Shak v. USI Insurance Services, LLC

• Court: District Court, S.D. California
• Decided: February 15, 2022
• Docket: 3:21-cv-01631
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 KATIE SHAK, Case No.: 21-cv-01631-AJB-AGS

12 Plaintiff, ORDER: 13 v. (1) GRANTING PLAINTIFF’S 14 MOTION TO REMAND; AND 15 USI INSURANCE SERVICES, LLC, a limited liability company; DUKE TOMEI, (2) DENYING DEFENDANTS’ 16 an individual; and DOES 1 through10, MOTION TO DISMISS AS MOOT 17 inclusive, (Docs. No. 11, 13) 18 Defendants. 19 20 21 22 23 24 Before the Court is Plaintiff Katie Shak’s (“Shak”) motion to remand, (Doc. No. 11), 25 and Defendants USI Insurance Services, LLC (“USI”) and Duke Tomei’s (“Tomei”) 26 (collectively, “Defendants”) motion to dismiss, (Doc. No. 13). The Court has reviewed the 27 parties’ moving papers. For the reasons set forth below, the Court GRANTS Shak’s motion 28 to remand and DENIES AS MOOT Defendants’ motion to dismiss. 1 I. BACKGROUND 2 This is an employment discrimination, retaliation, wrongful termination, and hostile 3 work environment action under California law brought by Shak against her former 4 employer, USI, and her former supervisor, Tomei. (Doc. No. 8, FAC at 1–2.) Shak was 5 employed as a Producer of USI’s commercial insurance lines from May 2017 until her 6 termination on August 14, 2020. (Id. at ¶¶ 16, 37.) During this time, Shak reported to 7 Dennis Bass (“Bass”), the SVP Commercial Lines Practice Leader. (Id. at ¶ 18.) In 2019, 8 Tomei transferred to Shak’s region as the Regional Commercial Lines Practice Leader, 9 becoming Bass’s supervisor. (Id.) Shak is a single woman who alleges that under Tomei’s 10 leadership, she experienced “unwanted harassing conduct based on her gender and marital 11 status, causing a hostile or abusive work environment.” (Id. at ¶ 140.) Specifically, Shak 12 alleges, among other things, that Tomei made offensive comments about her gender, 13 required her to team up with a male counterpart on her accounts, removed her from new 14 business accounts, rejected her ideas and opinions, and placed her on a Performance 15 Improvement Plan (“PIP”) holding her to a different standard than her male colleagues. 16 (Id. at ¶¶ 18–35.) Shak further alleges a female colleague was also treated differently by 17 Tomei due to her gender. (Id. at ¶ 27.) On August 14, 2020, USI terminated Shak’s 18 employment due to “poor performance.” (Id. at ¶ 37.) 19 On August 9, 2021, Shak filed the original complaint in this action in San Diego 20 County Superior Court against all Defendants, alleging claims of discrimination and 21 retaliation. On September 16, 2021, Defendants removed the action to federal court, 22 asserting that this Court has diversity jurisdiction. (Doc. No. 1 at 3.) Although Shak and 23 Tomei are both citizens of California, USI contends Tomei was fraudulently joined for the 24 sole purpose of destroying diversity. (Id. at 4–5.) Defendants argue that Tomei’s citizenship 25 should be disregarded in assessing whether diversity jurisdiction exists. (Id.) 26 27

28 1 On October 6, 2021, Shak filed a FAC, adding a cause of action for hostile work 2 environment and dismissing Tomei from the other causes of action. (Doc. No. 8, FAC at 3 19–22.) On October 15, 2021, Shak filed a motion to remand, arguing that Defendants 4 failed to carry their burden of establishing that the parties are completely diverse. (Doc. 5 No. 11-1.) Defendants subsequently filed a motion to dismiss Shak’s FAC pursuant to 6 Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Doc. No. 13.) The 7 motions are fully briefed. This Order follows. 