Mulalley v. Starbucks Corporation

• Court: District Court, S.D. California
• Decided: March 10, 2021
• Docket: 3:21-cv-00032
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ASHLEY MULALLEY; SABRINA D. Case No.: 21-cv-0032-GPC-DEB EDWARDS; and SARAH T. BEKELE, 12 ORDER: Plaintiffs, 13 v. (1) DISMISSING PLAINTIFF 14 BEKELE’S SECOND AND FOURTH STARBUCKS CORPORATION; 15 CAUSES OF ACTION AGAINST STARBUCKS CORPORATION d/b/a DEFENDANT HUDDLESTON; AND 16 STARBUCKS COFFEE COMPANY;

STARBUCKS COFFEE COMPANY; 17 (2) REMANDING THE CASE SHAREE HUDDLESTON; and DOES 1

18 through 10, inclusive, [ECF Nos. 5, 6, 8] 19 Defendants. 20 21 Before this Court are three motions: (1) Defendant Sharee Huddleston’s Motion to 22 Dismiss Plaintiff Sarah T. Bekele’s Second and Fourth Causes of Action (“MTD”), ECF 23 No. 5; (2) Defendants’ Motion to Compel Arbitration (“MTC”), ECF No. 6; and (3) 24 Plaintiffs’ Motion to Remand (“MTR”), ECF No. 8. Upon considering the motions and 25 related papers, the Court GRANTS the MTD but also REMANDS the case back to state 26 court, without ruling on the MTC. 27 1 I. BACKGROUND 2 A. Procedural History 3 On February 5, 2020, Plaintiff Ashley Mulalley (“Plaintiff Mulalley”) filed a 4 Complaint in the Superior Court of California for the County of San Diego against 5 Defendants. Notice Removal Ex. 1, ECF No. 1-2. Defendants consist of Starbucks 6 Corporation, its d/b/a entity Starbucks Coffee Company, a separate entity labeled 7 “Starbucks Coffee Company” (collectively “Defendant Starbucks”), Defendant Sharee 8 Huddleston (“Defendant Huddleston”) who is a management level employee of 9 Defendant Starbucks, and fictitious Doe Defendants. 10 The Complaint alleged six causes of action: (1) wrongful termination in violation 11 of California’s public policy, against Defendant Starbucks; (2) sexual harassment in 12 violation of California Government Code Section 12940 et seq., against all Defendants; 13 (3) retaliation in violation of California Government Code Section 12940 et seq., against 14 Defendant Starbucks; (4) aiding and abetting sexual harassment in violation of California 15 Government Code Section 12940 et seq., against all Defendants; (5) failure to prevent 16 harassment and retaliation in violation of California Government Code Section 12940(j), 17 (k), against Defendant Starbucks; and (6) negligent hiring, supervision, retention, and 18 training, against Defendant Starbucks. 19 On August 20, 2020, Plaintiff Mulalley filed a First Amended Complaint (“FAC”). 20 Notice Removal Ex. 2 at 3–16, ECF No. 1-3. The FAC generally alleges the same six 21 causes of action but adds Plaintiff Sabrina D. Edwards (“Plaintiff Edwards”) and Plaintiff 22 Sarah T. Bekele (“Plaintiff Bekele”). Defendant Starbucks and Defendant Huddleston 23 were served a copy of the FAC and the related summons on December 9, 2020 and 24 December 12, 2020, respectively. 25 On January 8, 2021, Defendant Starbucks removed the case to the United States 26 District Court for the Southern District of California. Notice Removal, ECF No. 1. A 27 1 week later, Defendants filed the MTD and MTC. Concerning the MTD, it requests 2 Plaintiff Bekele’s claims against Defendant Huddleston be dismissed. ECF No. 5. In 3 response, Plaintiffs filed a Notice of Non-Opposition, confirming that Plaintiff Bekele 4 has no claims against Defendant Huddleston. ECF No. 11. Concerning the MTC, 5 Plaintiffs filed an Opposition, ECF No. 10, and Defendants filed a Reply, ECF No. 13. 6 On February 4, 2021, Plaintiffs moved to remand the case back to state court. 7 MTR, ECF No. 8. Defendant Starbucks filed an Opposition. ECF No. 14. Plaintiffs did 8 not file any reply brief. 9 B. Relevant Factual Allegations 10 Plaintiffs, all residents of San Diego County, California, were baristas employed 11 by Defendant Starbucks operating in San Diego County. Plaintiffs Mulalley and 12 Edwards worked at the One America Plaza location and Plaintiff Bekele worked at the 13 Horton Plaza location. FAC 1–3, ECF No. 1-3. Defendant Huddleston, also a resident of 14 San Diego County, supervised Plaintiffs Mulalley and Edwards. Id. ¶ 3. 