O 1 JS-6 2 3 4 5 6
8 United States District Court 9 Central District of California
11 GEORGIA BAKER, Case № 2:20-CV-07167-ODW (SKx)
12 Plaintiffs, ORDER GRANTING MOTION TO 13 v. REMAND [11] 14 SUNRISE SENIOR LIVING, et al.,
15 Defendants.
16 17 I. INTRODUCTION 18 Plaintiff Georgia Baker initiated this wrongful termination suit against 19 Defendants Sunrise Senior Living Management, Inc.1 and Herman Marquez in the 20 Superior Court of California, County of Los Angeles. (Decl. of Hazel U. Poei Ex. A 21 (“Compl.”), ECF No. 1-2.) Defendants removed the action to this Court based on 22 alleged diversity jurisdiction. (NOR ¶¶ 7–8.) Plaintiff moves to remand (“Motion”). 23 (Mot. to Remand (“Mot.”), ECF No. 11.) For the reasons discussed below, the Court 24 finds that it lacks subject matter jurisdiction and consequently REMANDS this action 25 to state court.2 26
1 Sunrise asserts that Baker erroneously sued “Sunrise Senior Living.” (Notice of Removal 27 (“NOR”) 1, ECF No. 1.) 28 2 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 Sunrise operates an elderly residential care facility which provides assisted 3 living for residents suffering from severe health conditions affecting memory. 4 (Compl. ¶ 9.) In 2015, Sunrise hired and then promoted Baker to the position of 5 executive director at Sunrise of Westlake Village, one of its California facilities. 6 (Compl. ¶ 7.) In her capacity as executive director, Baker reported to Marquez, her 7 supervisor and Regional Director of Operations. (See Compl. ¶¶ 11, 14–29.) Baker 8 alleges Defendants wrongfully terminated her employment because, among other 9 reasons, she “disclosed to Defendants, and threatened to disclose to the state, 10 information that related to violations or noncompliance with state or federal laws.” 11 (Compl. ¶ 75.) 12 As a result of her allegedly wrongful termination, Baker filed this suit bringing 13 three causes of action against both Sunrise and Marquez, and an additional three 14 causes of action against only Sunrise. (See Compl.) Baker and Marquez are citizens 15 of California. (NOR ¶¶ 12, 19.) Sunrise is a Delaware corporation with its principle 16 place of business in Virginia. (NOR ¶ 17.) Defendants removed the action to this 17 Court on the basis of alleged diversity jurisdiction, arguing that Marquez is 18 fraudulently joined and his citizenship should be disregarded. (NOR ¶¶ 1–6, 19–27.) 19 Baker moves to remand for lack of subject matter jurisdiction. (Mot.) 20 III. LEGAL STANDARD 21 Federal courts are courts of limited jurisdiction, having subject matter 22 jurisdiction only over matters authorized by the Constitution and Congress. See 23 Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A suit filed in state 24 court may be removed to federal court if the federal court would have had original 25 jurisdiction over the suit. 28 U.S.C. § 1441(a). Federal courts have original 26 jurisdiction where a claim arises from federal law or where each plaintiff’s citizenship 27 is diverse from each defendant’s citizenship and the amount in controversy exceeds 28 $75,000. 