8 II. LEGAL STANDARD 9 The right to remove a case to federal court is entirely a creature of statute. See 10 Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal 11 statute, 28 U.S.C. § 1441, allows defendants to remove an action when a case originally 12 filed in state court presents a federal question, or is between citizens of different states and 13 involves an amount in controversy that exceeds $75,000. See 28 U.S.C. §§ 1441(a), (b); 28 14 U.S.C. §§ 1331, 1332(a). “[J]urisdiction founded on [diversity] requires that parties be in 15 complete diversity and the amount in controversy exceed $75,000.” Matheson v. 16 Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (per curiam); see 28 17 U.S.C. § 1332(a)(1). Complete diversity requires that each plaintiff’s citizenship is diverse 18 from that of each named defendant. 28 U.S.C. §§ 1332(a)(1), 1332(c)(1); Caterpillar Inc. 19 v. Lewis, 519 U.S. 61, 68 n.3 (1996). 20 The Ninth Circuit “strictly construe[s] the removal statute against removal 21 jurisdiction,” and “[f]ederal jurisdiction must be rejected if there is any doubt as to the right 22 of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per 23 curiam) (citations omitted). “The ‘strong presumption’ against removal jurisdiction means 24 that the defendant always has the burden of establishing that removal is proper.” Id. 25 III. DISCUSSION 26 Shak alleges the instant action must be remanded because Shak and Tomei are both 27 citizens of California, and thus, there is no complete diversity for purposes of subject matter 28 jurisdiction. (Doc. No. 11-1 at 6.) Defendants do not dispute that Tomei is a citizen of 1 California. Rather, Defendants contend that complete diversity nevertheless exists because 2 Tomei’s citizenship can be disregarded because he was fraudulently joined in this action 3 and is therefore a sham defendant. (Doc. No. 13-1 at 6.) 4 A. Fraudulent Joinder Standard 5 “In determining whether there is complete diversity, district courts may disregard 6 the citizenship of a non-diverse defendant who has been fraudulently joined.” Grancare, 7 LLC v. Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018). It is well-settled 8 law that “fraudulently joined defendants will not defeat removal on diversity grounds.” 9 Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). A fraudulent joinder is 10 established “if a defendant shows that an individual joined in the action cannot be liable on 11 any theory.” Grancare, 889 F.3d at 548 (internal quotations, alterations, and citations 12 omitted). There is a general presumption against finding fraudulent joinder, and thus, a 13 defendant invoking federal court diversity jurisdiction on that basis “bears a ‘heavy 14 burden.’” Id. The fraudulent joinder “must be proven by clear and convincing evidence.” 15 Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). 16 A joinder is fraudulent if a plaintiff fails to state a claim against the non-diverse 17 defendant, and “and the failure is obvious according to the settled rules of the state.” Hunter 18 v. Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009). The Ninth Circuit has explained 19 that the tests for fraudulent joinder and for a failure to state a claim under Rule 12(b)(6) 20 “are not equivalent.” Grancare, 889 F.3d at 549. Even if a claim cannot withstand a Rule 21 12(b)(6) motion, the fraudulent joinder inquiry does not end there. Id. at 550. The district 22 court must consider “whether a deficiency in the complaint can possibly be cured by 23 granting the plaintiff leave to amend. Id. “[I]f there is a ‘possibility that a state court would 24 find that the complaint states a cause of action against any of the non-diverse defendants,’” 25 the court must find the joinder proper and remand the case. Id. at 548 (quoting Hunter, 582 26 F.3d at 1046). “[A]ll disputed questions of fact and all ambiguities in the controlling state 27 law must be resolved in favor of remand to state court.” Hunter, 582 F.3d at 104 at 1042. 28 1 B. Whether Shak Fraudulently Joined Tomei 2 Here, Shak alleges a cause of action against Tomei for a hostile work environment 3 violation under the Fair Employment Housing Act (“FEHA”) on the basis that Defendants 4 harassed Shak based on her gender and marital status. (Doc. No. 8, FAC ¶¶ 139–40.) 