Chartrand v. Solarflare Communications, Inc.

• Court: District Court, S.D. California
• Decided: April 22, 2021
• Docket: 3:20-cv-01842
• Status: Unknown

Opinion

8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 ANDRE CHARTRAND, Case No. 20cv1842-LAB-WVG 11 Plaintiff, ORDER GRANTING MOTION TO 12 REMAND [Dkt. 8] v. 13 SOLARFLARE COMMUNICATIONS, 14 INC.; RUSSELL STERN; and XILINX, INC., 15 Defendants. 16

17 Plaintiff Andre Chartrand filed this action in the Superior Court of 18 California, County of San Diego, Central Division, alleging claims against his 19 former employer, Solarflare Communications, Inc.; its CEO, Russell Stern; 20 and the company that acquired Solarflare, Xilinx, Inc. He contends generally 21 that Solarflare contracted to do work that violates state privacy laws and, 22 after Chartrand complained and refused to participate in that work, Solarflare 23 and Xilinx retaliated by reducing his compensation and terminating his 24 employment. 25 The case proceeded in state court for seven months. Six months in, 26 Chartrand amended his complaint to join Xilinx as a defendant. Xilinx then 27 removed the case to this Court, contending that the alleged identity of its 1 federal questions over which federal courts have jurisdiction. Specifically, 2 Xilinx argues that Chartrand’s claims implicate federal common law doctrines 3 surrounding state secrets because Chartrand alleges that the work he 4 complained of and refused to participate in was done under a contract with 5 a federal government intelligence agency. Xilinx premises removal on 6 28 U.S.C. §§ 1441(c) and 1442(a), asserting that the federal questions in the 7 case permit removal both because Xilinx is a federal contractor and because 8 a federal question appears on the face of the complaint. 9 Chartrand moved to remand to state court. (Dkt. 8.) Defendants 10 opposed and moved the Court to continue the submission date on the Motion 11 for Remand by 45 days to give the government an opportunity to consider 12 whether to assert the state secrets privilege. (Dkt. 13.) The Government 13 subsequently appeared and submitted several requests that the Court delay 14 ruling on that Motion, ultimately asking the Court to forbear until 15 April 21, 2021. 16 On that deadline, the Government and Chartrand filed a notice 17 indicating that Chartrand intended to move for leave to file a Third Amended 18 Complaint. If that motion is granted, the Government has agreed not to 19 invoke its state secrets privilege “at this time,” but reserves its rights to do so 20 in the future. 21 The Court finds that the only potential basis for federal jurisdiction in 22 this case is the Government’s state secrets privilege, which the Government 23 hasn’t asserted and now appears far from certain to assert in this action. The 24 Court can’t exercise subject matter jurisdiction to grant or deny a motion for 25 leave to amend where no party with the right to remove has even intervened 26 in the case, much less sought removal. Rather than wait for the filing of such 27 a motion, then, the Court now resolves the Motion for Remand, GRANTING it and this action to state court. 1 DISCUSSION 2 I. The Complaint Doesn’t Raise a Federal Question 3 Xilinx can’t remove under 28 U.S.C. §§ 1441(c) and 1331. Those 4 statutes require Xilinx to demonstrate that the claims at issue arise under the 5 Constitution, laws, or treaties of the United States. Whether a claim so arises 6 turns on “what necessarily appears in the plaintiff’s [pleading], unaided by 7 anything alleged in anticipation or avoidance of defenses.” Franchise Tax 8 Bd. of State of Cal. v. Construction Laborers Vacation Trust for S. Cal., 9 463 U.S. 1, 10 (1983), quoting Taylor v. Anderson, 234 U.S. 74, 75–76 10 (1914). 11 “[A] right or immunity created by the Constitution or laws of the United 12 States must be an element, and an essential one, of the plaintiff's cause of 13 action.” Cal. Shock Trauma Air Rescue v. State Compensation Ins. Fund, 14 636 F.3d 538, 541 (9th Cir. 2011) (“CALSTAR”) (quoting Gully v. First Nat’l 15 Bank, 299 U.S. 109, 112 (1936)). The Court isn’t permitted to consider even 16 allegations in the complaint that aren’t “not necessary to [the] plaintiff[’s] 17 cause of action.” Marshall v. Desert Properties Co., 103 F.2d 551, 552 (9th 18 Cir. 1939); see also Gully, 299 U.S. at 113 (“[T]he complaint itself will not 19 avail as a basis of jurisdiction in so far as it goes beyond a statement of the 20 plaintiff's cause of action and anticipates or replies to a probable defense.”). 