Roe Sr 3 v. The Church of Jesus Christ of Latter-day Saints (including its ecclesiastical unit, the Morgan Hill California Stake)

• Court: District Court, N.D. California
• Decided: January 30, 2025
• Docket: 5:24-cv-07119
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 JANE ROE SR 3, Case No. 24-cv-07119-EJD 9 Plaintiff, ORDER DENYING MOTION TO REMAND v. 10 11 THE CHURCH OF JESUS CHRIST OF Re: ECF No. 11 LATTER-DAY SAINTS, et al., 12 Defendants. 13 14 This case involves various state law claims by Plaintiff against the Church of Jesus Christ 15 of Latter-Day Saints (the “Church”), the Temple Corporation of the Church of Jesus Christ of 16 Latter-Day Saints (“Temple Corporation”), the Morgan Hill California Stake (“Morgan Hill 17 Stake), and Does 4 to 100 for sexual abuse Plaintiff suffered as a minor. The case was originally 18 filed in Santa Clara Superior Court on September 4, 2024. ECF No. 1. Defendants removed the 19 case to this Court on October 11, 2024, based on diversity jurisdiction because the only California- 20 based Defendant, the Morgan Hill Stake, was purportedly fraudulently joined and should be 21 disregarded for removal jurisdiction. Id. 22 Before the Court is Plaintiff’s motion to remand. ECF No. 11 (“Mot.” or “Motion”). The 23 Motion is fully briefed, and the Court has received two statements of recent decisions, along with 24 a supplemental brief from both sides addressing the recent decisions. Having carefully reviewed 25 the relevant documents, the Court finds this matter suitable for decision without oral argument 26 pursuant to Civil Local Rule 7-1(b). For the reasons stated below, Plaintiff’s Motion is DENIED. 27 1 I. LEGAL STANDARD 2 “[A]ny civil action brought in a State court of which the district courts of the United States 3 have original jurisdiction, may be removed by the defendant ... to the district court of the United 4 States for the district and division embracing the place where such action is pending.” Franchise 5 Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 7–8 (1983) (citation omitted); see also 28 6 U.S.C. § 1441(a). However, federal courts are courts of limited jurisdiction. See, e.g., Kokkonen 7 v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly, the burden of 8 establishing federal jurisdiction for purposes of removal is on the party seeking removal, and the 9 removal statute is strictly construed against removal jurisdiction. Valdez v. Allstate Ins. Co., 372 10 F.3d 1115, 1117 (9th Cir. 2004); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 11 “Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first 12 instance.” Gaus, 980 F.2d at 566. A federal court has jurisdiction where the case concerns an 13 issue of federal law or there is complete diversity between the parties and the amount in 14 controversy exceeds $75,000. 28 U.S.C. § 1332. 15 “Diversity removal requires complete diversity, meaning that each plaintiff must be of a 16 different citizenship from each defendant.” Grancare, LLC v. Thrower by & through Mills, 889 17 F.3d 543, 548 (9th Cir. 2018) (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996)). “In 18 determining whether there is complete diversity, district courts may disregard the citizenship of a 19 non-diverse defendant who has been fraudulently joined.” Id. (citing Chesapeake & Ohio Ry. Co. 20 v. Cockrell, 232 U.S. 146, 152 (1914)). 21 II. ANALYSIS 22 Defendants removed this action based on diversity jurisdiction because the only non- 23 diverse Defendant, the Morgan Hill Stake, is not a legal entity that can be sued. 1 Rather, they 24 argue it is merely a division of the Church, which itself is incorporated and based in Utah. 25