15 The dispute primarily arises from a series of unwanted sexual advances by a 16 regular customer, Mike Wilkinson. See id. ¶ 11. Plaintiffs had made multiple complaints 17 to their respective supervisors (including Defendant Huddleston) concerning the hostile 18 work environment due to Mr. Wilkinson’s unwelcome behavior. See id. ¶¶ 13, 17–21. In 19 Plaintiff Bekele’s case, she also complained about homeless people masturbating in front 20 of her, which highly offended her. The management did nothing in response to the 21 complaints. See, e.g., id. ¶ 11. In fact, Plaintiff Edwards was instructed to “wait on 22 ‘Mike’ when he came in, because she was the only African-American employee.” Id. 23 Specifically concerning Defendant Huddleston, not only did she fail to resolve the 24 concerns expressed by Plaintiffs Mulalley and Edwards, she was part of the problem. 25 Defendant Huddleston made unwanted physical contact with Plaintiffs Mulalley and 26 Edwards, and did not change her behavior even though she was aware of the Plaintiffs’ 27 1 aversion to it. See id. ¶¶ 11, 14, 19. When Plaintiff Mulalley complained to Defendant 2 Huddleston about Mr. Wilkinson, Defendant Huddleston ignored the complaints and cut 3 Plaintiff Mulalley’s working hours. See id. ¶¶ 13, 18, 20, 21. 4 Plaintiff Mulalley tried calling the Starbucks company hotline to make her 5 complaint, but also to no avail. See id. ¶ 13. Eventually, Plaintiffs were “forced to 6 resign.” See id. ¶¶ 21, 27. 7 II. DEFENDANT HUDDLESTON’S MOTION TO DISMISS 8 The Court first addresses the issue that the parties agree on. Defendant Huddleston 9 moved to dismiss Plaintiff Bekele’s Second and Fourth Causes of Action. MTD, ECF 10 No. 5. Plaintiffs filed a Notice of Non-Opposition: “Plaintiff Bekele does not make any 11 claims against Defendant Huddleston. Review of the pleading shows this. . . . Plaintiff 12 only makes claims against defendant Starbucks as her employer.” ECF No. 11. 13 Accordingly, the Court DISMISSES with prejudice Plaintiff Bekele’s Second 14 and Fourth Causes of Action against Defendant Huddleston. At the same time, the Court 15 flags that granting the MTD is not a complete dismissal of the Second and Fourth causes 16 of action, as Defendants are aware. See MTD Mem. 2 n.2, ECF No. 5-1 (stating that if 17 the Court does not grant the MTC, “Defendant Huddleston intends to file a further 18 motion to dismiss as to the claims brought by Plaintiffs Mulalley and Edwards”). 19 Plaintiff Bekele still has her Second and Fourth Causes of Action against Defendant 20 Starbucks, and Plaintiffs Mulalley and Edwards preserve their Second and Fourth Causes 21 of Action against all Defendants, including Defendant Huddleston. 22 III. PLAINTIFFS’ MOTION TO REMAND 23 Plaintiffs moved to remand the case. Defendant Starbucks originally removed this 24 case based on diversity of citizenship because according to Defendant Starbucks, 25 complete diversity exists; Defendant Starbucks is domiciled in the state of Washington, 26 and Defendant Huddleston’s domicile (of California) should be ignored because she was 27 1 fraudulently joined. However, the Court rejects Defendant Starbucks’s claim of 2 fraudulent joinder. Taking Defendant Huddleston’s domicile into account, there is no 3 complete diversity, and remand is proper.1 4 A. Legal Standard 5 A defendant may remove to federal court a claim filed in state court that could 6 have initially been brought in federal court. 28 U.S.C. § 1441(a). However, the court 7 must remand the case to state court if the district court lacks subject matter jurisdiction. 8 Id. § 1447(c). “A federal court is presumed to lack jurisdiction in a particular case unless 9 the contrary affirmatively appears.” United States v. Lee, 472 F.3d 638, 641 (9th Cir. 10 2006) (quoting United States v. Arnaiz, 842 F.2d 217, 219 (9th Cir. 1988)). The removal 11 statute is strictly construed, and any doubt about the right of removal is resolved in favor 12 of remand. Grancare, LLC v. Thrower by & through Mills, 889 F.3d 543, 550 (9th Cir. 13 2018) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)). “The presumption 14 against removal means that the defendant always has the burden of establishing that 15 removal is proper.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th 16 Cir. 2009) (quotations omitted). 17 B. Diversity Jurisdiction and Fraudulent Joinder 18 Defendant Starbucks argues that this Court has diversity jurisdiction over the case. 19 A district court has diversity jurisdiction over any civil action where complete diversity 20 exists between the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. 21