21 Federal questions may exist in causes of action created by federal law 22 and in state law claims for which a federal question is nevertheless an 23 essential element. Grable & Sons Metal Prods., Inc. v. Darue Engineering & 24 Mfg., 545 U.S. 308, 314–15 (2005). Even in the latter case, though, the 25 federal question must appear on the face of a well-pleaded complaint. 26 CALSTAR, 636 F.3d at 542. “[A] state-law claim will present a justiciable 27 federal question only if it satisfies both the well-pleaded complaint rule and . . . the federal issue . . . [is] necessary [and] actually disputed and 1 substantial, [and one] which a federal forum may entertain without disturbing 2 any congressionally approved balance of federal and state judicial 3 responsibilities.” Id. (emphasis in original). It’s not enough for a state-law 4 claim to “implicate[] significant federal issues” because federal law may bar 5 that claim—any such issues must be a necessary part of the plaintiff’s claims 6 to justify removal under § 1441. Id. at 542–43 (internal marks omitted). 7 Xilinx identifies two federal questions that purportedly give the Court 8 jurisdiction here: the government’s state secrets privilege under United 9 States v. Reynolds, 345 U.S. 1 (1953), and a federal prudential rule, first 10 announced in Totten v. United States, 92 U.S. 105 (1875), barring actions in 11 which the plaintiff’s “success depends upon the existence of [a] secret 12 espionage relationship with the government.” Tenet v. Doe, 544 U.S. 1, 8 13 (2005) (citing Totten, 92 U.S. at 106–07). Xilinx doesn’t have standing to 14 raise the government’s privilege under Reynolds—only the government can 15 raise its own privilege. Reynolds, 345 U.S. at 7–8. The government hasn’t 16 intervened to raise the privilege, so this federal question can’t support 17 jurisdiction because it isn’t actually disputed. See CALSTAR, 636 F.3d 18 at 542. 19 The only hook left for Xilinx to hang federal question jurisdiction on, 20 then, is the Totten bar’s purported appearance on the face of a well-pleaded 21 complaint. But Totten isn’t a necessary part of Chartrand’s claims. Four of 22 them—for wages not timely paid upon termination, failure to furnish and 23 maintain accurate and complete wage statements, defamation per se, and 24 declaratory relief regarding the validity of an option waiver agreement—don’t 25 relate to the alleged relationship with the government at all. (See 26 Dkt No. 1-18 ¶¶ 81–114.) The other six assert claims for retaliation, tying 27 Chartrand’s termination to his complaints about the project’s alleged illegality and to his refusal to participate in what he considered an illegal project. (See 1 id. ¶¶ 34–80, 115–26.) These claims turn on the nature of the work that 2 Chartrand objected to, not “the existence of a secret espionage relationship 3 with the government.” Tenet, 544 U.S. at 8. Because Chartrand can prove 4 the nature of the project at issue without proving the existence of such a 5 relationship, the lawsuit isn’t “premised on [an] alleged espionage 6 agreement[].” Id. The allegations regarding such an agreement aren’t 7 necessary to Chartrand’s claims, so they’re not part of a well-pleaded 8 complaint and they can’t support removal jurisdiction. See Marshall, 9 103 F.2d at 552 (courts applying well-pleaded complaint rule must disregard 10 allegations unnecessary to plaintiff’s cause of action). 