Opinion
2:06-CV-0708-MCE-DAD.
July 5, 2006
MEMORANDUM AND ORDER
Through the present action, Plaintiff Cheryl McElroy ("McElroy") seeks damages from Defendants Tom Powers, Matt Simonich, Lowe's HIW, and Lowe's Home Centers (collectively "Defendants") based on alleged violations of certain state and federal laws. Specifically, McElroy advances the following claims: sex discrimination, sexual harassment, failure to prevent sexual harassment, physical disability discrimination, physical disability harassment, failure to prevent physical disability harassment, wrongful termination, negligent infliction of emotional distress, and violation of the Federal Family Medical Leave Act.
Before the Court are McElroy's Motion to Amend her Complaint and her Motion to Remand this action to the San Joaquin Superior Court. For the reasons explained below, McElroy's Motions are granted.
Because oral argument will not be of material assistance, the Court orders this matter submitted on the briefs. E.D. Cal. Local Rule 78-230(h).
BACKGROUND
On September 20, 2005, Plaintiff Cheryl McElroy initiated this action in San Joaquin Superior Court asserting various state law claims against individual Defendants Powers and Simonich. On September 27, 2005, McElroy filed her First Amended Complaint adding as defendants Lowe's HIW, Inc., and Lowe's Home Centers. On February 28, 2006, McElroy filed a Second Amended Complaint. Among other modifications, she added a cause of action for retaliation under the Federal Family Medical Leave Act ("FMLA"). McElroy characterizes this addition as an "afterthought" and attributes it to her counsel's legal mistake. On April 3, 2006, Defendants removed this action to this Court based on federal question jurisdiction conferred by the addition of the FMLA cause of action. McElroy now seeks to eliminate that claim through amendment which will destroy the federal basis upon which removal was based. Defendants do not oppose her proposed amendment but nonetheless request that the case proceed in this federal forum. As explained below, the Court will permit the amendment but declines to exercise jurisdiction over McElroy's remaining state law claims.STANDARD
I. Motion to Amend
A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served. Fed.R.Civ.P. 15(a). Otherwise, leave of court or written consent of the adverse party is required to amend a pleading. Id. Granting or denial of leave to amend rests in the sound discretion of the trial court, and will be reversed only for abuse of discretion. Swanson v. U.S. Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). Leave "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a).
Leave to amend is usually granted with "extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). Giving plaintiffs broad latitude to amend their complaints furthers the federal system's goal of adjudication on the merits, not on procedural technicalities. See Foman v. Davis, 371 U.S. 178, 182 (1962). An outright denial of leave to amend without any explanation is subject to reversal. Id.
While leave to amend is typically granted with extreme liberality, courts have identified the following factors that may support a denial of leave to amend: undue delay, bad faith or dilatory motive, futility of amendment, prejudice to the opposing party, and repeated failure to cure deficiencies by previous amendments. See, e.g., Eminence Capital, 316 F.3d at 1052. By far the most important factor is prejudice to the opposing party: "prejudice is the touchstone of the inquiry under Rule 15(a)." Id. (internal citation omitted). But without prejudice or a strong showing of any of the other factors, "there exists a presumption under Rule 15(a) in favor of granting leave to amend." Id.
II. Motion to Remand
A defendant may remove any civil action from state court to federal district court if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). Generally, district courts have original jurisdiction over civil actions in two instances: (1) where there is complete diversity between the parties, or (2) where a federal question is presented in an action arising under the Constitution, federal law, or treaty. 28 U.S.C. §§ 1331 and 1332.
The removing party bears the burden of establishing federal jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Furthermore, courts construe the removal statute strictly against removal. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). If there is any doubt as to the right of removal in the first instance, remand must be granted. See Gaus, 980 F.2d at 566. Therefore, if it appears before final judgment that a district court lacks subject matter jurisdiction, the case shall be remanded to state court. 28 U.S.C. § 1447(c).
If the district court determines that removal was improper, then the court may also award the plaintiff costs and attorney fees accrued in response to the defendant's removal. 28 U.S.C. § 1447(c). The court has broad discretion to award costs and fees whenever it finds that removal was wrong as a matter of law. Balcorta v. Twentieth-Century Fox Film Corp., 208 F.3d 1102, 1106 n. 6 (9th Cir. 2000).
ANALYSIS
1. McElroy's Motion for Leave to Amend her Complaint
A plaintiff may amend her complaint once as a matter of course or by written consent of the adverse party; otherwise, leave of court is required to amend a pleading. Fed.R.Civ.P. 15(a). Because McElroy is seeking a third amendment and Defendants have not presented the Court with proper written consent, she may only amend with leave of court.