26 1 Plaintiff makes much about Defendants’ burden in asserting fraudulent joinder. See Mot. 7, 9. 27 But the threshold issue is whether the Morgan Hill Stake is an independent entity capable of being sued––fraudulently or not. 1 Opp. 12–16. Much like an unincorporated division (for example, an HR department) of a 2 corporation is not a separate entity, Defendants argue that the Morgan Hill Stake similarly lacks 3 any legal existence apart from the Church. In support, Defendants rely on the declaration of 4 Branden Wilson, the Director of Risk Management for the Church. Wilson Decl. ¶ 1, ECF No. 5 22-1. Mr. Wilson explains that, in the Church’s organizational structure, a “stake” is an 6 “ecclesiastical subunit” of the Church. Id. ¶ 8. Each stake is led by a local volunteer clergyman 7 called a “stake president” selected by more senior Church leaders. Id. ¶ 9. Stakes, including the 8 Morgan Hill Stake, are funded by the Church. Id. ¶ 21. 9 Without Morgan Hill Stake as a separate entity, complete diversity exists, and federal 10 jurisdiction based on diversity is proper.2 Put differently, whether complete diversity exists 11 depends on whether Morgan Hill Stake is an independent entity for jurisdictional purposes. The 12 Court concludes that it is not. 13 In Breitman, the Ninth Circuit adopted the Sixth Circuit’s rule that “[a] division of a 14 corporation does not possess the formal separateness upon which the general rule is based, and 15 thus is not an independent entity for jurisdictional purposes.” Breitman v. May Co. Cal., 37 F.3d 16 562, 564 (9th Cir. 1994) (quoting Schwartz v. Electronic Data Sys., Inc., 913 F.2d 279, 284 (6th 17 Cir. 1990)) (recognizing that “the distinction between an incorporated subsidiary and an 18 unincorporated division is important for determining diversity jurisdiction.”). Courts in this 19 circuit have consistently applied this rule to disregard divisions of corporations for jurisdictional 20 purposes. See, e.g., Sanfilippo v. Match Grp. LLC, No. 20-55819, 2021 WL 4440337, at *1 (9th 21 Cir. Sept. 28, 2021) (district court did not err by considering only Match Group, LLC’s citizenship 22 when assessing Tinder’s jurisdiction where “Tinder continues to exist solely as an unincorporated 23 division of Match Group, LLC”); Rockymore v. Eurofins Donor & Prod. Testing, Inc., No. 22- 24

25 2 The parties agree that Plaintiff is a California resident, and both the Church and the Temple 26 Corporation are Utah residents. Compl. ¶¶ 3, 5, 6. Plaintiff does not dispute that the amount in controversy exceeds $75,000. And “the removal statute obligates the Court to disregard [Doe 27 Defendants’] citizenship.” Jane Roe KL 66 v. Doe 1, No. 24-CV-07661-AMO, 2024 WL 5264039, at *1 (N.D. Cal. Dec. 31, 2024) (citations omitted) (“Jane Roe KL 66”). 1 CV-00176-WHO, 2022 WL 1188859, at *4 (N.D. Cal. Apr. 20, 2022) (denying remand and 2 rejecting attempt to rely on citizenship of several business divisions of other named corporate 3 defendant where defendants successfully established the disputed “entities are simply 4 unincorporated divisions of the other entities”); L’Garde, Inc. v. Raytheon Space & Airborne Sys., 5 805 F. Supp. 2d 932, 939 (C.D. Cal. 2011) (defendant Raytheon Space and Airborne Systems, an 6 unincorporated business division of Raytheon Company, was “not an independent entity” and 7 whose citizenship was therefore “based on Raytheon Company”). 8 This rule has also been applied in the context of local congregations of churches, including 9 “stakes” of the Church like the Morgan Hill Stake at issue here. In both John Roe AJ 1 v. The 10 Church of Jesus Christ of Latter-Day Saints, et. al., No. 24-cv-02990-DC-CSK, 2025 WL 85759 11 (E.D. Cal. Jan. 14, 2025) (“Roe AJ 1”) and Roe JW 142 v. The Church of Jesus Christ of Latter- 12 Day Saints, et. al., No. 24-cv-2150-KKSP, 2024 WL 5182415 (C.D. Cal. Dec. 20, 2024) (“Roe JW 13 142”), the court denied motions to remand and determined that a stake is not an independent entity 14 with legal status. Roe JW 142 accepted the Church’s submitted evidence and concluded that the 15 stake, which was “part of defendant LDS’ network of churches and is subject to defendant LDS’ 16 control,” was “not an independent entity for jurisdictional purposes.” Roe JW 142, 2024 WL 17 5182415, at *2 (relying on Breitman). And Roe AJ 1 similarly concluded that the religious stake 18 at issue in that case was not an independent entity for jurisdictional purposes because defendants 19 had “shown that Defendant Napa Stake is controlled by Defendant LDS as one of its many places 20 of worship and is a citizen of Utah for the purposes of diversity jurisdiction.” Roe AJ 1, 2025 WL 21 85759, at *3 (relying on Breitman). 22 Here, as in Roe JW 142 and Roe AJ 1, Defendants have met their burden to establish that 23 the Morgan Hill Stake is not an independent entity for jurisdictional purposes. The Church is a 24 501(c)(3) nonprofit corporation that conducts the Church’s affairs in the secular world. 25 Wilson Decl. ¶ 12; see also Ex. B, Articles of Incorporation (“Any claim arising from the 26 activities of the Church or its agents that might be asserted against the Church shall instead pertain 27 solely to the corporation.”). The Morgan Hill Stake is an ecclesiastical unit of the Church which 1 operates according to the policies and procedures in the General Handbook of the Church. Id. 2 ¶¶ 15, 18. It is not separately incorporated, it is not registered to do business anywhere, it does not 3 own property, and it is funded by the Church. Id. ¶¶ 15, 20, 21. The Stake is, put simply, a part of 4 the corporation of the Church that is not an independent entity for jurisdictional purposes. Thus, 5 the Court looks to the Church’s place of citizenship, Utah, to assess diversity jurisdiction. See 6 Compl. ¶ 6. Complete diversity exists, and removal was appropriate. 7 Plaintiffs argue this Court should instead follow Jane Roe KL 66. There, the court granted 8 remand when faced with similar factual circumstances. After considering the Church’s evidence 9 that the stake involved was merely a subpart of the Church, the court was nevertheless 10 unconvinced that the stake was not a separate legal entity, citing Church Mutual. In Church 11 Mutual, the California Court of Appeal evaluated whether a local congregation of the hierarchical 12 Church of God––Mountain Lakes––was considered “an unincorporated religious association” such 13 that the group would be recognized as a legal entity for purposes of an insurance dispute. Church 14 Mut. Ins. Co., S.I. v. GuideOne Specialty Mut. Ins. Co., 72 Cal. App. 5th 1042, 1059 (2021), as 15 modified on denial of reh’g (Jan. 11, 2022). The court ultimately affirmed the trial court’s 16 determination that Mountain Lakes was a separate legal entity from the broader church. In so 17 holding, Church Mutual observed that Mountain Lakes was given authority to purchase––and did 18 purchase––the church property at issue in the case, and Mountain Lakes disaffiliated from the 19 Church before the insurance dispute arose. Id. at 1063. By contrast, the record before the Court 20 shows that the Morgan Hill Stake does not own property3, does not have insurance, and has not 21

