The opinion of the court was delivered by: SUSAN ILLSTON, District Judge
ORDER GRANTING PLAINTIFF'S
MOTION TO REMAND
Now before the Court is plaintiff's motion to remand this action to the
state court where it was originally filed. Having carefully considered
the parties' arguments and all papers submitted, the Court hereby GRANTS
plaintiff's motion for the reasons set forth below.
In June 1990, plaintiff Rosario Maiolino, a Certified Registered Nurse
Anesthetist, purchased a professional disability insurance policy from
defendant UnumProvident. Compl. at ¶ 29, Ex. A. At an undetermined time
prior to plaintiff's purchase of his policy, UnumProvident submitted a
form copy of the policy to the California Insurance Commissioner
("Commissioner"), who subsequently approved it for sale in California
pursuant to provisions of the California Insurance Code. Compl. at¶¶
100-102. Plaintiff began experiencing low back pain in 1993. Compl. at
¶ 33. In February, 2000, plaintiff's pain became severely exacerbated
during the performance of his occupational duties. Compl. at ¶ 34.
Plaintiff sought medical treatment, and his physicians concluded that his
condition permanently prevented him from working as a nurse anesthetist
and that he should retrain for another profession. Comp. at¶ 36-39.
Plaintiff filed a claim for total disability under his UnumProvident
policy in March, 2000. Compl. at¶¶ 35. UnumProvident initially approved plaintiffs claim and paid benefits under the policy. Compl. at ¶ 42.
Since its initial approval, UnumProvident has conducted surveillance and
two independent medical examinations ("IME's") of plaintiff medical
records. Compl. at ¶¶ 43-48. The results of the IME's indicated that
plaintiffs condition does not prevent him from performing his occupation
`In the usual and customary way," as required under the policy, and
formed the bases for termination of plaintiff's benefits. Compl. at ¶¶
44-50, Ex. B. Plaintiff appealed the IME's, but was rejected for the
final time in April, 2003. Compl. at ¶¶ 44-51. UnumProvident ceased paying
plaintiffs benefits in May, 2003. Compl. at ¶ 52.
On December 18, 2003, plaintiff filed suit against UnumProvident in
state court, alleging several state law causes of action over its failure
to pay disability benefits under the policy and naming the California
Insurance Commissioner as a defendant for improperly approving the policy
at issue. Plaintiff seeks money damages in the form of general, special
and punitive damages, as well as costs of suit and attorney fees against
UnumProvident. Compl. at 16-17. As to the Commissioner, plaintiff seeks
declaratory relief and a writ of mandamus, declaring that the insurance
policy at issue is ambiguous and misleading and ordering the Commissioner
to revoke approval of plaintiff's policy. Compl. at 17-18. UnumProvident
removed the case to this Court, asserting diversity jurisdiction on the
grounds that the Commissioner is a sham defendant. Def's. Notice of
Removal at ¶ 4. Defendant's motion to remand, filed on February 27,
2004, is now before the Court.
Generally, a state court action is only removable to federal court if
it might have been brought there originally. 28 U.S.C. § 1441(a). The
federal removal statute is strictly construed, and the federal courts
reject federal jurisdiction if there is any doubt as to whether removal
was proper. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). The
party seeking removal bears the burden of proving its propriety. Id. If,
at any time before final judgment, a federal court determines that it is
without subject matter jurisdiction, the action must be remanded to state
court. 28 U.S.C. § 1447(c). On the other hand, a plaintiff cannot avoid
federal removal jurisdiction or use the concurrent jurisdiction of state
courts as a shield when a case rightfully belongs in federal court. See
Emrich v. Touche Ross & Co., 846 F.2d 1190, 1196 (9th Cir. 1988). Diversity jurisdiction requires complete diversity of citizenship, with
each plaintiff being a citizen of a different state from each defendant.
28 U.S.C. § 1332(a)(1);: Caterpillar. Inc. v. Lewis. 519 U.S. 61, 68,
117 S.Ct. 467, 472 (1996); Morris, 236 F.3d at 1067. The one exception to
this standard arises when a non-diverse defendant is made a party to an
action as a "sham" to defeat diversity. Morris, 236 F.3d at 1067.
