United States District Court, N.D. California
ORDER ON MOTION TO REMAND Re: Dkt. Nos. 7, 16, 20
WILLIAM H. ORRICK, District Judge.
Plaintiffs Patricia Williams and Steve Gutfield are former employees of defendants Wyndham Worldwide Corporation and Wyndham Vacation Ownership (together, "Wyndham"). Plaintiffs' First Amended Complaint ("FAC") alleges that they were wrongfully terminated because they reported illegal business practices in Wyndham's San Francisco office and asserts causes of action against Wyndham for wrongful termination in violation of public policy, violation of California Labor Code section 1102.5, unfair competition in violation of California Business and Professions Code section 172000, and negligent hiring, supervision, and retention of unfit employees. Dkt. No. 1, Ex. A. Relevant here, plaintiffs allege two other causes of action against Wyndham and two of its employees, Anita Howell and Linda Tanner (together, "defendants"), for defamation and fraud.
Plaintiffs filed a Motion to Remand the case to the Superior Court of California, San Francisco County, alleging that this Court lacks jurisdiction because there is not complete diversity of citizenship between the plaintiffs and defendants. Dkt. No. 16. Defendants have filed motions to dismiss. Dkt. Nos. 7, 20. For the reasons below, the Motion to Remand is GRANTED and the motions to dismiss are DENIED as moot.
Plaintiffs allege that Wyndham is a corporation that sells, finances, and manages timeshares throughout the United States. FAC ¶ 3. Wyndham's San Francisco office purportedly trains its employees to intentionally mislead customers about the terms of their time share contracts to increase sales. FAC ¶¶ 19, 22. According to plaintiffs, Wyndham targeted their practices at senior citizens because they were perceived as vulnerable. FAC ¶¶ 17-19. For example, Wyndham representatives allegedly "falsely represented that they were going to be reducing the monthly payments for owners or that maintenance fees would be capped, ' when in fact such payments were actually being deferred or they were subject to increases." FAC ¶ 17. Wyndham representatives also persuaded customers to upgrade to the "Presidential Reserve Level" by advising them that they could enroll in a "guaranteed buy-back" program, even though no such program existed, and enrolled customers in a "Bill-Me-Later" program without disclosing that the program would make them ineligible for a refund. FAC ¶ 17. Defendant Anita Howell, a member services representative in the San Francisco office, allegedly committed credit card fraud by persuading elderly customers to sign documents to "renegotiate" their loans, but these documents were allegedly credit applications that allowed Howell to bill customers for additional timeshare interests without their knowledge. FAC ¶¶ 15, 18, 23. Wyndham also allowed sales representatives to sell timeshares without a license. FAC ¶ 17.
Plaintiff Patricia Williams worked as a member service representative in Wyndham's Virginia office from August 2007 until she transferred to the San Francisco office in July 2010. FAC ¶¶ 14-15. Plaintiffs assert that Williams was encouraged to engage in the sales practices described above, but she refused. FAC ¶ 20. She made two formal complaints to Wyndham's corporate headquarters and verbally reported the practices to Wyndham managers, including an administrative operations manager, human resources personnel, the vice president of the San Francisco office, and Wyndham's director of sales. FAC ¶¶ 21, 24, 33. When Williams complained to the Director of Sales about Anita Howell's conduct, she was told to "keep your mouth shut or you will be fired." FAC ¶ 33. On October 30, 2010, Williams organized a meeting with other member services representatives who plaintiffs allege also refused to engage in the allegedly unethical conduct in order to discuss how to expose and stop it. FAC ¶¶ 28, 30.
Plaintiffs assert that Wyndham assigned plaintiff Steve Gutfield, a human resources manager in the Wyndham San Francisco office, to investigate Williams' meetings with her co-workers and other allegedly "insubordinate conduct" by Williams. FAC ¶ 30, 36. Williams told Gutfield her concerns about the sales practices. FAC ¶ 31. Gutfield investigated, and determined that there was merit to her complaints, particularly the concerns about credit card fraud. FAC ¶ 36-37. Gutfield reported his findings to Wyndham managers. FAC ¶ 36. They told him "that Ms. Williams was a cancer' or a trouble maker'" and instructed him to stop the investigation. FAC ¶ 36-37. Gutfield refused to stop his investigation. FAC ¶ 37.
Williams was terminated on December 8, 2010, and Gutfield was terminated in March 2011. FAC ¶¶ 35, 37. They allege that they were terminated in retaliation for "standing up for the rights of other employees and for opposing the fraudulent sales practices by Anita Howell and other sales associates." FAC ¶ 37. See also FAC ¶ 35.
Plaintiffs filed this case on November 16, 2012 in the Superior Court of California, County of San Francisco. Plaintiffs filed the FAC on January 25, 2013. Defendants filed an Answer on October 30, 2013, and removed the case on October 31, 2013. Dkt. No. 1. Wyndham filed a Motion to Dismiss on November 7, 2013. Dkt. No. 7. Plaintiffs filed a Motion to Remand on November 21, 2013. Dkt. No. 16. Defendant Linda Tanner filed a Motion to Dismiss on November 26, 2013. Dkt. No. 20.
"Except as otherwise expressly provided by Act of Congress, any civil action brought in a state court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "If at any time before final judgment, it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). The burden of establishing federal jurisdiction lies with the party asserting it. Hertz Corp. v. Friend , 559 U.S. 77, 96 (2010). The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id.
I. FRAUDULENT ...