28 U.S.C. §§ 1331, 1332. As there is a strong presumption against removal 1 jurisdiction, federal courts must reject jurisdiction if a defendant does not meet their 2 burden of establishing the “right of removal in the first instance.” Gaus v. Miles, Inc., 3 980 F.2d 564, 566 (9th Cir. 1992). A removed action must be remanded to state court 4 if the federal court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). 5 Where a defendant invokes diversity of citizenship as the basis of the court’s 6 subject matter jurisdiction, as Defendants have done, the Supreme Court has 7 consistently held 28 U.S.C. § 1332 requires complete diversity. E.g. Exxon Mobil 8 Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005). The presence of a 9 defendant from the same state as a plaintiff deprives federal courts of original 10 diversity jurisdiction. Id. 11 IV. DISCUSSION 12 Defendants assert the amount in controversy exceeds $75,000, and complete 13 diversity exists. (NOR ¶¶ 10, 19.) As the parties do not dispute that Baker and 14 Marquez are California citizens, (Compl. ¶¶ 1–3; NOR ¶¶ 12, 14, 19; Mot. 2), Baker 15 contends her common citizenship with Marquez precludes complete diversity and 16 therefore destroys this Court’s subject matter jurisdiction over the matter, (Mot. 2, 3). 17 In opposition, Defendants argue the Court should disregard Marquez’s citizenship 18 because he is fraudulently joined. (NOR ¶ 19; Opp’n to Mot. (“Opp’n”) 6, ECF 19 No. 12.) 20 District courts may disregard the citizenship of defendants who have been 21 fraudulently joined for the purposes of assessing complete diversity. Grancare, LLC 22 v. Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (citing Chesapeake 23 & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 152 (1914)). A fraudulently joined 24 defendant is one against whom the plaintiff “fails to state a cause of action . . . and the 25 failure is obvious according to the settled rules of the state.” Hamilton Materials, Inc. 26 v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) (quoting McCabe v. Gen. 27 Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). However, “there is a general 28 presumption against fraudulent joinder.” Id. It is not enough to show that a plaintiff 1 is unlikely to prevail on her claim; the defendant must show by clear and convincing 2 evidence that there is no “possibility that a state court would find that the complaint 3 states a cause of action against any of the [non-diverse] defendants.” Grancare, 4 889 F.3d at 548 (citing Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 5 2009)); Hamilton Materials, 494 F.3d at 1206; Padilla v. AT & T Corp., 697 F. Supp. 6 2d 1156, 1158 (C.D. Cal. 2009) (“[A] non-diverse defendant is deemed a [fraudulent] 7 defendant if, after all disputed questions of fact and all ambiguities in the controlling 8 state law are resolved in the plaintiff’s favor, the plaintiff could not possibly recover 9 against the party whose joinder is questioned.”). 10 Here, if Baker could possibly recover against Marquez on any single cause of 11 action, Marquez is not fraudulently joined. See Jacobson v. Swisher Int’l, No. CV 20- 12 01504-CJC (SKx), 2020 WL 1986448, at *4 (C.D. Cal. Apr. 27, 2020) (declining to 13 consider plaintiff’s remaining claims after finding there was a possibility that plaintiff 14 could state a single claim against non-diverse defendant).
