Opinion
5:23-cv-02198-MEMF (SHKx)
04-26-2024
JOHN PETERSON, in and through his Successor-In-Interest, Mary Peterson, MARY PETERSON, an individual, Plaintiffs, v. RECHE CANYON REGIONAL REHAB CENTER; CAMBRIDGE SIERRA HOLDING, LLC dba RECHE CANYON REGIONAL REHAB CENTER; WEST COAST COMMONWEALTH PARTNERS, LLC.; SARAH SESAY; and DOES 1-40, inclusive, Defendants.
ORDER GRANTING MOTION TO REMAND [ECF NO. 16]
MAAME EWUSI-MENSAH FRIMPONG UNITED STATES DISTRICT JUDGE
Before the Court is a Motion to Remand filed by Plaintiff Mary Peterson, as successor-in-interest for her husband, John Peterson. ECF No. 16. For the reasons stated herein, the Court GRANTS the Motion to Remand.
I. Background
The following factual background is derived from the allegations in Plaintiffs' First Amended Complaint, ECF No. 12 (“FAC”), except where otherwise indicated. The Court makes no finding on the truth of these allegations and includes them only as background.
Plaintiff John Peterson was an individual and a resident of California. FAC ¶ 2. He is now deceased. See id. Plaintiff Mary Peterson (collectively with John Peterson, “Plaintiffs”) is an individual residing in California. Id. ¶ 3. John Peterson was Mary Peterson's husband, and Mary Peterson brings this suit on his behalf as his successor-in-interest. See id. ¶ 1.
Defendant Cambridge Sierra Holdings, LLC d/b/a Reche Canyon Regional Rehab Center (“Cambridge Sierra”) is a limited liability company whose members are all citizens of Florida. See id. ¶ 5; ECF No. 1 ¶ 6. Defendant West Coast Commonwealth Partners, LLC (“WCCP”) is a limited liability company that was a member of the holding company that owned Cambridge Sierra. See FAC ¶ 6; ECF No. 1 ¶ 10. Defendant Sarah Sesay (“Sesay,” or collectively with Cambridge Sierra and WCCP, “Defendants”) is an individual residing in California. See FAC ¶ 7.
Defendants owned, operated, and managed a 24-hour skilled nursing facility in Colton, California. See id. ¶¶ 4, 5, 8. John Peterson, who was over 65 years old at the time, was admitted to Defendants' facility in February 2023, following hospitalization after a heart attack. See id. ¶¶ 16, 17. Defendants neglected John Peterson, failed to protect him from hazards, failed to care for him, and failed to notify Mary Peterson of changes in his condition. See id. ¶ 20.
John Peterson's physician ordered that his vital signs be checked every 8 hours, and Defendants' staff observed that he needed assistance during meals. See id. ¶¶ 22, 23. In March 2023, he informed Defendants' staff that he could not breathe. See id. ¶ 26. Despite these facts, Defendants' staff did not monitor John Peterson's vital signs every 8 hours and did not assist him during meals. See id. An x-ray taken in March 2023 revealed that he had aspiration pneumonia. See id. ¶ 27. Defendants' staff informed Mary Peterson that John Peterson was having trouble breathing, but did not inform her of the aspiration pneumonia and other issues. See id. ¶ 28. Mary Peterson requested that John Peterson be transferred to a hospital but Defendants' staff refused this request. See id. His condition worsened throughout the following night, and he informed Defendants' staff of this. See id. ¶ 28. Defendants' staff administered him oxygen without consulting a physician. See Id. Later the same night, he was found unresponsive in his room, after being unresponsive for an unknown period of time, and pronounced dead. See id. ¶ 29.
Defendants failed to adequately train and supervise their staff and failed to have a sufficient budget and number of employees to meet the needs of their residents. See id. ¶¶ 30, 31. Defendants did this to increase profits. See id. ¶¶ 32, 33. John Peterson's injuries and death could have been prevented but for these practices. See id. ¶ 34. To the extent that the acts or omissions causing John Peterson's injuries were performed by Defendants' employees, Defendants ratified the employees' conduct. See id. ¶ 41. Defendants and their high level employees had knowledge of the issues. See id. ¶ 43.