FRCP 15(a) allows amendment "by written consent of the adverse party." Fed.R.Civ.P. 15(a). This usually takes the form of a written stipulation signed by both parties. In this case, the parties may have been moving toward a written stipulation, but it never materialized. See Declaration of David D. Cheng ¶ 6; Declaration of Juanita E. Mantz ¶ 2.
As noted above, leave to amend should be "freely given when justice so requires." Fed.R.Civ.P. 15(a). See, e.g., Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). Accordingly, absent a showing of undue delay, bad faith or dilatory motive, futility of amendment, prejudice to the opposing party, or repeated failure to cure deficiencies by previous amendments, leave to amend is proper. Id. at 1052.
Here, the balance tips in favor of McElroy. First, Defendants do not allege, nor does the Court find, that they will be prejudiced by permitting McElroy to amend her Complaint. Further, there is no evidence that McElroy unduly delayed her Motion. In fact, McElroy filed it one month after Defendants removed the case to this Court. Similarly, there is no indication of bad faith nor is McElroy's Motion futile because it affects subject matter jurisdiction, a vital component of any claim. In sum, the Court finds no countervailing factors to outweigh the strong presumption in favor of granting leave to amend. Therefore, McElroy's Motion for Leave to Amend her Complaint is properly granted.
2. McElroy's Motion to Remand
A defendant may remove any civil action from state court to federal district court if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). After removal, the district court can exercise supplemental jurisdiction over plaintiff's state law claims if they are part of the "same case or controversy" as the federal claim. 28 U.S.C. § 1367(a). Because McElroy's FMLA claim clearly falls under this Court's original subject matter jurisdiction, Defendants' removal of the action to this Court was proper. The Court also has supplemental jurisdiction over McElroy's state law claims because they are part of the same case or controversy as McElroy's FMLA claim.
Even though McElroy amended her Complaint to eliminate the sole federal cause of action, the Court may nonetheless adjudicate McElroy's state law claims. See Albingia Versicherungs A.G. v. Schenker Int'l Inc., 344 F.3d 931 (9th Cir. 2003). In Albingia, the court held that, so long as the original removal was proper, a federal district court's supplemental jurisdiction over related state law claims was not destroyed upon dismissal of the federal claim. Id. Similarly, a plaintiff cannot escape federal jurisdiction after removal by submitting an amended complaint. See Sparta Surgical Corp. v. Nat'l Ass'n of Secs. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998) ("a plaintiff may not compel remand by amending a complaint to eliminate the federal question upon which removal was based").
Defendants' removal was proper and the federal question existed at time of removal. Therefore, even after McElroy eliminated the federal question through amendment, this Court still retains jurisdiction over McElroy's state law claims.
While the decision to adjudicate McElroy's state law claims lies completely within the Court's discretion, policy reasons generally favor the remand or dismissal of purely state law claims. "[I]n the usual case in which all federal-law claims are eliminated before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state law claims." Acri v. Varian Assocs., 114 F.3d 999, 1001 (9th Cir. 1997) (quoting Carnegie-Mellon Univ. V. Cohill, 484 U.S. 343, 350 n. 7 (1988)). The Court must balance a number of factors in determining whether to keep the state claims such as judicial economy, convenience, fairness, and comity. See United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966).
Applying the Gibbs factors to this case, the Court finds it appropriate to remand this action. McElroy's FMLA claim was the only federal cause of action out of ten claims in her Second Amended Complaint. Whether it was an "afterthought" or an attempt to forum shop, the FMLA claim is not central to the merits of McElroy's case. State law issues predominate in this case. Therefore, the interests in judicial economy and comity far outweigh any potential inconvenience Defendants might suffer from remand.
Given the Court's decision not to exercise pendant jurisdiction over McElroy's state claims, the Court has discretion either to dismiss the case or to remand it to the state court. The Court finds that remand better serves the interests of convenience and comity. In light of these considerations, the Court grants McElroy's Motion to Remand.
3. Defendants' Request for Attorneys Fees
Defendants request that the Court consider McElroy's "manipulative" behavior and impose sanctions accordingly. See Baddie v. Berkeley Farms, Inc., 64 F.3d 487 (9th Cir. 1995). Because McElroy's decision to add the FMLA claim was either an honest mistake or a "legitimate tactical decision" within the scope of Baddie, McElroy's behavior does not warrant sanctions.
The Court also declines to impose sanctions under Rule 11 of the Federal Rules of Civil Procedure. For the reasons stated above, the Court finds no bad faith on McElroy's part that would require such action.
CONCLUSION
For the preceding reasons, McElroy's Motion for Leave to Amend her Complaint is GRANTED. McElroy's Motion for Remand is GRANTED and this case is remanded to San Joaquin Superior Court.IT IS SO ORDERED.