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O 1 JS-6 2 3 4 5 6
8 United States District Court 9 Central District of California
11 GEORGIA BAKER, Case № 2:20-CV-07167-ODW (SKx)
12 Plaintiffs, ORDER GRANTING MOTION TO 13 v. REMAND [11] 14 SUNRISE SENIOR LIVING, et al.,
15 Defendants.
16 17 I. INTRODUCTION 18 Plaintiff Georgia Baker initiated this wrongful termination suit against 19 Defendants Sunrise Senior Living Management, Inc.1 and Herman Marquez in the 20 Superior Court of California, County of Los Angeles. (Decl. of Hazel U. Poei Ex. A 21 (“Compl.”), ECF No. 1-2.) Defendants removed the action to this Court based on 22 alleged diversity jurisdiction. (NOR ¶¶ 7–8.) Plaintiff moves to remand (“Motion”). 23 (Mot. to Remand (“Mot.”), ECF No. 11.) For the reasons discussed below, the Court 24 finds that it lacks subject matter jurisdiction and consequently REMANDS this action 25 to state court.2 26
1 Sunrise asserts that Baker erroneously sued “Sunrise Senior Living.” (Notice of Removal 27 (“NOR”) 1, ECF No. 1.) 28 2 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 Sunrise operates an elderly residential care facility which provides assisted 3 living for residents suffering from severe health conditions affecting memory. 4 (Compl. ¶ 9.) In 2015, Sunrise hired and then promoted Baker to the position of 5 executive director at Sunrise of Westlake Village, one of its California facilities. 6 (Compl. ¶ 7.) In her capacity as executive director, Baker reported to Marquez, her 7 supervisor and Regional Director of Operations. (See Compl. ¶¶ 11, 14–29.) Baker 8 alleges Defendants wrongfully terminated her employment because, among other 9 reasons, she “disclosed to Defendants, and threatened to disclose to the state, 10 information that related to violations or noncompliance with state or federal laws.” 11 (Compl. ¶ 75.) 12 As a result of her allegedly wrongful termination, Baker filed this suit bringing 13 three causes of action against both Sunrise and Marquez, and an additional three 14 causes of action against only Sunrise. (See Compl.) Baker and Marquez are citizens 15 of California. (NOR ¶¶ 12, 19.) Sunrise is a Delaware corporation with its principle 16 place of business in Virginia. (NOR ¶ 17.) Defendants removed the action to this 17 Court on the basis of alleged diversity jurisdiction, arguing that Marquez is 18 fraudulently joined and his citizenship should be disregarded. (NOR ¶¶ 1–6, 19–27.) 19 Baker moves to remand for lack of subject matter jurisdiction. (Mot.) 20 III. LEGAL STANDARD 21 Federal courts are courts of limited jurisdiction, having subject matter 22 jurisdiction only over matters authorized by the Constitution and Congress. See 23 Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A suit filed in state 24 court may be removed to federal court if the federal court would have had original 25 jurisdiction over the suit. 28 U.S.C. § 1441(a). Federal courts have original 26 jurisdiction where a claim arises from federal law or where each plaintiff’s citizenship 27 is diverse from each defendant’s citizenship and the amount in controversy exceeds 28 $75,000. 28 U.S.C. §§ 1331, 1332. As there is a strong presumption against removal 1 jurisdiction, federal courts must reject jurisdiction if a defendant does not meet their 2 burden of establishing the “right of removal in the first instance.” Gaus v. Miles, Inc., 3 980 F.2d 564, 566 (9th Cir. 1992). A removed action must be remanded to state court 4 if the federal court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). 5 Where a defendant invokes diversity of citizenship as the basis of the court’s 6 subject matter jurisdiction, as Defendants have done, the Supreme Court has 7 consistently held 28 U.S.C. § 1332 requires complete diversity. E.g. Exxon Mobil 8 Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005). The presence of a 9 defendant from the same state as a plaintiff deprives federal courts of original 10 diversity jurisdiction. Id. 11 IV. DISCUSSION 12 Defendants assert the amount in controversy exceeds $75,000, and complete 13 diversity exists. (NOR ¶¶ 10, 19.) As the parties do not dispute that Baker and 14 Marquez are California citizens, (Compl. ¶¶ 1–3; NOR ¶¶ 12, 14, 19; Mot. 2), Baker 15 contends her common citizenship with Marquez precludes complete diversity and 16 therefore destroys this Court’s subject matter jurisdiction over the matter, (Mot. 2, 3). 