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Michael Ross v. Morgan Stanley Smith Barney

March 7, 2013

MICHAEL ROSS, PLAINTIFF,
v.
MORGAN STANLEY SMITH BARNEY, LLC ET AL., DEFENDANTS.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

ORDER DENYING PLAINTIFF'S MOTION TO REMAND [21]

I.INTRODUCTION

Plaintiff Michael Ross originally filed his Complaint in Los Angeles County Superior Court, alleging that Defendants Morgan Stanley Smith Barney, LLC ("MSSB") and members of its management ("individual Defendants") retaliated against him by terminating his employment. Defendants removed the case to this Court. Ross amended his Complaint to omit any federal-law claims and now requests that the Court remand his case to state court. But since the individual defendants in this case were "fraudulently joined," the Court has diversity jurisdiction over Ross's action. The Court therefore DENIES Ross's Motion to Remand.*fn1

II.FACTUAL BACKGROUND

On July 26, 2010, Ross began his employment with MSSB in Beverly Hills, California as a Financial Advisor Associate ("FAA"). (SAC ¶ 21.) MSSB hired Ross as an at-will employee. (Id. Ex. F.) Ross was classified as an hourly, non-exempt employee. (Id. ¶ 24.)

During the next five months of his employment, MSSB required Ross to complete the FAA training program. (Id. ¶ 23.) In December 2010, Ross attended Performance Session 1 ("PS1"), an MSSB training program in Warren, New Jersey. (Id. ¶ 39.) Ross alleges that he was not paid statutorily mandated overtime for overnight travel to PS1. (Id. ¶ 38.)

In late December 2011, Ross contacted MSSB Human Resources and the National Development Center in New Jersey regarding overtime pay for his travel. (Id. ¶ 40.) He was told he had to resolve the issue with his branch manager, Defendant Cynthia Newman. (Id.)

Ross claims he then unsuccessfully attempted to reconcile the overtime issue with Newman and David Pogosyan, Vice President and Complex Service Manager.*fn2

(Id. ¶ 41.) Ross alleges that Newman and Pogosyan maintained that there was no MSSB policy authorizing payment of overtime for overnight travel. (Id.) Ross nevertheless included the questioned overtime in his timecard. But on January 5, 2011, both Newman and Pogosyan directed him to remove the overtime. (Id. ¶ 42.)

Ross was eventually able to locate the FAA overtime policy. (Id. ¶ 43; Ex. B.) Newman informed Ross he would be paid for 2.5 hours of overtime. (Id. ¶ 43.) But Ross claims that MSSB did not pay him the overtime hours until February 28, 2011, and that MSSB only paid him 60 percent of the overtime he was due. (Id. ¶ 47.)

On May 25, 2011, Defendant Robert L. Perry promoted Newman to the Regional Director position. (Id. ¶¶ 52--53.) Newman then left the Beverly Hills office, and Defendant Brian Krueger was selected as Newman's replacement.

(Id. ¶¶ 52, 56.) Ross alleges that Newman, Krueger, and Perry conspired to "tortiously and pretextually terminate his employment at MSSB." (Id. ¶ 57.)

On August 23, 2011, Krueger informed Ross that Ross was being terminated, allegedly for being $850 under his July 2011 production requirement. (Id. ¶ 58.) Ross told Krueger that he had already met his third-quarter production requirement and that the monthly numbers were only a "guidepost." (Id.) Krueger suspended the termination for the rest of the day. (Id. ¶¶ 59--60.)

On August 24, 2011, Krueger informed Ross that the termination decision would stand. (Id. ¶ 60.) The next day, Ross contacted Andy Saperstein, MSSB's head of wealth management. (Id. ¶ 63.) Saperstein informed Ross that the termination decision was "completely local." (Id. ¶ 64.)

On September 2, 2011, MSSB filed a Uniform Termination for Securities Industry Registration ("Form U-5") with the National Securities Dealers Association ("NASD"). (Id. ¶ 65.) MSSB listed Ross's termination reason as "DID NOT MEET REQUIREMENTS OF TRAINING PROGRAM." (Id.; Ex. E.) Ross claims that this statement is false and was a pretext for terminating Ross for complaining about the unpaid overtime. (Id. ¶ 77.)

On October 12, 2012, Ross filed a First Amended Complaint in Los Angeles County Superior Court against MSSB, Newman, Krueger, and Perry. (ECF No. 1, Ex. A.) He alleged five causes of action: (1) wrongful termination in violation of public policy and the California Labor Code against MSSB; (2) intentional infliction of emotional distress against all Defendants; (3) breach of the implied covenant of good faith and fair dealing against MSSB; (4) unlawful termination and retaliation in violation of the Fair Labor Standards Act and the California Labor Code against all defendants; and (5) intentional interference with employment relationship and prospective economic advantage against Newman, Krueger, and Perry. (Id.)

On November 12, 2012, Defendants removed the case to this Court. On December 13, 2012, Ross moved for leave to file a Second Amended Complaint to omit the federal Fair Labor Standards Act reference. (ECF No. 10.) Ross also requested that the Court sua sponte remand the case to California state court for lack of subject-matter jurisdiction. (Id.) Defendants opposed only the remand request. (ECF No. 11.)

On January 2, 2013, the Court granted Ross's motion for leave to amend but noted that omitting reference to the FLSA may not divest this Court of jurisdiction. (ECF No. 15.) Ross filed his Second Amended Complaint on January 14, 2013. (ECF No. 20.) Predictably, Ross included the same five causes of action as in his First Amended Complaint but omitted reference to the Fair Labor Standards Act in the fourth claim. Though he was not permitted to do so, he also alleged two additional causes of action: violations of the California Unfair Competition Law against all Defendants and failure to pay wages upon termination against MSSB. (Id.)

On January 17, 2013, Ross moved to remand the case to state court for lack of subject-matter jurisdiction. (ECF No. 21.) Defendants opposed the Motion on February 1, 2013. (ECF No. 24.) ...


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