B. Procedural History
Plaintiffs filed suit in San Bernardino County Superior Court on September 15, 2023. See ECF No. 1-1. Plaintiffs' initial Complaint included three Defendants-Reche Canyon Region Rehab Center; Cambridge Sierra d/b/a Reche Canyon Region Rehab Center; and WCCP-as well as Does 1-50. See id. The initial Complaint did not include Sesay as a Defendant.
Defendants removed to this Court on October 25, 2023. ECF No. 1. This removal was based on the argument that this Court had jurisdiction because of diversity of citizenship. See id.
On December 12, 2023, before Defendants had answered or otherwise filed a responsive pleading, Plaintiffs filed their FAC. See FAC. The FAC added Sesay, a citizen of California, as a Defendant. See id.
Plaintiffs filed the instant Motion to Remand on January 2, 2024. ECF No. 16 (“Motion” or “Mot.”). The Motion argues that Plaintiffs' inclusion of Sesay as a Defendant destroys diversity of citizenship and requires that the action be remanded. See id. Defendants filed an Opposition to the Motion on April 10, 2024. ECF No. 32 (“Opposition” or “Opp'n”). Plaintiffs filed a Reply in support of the Motion on April 15, 2024. ECF No. 33 (“Reply”).
As the Court noted in a Minute Order that prompted Defendants to file their Opposition, Defendants failed to timely oppose the Motion. See ECF No. 31. The Court will nevertheless consider the merits of Defendants' Opposition.
Defendants have also filed a Motion to Compel Arbitration, which is currently pending. See ECF No. 25.
The Court must first consider whether it has jurisdiction before reaching other issues. “The validity of an order of a federal court depends upon that court's having jurisdiction over both the subject matter and the parties.” Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982). Id. The Court may not issue any orders in an action over which it lacks jurisdiction. See id. Hence, the Court will first decide this Motion before considering the Motion to Compel Arbitration.
II. Applicable Law
A plaintiff may generally amend his or her complaint as of right “once as a matter of course at any time before a responsive pleading is served.” Fed.R.Civ.P. 15(a)(1)(B) (“Rule 15”). However, if “after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.” 28 U.S.C.A. § 1447(e) (“Section 1447”). Whether to allow the joinder and remand the action when Section 1447 applies is left to the discretion of the district court. See Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998).
Under most circumstances, either Rule 15 or Section 1447 governs; not both. But this case represents the one area where there is the potential for conflict between Rule 15-which permits amendment as of right before a responsive pleading is filed-and Section 1447-which permits amendment after removal only at the discretion of the Court. In the circumstances of this case, both sections would seem to apply.
The Ninth Circuit has not directly addressed what district courts should do in this situation. It has addressed how to evaluate the pre-removal joinder of a non-diverse defendant in a case where the defendant later removes. See Grancare, LLC v. Thrower by & through Mills, 889 F.3d 543, 54852 (9th Cir. 2018) (court should remand the action unless pre-removal joinder of non-diverse defendant is found to be a fraudulent joinder). And it has also addressed what to do with a post-removal joinder via a Motion for Leave to Amend (not amendment as of right), holding that where a district court grants a motion for leave to amend and allows a plaintiff to add a non-diverse defendant, Section 1447 requires the district court to then remand the action. See Yniques v. Cabral, 985 F.2d 1031, 1034-35 (9th Cir. 1993), disapproved of on other grounds by McDowell v. Calderon, 197 F.3d 1253, 1255 n.4 (9th Cir. 1999). However, no binding precedent has directly analyzed the situation where the plaintiff seeks to amend and add a non-diverse defendant during the period when the plaintiff would be permitted to amend as of right (where the plaintiff simply files an amended complaint instead of a motion for leave to amend).
