question jurisdiction was proper because the retaliation claim
arose under and is preempted by the LMRA. UPS also contended that
diversity jurisdiction was proper because plaintiff is a resident
of California, UPS is a resident of Ohio and Georgia, and Herzog,
although a resident of California, had not been served and, in
any event, is a sham defendant whose residence has no affect upon
On September 3, 1999, the Court heard oral arguments regarding
UPS's motion to dismiss the retaliation claim based on preemption
by the LMRA, failure to state a claim, and the statute of
limitations. The Court ruled that plaintiff's claim was not
preempted by the LMRA, and since there is no federal question
jurisdiction, the Court ordered UPS to show cause why this case
was properly removed on grounds of diversity jurisdiction.
I. THE NON-DIVERSE DEFENDANT
A. Herzog's Non-Service
UPS first claims that Herzog's residence is irrelevant to
jurisdiction because he has not been served. In support of this
proposition UPS cites 28 U.S.C. § 1441(b). UPS's reliance
on section 1441(b) is misplaced. Diversity depends upon the
citizenship of the parties named, not whether they have been
served. See Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174,
1176 (9th Cir. 1969) (citing Pullman Co. v. Jenkins,
305 U.S. 534, 541, 59 S.Ct. 347, 83 L.Ed. 334 (1939)).
In Cripps v. Life Insurance Company of North America,
980 F.2d 1261 (9th Cir. 1992), the Ninth Circuit held that only
defendants who have been served may be counted for jurisdictional
purposes in an interpleader action. Id. at 1266. However the
Cripps court distinguished its facts from Clarence Morris v.
Vitek: "That case [Clarence Morris v. Vitek] held that a
defendant could not ignore an unserved, nondiverse co-defendant
in seeking to remove a case to federal court based on diversity.
Because the party seeking removal in Vitek had no control over
who was served the danger of manipulation present here did not
exist in Vitek." Id. at 1266 n. 4. Thus, complete diversity is
defeated by joinder of a nondiverse codefendant even if he or she
has not been served.
Both plaintiff Soo and defendant Herzog are residents of
California. Therefore, removal is improper unless Herzog is a
"sham" defendant and the amount in controversy exceeds $75,000.
B. Is Herzog a Sham Defendant?
1. Legal Standard for Sham Defendants
A defendant has the burden of proving that the requisite
jurisdiction exists to support removal. See Murakami v. E.L.
DuPont De Nemours, 1999 WL 701902 (9th Cir. Sept.9, 1999)
(citing Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992)). When
a case is removed to federal court there is a strong presumption
against federal jurisdiction. See id.
The joinder of a nondiverse defendant is fraudulent or a "sham"
and does not defeat jurisdiction if the plaintiff fails to state
a cause of action against the defendant, and the failure is
obvious according to the settled rules of the state. See McCabe
v. General Foods Corporation, 811 F.2d 1336, 1339 (9th Cir.
1987) ("fraudulent joinder is a term of art"). A party is deemed
to have been joined "fraudulently" if, "after all disputed
questions of fact and all ambiguities in the controlling state
law are resolved in the plaintiff's favor, the plaintiff could
not possibly recover against the party whose joinder is
questioned." Kalawe v. KFC National Management Co., 1991 WL
338566, *2 (D.Hawai'i July 16, 1991) (citing Kruso v.
International Telephone & Telegraph Corp., ITT, 872 F.2d 1416,
1426 (9th Cir. 1989)). Where fraudulent joinder is an issue, the
court may go outside the pleadings, and the defendant may present
facts showing that the joinder is fraudulent. See Ritchey v.
Upjohn Drug Company, 139 F.3d 1313, 1318 (9th Cir. 1998). The
have the opportunity to show that the individuals joined cannot
be liable on any theory. See Kaminski v. Target Stores, 1998 WL
575097, *2 (N.D.Cal. Sept. 4, 1998) (citing Ritchey, 139 F.3d
2. Herzog is Not a Sham Defendant
a. Herzog may be personally liable.
Defendant UPS alleges that defendant Herzog is a sham defendant
designed to destroy the Court's diversity jurisdiction. Defendant
cites Reno v. Baird, 18 Cal.4th 640, 76 Cal.Rptr.2d 499,
957 P.2d 1333 (1998), for the proposition that supervisors are not
personally liable under the FEHA for the discriminatory
employment decisions of their employer, including decisions to
terminate or suspend. Plaintiff uses the same case in support of
the proposition that individual supervisors can be sued when the
cause of action is retaliation, not discrimination.
Plaintiff Soo does not make a claim of discrimination under
Government Code section 12940(a), the FEHA section interpreted by
the Court in Reno. Plaintiff instead makes a claim of
retaliation. Retaliation is addressed in a separate subsection of
the FEHA, section 12940(f), which contains language that is
different on this issue. Whereas section 12940(a) prohibits
discrimination only by an "employer," section 12940(f) prohibits
retaliatory employment decisions on the part of "employers" and
It shall be an unlawful employment practice . . . for
any employer . . . or person to discharge, expel,
or otherwise discriminate against any person because
the person has opposed any practices forbidden under
this part or because the person has filed a
complaint, testified, or assisted in an proceeding
under this part.
Cal.Gov.Code. § 12940(f) (emphasis added). The California Court
of Appeal has held that "as to supervisors, . . . the language of
FEHA is unambiguous in imposing personal liability for harassment
or retaliation violation of FEHA." Page v. The Superior Court
of Sacramento County, 31 Cal.App.4th 1206, 1212, 37 Cal.Rptr.2d 529
(1995) (emphasis added). While Page was decided before
Reno, nothing in Reno undermines the Page court's
reasoning. Indeed, a court in this district held after Reno
that, "§ 12940(f), unlike the provision at issue in Reno,
expressly imposes liability on individuals." Kaminski v. Target
Stores, 1998 WL 575097, *2 (N.D. 1998).