5 Applying the fraudulent joinder analysis, the Court considers whether Defendants have 6 shown that Shak has failed to state a hostile work environment claim against Tomei, and 7 that such failure is “obvious” according to state law and cannot possibly be cured by 8 amendment. Hunter, 582 F.3d at 1043, 1046; Grancare, 889 F.3d at 550. 9 The FEHA prohibits an employer from harassing an employee based on, among 10 other protected groups, the employee’s marital status and gender. See Cal. Gov’t Code 11 § 12940(j)(1). The statute makes harassment by an employee unlawful and allows for 12 harassment claims against individuals. See Cal. Gov’t Code § 12940(j)(3) (“An employee 13 . . . is personally liable for any harassment prohibited by this section that is perpetrated by 14 the employee, regardless of whether the employer . . . knows or should have known of the 15 conduct and fails to take immediate and appropriate corrective action.”). “[H]arassment 16 focuses on situations in which the social environment of the workplace becomes 17 intolerable because the harassment (whether verbal, physical, or visual) communicates an 18 offensive message to the harassed employee,” Roby v. McKesson Corp., 47 Cal. 4th 686, 19 706 (2009), as modified (Feb. 10, 2010). 20 Defendants assert that Tomei has not alleged facts amounting to harassment because 21 the alleged conduct consists solely of personnel management activity such as placing her 22 on a PIP, removing her from prospective business accounts, and rejecting her suggestions 23 or opinions. (Doc. No. 17 at 13–16.) While Defendants are correct that adverse official 24 employment actions do not necessarily constitute harassment, see Reno v. Baird, 18 Cal. 25 4th 640, 646-47 (1998), such actions are not per se shielded from harassment claims. The 26 California Supreme Court has expressly recognized that “in some cases the hostile message 27 that constitutes the harassment is conveyed through official employment actions,” and thus, 28 such evidence “can form the basis of a harassment claim.” Roby, 47 Cal. 4th at 708; accord 1 Landucci v. State Farm Ins. Co., 65 F. Supp. 3d 694, 705–06 (N.D. Cal. 2014). 2 Consequently, the Court rejects Defendants’ argument that Shak cannot state a harassment 3 claim with allegations involving official employment actions. 4 Upon review of Shak’s FAC, the Court finds that Defendants have not established 5 that there is no possibility Shak could show that Tomei’s adverse managerial actions 6 towards her had the effect of communicating his hostile message that females are not 7 valued. See Roby, 47 Cal. 4th at 708; Landucci, 65 F. Supp. 3d at 707. Shak alleges that 8 Tomei attempted to “instill antiquated treatment of women in the workplace, and reinforce 9 alleged ideals that men [] dominate over women.” (Doc. No. 8 at ¶ 20.) As examples, Shak 10 asserts that she: (1) presented ideas that Tomei ignored and would only later implement 11 after a male colleague raised the exact same idea; (2) was required to team up with a male 12 colleague and was told to “play nice” with the colleague and “stroke his ego”; (3) was 13 swapped out of large business accounts so her male colleagues could land those deals; and 14 (4) learned that a female colleague was also being targeted by Tomei due to her gender. 15 (Id. at ¶¶ 19 – 22, 27.) The Court finds these allegations demonstrate a possibility that a 16 California court would find that the FAC states a cause of action against Tomei. See 17 Grancare, 889 F.3d at 549. A district court considering nearly identical issues to those 18 raised here found the same. See Courtney v. USI Ins. Servs., LLC, et al., No. SA-CV-21- 19 01522-CJC, 2021 WL 5356635, at *3 (C.D. Cal. Nov. 16, 2021) (“Viewing the First 20 Amended Complaint in the light most favorable to Plaintiff [], Defendants have not shown 21 that there is no possibility that Plaintiff could show that Tomei’s many adverse managerial 22 actions were the means by which he harassed Plaintiff because of her gender.”). 23 Defendants also argue that Shak “has failed to plead facts against Tomei showing 24 severe or pervasive harassment based on gender or marital status.” (Doc. No. 17 at 16.) 