11 Xilinx’s rejoinder that the Totten bar isn’t an affirmative defense, but a 12 “threshold question of justiciability,” misunderstands the well-pleaded 13 complaint rule. (Dkt. 10 at 10.) While that rule often operates to prevent 14 removal based on an affirmative defense, the rule’s scope isn’t limited to that 15 context. It forecloses removal under § 1441 based on any matter that isn’t 16 an essential element of the plaintiff’s cause of action. See CALSTAR, 17 636 F.3d at 541. And since plaintiffs don’t need to prove justiciability as an 18 element of their claims, a defendant can’t remove by raising a federal 19 justiciability issue. See, e.g., Provincial Gov’t of Marinduque v. Placer Dome, 20 582 F.3d 1083, 1090 (9th Cir. 2009), (“[It’s] [f]atal to the district court’s 21 removal jurisdiction” that “the act of state doctrine is implicated . . . only 22 defensively and the complaint does not ‘necessarily raise a stated federal 23 issue, actually disputed and substantial’”), quoting Grable, 545 U.S. at 314; 24 see also Republic of Venezuela v. Philip Morris Inc., 287 F.3d 192, 199 n.* 25 (D.C. Cir. 2002) (prudential standing issues are not “substantive element[s] 26 of [a] plaintiff[‘s] state common law claims” and can’t support removal under 27 § 1441). 1 The state secrets doctrines that Xilinx relies on aren’t necessarily 2 raised by the Complaint, while the Reynolds privilege belongs only to the 3 government, which isn’t a party to this case. Without a federal question 4 necessary to one or more causes of action, the Court can’t exercise removal 5 jurisdiction under § 1441. 6 II. Xilinx’s Alleged Acts Weren’t Under Color of Office 7 Xilinx can’t remove under § 1442(a), either. That statute permits a 8 person “acting under any agency . . . or . . . officer . . . of the United States,” 9 such as a federal contractor, to remove any action “for or relating to any act 10 under color of such office.” 28 U.S.C. § 1442(a)(1). Xilinx claims federal 11 contractor status based on Solarflare’s alleged contract with the 12 government.1 13 A federal contractor acts under color of federal office where “there is a 14 causal nexus between its actions, taken pursuant to a federal officer’s 15 directions, and plaintiff’s claims.” Stirling v. Minasian, 955 F.3d 795, 800 16 (9th Cir. 2020) (internal marks and citation omitted). While the “hurdle 17 erected by [this] requirement is quite low,” Goncalves v. Rady Children’s 18 Hosp. San Diego, 865 F.3d 1237, 1244 (9th Cir. 2017), clearing it requires 19 more than showing that the defendant acted in performance of a contract 20 with the government. See Cabalce v. Thomas E. Blanchard & Assocs., Inc., 21 797 F.3d 720, 728 (9th Cir. 2015). Instead, the acts alleged must be “causally 22 connected to the federal government’s subjection, guidance, or control.” Id. 23 If the defendant wasn’t “operat[ing] under federal supervision” when taking 24 25 1 Chartrand doesn’t appear to contest this imputation of federal contractor 26 status from a subsidiary to a parent, and it appears to have some basis in 27 his allegations, so the Court need not consider whether Xilinx can be a federal contractor by virtue of Solarflare’s contract. (See Dkt. 1-18 ¶ 6 1 those acts, they weren’t under color of federal office and can’t support 2 removal. Id. 3 Xilinx hasn’t shown that its alleged conduct in reducing Chartrand’s 4 compensation and terminating his employment was causally connected to 5 the federal government’s subjection, guidance, or control. It doesn’t contend 6 that the government directed any of those actions or even knew about them. 7 Nor does Xilinx offer anything to suggest that the government exercised a 8 high degree of control over Xilinx’s performance. Instead, it argues that it 9 needed to terminate Chartrand because he was interfering with its 10 performance under the contract. (See Dkt. 10 at 21 (arguing that terminating 11 Chartrand was a “reasonable step” that Xilinx was “required to take . . . to 12 deliver [its] part of the bargain”).) Even if this were sufficient—under Cabalce, 13 it’s not, 797 F.3d at 728—neither Xilinx nor the Complaint provide any facts 14 to support the conclusion that Chartrand interfered with Xilinx’s performance. 15 Chartrand alleges that he complained to Defendant Stern, who proceeded 16 with the project nevertheless, and that Chartrand refused to work on the 17 project. Xilinx provides no additional detail beyond the conclusory assertion 18 that these allegations amount to interference. (Dkt. 10 at 21.) Accordingly, 19 there’s no indication that terminating Chartrand advanced Defendants’ 20 performance under the contract, as opposed to merely saving the cost of 21 paying for an employee that wasn’t doing as his employer asked. 