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Hidalgo v. YRC Logistics Services

November 22, 2010


The opinion of the court was delivered by: Alicemarie H. Stotler United States District Judge



On October 28, 2010, the Court issued an Order to Show Cause ("OSC") why the case should not be remanded to state court for lack of subject matter jurisdiction. (Doc. No. 18.) The Court indicated that "strict construction of the removal statute appears to warrant remand" due to non-diverse parties. The OSC permitted YRC an opportunity to demonstrate otherwise. In particular, the Complaint states that plaintiffs are California citizens, Defendant YRC Logistics Services, Inc. ("YRC") is a citizen of Illinois and Kansas (according to the Notice of Removal), but defendants Heather Hampton ("Hampton") and Christina Roe ("Roe") are also citizens of California.

On November 8, 2010, YRC filed a timely response, along with a request for judicial notice. (Doc. Nos. 19 and 20.) On November 15, 2010, plaintiff Sonia Hidalgo ("plaintiff") filed a timely response to YRC's filing. (Doc. No. 21.)

For the reasons set forth below, the Court finds that YRC does not meet its burden to demonstrate fraudulent joinder of Hampton and Roe. Thus, the case must be remanded to state court due to lack of complete diversity.

A. Legal Standard

Removal of a case to federal court is governed by 28 U.S.C. § 1441(b), which states that an action not arising under federal law may be removed "only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b). "Because of the Congressional purpose to restrict the jurisdiction of the federal courts on removal, the statute is strictly construed, and federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (internal citations and quotation marks omitted). The party invoking the federal court's jurisdiction has the burden of establishing federal jurisdiction. Id.

"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." Plute v. Roadway Package Sys., Inc., 141 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001). The joinder of a defendant 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). In such a case, the Court may disregard the citizenship of the resident defendant for purposes of removal jurisdiction. Id.

B. Discussion

Plaintiffs bring three claims against the purported sham defendants Hampton and Roe: defamation, wrongful death, and loss of consortium

1. Defamation

YRC argues that plaintiffs fail to state a claim for defamation because Hampton's allegedly defamatory statements were made in a December 2007 letter, well over one year before the filing of plaintiffs' June 24, 2010 complaint, which means the claim is time-barred. (YRC Response at 4.)

While plaintiffs raise the December 2007 letter as one basis for their defamation claim, the complaint alleges "written and/or oral statements about [Mr. Hidalgo], which were untrue, including, without limitation, that he engaged in sexual harassment and other reprehensible conduct in the workplace" which were made "before and after he was terminated." (Compl. ¶ 91.) Even if "the publications may have started in December 2007," (id. ¶ 93), plaintiffs allege multiple oral and written communications, including after Mr. Hidalgo's termination. Statements made after June 2009 would not be time-barred before the filing of the June 2010 complaint. See Cal. Civ. P. Code § 340(c). Also, YRC does not explain why the discovery rule does not prevent some statements from being time-barred if those "defamatory statement[s] are hidden from view." Shively v. Bozanich, 31 Cal. 4th 1230, 1249 (Cal. 2003).

In its Notice of Removal, YRC contends that defamation of a deceased person does not give rise to a civil right of action in favor of the surviving spouse. (Notc. of Removal at 5.) YRC is correct. See, e.g., Flynn v. Higham, 149 Cal. App. 3d 677, 680 (1983) ("The malicious defamation of the memory of the dead... cannot be the basis for recovery in a civil action."); Saucer v. Giroux, 54 Cal. App. 732 (1921) (no cause of action for defamatory statements made about one who is dead). However, plaintiffs do not allege defamation of a deceased person. Rather, they allege that ...

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