25 The Court’s task on the present motion, however, is not to evaluate whether Tomei’s acts 26 were sufficiently severe or pervasive such that Shak will prevail on her claim. Rather, it is 27 to determine whether she has so obviously failed to state a claim under California law that 28 her joinder of Tomei is fraudulent for purposes of jurisdiction. See Hunter, 582 F.3d at 1 1043. As explained above, that is not the case here. In addition, the Court finds unavailing 2 Defendants’ argument that Tomei’s alleged behavior is not objectively offensive. (Doc. 3 No. 17 at 16.) Again, the Court’s job is not to determine if Shak will actually, or even 4 probably, prevail on the merits of her case. Rather, the Court must evaluate whether there 5 is any possibility that she may do so. See Grancare, 889 F.3d at 548. Defendants have not 6 shown that the statute of limitations bars Shak’s hostile work environment claim, nor have 7 they presented “extraordinarily strong evidence or arguments” that she could not possibly 8 prevail on her claim. Id. And as previously noted, “all disputed questions of fact and all 9 ambiguities in the controlling state law must be resolved in favor of remand to state court.” 10 Hunter, 582 F.3d at 104 at 1042. For the aforementioned reasons, the Court finds that 11 Defendants have not satisfied their burden to show that Shak obviously failed to state a 12 hostile work environment claim such that there is no possibility that she could prevail. 13 Moreover, even if Shak failed to plead facts sufficient to state a claim against Tomei, 14 Defendants have not established that Shak could not amend her pleadings to cure the 15 deficiency. See Grancare, 889 F.3d at 549; Rangel v. Bridgestone Retail Operations, LLC, 16 200 F. Supp. 3d 1024, 1028 (C.D. Cal. 2016) (“[R]emand must be granted unless the 17 defendant shows that the plaintiff would not be afforded leave to amend his complaint to 18 cure the purported deficiency.”). Defendants argue that because Shak already amended her 19 original complaint and still fails to state a claim against Tomei, a subsequent amendment 20 would be futile and would not cure the defect. (Doc. No. 17 at 19.) The Court disagrees.2 21 As the district court in Courtney explained, the Court “is not deciding whether to grant 22 leave to amend here.” See No. SA-CV-21-01522-CJC, 2021 WL 5356635, at *3 n.5. And 23 although “leave to amend may be futile when a plaintiff fails to cure her complaint after a 24 court has identified its deficiencies on a prior motion to dismiss, the same does not hold 25 when an adversary points out those deficiencies and a court has yet to address them.” Id. 26 27 2 Additionally, Defendants’ claim that Shak only sued Tomei in bad faith to destroy diversity is 28 | || Thus, Defendants’ arguments as to why Shak could not amend her FAC to add more facts 2 buttress her harassment claim are unavailing. 3 For the reasons stated herein, the Court finds that Defendants have not met their 4 ||“heavy burden” to show that there 1s no possibility that a state court would find that the 5 states a cause of action against Tomei and that a deficiency cannot possibly be cured 6 || by amendment. See Grancare, 889 F.3d at 549-50. Consequently, the Court finds Tomei’s 7 joinder proper and destroys complete diversity for purposes of subject matter jurisdiction. 8 || The Court must therefore remand the case to state court. See id. at 548. 9 IV. CONCLUSION 10 Based on the foregoing, Defendants have failed to establish that the Court has subject 11 || matter jurisdiction over this action. Accordingly, Shak’s motion to remand is GRANTED 12 ||(Doc. No. 11), and Defendants’ motion to dismiss is DENIED AS MOOT (Doc. No. 13). 13 || The Clerk of Court is instructed to REMAND this case to the Superior Court of California, 14 Diego County. 15 IT IS SO ORDERED. 16 Dated: February 15, 2022 © ¢ 7 Hon. Anthony J.Battaglia 18 United States District Judge 19 20 21 22 23 24 25 26 27 28 8 A414 n~ynat