA , INC.

bound by a judgment in an action brought by the
government.” Arias, 209 P.3d at 933. If aggrieved
employees possessed individual substantive rights under the
Act, this broad rule of preclusion would raise serious due
process concerns. Taylor v. Sturgell, 553 U.S. 880, 892–95
(2008).

    For these reasons, a judgment in a representative action
under the Act does not preclude aggrieved employees from
later pursuing individual wage and hour, discrimination, or
benefits interference claims founded on the same labor code
violations. The rationale for this rule is that such claims are
individual in nature, deriving from the aggrieved employee’s
contractual relationship with the defendant. Thus, multiple
employees filing individual actions cannot aggregate their
wage and hour, discrimination, or benefits claims to satisfy
the statutory amount-in-controversy requirement. See
Potrero Hill Cmty. Action Comm. v. Hous. Auth. of the City
& Cnty. of S.F., 410 F.2d 974, 977–78 (9th Cir. 1969)
(holding that common questions of law and fact do not suffice
to establish the common and undivided interest necessary to
aggregate multiple plaintiffs’ claims).

    Because Urbino pursues a common and undivided claim
in his role as proxy for the State, the district court correctly
calculated the amount in controversy based on the aggregate
civil penalties sought in this action, and properly determined
that the total exceeded $75,000. Therefore, in my view, the
district court properly exercised diversity jurisdiction.
