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Roberto Medrano and Alberto Landa v. Genco Supply Chain Solutions Aka Genco Distribution Systems and Genco

January 10, 2011


The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge


(Docket No. 8)


A. Procedural Background

On July 9, 2010, Plaintiffs Robert Medrano ("Medrano") and Albert Landa ("Landa") (collectively "Plaintiffs") filed a complaint in Fresno Superior Court against Genco I, Inc. ("Genco") (erroneously sued as "Genco Supply Chain Solutions"), and Richard Hamlin ("Hamlin"), the Facility Manager*fn1 at Genco (collectively "Defendants"), alleging various violations of the California Fair Employment and Housing Act ("FEHA"), codified at California Government Code § 12000, et. seq.*fn2

Although service of process is disputed in this case, a proof of service as to Richard Hamlin reflects that he was served on July 27, 2010, by substitute service pursuant to California law. (Doc. 18, 4-6.) Genco asserts in its removal papers that it was served on July 28, 2010 (Doc. 1, ¶ 3 ("Genco I, Inc. was served on July 28, 2010"), but states in its opposition papers that it has never been served with process (Doc. 15, ¶ 18:3 ("Genco has not been served with process")).*fn3

On August 26, 2010, Genco filed an Answer to the complaint in the Fresno County Superior Court. On August 27, 2010, Genco filed a Notice of Removal. (Doc. 1.) Hamlin did not join in the removal, but instead filed a declaration stating that he had not yet been served in the matter. (Doc. 1-8, ¶ 2.) Genco asserted in its removal that Hamlin was a fraudulent defendant and that his citizenship must be disregarded for purposes of assessing removal jurisdiction. (Doc. 1, ¶ 11.)

On September 24, 2010, Plaintiffs filed a Motion to Remand the case to state court. (Doc. 8.) A hearing was held on December 15, 2010, regarding Plaintiffs' motion, which is currently pending before the Court.

B. Factual Background

Plaintiffs' complaint states six causes of action. The only cause of action against Defendant Hamlin is one for hostile work environment sexual harassment under FEHA asserted by only Plaintiff Medrano.*fn4 Medrano alleges that Hamlin subjected him to "third party visual and physical sexual harassment." (Complaint ("Compl.") ¶¶ 13, 54.) This "harassment was daily,"*fn5 and Medrano provides two examples of the complained of conduct as follows:

54. Defendant Hamlin created a hostile work environment by subjecting [Medrano] to third party visual and physical sexual harassment. For example, on one occasion in approximately December 2008, a female employee (in Medrano's presence) asked Defendant Hamlin if he was going to get some donuts, and said that she liked the ones with jelly. Defendant Hamlin responded, "Oh yes, I like to suck the jelly out of donuts," as he made a sexual expression with his tongue.

55. As a second example, Defendant Hamlin sexually harassed Plaintiff Medrano's wife and stepdaughter, who were Genco employees, by, for example, making sexual advances towards Medrano's wife, including, for example, rubbing his body against hers and staring at her breasts.

(Doc. 1-1, ¶¶ 54-55.) Medrano contends that he complained to Genco's managers between April 2008 and December 2008 about the sexual discrimination and the sexual harassment "against himself, his wife, and his daughter." (Compl. ¶¶15, 56.) "Despite [Medrano's] complaints, the sexual harassment and sex discrimination continued." (Compl. ¶¶ 16, 57.) When Genco and Hamlin learned of Medrano's "complaints of sex discrimination and sexual harassment, they took action to terminate [Medrano's] employment." (Compl. ¶¶ 16, 57.) Ultimately, Medrano's employment was terminated on February 16, 2009. (Compl. ¶¶ 20, 61.)


A. Legal Standard -- Remand

"A defendant may remove an action to federal court based on federal question jurisdiction or diversity jurisdiction." Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. § 1441). It is presumed, however, "that a cause lies outside [the] limited jurisdiction [of the federal courts] and the burden of establishing the contrary rests upon the party asserting jurisdiction." Id. (internal quotation marks omitted).

"Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). The defendant always bears the burden of establishing that removal is proper, and the court "resolves all ambiguity in favor of remand." Hunter, 582 F.3d at 1042.

The propriety of removal requires the consideration of whether the district court has original jurisdiction of the action, i.e., whether the case could have originally been filed in federal court based on a federal question, diversity of citizenship, or another statutory grant of jurisdiction. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). If the case is within the original jurisdiction of the district court, removal is proper so long as the defendant complied with the procedural requirements set forth in 28 U.S.C. § 1446. If the case is not within the original jurisdiction of the district court, removal is improper. The absence of subject matter jurisdiction is not waivable by the parties. See Am. Fire & Cas. Co. v. Finn, 341 U.S. 6 (1951).

Federal district courts have original jurisdiction over cases where there is complete diversity of citizenship, i.e., between citizens of different states. See 28 U.S.C. § 1332(a). Further, a defendant may remove an action to federal court under Section 1332 provided no defendant is a citizen of the same state in which the action was brought. See id. § 1441(a), (b). An exception to the requirement for complete diversity exists, however, when a non-diverse defendant has been fraudulently joined for the purpose of defeating diversity jurisdiction. McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). In that case, the district court may disregard a non-diverse party named in the state court complaint and retain jurisdiction if joinder of the non-diverse party is a sham or fraudulent.

B. Contentions of the Parties

Plaintiffs assert that Medrano's hostile work environment sexual harassment claim against Hamlin in his individual capacity is viable and he is, therefore, not a sham defendant. As Hamlin is a California resident, his presence in the lawsuit destroys diversity and deprives the Court of jurisdiction. (Doc. 8-1, Plaintiffs' Motion for Remand, 6:24 - 10:12.) Plaintiffs contend, therefore, that remand to Fresno County Superior Court is required. Moreover, Plaintiffs aver that procedural defects in Genco's removal are fatal and dictate remand even if Hamlin's joinder is improper. (Doc. 8-1, 4:16 - 6:22.)

Genco maintains that Medrano's sexual harassment claim against Hamlin is not viable because Medrano (a man) is not a member of the protected class at whom Hamlin's harassing conduct was allegedly directed (women). Medrano, therefore, is a bystander who cannot satisfy the elements of a hostile work environment claim and lacks adequate standing. Accordingly, Genco asserts that no viable cause of action is stated against Hamlin, he must be dismissed as a fraudulent or sham defendant, and his presence (importantly, his California citizenship) is to be disregarded for purposes of removal jurisdiction. Further, Genco contends no procedural flaws in its removal exist and Plaintiffs' motion for remand must be denied.

C. Hamlin Is a Sham/Fraudulent Defendant

1. Legal Standard -- Fraudulent Joinder

"Fraudulent joinder is a term of art" and does not require an ill motive. Id.; Lewis v. Time Inc., 83 F.R.D. 455, 460 (E.D. Cal. 1979), aff'd, 710 F.2d 549 (9th Cir. 1983). Joinder will be deemed fraudulent where the plaintiff fails to state a cause of action against the resident defendant, and the failure is obvious according to the settled rules of the state. Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998); McCabe, 811 F.2d at 1339. In determining whether a cause of action is stated, typically courts "'look only to a plaintiff's pleadings to determine removability.'" Ritchey, 139 F.3d at 1318 (quoting Gould Mut. Life Ins. Co. of N.Y., 790 F.2d 769, 773 (9th Cir. 1986)). Yet, where fraudulent joinder is an issue, the Ninth Circuit has directed that courts may go "somewhat further" by allowing a defendant to present facts showing that joinder is fraudulent. Id. The review of the complaint, however, is constrained to the facts actually alleged therein; it does not extend to facts or causes of action that could be alleged via an amended complaint. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1426 n.12 (9th Cir. 1989) (affirming district court's refusal to consider allegations made in plaintiffs' unfiled, proposed amended complaint submitted as an attachment to a motion for reconsideration to determine whether valid claims had been stated for fraudulent joinder purposes (citing C. Wright & A. Miller & E. Cooper, Federal Practice and Procedure: Jurisdiction § 3739, at 580-81 (2d ed. 1985))); Smith v. City of Picayune, 795 F.2d 482, 485 (5th Cir. 1986) ("Generally, the right of removal is determined by the pleadings as they stand when the petition for removal is filed.").