UPS attached to its brief an unpublished decision from the
Superior Court for the County of San Francisco which interprets
Reno differently. Nonetheless, because UPS has not demonstrated
that it is a "settled rule of the state" that supervisors cannot
be held personally liable for retaliatory employment decisions,
Herzog is not a "sham" defendant.
b. Plaintiff has sufficiently alleged a claim of retaliation
Plaintiff alleges that defendant Herzog engaged in the
following retaliatory actions in response to plaintiff filing
various complaints alleging harassment and discrimination:
• Herzog initially fired plaintiff, then agreed with
plaintiff's union to suspend plaintiff for three
days. Herzog later increased the suspension to live
• Herzog failed to take appropriate disciplinary
action against a driver who called plaintiff her
"Indian slave" and "fucking lazy" and "harassed him
all day long."
• On one occasion Herzog ordered a UPS supervisor to
pull off plaintiff's regular stops and load "shag"
and heavy bulk delivery stops on plaintiff's truck.
This caused plaintiff to make deliveries all over
the city instead of a discrete delivery area
usually assigned to plaintiff. Plaintiff was unable
to complete this route due to increasing back pain
Defendant alleges that Herzog is a sham defendant because
plaintiff has not sufficiently
alleged any acts against him which rise to the level of adverse
employment actions, a required element of a retaliation claim.
It is true as defendant urges that not every employment
decision amounts to an adverse employment action. See Steiner v.
Showboat Operating Co., 25 F.3d 1459, 1465 n. 6 (9th Cir. 1994)
(questioning existence of "adverse" employment action where
employee "was not demoted, or put in a worse job, or given any
additional responsibilities") Mere ostracism in the workplace is
not enough to show an adverse employment decision. See Fisher v.
San Pedro Peninsula Hosp., 214 Cal.App.3d 590, 615,
262 Cal.Rptr. 842 (1989) (finding that the existence of a hostile
work environment could make employer liable for retaliation, but
noting that ostracism does not amount to a hostile environment).
However, California courts are vague with respect to the minimum
standards for a claim of adverse employment, and in particular,
whether an adverse employment action must be "tangible" in order
to constitute retaliation under FEHA. As a result, the California
courts look for guidance to the federal courts' treatment of the
adverse action requirement in retaliation suits brought pursuant
to Title VII. See Flait v. North American Watch Corp.,
3 Cal.App.4th 467, 4 Cal.Rptr.2d 522 (1992).
The Ninth Circuit has not yet provided clear guidance on the
issue. In Yartzoff v. Thomas, 809 F.2d 1371 (9th Cir. 1987),
the Ninth Circuit states that employment decisions such as
"transfers of job duties and undeserved performance ratings, if
proven, would constitute `adverse employment decisions'
cognizable under Title VII." Id. at 1375. This holding suggests
that an adverse action does not need to rise to the level of an
"ultimate" employment decision in order to be actionable. See
Cellini v. Harcourt Brace & Company, 51 F. Supp.2d 1028, 1038
(S.D.Cal. 1999) (holding that although an adverse action need not
be an "ultimate" employment decision in order to be actionable, a
plaintiff must nevertheless demonstrate some adverse material
effect upon the terms or conditions of employment). In Steiner
v. Showboat Operating Co., 25 F.3d 1459 (9th Cir. 1994), the
Ninth Circuit questioned the existence of an adverse employment
action where an employee was transferred to a different work
shift, but did not suffer any material detriment. Id. at 1465
n. 6 ("We note in addition that the transfer is just barely — if
at all — characterizable as `adverse' employment action: Steiner
was not demoted or put in a worse job, or given any additional
responsibilities.") The court did, however find that Steiner had
established a prima facie case for retaliation stemming from
three low marks on her employee evaluation. See id. at 1465.
Thus although the California courts and the Ninth Circuit are
not explicit as to what satisfies the minimum requirements of an
adverse employment decision, "to be actionable a plaintiff must
demonstrate some adverse material effect upon the terms or
conditions of employment stemming from the employer's actions in
order to satisfy the adverse action requirement." Cellini, 51
F. Supp.2d at 1038.
Plaintiff has alleged instances in which defendant Herzog's
actions may have had a material effect upon his employment.
Plaintiff Soo alleges material detriment as he claims Herzog
fired, suspended, and gave him more difficult and demanding
workloads that were at times impossible to execute. Plaintiff has
alleged facts which, if true, have the ability to materially
affect his employment.
Accordingly, defendant has not met its heavy burden of proving
that Herzog is a sham defendant. Defendant has failed to show
that it is obvious according to the settled rules of the state
that plaintiff has no possible cause of action against Herzog. If
disputed questions of fact and all ambiguities in the controlling
state law are resolved in the plaintiff's favor, it cannot be
definitively said that plaintiff could not
possibly recover against defendant Herzog. Whether or not Soo
prevails on the merits of his retaliation claim against defendant
Herzog remains to be seen, but he has succeeded in pleading a
prima facie case of retaliation in his complaint.
II. AMOUNT IN CONTROVERSY
Because UPS is unable to meet its burden that Herzog is a sham
defendant, the Court need not address UPS's argument regarding
the amount in controversy.
Defendant has not met its burden of proving that Herzog is a
sham defendant. As both plaintiff and Herzog are California
residents there is no diversity jurisdiction and the case is
IT IS SO ORDERED.
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