The opinion of the court was delivered by: Vaughn R. Walker, United States District Judge.
Plaintiff moves to remand to state court. Doc #7. Defendant Pitney
Bowes Management Services (PBMS) moves to dismiss plaintiff's first two
causes of action and to strike Doe defendants. Doc #5.
Plaintiff filed suit in San Francisco superior court on July 25, 2001,
alleging that she was unlawfully subjected to sexual harassment and
discrimination during her employment at PBMS. See Compl (Doc #1, Exh B).
Plaintiff was hired by PBMS as a customer service associate in November
1992. See id at ¶ 20. In May 1998, plaintiff was assigned to the PBS
account at the Howard Rice law firm in San Francisco. See id at ¶
21. According to plaintiff's complaint, approximately one to two months
after this assignment, plaintiff began to be sexually harassed by her
manager, defendant Phil Olt. See id at ¶ 22. This harassment
allegedly involved repeated and uninvited direct physical contact. Id.
Beginning in December 1998, plaintiff alleges that a co-worker, defendant
David Webster, also began sexually to harass plaintiff. See id at ¶
23. This alleged harassment also involved repeated and uninvited direct
physical contact. Plaintiff asserts that she complained of this harassment
and that this complaint led to her being transferred to a less desirable
position. See id at ¶ 31.
In her complaint, plaintiff brings eight causes of action: (1)
violation of California Business & Professions Code § 17200; (2)
aiding and abetting violation of § 17200; (3) discrimination in
violation of California Fair Employment and Housing Act (FEHA); (4)
harassment in violation of FEHA; (5) failure to investigate in violation
of FEHA; (6) retaliation in violation of FEHA; (7) violation of
California's Labor Code § 1050; and (8) intentional infliction of
emotional distress. The first two claims are brought against Olt and
Webster and the remaining claims are brought against PBMS.
On December 19, 2001, PBMS removed to this court. Doc #1. This removal
was based on diversity jurisdiction, as PBMS alleges that the two
non-diverse defendants, Olt and Webster, are sham defendants who have
been fraudulently joined. See Def Opp B.R. (Doc #14) at 1. Olt and Webster
are, admittedly, both California residents, as is plaintiff. PBMS is a
"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." Plute,
141 F. Supp.2d at 1007. "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." Id, citing Nishimoto v.
Federman-Bachrach & Assocs, 903 F.2d 709, 712 n3 (9th Cir 1990); Emrich
v. Touche Ross & Co, 846 F.2d 1190, 1195 (9th Cir 1988). A defendant
seeking to establish removal jurisdiction is entitled to present facts
showing the joinder to be fraudulent. McCabe v. General Foods Corp,
811 F.2d 1336, 1339 (9th Cir 1987).
PBMS contends that Olt and Webster are sham defendants because, even
accepting the facts as pled by plaintiff, Olt and Webster are not subject
to liability for violation of California Business and Professions Code
§ 17200 et seq. See Def Opp B.R. (Doc #14) at 1. As noted above, Olt
and Webster are presently only named as defendants to plaintiff's first
two causes of action. Section 17200 seeks to protect business competitors
and consumers by prohibiting unfair competition, which includes "any
unlawful or fraudulent business act or practice and unfair, deceptive,
untrue or misleading advertising* * *." Cal Bus & Prof Code § 17200.
PBMS contends that Olt and Webster cannot be subject to liability under
this section because the sexual harassment complained of by plaintiff was
not a business practice and § 17200 only prohibits unlawful business
practices. See Def Opp B.R. (Doc #14) at 3. PBMS also contends that Olt and
Webster cannot be subject to individual liability under § 17200
because they did not have sufficient control over PBMS. See id.
PBMS may well be correct that plaintiff has failed to state a valid
cause of action against Olt and Webster under § 17200. As a result, a
strictly mechanical reading of fraudulent joinder doctrine, focusing
solely on plaintiff's complaint as pled, may suggest that removal
jurisdiction exists. The court does not find it appropriate, however, to
confine its consideration in this manner.
The court is particularly reluctant to hold that Olt and Webster are
sham defendants because Olt and Webster are the individuals that engaged
in the conduct for which plaintiff seeks a remedy. Moreover, there is
little doubt that plaintiff could name Olt and Webster as individual
defendants to some of the claims in plaintiff's complaint, including the
claim for sexual harassment under FEHA. See Plute, 141 F. Supp.2d at
1011. Plaintiff clearly intends to impose individual liability upon Olt
and Webster. See Pl B.R. (Doc #8) at 3 (noting that "[p]laintiff sues Olt
and Webster for their own conduct * * *."). At oral argument in this
matter, on March 7, 2002, plaintiff, through counsel, reiterated her
intention to pursue claims against Olt and Webster for their individual
conduct and stated that her apparent failure to do so under FEHA in her
complaint was a result of inartful pleading. In order to seek liability
against Olt and Webster under FEHA, plaintiff would not be required to
allege any additional facts, but simply would have to clarify, in her
complaint, that certain claims already in the
complaint are also brought
against Olt and Webster. Because the removing party bears the heavy
burden of establishing jurisdiction and, consequently, the presence of
sham defendants, "doubt arising from merely inartful, ambiguous, or
technically defective pleadings should be resolved in favor of remand."
Lewis v. Time, Inc., 83 FRD 455, 460 (E.D. Cal 1979).
As noted, "[t]here is a presumption against finding fraudulent
joinder, and defendants who assert that plaintiff has fraudulently joined
a party carry a heavy burden of persuasion." Plute, 141 F. Supp.2d at
1007. See also, Green v. Amerada Hess Corp, 707 F.2d 201, 205 (5th Cir
1983) ("The burden of proving a fraudulent joinder is a heavy one. 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
instant defendant in state court, or that there has been outright fraud
in the plaintiff's pleadings of jurisdictional facts.").
The court has not been able to find another case, in any circuit, in
which a court was faced with an allegation of fraudulent joinder, when,
under the facts alleged, the alleged sham defendants could clearly have
been named as defendants to causes of action in plaintiff's complaint,
but were not so named due to inartful pleading. The court notes,
however, that when the theory of a complaint is unclear or inartfully
pled, as here, courts have not confined their focus to the claim
explicitly brought against the alleged sham defendant. See, e g,
Cavallini v. State Farm Mutual Auto Ins Co, 44 F.3d 256, 259 (5th Cir
1995) (noting that as the burden of proving fraudulent joinder is a heavy
one, "[t]he 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" and considering causes of
action not in plaintiff's complaint); Good v. Prudential Ins Co of
America, 5 F. Supp.2d 804, 807 (N.D. Cal 1998) (noting that "the
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" and considering a theory of liability
not in plaintiff's complaint).
From these considerations, the court concludes that an overly
mechanistic approach to defendant's fraudulent joinder claim is not
appropriate. Because defendant bears a heavy burden of establishing the
presence of sham defendants, because plaintiff has avowed her desire to
seek individual liability against the defendants in question and can,
undoubtedly, so seek liability under the facts alleged and the causes of
action pled in plaintiff's complaint, the court determines that ...