In ruling on a motion for remand where fraudulent joinder is alleged, a court must evaluate the factual allegations in the light most favorable to the plaintiff, resolving all contested issues of fact in favor of the plaintiff. Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003); see also Albi v. Street & Smith Publ'ns, 140 F.2d 310, 312 (9th Cir. 1944) ("In borderline situations, where it is doubtful whether the complaint states a cause of action against the resident defendant, the doubt is ordinarily resolved in favor of the retention of the cause in the state court."). Federal courts in this circuit apply the fraudulent-joinder rule in cases only where it is indisputably clear that the plaintiff states no cause of action against the non-diverse defendant. See Dominick's Finer Foods v. Nat'l Constr. Servs., Inc., No. CV10-00836-SVW (PWJx), 2010 WL 891321, at *2 (C.D. Cal. Mar. 9, 2010) (citing Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067-68 (9th Cir. 2001); Kruso, 872 F.2d at 1427; McCabe, 811 F.2d at 1339; Maffei v. Allstate Cal. Ins. Co., 412 F. Supp. 2d 1049, 1053 (E.D. Cal. 2006); Brown v. Allstate Ins. Co., 17 F. Supp. 2d 1134, 1136-37 (S.D. Cal. 1998); Gasnik v. State Farm Ins. Co., 825 F. Supp. 245, 249 (E.D. Cal. 1992); Zogbi v. Federated Dep't Store, 767 F. Supp. 1037, 1041-42 (C.D. Cal. 1991)).

2. Claim Against Hamlin for Third-Party Sexual Harassment

Plaintiff Medrano alleges a cause of action against both Genco and Richard Hamlin for sexual harassment in violation of FEHA. FEHA makes it an unlawful employment practice for an employer, "because of the . . . sex. . . of any person, . . . to discriminate against the person in compensation or in terms, conditions, or privileges of employment." Cal. Gov't Code § 12940(a). Further, it is an unlawful employment practice for an employer, "because of . . . sex, . . . to harass an employee." Id. § 12940(j)(1).

Additionally, an individual employee of an entity subject to FEHA can be held personally liable for harassing behavior that is outside or extraneous to his job duties.*fn6 Id. § 12940(j)(3) ("An employee of an entity subject to this subdivision is personally liable for any harassment prohibited by this section that is perpetrated by the employee, regardless of whether the employer or covered entity knows or should have known of the conduct and fails to take immediate and appropriate corrective action.").

Sexual harassment is a form of sexual discrimination. Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 66 (1986). In turn, hostile work environment claims are a particular subset of sexual harassment claims. See Ellison v. Brady, 924 F.2d 872, 875 (9th Cir. 1991). California recognizes two theories upon which sexual harassment may be alleged. The first of these is quid pro quo harassment, which occurs where a term of employment is conditioned upon submission to unwelcome sexual advances. Fisher v. San Pedro Peninsula Hosp., 214 Cal. App. 3d 590, 607 (1989). The second theory is one based upon a hostile work environment where the harassment is sufficiently pervasive such that the conditions of employment are altered and an abusive work environment is created. Id. Additionally, there are hybrid cases that involve a blending of the two theories. Mogilefsky v. Super. Ct., 20 Cal. App. 4th 1409, 1415 (1993). For example, "[a] hostile work environment may result from inappropriate sexual conduct in the workplace." Id.

A claim for hostile work environment sexual harassment requires a claimant to assert that (1) he was a member of a protected class; (2) he was subjected to unwelcome sexual harassment; (3) the harassment was based on sex; and (4) the harassment unreasonably interfered with his work performance by creating an intimidating, hostile, or offensive work environment. Lyle v. Warner Bros. Television Prods., 38 Cal. 4th 264, 279 (2006); Fisher, 214 Cal. App. 3d at 608.*fn7 Typically, plaintiffs assert hostile work environment claims against their ...

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