Opinion
5:24-cv-01297-SB-SP
07-26-2024
JESSICA DIAZ, Plaintiff, v. WESTROCK SERVICES, LLC, et al., Defendants.
ORDER GRANTING MOTION TO REMAND [DKT. NO. 14]
STANLEY BLUMENFELD, JR. UNITED STATES DISTRICT JUDGE
On June 20, 2024, Defendant Westrock Services, LLC, removed this employment discrimination case from state court alleging diversity jurisdiction. Westrock acknowledged that Plaintiff Jessica Diaz and Defendant Frank Hernandez are both citizens of California,but claimed that Hernandez was fraudulently joined. The Court ordered Diaz to file a motion to remand addressing the allegations of fraudulent joinder or to voluntarily dismiss Hernandez. Diaz moved to remand. Because Westrock has not shown that Hernandez has been fraudulently joined, the Court grants the motion to remand.
Defendant Christina “Doe” (last name unknown) is also allegedly a California citizen, but the citizenship of a Doe defendant (even one whose first name is known) is not considered when evaluating diversity jurisdiction following removal. Dkt. No. 13; see also Green v. Doe, No. 1:22-cv-0435, 2023 WL 4074775, at *4 (E.D. Cal. June 20, 2023).
I.
According to the allegations in the first amended complaint (FAC), Diaz worked for Westrock for approximately two-and-a-half months. Dkt. No. 1-6 ¶ 12. Throughout her tenure of employment, Diaz was continually harassed by her coworkers based on her sex, gender, and perceived sexual orientation. Id. ¶¶ 1216. Frank Hernandez was Diaz's direct supervisor. Id. ¶ 16. Diaz complained to Hernandez “on an almost daily basis” about the comments from her coworkers. Id. In response, Hernandez laughed, told Diaz not to pay attention to the harassment, and told her he would talk to her coworkers. Id. Hernandez took no action, and the harassment continued. Id. ¶ 17. Diaz also complained to Hernandez and another supervisor about meal and rest break violations and failure to pay for off-the-clock work. Id. ¶ 31. These complaints were dismissed with the statements, “this is what the job is,” and “if you don't like it,” followed by a gesture toward the door. Id. One month into her employment, Diaz was questioned at a meeting with Hernandez about her fitness for the job and the fact that she was “causing [them] problems.” Id. ¶ 19. A month-and-a-half later, she was fired. Id. ¶ 26.
Diaz sued Westrock and Hernandez for sexual orientation harassment (Cal. Gov't Code § 12940(j)). Id. ¶¶ 34-46. Diaz also sued Westrock for other violations of California's Fair Employment and Housing Act (FEHA) and the California Labor Code. Id. ¶¶ 47-110. Westrock removed, alleging Hernandez had been fraudulently joined and explaining why “there is no possibility” that Diaz can recover against Hernandez “based on the allegations in the FAC.” Dkt. No. 1 ¶ 32. After the Court ordered Diaz to address the fraudulent joinder allegations by either filing a motion to remand or dismissing the nondiverse defendants, Diaz moved to remand. Dkt. No. 14. The Court heard argument on the motion on July 26, 2024.
Although the FAC lists the other causes of action as against “all defendants,” Diaz clarified in her motion to remand that Hernandez is only properly named as a defendant in the first cause of action for sexual orientation harassment. Dkt. No. 14 at 8.
II.
Federal courts have subject-matter jurisdiction only over matters authorized by the Constitution and Congress. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). This Court has a duty to assess whether jurisdiction exists and may consider the issue sua sponte at any stage of the proceedings. Allstate Ins. Co. v. Hughes, 358 F.3d 1089, 1093 (9th Cir. 2004); see also Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (recognizing that “Article III generally requires a federal court to satisfy itself of its jurisdiction over the subject matter before it considers the merits of a case”).
A federal district court has original jurisdiction over a civil action when there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). Complete diversity means that each of the plaintiffs must be a citizen of a different state than each of the defendants. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). However, in assessing diversity, courts “disregard the citizenship of a non-diverse defendant who has been fraudulently joined.” Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 2019).