22 1 The Court also questions whether Defendant Starbucks’s removal was procedurally 23 proper. The Court could not find any explicit record that Defendant Huddleston 24 affirmatively joins or consents to the removal. See 28 U.S.C. § 1446(b)(2)(A); Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1266 (9th Cir. 1999) (discussing the 25 removing party’s burden on the issue, and how the defect must be cured within thirty (30) 26 days), overruled on other grounds; cf. Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1225 (9th Cir. 2009) (discussing the minimal requirements). 27 1 § 1332(a). Here, the amount in controversy is not in dispute. Compare Notice Removal 2 ¶ 26, ECF No. 1, with FAC 13, ECF No. 1-3. Instead, the parties disagree whether 3 complete diversity exists, i.e., whether each plaintiff is of a different citizenship from 4 each defendant, Grancare, 889 F.3d at 548 (citation omitted). The burden of proof on the 5 matter lies on the proponent of removal. See Abrego Abrego v. The Dow Chem. Co., 443 6 F.3d 676, 685 (9th Cir. 2006). 7 All Plaintiffs are citizens of California. FAC ¶ 1, ECF No. 1-3. Defendant 8 Starbucks is domiciled in the state of Washington. See Decl. Julie Broxson, ECF No. 3. 9 Fictitious “Doe” defendants are ignored for determining diversity jurisdiction. See 28 10 U.S.C. § 1441(b)(1). And Defendant Huddleston is allegedly a citizen of California.2 11 FAC ¶ 3, ECF No. 1-3. Thus on the surface, the case lacks complete diversity because 12 Plaintiffs and Defendant Huddleston are citizens of the same state. 13 Defendant Starbucks contends that the Court should ignore Defendant Huddleston 14 for purposes of determining diversity, because she was fraudulently joined in the lawsuit. 15 Indeed, one exception to the complete diversity requirement is if the non-diverse 16 defendant is a “sham” or “fraudulently joined.”3 See Morris v. Princess Cruises, Inc., 17 236 F.3d 1061, 1067 (9th Cir. 2001). Fraudulent joinder exists when either (1) there is 18 actual fraud in the pleading of jurisdictional facts; or (2) plaintiff is unable to establish a 19 cause of action against the non-diverse party in state court. Hunter v. Philip Morris USA, 20 582 F.3d 1039, 1044 (9th Cir. 2009) (citation omitted). Defendant Starbucks’s theory of 21

22 23 2 Defendant Starbucks objects to the Declaration submitted by Plaintiffs’ counsel. ECF No. 14-1. The Objection is sustained. Fed. R. Evid. 602. At the same time, the 24 Objection alone does not negate the allegations of Defendant Huddleston’s citizenship. 25 3 These are terms of art used for removal purposes, and do not imply any intent to deceive 26 the court or the opposing party. See Mariano v. UPS, Inc., No. 3:13-CV-0776-GPC- JMA, 2013 WL 3795709, at *5 (S.D. Cal. July 18, 2013) (citation omitted). 27 1 fraudulent joinder stems from the latter, in which it argues that no viable cause of action 2 exists against Defendant Huddleston. 3 There is a “general presumption against fraudulent joinder,” and the removing 4 party bears the “heavy burden” of overcoming it. Weeping Hollow Ave. Tr. v. Spencer, 5 831 F.3d 1110, 1113 (9th Cir. 2016) (quoting Hunter, 582 F.3d at 1046). And while the 6 party arguing fraudulent joinder “is entitled to present the facts showing the joinder to be 7 fraudulent,” McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987) (citation 8 omitted); cf. Morris, 236 F.3d at 1068 (discussing that courts may “pierce the pleadings” 9 and consider “summary judgment-type evidence” such as declarations and affidavits), the 10 fraudulent joinder claim must still be proven by “clear and convincing evidence,” 11 Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). 