Allegations of the presence of a sham defendant can only succeed on a
showing that there is an obvious failure to assert a cause of action
against that defendant under well-settled rules of state law. United
Computer Systems. Inc. v. AT&T Corp., 298 F.3d 756, 761 (9th Cir.
2002); Morris v. Princess Cruises. Inc., 236 F.3d 1061, 1067 (9th Cir.
As a threshold matter, plaintiff argues that remand is required because
the Commissioner did not participate in the notice of removal. The "rule
of unanimity" requires all defendants in a state court action to join in
a petition for removal. 28 U.S.C. § 1446(a). However, a judicially
created exception exists for parties who are fraudulently joined.
Emrich, 846 F.2d at 1193 n.1. UnumProvident petitioned for removal on the
grounds that the Commissioner is a sham defendant, named only for
purposes of defeating diversity. If this Court finds that the Commissioner
is indeed a sham defendant, the Commissioner need not have joined the
Notice of Removal, and his citizenship will be ignored for purposes of
diversity. Morris, 236 F.3d at 1067. If the Court finds that the
Commissioner is not a sham defendant, this case will lack diversity and
will be remanded.
Plaintiff also contends that the amount in controversy required for
diversity jurisdiction is not met in this case. The amount in controversy
requirement for diversity cases must exceed $75,000. 28 U.S.C. § 1332(a).
If a party wishes to avoid federal jurisdiction for lack of
jurisdictional amount in controversy, "it must appear to a legal
certainty that the claim is really for less than the jurisdictional
amount." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283,
288-89, 58 S.Ct. 586, 590 (1938); Crum v. Circus Circus Enterprises,
231 F.3d 1129, 1131 (9th Cir. 2000). The burden of establishing such
legal certainty falls on the party alleging lack of jurisdiction to show
that the amount in controversy cannot exceed $75,000. Here, the burden
rests with the plaintiff, who is the party seeking remand. Although plaintiff argues that
the failure to specifically plead the jurisdictional requirement in his
complaint is sufficient to fall below the $75,000 threshold, the
complaint still seeks enforcement of a policy that would pay more than
$4,000 per month, as well as seeking punitive damages. Plaintiff does
nothing to demonstrate that the damages he seeks cannot, with any
certainty, meet the requirement for diversity jurisdiction. Accordingly,
plaintiff has not carried his burden of establishing that the amount in
controversy in this case is $75,000 or less, and based on the argument in
UnumProvident's notice of removal, the Court deems the amount in
controversy requirement satisfied.
Thus, plaintiffs motion for remand ultimately turns on the question of
whether causes of action brought by a longtime individual policy holder
seeking declaratory relief and a writ of mandamus from the Commissioner
are barred by well-settled state law. If so, the Commissioner would be a
sham defendant, his citizenship would be disregarded for diversity
purposes, and the case would remain in federal court. The Court concludes
that such causes of action are not barred by well-settled state law.
2. Judicial review of the Commissioner's actions
A disability policy cannot be issued in California without approval
from the Commissioner. Van Ness v. Blue Cross of California,
87 Cal.App.4th 364, 368 (2001); See also Cal. Ins. Code § 10290 (stating
that "a disability policy shall not be issued or delivered to any person
in this State until" the policy is delivered to the Commissioner and
either "[t]hirty days expires without notice from the commissioner after
such copy is filed" or [t]he commissioner gives his written approval
prior to that time.").
The actions of the Commissioner are subject to judicial review. Cal.
Ins. Code § 12940. This review, when it occurs, is conducted in
accordance with the California Code of Civil Procedure. Cal. Ins. Code §
10295. l(h). Under the California Code of Civil Procedure, a "writ of
mandamus may be issued by any court to any . . . person, to compel the
performance of an act which the law specifically enjoins, as a duty
resulting form an office, trust or station." Cal. Code Civ. P. §
1085(a). Furthermore, the Commissioner is required to "perform all duties
imposed on him or her by the [Insurance Code] and other laws regulating
the business of insurance in [California], and shall enforce the
execution of those provisions and laws." ...