There is one non-binding but widely cited district court opinion that has addressed this situation. See Palestini v. Gen. Dynamics Corp., 193 F.R.D. 654 (S.D. Cal. 2000). Palestini noted the inconsistency described above, and rather than seeking to settle the issue, analyzed the question under both standards, finding both led to the same result. See id. at 657-58. First, the court explained that “assuming Rule 15 governs, remand is mandatory due to the addition of the [non-diverse defendants].” See id. at 657 (citing Yniques, 985 F.2d at 1034, for the proposition that if the court allows amendment to include a non-diverse defendant, the action must be remanded). Second, the court analyzed whether to allow an amendment in its discretion pursuant to Section 1447. See id. at 658. The court identified six considerations that governed its analysis:
(1) whether the new defendants should be joined under Fed.R.Civ.P. 19(a) as “needed for just adjudication”; (2) whether the statute of limitations would preclude an original action against the new defendants in state court; (3) whether there has been unexplained delay in requesting joinder; (4) whether joinder is intended solely to defeat federal jurisdiction; (5) whether the claims against the new defendant appear valid; and (6) whether denial of joinder will prejudice the plaintiff.Id. The Court then found that allowing amendment was appropriate, so the second analysis led to the same result as the first, and the action was remanded. See id.
The Palestini factors have not been formally adopted by the Ninth Circuit, but they are broadly used within this circuit by district courts analyzing whether to allow amendment under Section 1447. See, e.g., Meggs v. NBCUniversal Media, LLC, No. 2:17-CV-03769, 2017 WL 2974916, *3 (C.D. Cal. July 12, 2017) (citing Palestini and using the same considerations); Swain v. Enter. Bank & Tr., No. 2:21-CV-8728, 2022 WL 252005, *2-*3 (C.D. Cal. Jan. 25, 2022) (same); Sally Meza v. Extended Stay America, Inc. et al, 2:22-cv-04188, ECF No. 45, 3-13 (C.D. Cal. Sep. 26, 2023) (same); Karen L. Stevenson, et al., Rutter Group Prac. Guide Fed. Civ. Pro. Before Trial, 2D-9, §§ 2:3645 - 2:3651 (2023) (listing same factors).
III. Discussion
The Court will take the same approach as the Palestini court-the Court need not settle whether Rule 15 gives a plaintiff to amend and add a nondiverse defendant as of right, or whether Section 1447 requires the Court to determine whether to allow such an amendment. The Court finds that the analysis leads to the same result either way, and the action should be remanded. If the amendment were allowed as of right, remand would be required. And if the Court had discretion regarding whether to allow the amendment, the Court would allow amendment based on the Palestini factors.
Plaintiffs urge the Court to merely consider whether the joinder was fraudulent pursuant to Grancare, and to remand the action so long as joinder is not found fraudulent. See Mot.; Reply. This is not the correct standardGrancare considered a joinder that occurred prior to removal, and so did not implicate Section 1447, which allows a court to consider whether to allow joinder of a nondiverse defendant after removal regardless of whether the joinder would be fraudulent. See Grancare, 889 F.3d at 547; see also 28 U.S.C.A. § 1447(e). Defendants urge the Court to construe the Motion to Remand as a Motion to Amend and analyze it under the Palestini factors. See Opp'n (citing IBC Aviation Servs., Inc. v. Compania Mexicana de Aviacion, S.A. de C.V., 125 F.Supp.2d 1008 (N.D. Cal. 2000), which cited Palestini and used the same six factors). As discussed above, this proposed approach still does not resolve the potential conflict between Rule 15 and Section 1447 since depending on which authority applies, Plaintiffs might be allowed to amend as of right without consideration of fraudulent joinder.
A. Assuming Rule 15 governs, then the action must be remanded.
The Ninth Circuit has made clear that if amendment to add a non-diverse defendant is allowed, then Section 1447 requires the district court to remand the action. See Yniques, 985 F.2d at 1034. So, if the Court is required to allow Plaintiffs to amend as of right, the Court must remand the action. Thus, if Rule 15 governs here, the action must be remanded.
B. Assuming Section 1447 gives the Court discretion regarding whether to allow amendment, the Court will allow the amendment, and then is required to remand the action.
