Pitsick-Perez: A PAGA Fee Estimate Failed the Test for Federal Court

An employer’s estimate of future attorney fees can help determine whether an employment lawsuit belongs in federal court. The estimate still needs evidence connecting the proposed work to the actual claims. In Pitsick-Perez v. Southwest Airlines Co., No. 25-cv-03000-DMS-BLM, ECF No. 17 (S.D. Cal. Jan. 15, 2026), that connection was missing. The court returned the PAGA action to San Diego County Superior Court despite the airline’s revised estimate of $126,025 in controversy.

The district court’s order applies the requirements for ordinary diversity jurisdiction to this record. Its explanation is useful when a large fee estimate rests on another lawsuit’s hours: The work, claims and people covered by that comparison matter.

Diversity was established, but the dollar amount was disputed

Raymond Pitsick-Perez filed the action in state court on August 1, 2025, invoking California’s Private Attorneys General Act, or PAGA. The allegations concerned wages for work performed, wages due during employment and at termination, wage statements and payroll records, and payment twice per month. Southwest removed the case to federal court on November 5.

For the diversity ground Southwest invoked, the parties had to be citizens of different states and the amount in controversy had to exceed $75,000. The citizenship requirement was satisfied: Pitsick-Perez was a California citizen, while Southwest was incorporated and had its principal place of business in Texas. The disputed question was the amount at stake.

A notice of removal may state that amount when the complaint supplies no total. Once the plaintiff contests it, however, the parties submit proof and the court decides whether the requirement is met by a preponderance of the evidence—whether the supporting proposition is more likely true than not. The order drew that rule from Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 84, 87–88 (2014).

Future legal fees supplied most of Southwest’s estimate

The notice of removal initially estimated more than $100,000 in fees through trial and four PAGA penalty categories totaling $21,900, for a stated total exceeding $121,900. Southwest’s opposition later used a different calculation: $88,125 in fees, $25,400 in penalties and a proposed $12,500 representative service award, totaling $126,025. Those were estimates presented to establish federal jurisdiction.

The fee category mattered because statutorily authorized attorney fees can count toward the amount in controversy. The order cited Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005), and PAGA’s provision for reasonable fees to a prevailing employee. With the penalty estimate well below $75,000, Southwest needed support for the much larger fee component.

The parties proposed different ways to calculate that component. Southwest favored hours multiplied by hourly rates, called the lodestar method. Pitsick-Perez proposed a percentage approach. The court examined both and found Southwest’s jurisdictional showing insufficient under either.

The comparator declaration included work for the whole group

Southwest proposed 150 hours, split equally between rates of $650 and $525. Seventy-five hours at each rate produces $88,125. To support the hours, it relied partly on a declaration that plaintiff’s counsel had submitted in another wage-and-hour matter. That declaration described 156 hours: 82 hours by one lawyer at $800 per hour and 74 by another at $600 per hour. Southwest used lower rates for its proposed calculation and based its equal split of hours on representations in that declaration.

The problem was what those hours covered. The declaration supported approval of a PAGA settlement and included a mediation damage-and-exposure model, revisions to the settlement agreement and notice to aggrieved employees, settlement-approval papers and review of the settlement administrator’s declaration. Those tasks served the broader group. The declaration alone did not establish $88,125 in fees for Pitsick-Perez’s individual PAGA claim.

That is a proof-of-fit problem. A declaration showing substantial work in one action needs a reasoned connection to the work attributed to the claim used for the jurisdictional calculation. Selecting slightly fewer hours and lower rates does not supply that connection.

The other lawsuits involved a broader set of wage disputes

Southwest also cited cases suggesting that individual wage-and-hour litigation commonly requires more than 100 hours. The court compared their claims. Swans involved nine causes of action. Hernandez and Lippold involved eight, including distinct overtime, meal-and-rest-break or other wage disputes. The order also noted that Lippold attributed individual and class-wide fees to the named plaintiff.

Pitsick-Perez described his own dispute as narrower: Whether employees should have been paid for waiting for and taking a shuttle to and from a remote parking lot. He characterized the other three claims as derivative. The court used that description when assessing the proposed comparison. Southwest had not sufficiently shown that this action was the typical case requiring 150 or more hours.

The explanation in Pitsick-Perez therefore turns on the substance of the claims and the evidence supporting the projected workload. A shared label such as “wage-and-hour case” was too general to bridge the difference.

The alternative calculation also stayed below $75,000

Using the alternative percentage approach, the court took Southwest’s highest penalty estimate of $25,400 and added fees equal to 25 percent of that amount: $6,350. The resulting $31,750 remained below the jurisdictional threshold. Even adding the disputed $12,500 service award would produce only $44,250.

Those figures were assumptions tested in this jurisdictional dispute. The court’s conclusion followed under either proposed fee method; it had no need to select one as the generally preferred approach. The percentages and penalty estimates should be read with that specific task in mind.

The order returned the action to state court

Judge Dana M. Sabraw granted the motion to remand because Southwest had not established an amount in controversy exceeding $75,000. The January 15 order returned the action to San Diego County Superior Court.

When reviewing a similar filing, identify the fee method, proposed hours and rates, the tasks in any supporting declaration, and the claims those tasks serve. Our guide to reading a PAGA jurisdictional estimate explains how to separate those numbers from an employee’s expected recovery.