When a defendant removes a case based on diversity jurisdiction premised on an allegation of a fraudulently joined defendant, a district court must remand the case if there is “a possibility that a state court would find that the complaint states a cause of action” against that defendant. Id. at 548 (cleaned up). This “‘possibility' standard”-which requires the removing party to show that the allegations against the nondiverse defendant are “wholly insubstantial and frivolous”-is not equivalent to the motion-to-dismiss standard under Federal Rule of Civil Procedure 12(b)(6). Id. at 549-50. On the contrary, a searching inquiry into the merits of the case when screening for fraudulent joinder is improper. Id. at 548-49. The possibility standard, moreover, must consider whether the alleged pleading defects are curable by amendment. Id. at 550. Thus, a removing party asserting fraudulent joinder bears the “heavy burden” of showing that the claims against a nondiverse defendant are frivolous as alleged and cannot possibly be cured by amendment. Id. at 548, 550.
III.
Westrock falls short of meeting Grancare's demanding standard. It does not cite or address Grancare in its notice of removal or its opposition to the motion to remand (despite the Court having discussed Grancare at length in its July 2 order), instead making arguments better suited for a 12(b)(6) motion. Viewing the claim against Hernandez in light of the appropriate standard, the Court cannot conclude that there is no “possibility of recovery” or that the defects identified by Westrock could not be cured by amendment. Id. at 550.
Westrock argues that the sexual orientation harassment claim “fails as a matter of law” against Hernandez because (1) the FAC does not allege Diaz is a member of a protected class,(2) Hernandez's inaction does not constitute harassment, and (3) Hernandez's inaction did not interfere with her work performance. Dkt. No. 1 ¶ 46. Westrock further argues that the comments Diaz identifies do not rise to the level of severe and pervasive harassment required for a harassment claim and that the FAC fails to attribute any one of them to Hernandez. Dkt. No. 15 at 7-8. Westrock's arguments, when made in opposition to a remand motion, are unavailing.
In her motion to remand, Diaz states that she was perceived as transgender, a protected class under FEHA, and was subjected to harassment based on that perception. Dkt. No. 14 at 9 (citing Cal. Gov't Code § 12926(r)(2)). To the extent this was not adequately alleged in the FAC, it appears to be curable by amendment.
These alleged deficiencies go to the sufficiency of the allegations in the FAC rather than the potential viability of the claim. Westrock concedes that, legally, the sexual orientation claim is “potentially viable.” Dkt. No. 1 ¶ 35. And under California law, supervisors like Hernandez can be held personally liable for FEHA harassment claims. Reno v. Baird, 18 Cal.4th 640, 644-45 (1998); see also Roby v. McKesson Corp., 47 Cal.4th 686, 709 (2009) (holding that “when . . . actions establish a widespread pattern of bias,” even “some official employment actions done in furtherance of a supervisor's managerial role can also have a secondary effect of communicating a hostile message” supporting a harassment claim). In Stanbrough v. Georgia-Pacific Gypsum LLC, two plaintiffs brought several FEHA claims against their former employer and asserted a single claim for age-based harassment against their direct supervisor. No. 08-cv-8303-GAF, 2009 WL 137036, at *1 (C.D. Cal. Jan. 20, 2009). The defendant employer removed, asserting that the nondiverse supervisor had been fraudulently joined and that the alleged conduct attributable to the supervisor was not sufficiently severe or pervasive to constitute harassment. Id. at *1-2. Applying the standard for fraudulent joinder, the court reasoned:
Even if the allegations in Plaintiffs' complaint are insufficient to withstand a demurrer in state court, an issue as to which the Court offers no opinion, Defendants have not sufficiently established that Plaintiffs could not amend their complaint and add additional allegations to correct any deficiencies. In other words, the complaint's shortcomings, if any, are strictly factual; Plaintiffs clearly may pursue a cause of action for harassment against [the nondiverse supervisor defendant] under section 12940(j)(3) of the California Government Code if they can allege sufficient facts.Id. at *2.
This case involves the same cause of action, same issue on removal, and same argument of the complaint's insufficiency. Like the defendants in Stanbrough, Westrock has not shown that Diaz cannot cure the alleged defects on amendment. “Because these arguments go to the sufficiency of the complaint, rather than to the possible viability of [Plaintiff's] claims against [the nondiverse defendant], they do not establish fraudulent joinder.” Grancare, 889 F.3d at 552.
Because Westrock has not established that Hernandez has been fraudulently joined, the Court must consider his citizenship. Westrock does not dispute that Hernandez, like Diaz, is a California citizen. Dkt. No. 1 ¶¶ 21, 32. Therefore, complete diversity does not exist in this case.
IV.
The Court grants the motion and remands the case for lack of subject-matter jurisdiction.