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Clark v. Chase Home Finance

June 3, 2008

CHRISTOPHER CLARK; JAMES RENICK, PLAINTIFFS,
v.
CHASE HOME FINANCE, LLC; CHASE MANHATTAN MORTGAGE CORPORATION; AND JAMES BOUDREAU, DEFENDANTS.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER DENYING MOTION TO REMAND; GRANTING IN PART AND DENYING IN PART RULE 12(C) MOTION

Plaintiffs Christopher Clark and James Renick move to remand this action to state court on the ground that complete diversity is lacking and therefore the court lacks subject matter jurisdiction to entertain this action. Defendants Chase Home Finance LLC, Chase Manhattan Mortgage, and James Boudreau move for Rule 12(c) judgment on the pleadings or, alternatively, for partial summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. All motions are opposed. Pursuant to Local Rule 7.1(d)(1), this matter is appropriate for decision without oral argument. For the reasons set forth below, the motion to remand is denied, the Rule 12(c) motion is granted in part and denied in part, and the court presently declines to entertain a motion for summary judgment.

BACKGROUND

On March 18, 2008 Defendants removed this action based upon diversity jurisdiction, asserting that defendant James Boudreau, a citizen of California, is a sham defendant whose citizenship should not be considered in determining whether diversity jurisdiction exists in the present case. The operative First Amended Complaint ("FAC"), filed in San Diego Superior Court on February 14, 2008, alleges six causes of action for (1) failure to pay overtime in violation of Labor Code §§510, 1194, 1198l (2) waiting time penalties in violation of Labor Code §§203, 558; (3) failure to provide accurate itemized statements in violation of Labor Code §2226; (4) failure to provide rest periods in violation of Labor Code §§226.7 and IWC wage orders; (5) unfair competition in violation of Bus. & Prof. Code §17200 et seq.; and (6) failure to pay overtime and provide itemized wage statements in violation of Labor Code §2699.

Plaintiffs, residents of California, are alleged former employees of Defendants in that each defendant "directly employed or exercised control over each respective Plaintiff's wages, hours, and/or working conditions and were thus 'employers' within the meaning of all applicable [California] statutes." (FAC ¶7). Plaintiff Renick's employment with defendant Chase Home Finance, LLC ("Chase") ended on or about April 6, 2005, (FAC ¶27), and Plaintiff Clark's on or about July 15, 2005. (FAC §22). All of Plaintiffs' claims are based upon the allegation that Plaintiffs were mis-classified as "exempt" employees, (FAC ¶¶24, 29), and not compensated in accordance with California labor law. (FAC ¶¶22-36). Plaintiffs declare and allege that defendant "Boudreau was a manager in the department in which [they] worked and [they] reported directly Boudreau." (Clark Decl. ¶4; Renick Decl. ¶4; FAC ¶6).

Plaintiffs move to remand the action to state court and Defendants move for judgment on the pleadings or, alternatively, for partial summary judgment. All motions are opposed.

DISCUSSION

Legal Standards

Fraudulent Joinder

A civil action brought in state court may be removed to federal court by a defendant when federal courts have original jurisdiction over the matter. 28 U.S.C. § 1441. Where jurisdiction is based upon diversity of citizenship, joinder of a non-diverse defendant is deemed fraudulent, and the defendant's presence in the lawsuit is ignored, for purposes of determining diversity "[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. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). "[T]he question is simply whether there is any possibility that plaintiff will be able to establish liability against the party in question." Briano v. Conseco Life Ins. Co., 126 F.Supp.2d 1293, 1296 (C.D. Cal. 2000). The party who invokes federal removal jurisdiction has the burden of demonstrating the existence of federal jurisdiction. See Gaus v. Miles, Inc. 980 F.2d 564, 566 (9th Cir. 1992); B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. 1981). In determining whether joinder is fraudulent, the court considers the complaint, facts identified in the Notice of Removal and any pertinent affidavits or declarations. See West America Corp. v. Vaughan Basset Furniture, (9th Cir. 1985). Any doubts regarding removal jurisdiction are construed against removal and in favor of remanding the case to state court. See Gaus, 980 F.2d at 566.

Judgment on the Pleadings

A Rule 12(c) motion challenges the legal sufficiency of an opposing party's pleadings. Fed.R.Civ.P. 12(c). Like a Rule 12(b)(6) motion, the court must assume the truthfulness of the material facts alleged in the complaint and all inferences reasonably drawn from the allegations must be construed in favor of the responding party. See General Conference Corp. of Seventh-Day Adventists v. Seventh-Day Adventist Congregational Church, 887 F.2d 228, 230 (9th Cir. 1989); Hal Roach Studios, Inc. v. Richard Feiner & Co. , 896 F.2d 1542, 1550 (9th Cir. 1990). Defendants are not entitled to judgment on the pleadings if the complaint raises issues of fact, which, if proved would support the Plaintiffs' legal theories. Id.

The Motion to Remand

Plaintiffs argue that there is a possibility of asserting a claim against defendant Boudreau pursuant to (1) Labor Code §558 for failure to pay overtime (sixth cause of action), and (2) Bus. and Prof. Code §17200 for unfair competition (fifth cause of action), (Motion at p.5:4-7), and ...


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