22 To the contrary, Xilinx casts doubt on its own argument that 23 Chartrand’s termination was causally connected to government oversight or 24 even performance under the alleged government contract. It asserts that, 25 when it acquired Solarflare, “Xilinx already had its own Vice President of 26 Engineering,” Chartrand’s position at Solarflare, and so “Xilinx would have 27 needed to terminate the employment relationship with an existing VP of Engineering in order to hire [Chartrand].” (Dkt. 10-1 ¶ 4.) And it argues that 1 decision not to hire Chartrand was simply a matter of terminating an 2 employee who refused to carry out assigned duties. (Dkt. 10 at 21.) Neither 3 explanation turns on the government’s involvement or even Xilinx’s ability to 4 perform under the alleged contract, and so both undermine the conclusion 5 that Xilinx was acting under color of office in terminating Chartrand’s 6 employment. 7 Xilinx hasn’t shown, by a preponderance of the evidence, that its 8 termination of Chartrand was under color of federal office. Accordingly, it 9 didn’t have the right to remove this action as a federal contractor under 10 28 U.S.C. § 1442(a). 11 III. Xilinx Can’t Premise Removal on Another Entity’s Unasserted 12 Right 13 Xilinx contends in the alternative that the Government itself could 14 assert federal defenses under § 1442. Xilinx presents no authority to suggest 15 that § 1442’s provision that an action “directed to any of the following 16 [including the United States] may be removed by them” grants any removal 17 right to a party not enumerated in that statute simply because the action is 18 directed to another entity that the statute does address.2 28 U.S.C. § 1442(a) 19 (emphasis added). And the mere possibility of the Government’s intervention 20 “speculation and conjecture” is insufficient to warrant removal. Ibarra v. 21 Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015); 22 cf. Whitmore v. Arkansas, 495 U.S. 149, 155–56 (1990) (federal courts are 23 “powerless to create [their] own jurisdiction” through conjecture and 24 hypothesis). 25 Nevertheless, Xilinx argues that the Court should follow In re Nat’l Sec. 26 Agency Telecomms. Records Litig., 483 F. Supp. 2d 934 (N.D. Cal. 2007) 27 2 The question whether the United States would be entitled to remove if it 1|| (“In re NSA”), in permitting removal based on the Government's potential 2|| intervention. But the court in that case relied on a finding that that the action 3|| “would inevitably be removed to federal court.” See id. at 946-47 (“[T]he 4|| standard to invoke the futility exception is exacting, as it requires the court to 5|| find that a state court action would inevitably be removed to federal court”) 6|| (citing Bell v. City of Kellogg, 922 F.2d 1418, 1425 (9th Cir. 1991)). There’s 7|| no such inevitability here—the Government states that it will not intervene to 8|| assert its rights “at this time” if Chartrand is permitted to file his Third 9|| Amended Complaint, and it may not ever assert those rights. (Dkt. 24 at 3.) 10|| Since the Government’s subsequent removal is uncertain, the Court can’t find remand futile and it can’t follow /n re NSA. 12 CONCLUSION 13 Xilinx hasn't demonstrated that it had a right to remove this case to 14|| federal court. It can’t support removal by defensively raising federal doctrines that aren't essential to Chartrand’s claims. And its reliance on the federal 16|| officer removal statute is misplaced: It hasn’t shown that terminating 17|| Chartrand’s employment was done under the federal government’s subjection, guidance, or control. Nor can it remove based on a purported right belonging to the government. 20 The Court lacks jurisdiction over the case. The Motion for Remand is 21|| GRANTED. (Dkt. 8.) The case is remanded to the California Superior Court, 22|| County of San Diego. 23 IT IS SO ORDERED. DATED: April 22, 2021 laws Ae f Zul on. Larry A. Burns 6 United States District Judge 27 28