12 Important to note from the discussion above, the fact that courts may consider 13 external evidence by the defendants does not mean that the burden of persuasion 14 somehow shifts to the plaintiffs. In fact, district courts have consistently discussed how 15 “all disputed questions of fact and all ambiguities” must be resolved in favor of the non- 16 removing party. See, e.g., Nasrawi v. Buck Consultants, LLC, 776 F. Supp. 2d 1166, 17 1169–70 (E.D. Cal. 2011); Plute v. Roadway Package Sys., Inc., 141 F. Supp. 2d 1005, 18 1008 (N.D. Cal. 2001) (citing Dodson v. Spiliada Mar. Corp., 951 F.2d 40, 42–43 (5th 19 Cir. 1992)). 20 Yet switching burdens is effectively what Defendant Starbucks is asking the Court 21 to do. Rather than presenting any evidence (e.g., an affidavit or declaration) as initially 22 discussed in the brief, see Opp’n MTR 3, ECF No. 14, Defendant Starbucks merely flags 23 the supposed insufficiencies in the FAC and the MTR. To start, Plaintiffs are under no 24 obligation to “expand upon their allegations” in the MTR, id. at 5, or provide additional 25 evidence. It is rather the removing party’s obligation to provide “clear and convincing 26 evidence” if it wants its way. 27 1 In fact, a review of the pleadings indicates that a viable Second Cause of Action 2 (claims of sexual harassment) exists against Defendant Huddleston. At minimum, 3 Defendant Starbucks’s characterizations of Plaintiff’s FAC does not meet the burden of 4 persuasion for the Court to conclude that Defendant Huddleston was fraudulently joined. 5 On Defendant Starbucks’s argument that the “two” instances of Defendant Huddleston’s 6 alleged conduct were “isolated,” see id. at 4–5, the FAC indicates otherwise. See 7 generally FAC ¶ 38, ECF No. 1-3 (discussing how “examples are stated for 8 representative purposes and are not intended to be exhaustive”). The FAC alleges that 9 Defendant Huddleston “constantly” approached Plaintiff Mulalley, and that Defendant 10 Huddleston “refused to stop her behavior.” Id. ¶ 19. These articulations already signal 11 something more than a one-off event. Further, the fact that “Ms. Mulalley made it well 12 known that she was a person who does not like to be touched” and that “Huddleston 13 knew Ms. Mulalley was a person who does not like to be touched physically,” id. ¶¶ 14, 14 19, imply that some preceding event occurred,4 which could point towards pervasiveness. 15 Finally, when Plaintiff Mulalley made a face-to-face verbal complaint to Defendant 16 Huddleston about the sexual misconduct that she experienced, the response she received 17 was that “Starbucks ‘wants the employees to make a connection with the customers.’” 18 Id. ¶ 20 (emphasis added). Given the context of an employee complaining about repeated 19 sexual misbehavior by a customer, such word choices by Defendant Huddleston could 20 also be deemed inappropriate, and further buttress Plaintiffs’ case for severity and 21 pervasiveness. 22

23 24 4 In fairness, the statement could mean that Plaintiff Mulalley made an upfront announcement to Defendant Huddleston before any contact ever occurred. But it could 25 also mean that Defendant Huddleston touched Plaintiff Mulalley, discomfort was 26 expressed, and later Defendant Huddleston touched Plaintiff again. With no evidence supporting either way, the Court will not construe the allegations in Defendants’ favor. 27 1 Next, the Court rejects Defendant Starbucks’s contention that the pleadings do not 2 allege a (mis)conduct “based on Plaintiff’s sex.” Plaintiffs Mulalley and Edwards allege 3 that they were subjected to Defendant Huddleston’s improper physical contact, and both 4 Plaintiffs were female. In addition, it appears that the female Plaintiffs received 5 unwanted sexual advances by the male customer due to their sex, yet the response 6 Plaintiff Mulalley received from her supervisor after lodging her complaints was that she 7 should “connect” with the customers.5 It is reasonable to assume that the interaction a 8 male employee may have had with Defendant Huddleston under the same fact pattern 9 would be different. At the very least, with no contravening undisputed facts provided by 10 Defendant Starbucks, the Court declines to deem the pleadings insufficient, or lacking 11 any basis for relief. 