22 3 This fact distinguishes the Morgan Hill Stake from the “the Corporation of the President of the San Jose Stake of the Church of Latter-Day Saints” (“CPSJS”)––the local congregation subject of 23 a motion to remand in Geppert v. Church of Jesus Christ of Latter-Day Saints, Inc., No. 23-CV- 05763-JSW, 2024 WL 495255, at *1 (N.D. Cal. Feb. 8, 2024). In that case, CPSJS was a 24 corporate entity separate from the Church corporation with its own Articles of Incorporation that was created for the sole purpose of holding property. Id. at ECF No. 19-2 ¶¶ 18–19. The court 25 observed that it was not clear from the record whether “CPSJS and the San Jose Stake are separate entities” or that Plaintiffs intentionally added CPSJS as a sham defendant. Geppert, 2024 WL 26 495255, at *3. The court determined that the defendants had failed to show fraud in plaintiff’s pleading of jurisdictional facts and granted the motion to remand. Here, the Morgan Hill Stake is 27 not a separate corporate entity with Articles of Incorporation. The Court is similarly unpersuaded that the out-of-circuit decisions Plaintiff cites warrant remand. 1 disaffiliated with the Church. 2 Accordingly, the Court respectfully concludes that Church Mutual does not require finding 3 that the Morgan Hill Stake is an independent, legal entity. Instead, under Breitman’s guidance, the 4 || Court finds that Defendants have shown that the opposite is true; the Morgan Hill Stake is a 5 division of the incorporated Church corporation whose citizenship should be disregarded for 6 || jurisdictional purposes.* Without the Morgan Hill Stake, complete diversity exists.° 7 || CONCLUSION 8 For the above reasons, Plaintiff's motion to remand is DENIED. 9 10 IT IS SO ORDERED. 11 Dated: January 30, 2025 12

EDWARD J. DAVILA 14 United States District Judge 15 16

= 17

Z 18 19 20 21 22 23 24 25 | The Court DENIES Plaintiff’s request for additional time to conduct discovery and declines to 6 address the additional fraudulent joinder arguments presented by the parties. > The Court rejects Plaintiff's argument that remand is appropriate because the Morgan Hill Stake 27 is a forum defendant. The forum defendant rule does not apply because the Morgan Hill Stake does not have independent legal status. 28 || Case No.: 24-cv-07119-EJD ORDER DENYING MOTION FOR REMAND