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PLUTE v. ROADWAY PACKAGE SYSTEM

April 18, 2001

ALBERT PLUTE, PLAINTIFF,
v.
ROADWAY PACKAGE SYSTEM, INC., DBA RPS INC., FDX INC., DBA FEDEX GROUND INC., STACY SHOUN, MARK FREEL AND DOES 1-20, DEFENDANTS.



The opinion of the court was delivered by: Illston, District Judge.

ORDER GRANTING MOTION TO REMAND; DENYING AS MOOT MOTIONS TO STRIKE, TO STAY AND TO COMPEL ARBITRATION; AND REMANDING ACTION TO THE ALAMEDA COUNTY SUPERIOR COURT

On April 18, 2001, the Court heard argument on plaintiff's motion to remand and defendants' motion to strike and motion to stay this action and compel arbitration. Having carefully considered the arguments of the parties and the papers submitted, the Court hereby GRANTS plaintiff's motion and DENIES defendants' motions as moot, for the reasons set forth below.

BACKGROUND

This employment discrimination action involves plaintiff Albert Plute's experience as a delivery driver for defendant FedEx Ground, Inc. ("FedEx").*fn1 Plute began working for FedEx in August 1994. Compl. ¶ 16. He claims that FedEx and two of his supervisors, Stacy Shoun ("Shoun") and Mark Freel ("Freel"), subjected him to discriminatory comments and unequal terms of employment on account of his age. See Compl. ¶¶ 21-24. Plute is over the age of 40. Compl. ¶ 17. Beginning in 1995, Plute complained about and participated in an investigation of the alleged wrongful treatment. Compl. ¶ 19. He claims that defendants nonetheless continued their behavior and retaliated against him for exercising his rights. Compl. ¶¶ 23-24. On or about August 18, 1999, FedEx terminated Plute. Compl. ¶ 25.

Plute filed suit in Alameda County Superior Court on August 16, 2000, against FedEx and his supervisors in their individual capacity, alleging age discrimination and retaliation in violation of the California Fair Employment and Housing Act ("FEHA"), breach of contract, intentional infliction of emotional distress, and an alternative claim under the Unruh Act. FedEx removed the action to this Court on January 22, 2001, on the basis of diversity jurisdiction. See Notice of Removal ¶ 1. Plute is a California resident, and FedEx is a Delaware corporation with its principal place of business is in Pennsylvania. Id. at ¶¶ 2-3. According to FedEx, California residents Shoun and Freel were fraudulently joined in the action in order to defeat complete diversity of citizenship. Id. at ¶ 5.

Presently before the Court are plaintiff's motion to remand, FedEx's motion to strike Shoun and Freel as defendants, and FedEx's motion to stay the action and compel arbitration. The Court finds that defendants cannot demonstrate complete diversity of citizenship between the parties, and consequently, this matter must be remanded. The Court does not reach defendants' motions, which should be raised in state court.

LEGAL STANDARD

A suit filed in state court may be removed to federal court if the federal court would have had original subject matter jurisdiction over that suit. 28 U.S.C. § 1441 (a); Snow v. Ford Motor Co., 561 F.2d 787, 789 (9th Cir. 1977). A motion to remand is the proper procedure for challenging removal. Remand to state court may be ordered either for lack of subject matter jurisdiction or for any defect in removal procedure. See 28 U.S.C. § 1447(c). The court may remand sua sponte or on motion of a party, and the party who invoked the federal court's removal jurisdiction has the burden of establishing federal jurisdiction. See Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921)). The removal statute is strictly construed against removal jurisdiction and any doubt is resolved in favor of remand. Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988); Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979).

DISCUSSION

Plaintiff argues that removal was improper and this action must be remanded because complete diversity of citizenship does not exist. Plaintiff and defendants Shoun and Freel are all California residents. FedEx argues that defendants Shoun and Freel must be ignored for diversity jurisdiction purposes because Plute has not stated a viable claim against them. FedEx contends that Shoun and Freel were fraudulently joined for the sole purpose of defeating diversity of citizenship.

A district court may disregard a non-diverse party named in the state court complaint and retain federal jurisdiction if the non-diverse party is joined as a sham or if the joinder is fraudulent.*fn2 Farias v. Bexar County Bd. of Trustees, 925 F.2d 866, 871 (5th Cir. 1991). Joinder is fraudulent "[i]f the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state." McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). There is a presumption against finding fraudulent joinder, and defendants who assert that plaintiff has fraudulently joined a party carry a heavy burden of persuasion. See Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988).

Courts have denied a claim of fraudulent joinder when there is any possibility that a plaintiff may prevail on the cause of action against the in-state defendant. See Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 259 (5th Cir. 1995) ("The removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court."); Good v. Prudential Insurance Company of America, 5 F. Supp.2d 804, 807 (N.D.Cal. 1998) ("[T]he defendant must demonstrate that there is no possibility that the plaintiff will be able to establish a cause of action in state court against the alleged sham defendant.").

In determining whether a defendant was joined fraudulently, the courts must resolve "all disputed questions of fact and all ambiguities in the controlling state law in favor of the non-removing party." Dodson, 951 F.2d at 42-43. Furthermore, "[a]ll doubts concerning the sufficiency of a cause of action because of inartful, ambiguous or technically defective pleading must be resolved in favor of remand [citation], and a lack of clear precedent does not render the joinder fraudulent." Archuleta v. American Airlines, Inc., 2000 WL 656808, *4 (C.D.Cal. 2000) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992), and Lieberman v. Meshkin, Mazandarani, 1996 WL 732506, *3 (N.D.Cal. 1996)). The court may look beyond the pleadings and consider affidavits or other evidence to determine if the joinder was a sham. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1068 (9th Cir. 2001) (quoting Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 263 (5th Cir. 1995) ("[F]raudulent joinder claims may be resolved by `piercing the pleadings' and considering summary judgment-type evidence such as affidavits and deposition testimony.")); Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).

Plute asserts two causes of action against Shoun and Freel in their individual capacity: retaliation in violation of FEHA, Cal. Gov.Code ยง 12940(h), and intentional infliction of emotional distress. To prove fraudulent joinder, FedEx must establish that, under settled California law, ...


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