12 With Plaintiffs Mulalley and Edwards having sufficiently established the Second 13 Cause of Action against Defendant Huddleston, the Court need not address the 14 sufficiency of the Fourth Cause of Action (claims of aiding and abetting sexual 15 harassment). Plaintiffs “need only have one potentially valid claim against a non-diverse 16 defendant.” Knutson v. Allis-Chalmers Corp., 358 F. Supp. 2d 983, 993 (D. Nev. 2005) 17 (collecting cases); see also Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 18 1998) (discussing how a defendant must show that the non-diverse entity “cannot be 19 liable on any theory” (emphasis added)). The legal merits of the Fourth Cause of Action 20 / / / 21

22 5 The FAC also alleges that “Edwards was also instructed by management to wait on 23 ‘Mike’ when he came in, because she was the only African-American employee.” FAC ¶ 24 11, ECF No. 1-3. While the allegation is not entirely precise, it could be read as Defendant Huddleston instructing Plaintiff Edwards to wait on a male customer with a 25 record of sexually inappropriate behavior due to Plaintiff Edwards’s sex. Again, 26 Defendant Starbucks provides no undisputed facts to construct such statements in its favor. 27 1 can wait for a separate motion to dismiss, in front of a court that has jurisdiction to 2 entertain such a motion. 3 In sum, Defendant Starbucks has failed to meet its burden for the Court to 4 conclude that no valid cause of action exists against Defendant Huddleston. Accordingly, 5 Defendant Huddleston, a California citizen, is a proper defendant in this case. And 6 because Plaintiffs and Defendant Huddleston are all California citizens, there is no 7 complete diversity among the parties, meaning that this Court lacks jurisdiction based on 8 diversity of citizenship. With no other basis for federal jurisdiction, the Court 9 REMANDS the case. 10 C. Attorney’s Fees and Costs 11 In the MTR, Plaintiffs also request an order requiring Defendants to pay attorney’s 12 fees and costs incurred from the removal, such order being permitted under 28 U.S.C. § 13 1447(c). MTR Mem. 2, ECF No. 8-1. 14 Directing attorney’s fees and costs under the removal/remand statute is not 15 automatic. See 28 U.S.C. § 1447(c) (discussing how the remand order “may” require 16 payment). Rather, “absent unusual circumstances, attorney’s fees should not be awarded 17 when the removing party has an objectively reasonable basis for removal.” Martin v. 18 Franklin Capital Corp., 546 U.S. 132, 136 (2005); see also Lussier v. Dollar Tree Stores, 19 Inc., 518 F.3d 1062, 1065 (9th Cir. 2008) (“But removal is not objectively unreasonable 20 solely because the removing party’s arguments lack merit, or else attorney’s fees would 21 always be awarded whenever remand is granted.”). 22 No part of Plaintiffs’ MTR brief discusses how Defendant Starbucks’s removal 23 rises to the heightened level of objective unreasonableness. Accordingly, the Court 24 DENIES Plaintiffs’ request for attorney’s fees and costs. 25 / / / 26 27 1 DEFENDANTS’ MOTION TO COMPEL ARBITRATION 2 With the Court remanding the case to state court, it declines to rule on Defendants’ 3 || MTC. The Court lacks jurisdiction to opine on the matter. CONCLUSION 5 For the foregoing reasons, the Court GRANTS Defendant Huddleston’s Motion to 6 || Dismiss Plaintiff Bekele’s Second and Fourth Causes of Action, ECF No. 5, and 7 ||GRANTS Plaintiffs’ Motion to Remand, ECF No. 8. 8 Accordingly, this Court DISMISSES with prejudice Plaintiff Bekele’s Second 9 Fourth Causes of Action against Defendant Huddleston. The Court also REMANDS 10 || the case to the Superior Court of California for the County of San Diego for lack of 11 || federal subject matter jurisdiction. See 28 U.S.C. § 1447(c) (‘If at any time before final 12 ||judgment it appears that the district court lacks subject matter jurisdiction, the case shall 13 remanded.”’). Related to the remand, the Court DENIES Plaintiffs’ request for 14 || attorney’s fees and costs incurred from the removal. In addition, the Court VACATES 15 || the hearing on this matter scheduled for March 12, 2021. 16 IT IS SO ORDERED. 17 18 || Dated: March 10, 2021 =<

20 United States District Judge 21 22 23 24 25 26 27 11 28 21-cv-0032-GPC-DEB