17 In opposition, Defendants argue the Court should disregard Marquez’s citizenship 18 because he is fraudulently joined. (NOR ¶ 19; Opp’n to Mot. (“Opp’n”) 6, ECF 19 No. 12.) 20 District courts may disregard the citizenship of defendants who have been 21 fraudulently joined for the purposes of assessing complete diversity. Grancare, LLC 22 v. Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018) (citing Chesapeake 23 & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 152 (1914)). A fraudulently joined 24 defendant is one against whom the plaintiff “fails to state a cause of action . . . and the 25 failure is obvious according to the settled rules of the state.” Hamilton Materials, Inc. 26 v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) (quoting McCabe v. Gen. 27 Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). However, “there is a general 28 presumption against fraudulent joinder.” Id. It is not enough to show that a plaintiff 1 is unlikely to prevail on her claim; the defendant must show by clear and convincing 2 evidence that there is no “possibility that a state court would find that the complaint 3 states a cause of action against any of the [non-diverse] defendants.” Grancare, 4 889 F.3d at 548 (citing Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 5 2009)); Hamilton Materials, 494 F.3d at 1206; Padilla v. AT & T Corp., 697 F. Supp. 6 2d 1156, 1158 (C.D. Cal. 2009) (“[A] non-diverse defendant is deemed a [fraudulent] 7 defendant if, after all disputed questions of fact and all ambiguities in the controlling 8 state law are resolved in the plaintiff’s favor, the plaintiff could not possibly recover 9 against the party whose joinder is questioned.”). 10 Here, if Baker could possibly recover against Marquez on any single cause of 11 action, Marquez is not fraudulently joined. See Jacobson v. Swisher Int’l, No. CV 20- 12 01504-CJC (SKx), 2020 WL 1986448, at *4 (C.D. Cal. Apr. 27, 2020) (declining to 13 consider plaintiff’s remaining claims after finding there was a possibility that plaintiff 14 could state a single claim against non-diverse defendant). As explained below, the 15 Court finds Marquez is not fraudulently joined because Baker could possibly recover 16 against Marquez on at least Baker’s third cause of action, under California Labor 17 Code section 1102.5. (See Compl. ¶¶ 70–80.) Defendants argue Baker could not 18 possibly succeed on this cause of action against Marquez because (1) her claim is 19 time-barred, and (2) section 1102.5 does not provide for individual liability. 20 (Opp’n 8–11.) Defendants’ arguments are unavailing. 21 A. Section 1102.5—Statute of Limitations 22 Defendants first argue that Baker’s claim under section 1102.5 is time-barred. 23 (Opp’n 8.) Although section 1102.5 does not provide its own statute of limitation, 24 courts have found that an action under section 1102.5 “must be brought within three 25 years” pursuant to California Civil Procedure Code section 338(a). Minor v. Fedex 26 Off. & Print Servs., Inc., 182 F. Supp. 3d 966, 988 (N.D. Cal. 2016) (citing Cal. Civ. 27 Proc. Code § 338(a) (providing that “[a]n action upon a liability created by statute, 28 other than a penalty or forfeiture” must be brought within three years)); see also Cal. 1 Lab. Code § 1102.5. “However, if the suit seeks the civil penalty provided in 2 [section] 1102.5(f), the claim is subject to a one-year limitations period.” Id.; see also 3 Ayala v. Frito Lay, Inc., 263 F. Supp. 3d 891, 917 (E.D. Cal. 2017) (concluding that, 4 although district courts to consider the issue have reached different conclusions, 5 “claims based on [sections] 1102.5 and 1102.5(f) seek to redress different harms, [so] 6 they implicate different types of primary rights, and give rise to separate and distinct 7 causes of action”). 8 Here, Baker seeks “general damages” under section 1102.5, (Compl. ¶¶ 70–80), 9 and her prayer for relief requests only “compensatory damages,” “attorneys’ fees and 10 costs,” and “punitive damages or other penalties recoverable by law,” (Compl. at 18). 11 Baker does not mention civil penalties or section 1102.5(f). (See Compl.) Therefore, 12 under California law, the three-year statute of limitations period applies to Baker’s 13 section 1102.5 claim. Ayala, 263 F. Supp. 3d at 917. As Baker filed her Complaint 14 less than two years after Defendants terminated her employment, (see Opp’n 8), her 15 section 1102.5 claim was filed within the applicable limitations period and is not 16 time-barred, see Ayala, 263 F. Supp. 3d at 917. 