In analyzing whether to allow a post-removal amendment that would destroy diversity, the Court will apply the generally accepted Palestini factors for the reasons described above. Those factors are:
(1) whether the new defendants should be joined under Fed.R.Civ.P. 19(a) as ‘needed for just adjudication;' (2) whether the statute of limitations would preclude an original action against the new defendants in state court; (3) whether there has been unexplained delay in requesting joinder; (4) whether joinder is intended solely to defeat federal jurisdiction; (5) whether the claims against the new defendant appear valid; and (6) whether denial of joinder will prejudice the plaintiff.See Palestini v. Gen. Dynamics Corp., 193 F.R.D. at 658. Court generally hold that “[a]ny of these factors might prove decisive, and none is an absolutely necessary condition for joinder.” Cruz v. Bank of N.Y.Mellon, No. 12-CV-00846-LHK, 2012 WL 2838957, at *4 (N.D. Cal. July 10, 2012); see also Meggs, 2017 WL 2974916 at *3 (same).
Here, the Court finds that the Palestini factors taken as a whole support allowing Plaintiffs to file their FAC, and the Court will do so. The Court must then remand the action.
As to the first factor, the Court sees no evidence that Sesay is a necessary party. See Palestini v. Gen. Dynamics Corp., 193 F.R.D. at 658. A party is required to be joined in two circumstances: (1) “in that person's absence, the court cannot accord complete relief among existing parties,” or (2) “that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may” impair that person's ability to protect the interest or leave an existing party subject to a risk of “double, multiple, or otherwise inconsistent obligations” because of the interest. Fed.R.Civ.P. 19(a)(1) (“Rule 19”). The determination of whether a particular nonparty is necessary to an action “is heavily influenced by the facts and circumstances of each case.” Confederated Tribes of Chehalis Indian Rsrv. v. Lujan, 928 F.2d 1496, 1498 (9th Cir. 1991). Here, even absent Sesay, there is no reason that the Court would be unable to accord complete relief between Plaintiffs and the other Defendants. Nor is there any indication that disposing of this action without Sesay would impair Sesay's ability to protect an interest. This factor weighs against allowing amendment.
As to the second factor, there is no indication that the statute of limitations would bar a state court action against Sesay. The relevant events occurred in 2023. See FAC. This factors also weighs against allowing amendment.
As to the third factor, there has not been any unexplained delay in seeking joinder. See Palestini v. Gen. Dynamics Corp., 193 F.R.D. at 658. Defendants concede as such. See Opp'n at 6. Defendants argue that there was, if anything, unexplained haste in seeking joinder. See id. To the extent that this is relevant, it will analyzed under the next factor (the motivation for seeking joinder). This factors thus weighs towards allowing amendment.
As to the fourth factor, the Court finds that the evidence suggests that joinder of Sesay was not intended solely to defeat federal jurisdiction. See Palestini v. Gen. Dynamics Corp., 193 F.R.D. at 658. Defendants argue that Plaintiffs made clear that they intended to join Sesay immediately after Defendants removed the action, suggesting that the joinder was at least in part, motivated by a desire to defeat jurisdiction. See Opp'n at 6-7. This is supported by the fact that Plaintiffs' counsel offered to forego amendment if Defendants agreed to remand the action. See id. at 10. Plaintiffs have also never affirmatively claimed that they always intended to include an administrator as a defendant. See id. at 6. To the contrary, they concede that they only began investigating who the Administrator was when the case was removed. See Mot. at 10. Plaintiffs cite numerous sections of the initial Complaint that contain allegations that could be construed as being made against someone in Sesay's position, but notably, although these paragraphs, see e.g., FAC ¶¶ 40, 42-48, contain allegations against “Nurse Administrators, Nurse Supervisors, [and] Nurse Managers,” the Doe Defendants are described as “owners, members, officers, directors, and managers” of the defendant entities. See FAC ¶¶ 7-10. Nevertheless, Plaintiffs' initial Complaint made clear that they intended to reserve the right to substitute other named defendants in place of the Doe Defendants named, and Plaintiffs state that they added Sesay as soon as they learned her identity. On balance, therefore, the Court is not convinced that this evidence shows that the joinder of Sesay was intended solely to defeat federal jurisdiction. This factor weighs in favor of allowing amendment, although not strongly so, in light of the circumstances and timeline described.
