The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge
This case arises out of the termination of Lynda Wason, who contends her former employer, AIG failed to accommodate her disability in violation of Cal. Govt. Code §§ 12940 et seq. and wrongly terminated her. She brings claims against her former supervisor Kimberly Tennent for intentional intention of emotional distress (IIED) and negligent infliction of emotional distress (NIED) under state law.
Defendants removed this action from state court on the basis of diversity jurisdiction. Wason is a California citizen. AIG and its subsidiary Chartis, Wason's former employer, are both Delaware corporations with their principal places of business in New York. However, Tennent, like Wason, is a California citizen, which ordinarily would destroy diversity. Defendants argue Tennent is a sham defendant, and because she is fraudulently joined, her citizenship can be disregarded and does not destroy diversity. See McCabe v. Gen'l Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987) (holding that fraudulently joined "sham defendants" do not destroy diversity). No other basis for subject matter jurisdiction is identified. Plaintiff has moved for remand pursuant to 28 U.S.C. § 1447(c), arguing Tennent is not a sham defendant.
I. Presumptions and Legal Standards
Defendants begin with two presumptions weighing against them. First, to prevail under a fraudulent joinder theory, a defendant must show either fraud in pleading jurisdictional facts (inapplicable here), or that there is no possibility the plaintiff will be able to establish a cause of action in state court against the alleged sham defendant. Hunter v. Philip Morris USA, 582 F.3d 1039, 1044 (9th Cir. 2009) (citing Smallwood v. Ill. Central R.R. Co., 385 F.3d 568 (5th Cir. 2004)). This is a "heavy burden." Id. It requires a "showing that compels a holding that there is no reasonable basis for predicting that state law would allow the plaintiff to recover against the in-state defendant...." Id. (quoting Smallwood, 385 F.3d at 574). Because this must be based on the state's "settled rules," the Court is also required to resolve all ambiguities of state law in the non-removing party's favor. Macey v. Allstate Property and Cas. Ins. Co., 220 F. Supp. 2d 1116, 1117 (N.D.Cal. 2002) (citing Good v. Prudential, 5 F. Supp. 2d 804, 807 (N.D.Cal.1998), William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Cal. Prac. Guide: Fed. Civ. Proc. Before Trial, at § 2:685 (The Rutter Group 2009)).
Second, the burden of showing removal was proper is on Defendants, and any doubt as to the right of removal must be resolved in favor of demand. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992). "[T]here is a general presumption against fraudulent joinder...." Hamilton Materials, Inc. v. Dow Chemical Corp., 494 F.3d 1203, 1206 (9th Cir. 2007).
Because Defendants have argued there is no possibility Wason can recover against Tennent, the Court undertakes a 12(b)(6) type analysis. County of Hawai'i v. Univev, LLC, 2010 WL 520696, slip op. at *11 (D.Haw., Feb. 11, 2010). The standard for remand is even more lenient than the standard for dismissal, however: the removing party must show that the plaintiff has no "cause of action against the resident defendant, and has no reasonable ground for supposing he has, and yet joins [her] in order to evade the jurisdiction of the federal court...." Id. (quoting Aardema Group, 2009 WL 1748082 at *2 n.1 and Albi v. Street & Smith Publ'ns, 140 F.2d 310, 312 (9th Cir. 1994)). In other words, Defendants must show Wason not only has failed to plead a claim, but she could not plead one that California's courts might approve if given the chance. A showing that Plaintiff will probably lose is insufficient. The failure to state a claim must be "obvious according to the settled rules of the state...." McCabe, 811 F.2d at 1339.
The complaint identifies Wason as a claims specialist who worked for AIG. (Complaint, ¶ 9) and Tennent as AIG's human resources contact person during Wason's employment, as well as an agent of AIG. ( ¶¶ 6, 8.) Plaintiff began to experience symptoms of hepatitis C and was put on disability leave. ( ¶ 9.) Wason has made a number allegations against Tennent alleging that Tennent misinformed her about how to handle matters surrounding her disability leave. (¶ 14--17.) The following statement of facts is taken from the complaint, and supplemented with specifics from Tennent's own declaration in support of her opposition to Wason's motion to remand.
Among other things, Wason says she told Tennent her doctor had given her a directive saying she needed to take extended medical leave. Tennent told her she did not need to provide AIG with the doctors' notes and should deal with Hartford, the disability plan administrator, directly. This interchange happened in late December or early January, 2009. Wason called Hartford, which said it had to decide whether she would be given short- or long-term leave.
Hartford sent Wason a letter requesting information, using an old address. The letter was returned as undeliverable and Hartford sent a second letter, which was also returned. Tennent knew both letters had been returned, and knew Wason's actual address. Tennent then on February 10, 2009 sent Wason a brief letter Wason she was on "unjustified leave of absence starting January 8, 2009." (Opp'n to Mot. for Remand, Tennent Decl., Ex. D).
The letter went on to say:
It is necessary that you either:
* return to work on Tuesday, February 17, 2009
* be approved for other time off by your manager or
* resign your position with the Company[.] (Id.) The letter did not give any other options or say what would happen if Wason did none of the three, but Defendants apparently interpret it as meaning she would be deemed to have resigned. UPS records show the letter was delivered to someone named Haynes on February 12, but later returned to Tennent on February 24, apparently unopened. On February 17, Tennent called Wason at a phone number in her personnel file, heard a message saying the number had been disconnected, and made no further efforts to contact Wason. She arranged for a final paycheck to be sent. That check was also returned by whoever received it.
On February 26, Tennent received a change of address form dated January 28 providing a new telephone number for Wason, as well as a different address, ...