17 B. Section 1102.5—Individual Liability 18 Defendants next argue Baker cannot possibly succeed against Marquez under 19 section 1102.5 because that statute does not provide for individual liability. (NOR 20 ¶¶ 19, 22; Opp’n 8–11.). However, current California law interpreting section 1102.5 21 is not so settled because, in 2014, the California legislature amended section 1102.5 22 by adding the following italicized language: “[A]n employer, or any person acting on 23 behalf of the employer, shall not retaliate against an employee . . . .” See Tan v. 24 InVentiv Health Consulting Inc., CV 19-07512-CJC (ASx), 2019 WL 5485654, at *3 25 (C.D. Cal. Oct. 24, 2019) (quoting Cal. Lab. Code § 1102.5). Prior to this 26 amendment, “there was little question that section 1102.5 precluded individual 27 liability,” but “[a]fter the amendment[], the plain language of section 1102.5 seems to 28 1 stretch itself to individual liability.” Id. (internal quotation marks and citations 2 omitted). 3 Post-amendment, California state courts are divided on whether section 1102.5 4 precludes individual liability. When interpreting state law, federal courts must look to 5 the state’s highest court. PSM Holding Corp. v. Nat’l Farm Fin. Corp., 884 F.3d 812, 6 820 (9th Cir. 2018). In the absence of decision from the highest court, “a federal court 7 must predict how the highest state court would decide the issue using intermediate 8 appellate court decisions,” among other authorities. See id. Here, neither party 9 identifies California Supreme Court or intermediate appellate court decisions on the 10 issue, but both point to California trial court rulings for support. (See Decl. Brandon 11 P. Ortiz ISO Mot. Ex. 1, ECF No. 11–1 (providing California Superior Court 12 decisions holding that the 2014 amendment to section 1102.5 created individual 13 liability); Opp’n 10–11 (citing California Superior Court decisions finding no 14 individual liability exists under section 1102.5). The disparate conclusions of these 15 courts demonstrate that the question of individual liability under section 1102.5 is far 16 from “settled.” And although not binding authority, the decisions Baker offers 17 demonstrate that at least some California courts have found individual liability 18 available under section 1102.5, thus opening the door to the possibility that Baker may 19 recover against Marquez in his individual capacity. 20 Courts in this district are also divided on the question. Compare Tan, 2019 WL 21 5485654, at *3 (remanding after finding California law unsettled regarding individual 22 liability under section 1102.5), and De La Torre v. Progress Rail Servs. Corp., No. 23 CV 15-4526-FMO (GJSx), 2015 WL 4607730, at *4 (C.D. Cal. July 31, 2015) 24 (remanding after finding section 1102.5 ambiguous on the issue of individual 25 liability), with CTC Glob. Corp. v. Huang, No. SACV 17-02202-AG (KESx), 2018 26 WL 4849715, at *4 (C.D. Cal. Mar. 19, 2018) (granting motion to dismiss under Rule 27 12(b)(6) standard after finding that “section 1102.5 precludes individual liability”)). 28 The Court need not resolve the question here, because Marquez is fraudulently joined 1] only if Baker’s claim against Marquez “obvious|ly]” fails “according to the settled 2 || rules of the state.” See Hamilton Materials, 494 F.3d at 1206. The conflicting district 3 | court holdings and the lack of binding state court authority demonstrate that the failure 4 || of Baker’s section 1102.5 claim is far from obvious or settled. 5 Defendants have not met their burden to demonstrate that no possibility exists 6] that Baker could recover against Marquez; therefore, the Court finds Marquez 7|| properly joined.* Marquez’s presence in the action destroys diversity of citizenship 8 || and the Court’s subject matter jurisdiction. 9 V. CONCLUSION 10 For the reasons discussed above, the Court GRANTS Baker’s Motion to 11 Remand. (ECF No. 11.) The Court REMANDS this action to the Superior Court for 12 || the State of California, County of Los Angeles, Stanley Mosk Courthouse, 111 North 13 | Hill Street, Los Angeles, California 90012, Case No. 20STCV17809. The Clerk of 14} the Court shall close this case. 15 16 IT IS SO ORDERED. 17 18 December 23, 2020 19 Sg a 20 i i” OTIS ns “ah Il » UNITED STATES DISTRICT JUDGE
23 24 25 26 27 28 || > As the Court determines that Marquez is not fraudulently joined based on Baker’s section 1102.5 claim, it does not reach Baker’s other claims. See Jacobson, 2020 WL 1986448, at *4 n.2.