The opinion of the court was delivered by: Breyer, District Judge.
On October 1, 1999, the Court heard oral argument regarding why
this case should remain in federal court and not be remanded to
state court for lack of jurisdiction. Having carefully considered
the papers submitted by the parties, and having had the benefit
of oral argument, the Court REMANDS this action to the Superior
Court for the County of San Francisco.
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
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 ...