The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge
Before the Court are Defendants' Motion to Dismiss (ECF No. 4), Plaintiff's Motion to Remand and Request for Attorney Fees (ECF No. 8), and Defendants' Motion to Disqualify Severson & Werson (ECF No. 16), the law firm representing Plaintiff.*fn1 The motions are fully briefed. For the reasons that follow, the Motion to Remand and Request for Attorney Fees (ECF No. 8) is GRANTED.
The case is remanded to the Superior Court of California, County of Placer, and the remaining motions are DISMISSED as moot.
In July 2011, Plaintiff Lawrence R. Tracy ("Tracy") filed his Complaint in the Superior Court of California, County of Placer. Tracy's Complaint alleges he was wrongfully terminated by both Aleph International Corporation ("AIC") and Aleph America Corporation ("AAC") (collectively, "Defendants"), essentially simultaneously, from positions he held with both companies. His Complaint states causes of action against both Defendants for
(1) wrongful termination in violation of public policy under the doctrine established in Tameny v. Atlantic Richfield Co., 27 Cal. 3d 167 (1980); and (2) unfair competition in violation of California's Business & Profession Code Sections 17200 et seq.
Tracy, a California resident, alleges that in November 2004 he was hired as Chief Executive Officer of AIC, a California Corporation and, several months later, he became AIC's President. Tracy asserts that he was hired by AAC, a Nevada Corporation, in February 2005, as Chief Executive Officer and President. Tracy also alleges that he was on the Board of Directors of both AIC and AAC.
AIC and AAC are both in the electronics business, are apparently related organizations, and there is allegedly some overlap between executives of the two companies, however, the precise relationship of the two companies is undefined in the Complaint.
Tracy contends that during the course of his employment with AIC and AAC he became concerned with various transactions undertaken by both companies. In his view, these transactions potentially violated both state and federal laws. In addition, Tracy alleges that management ordered him to falsify shipment documents. He alleges that he repeatedly brought his concerns regarding these activities to AAC and AIC's senior management, but that his attempts were repeatedly ignored or rebuffed. In January 2010, Tracy contends that, as a result of his repeated efforts to alert senior management of the issues regarding the potentially unlawful transactions, he received termination letters from both AIC and AAC. Thereafter, in July 2011, Tracy filed his Complaint.
On September 14, 2011, Defendants removed on the basis that the California corporation, AIC, was a "sham defendant," fraudulently named by Tracy to defeat diversity jurisdiction. ECF No. 2. Therefore, according to Defendants, there was diversity jurisdiction under 28 U.S.C. § 1332(a)(1) because the actual dispute was between Tracy, a California citizen, and AAC, a Nevada Corporation, and the amount in controversy was greater than $75,000. Defendants did not explain why AIC was a "sham defendant."
Then, on September 22, 2011, Defendants filed a second Notice of Removal. ECF NO. 5. In their second notice, Defendants repeated their contention that AIC had been fraudulently joined to defeat diversity jurisdiction, but added the additional argument that the Court has original federal question jurisdiction over this action. According to Defendants, there is jurisdiction under 28 U.S.C. § 1331 because Tracy's wrongful termination and unfair competition claims both necessarily invoke and require Tracy to prove that Defendants violated federal tax laws. See ECF No. 5 at 2; see also Opposition to Motion to Remand, ECF No. 26, at 4.
Tracy thereafter moved to remand on the basis that (1) AIC is not a sham defendant; and (2) the fact that federal law is implicated in his state law claims does not confer federal question jurisdiction on this court. ECF Nos. 8 (Motion to Remand), 9 (Tracy's Declaration), and 30 (Reply to Opposition to Remand). Tracy also sought attorney fees based on the allegedly improper removal. ECF. No. 8 at 5-6; ECF No. 30 at 8-9.
A defendant may remove any civil action from state court to federal district court if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a).
Generally, district courts have original jurisdiction over civil actions in two instances: (1) where there is complete diversity between the parties, or (2) where a federal question is presented in an action arising under the Constitution, federal law, or treaty. 28 U.S.C. §§ 1331 and 1332.
The removing party bears the burden of establishing federal jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). The removal statute is strictly construed, and the court resolves any doubt in favor of remand. Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009). If there is any doubt as to the right of removal in the first instance, remand must be granted. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
The district court determines whether removal is proper by first determining whether a federal question exists on the face of the plaintiff's well-pleaded complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). When a complaint raises only state causes of action, federal-question jurisdiction "is unavailable unless it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims, or that one or the other claim is 'really' one of federal law." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 13 (1983). Therefore, federal-question jurisdiction may nonetheless exist in a complaint that alleges solely state ...