The Court notes that this factor is described at times as “the motive that the moving party has in seeking such amendment.” Desert Empire Bank v. Ins. Co. of N. Am., 623 F.2d 1371, 1375 (9th Cir. 1980) (focusing in part on whether the party had any “improper motive”). Even if the appropriate factor is the motive more broadly and not merely whether the motive was solely to defeat federal jurisdiction, the Court finds that a determination that the motive was not solely to defeat federal jurisdiction means that this factor-even if it weighs against allowing amendment-only does so slightly. In this case, the Court determines that consideration of all of the factors (even if this factor weighs against amendment) leads to the conclusion that amendment should be allowed.
As to the fifth factor, the claims against Sesay appear valid. See Palestini v. Gen. Dynamics Corp., 193 F.R.D. at 658. Because this motion is focused on a jurisdictional question, rather than a question of merits, the Court finds it appropriate to analyze this issue under the standard that the Ninth Circuit articulated for determining whether a pre-removal joinder was fraudulent. See Grancare, 889 F.3d at 548. Part of that inquiry is whether the plaintiff can “establish a cause of action against the non-diverse party.” See id. This is not analyzed under a 12(b)(6) standard, and courts instead consider whether there is a “possibility that a state court would find that the complaint states a cause of action” against the additional defendant. See id. In explaining this lower bar, the court emphasized that jurisdictional questions should not be conflated with 12(b)(6) motions which get at the merits. See id. The Court will take the same approach here. Applying that, the Court finds that there is at minimum a possibility that a state court would find that the FAC states a valid claim against Sesay. Plaintiffs' FAC lumps all Defendants together for most allegations and appears to state potentially viable claims. See FAC. Defendants perfunctorily argue that because Sesay is alleged to be an employee, any liability she has would also result in other defendants being liable, but this does not show that it is impossible that she might be liable individually. Although respondeat superior may give rise to employer liability, it does not shield an employee from liability for torts within the scope of his or her employment. See Hendriksen v. Young Men's Christian Ass'n of San Diego, 173 Cal.App. 2d 764, 770 (1959) (under respondeat superior, “both principal and agent may be sued in a single action”). Defendants provide no authority suggesting Sesay could not be liable in her individual capacity. This factor points in favor of allowing amendment.
Finally, as to the sixth factor, the Court finds little risk of prejudice to Plaintiffs if amendment is not allowed. Although it is possible that Sesay might be liable and the other defendants may not be, no evidence suggests that this is the case, and Plaintiffs have not argued this. Thus, the Court finds that this factor weighs against allowing amendment.
Defendants argue that they may suffer prejudice if the Motion to Remand is granted and therefore the Motion to Compel Arbitration is not heard in federal court. See Opp'n at 7. Possible prejudice to the defendant is not generally recognized as a factor relevant to determining whether the plaintiff should be permitted to amend and add a non-diverse defendant. See Palestini v. Gen. Dynamics Corp., 193 F.R.D. at 658. However, even if this were a factor, the Court finds no prejudice to Defendants, as nothing suggests that California courts are not competent to address whether arbitration is proper under the Federal Arbitration Act.
On balance, the Court finds that these factors favor allowing amendment here. Although some factors point against allowing it, the Court finds that the lack of evidence that joinder was solely intended to defeat jurisdiction and the potential viability of claims against Sesay outweigh the other factors. The Court thus finds that, to the extent that Section 1447 governs, the Court would allow the amendment and therefore be required to remand the action. See Yniques, 985 F.2d at 1034 (if amendment to add a non-diverse defendant is allowed, then Section 1447 requires the district court to remand the action).
Thus, applying either Rule 15 or Section 1447, the Court finds remand is required.
IV. Conclusion
For the reasons stated herein, the Court GRANTS the Motion to Remand. The Action shall be remanded to San Bernardino County Superior Court.
IT IS SO ORDERED.