United States District Court, C.D. California
October 28, 2014
JORGE GONZALEZ-DELRIO, Plaintiff,
AIRCRAFT SERVICE INTERNATIONAL, a business entity unknown; AIRCRAFT SERVICE INTERNATIONAL, INC., a corporation; CYNTHIA DOUGLAS, an individual; BBA AVIATION, a business entity unknown, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND (DOCKET NUMBER 8)
DEAN D. PREGERSON, District Judge.
Presently before the court are Plaintiffs' Motions to Remand and Request for Reimbursement. For reasons stated in this order the Motion to Remand is GRANTED.
Plaintiff Jorge Gonzalez-Delrio ("Plaintiff") worked as a ramp agent at Aircraft Service International's Los Angeles International location. (Ex. A, Bello Decl.; Ex. A, Abidoye Decl. (Complaint) ¶ 16.) On October 23, 2010, Plaintiff suffered a back injury while performing his job duties and was placed on medical leave for almost a year. (Id. ¶ 17, 19.) On October 17, 2011, Plaintiff's doctor allowed him to return to work with restrictions. (Id. ¶ 20.) Two days later, Plaintiff contacted Synthia Aruya, Aircraft Service International's Human Resources manager, to inform her that he wished to return to work. (Id. ¶ 21.) Plaintiff alleges Aruya terminated him stating that he could only return to work if he had a doctor's note that reinstated him without restrictions. (Id.)
On September 27, 2013, Plaintiff filed a complaint in the Los Angeles Superior Court against Aircraft Service International, Aircraft Service International, Inc. (Collectively, "Defendants"), and Sinthia Aruya ("Aruya"), erroneously sued as Cynthia Douglass. (Compl.) In the complaint, Plaintiff alleged seven causes of action under the California Fair Employment and Housing Act (FEHA)and the California Family Rights Act (CFRA) for discrimination and retaliation. (Id.) Plaintiff's single cause of action against Aruya was for retaliation under the CFRA. (Id. ¶¶ 106-120)
On March 20, 2014, Aruya filed a demurrer on grounds that individuals cannot be liable under the CFRA. (Ex. C, Bello Decl., Ex. Q, Abidoye Decl., Dkt. No. 1 (Demurrer)) On July 18, 2014, the Superior Court sustained the demurrer without leave to amend.(Ex. E, Bello Decl.; Ex. T, Abidoye Decl.) On August 13, 2014, the remaining defendants removed this case to federal court on the basis of diversity jurisdiction. (Notice of Removal, Dkt. No. 1.)
Plaintiff now moves to remand on two grounds: (1) that removal was untimely and (2) that this court lacks jurisdiction because the non-diverse defendant was not fraudulently joined. Plaintiff also moves for reimbursement of attorney's fees.
II. LEGAL STANDARD
District courts have original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between citizens of different States." 28 U.S.C. § 1332(a). A defendant may remove a case from state court to federal court if the case could have originally been filed in federal court. 28 U.S.C. § 1441(a). As the removing party, Defendant bears the burden of proving federal jurisdiction. Duncan v. Stuetzle , 76 F.3d 1480, 1485 (9th Cir. 1996); see also Matheson v. Progressive Specialty Ins. Co. , 319 F.3d 1089, 1090 (9th Cir. 2003). The removal statute is strictly construed against removal jurisdiction, and federal jurisdiction must be rejected if any doubt exists as to the propriety of removal. Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992) (explaining that courts resolve doubts as to removability in favor of remand).
A. Timeliness of the Removal
Defendants removed this action pursuant to 28 U.S.C. § 1441(b), which permits removal under this Court's diversity jurisdiction, 28 U.S.C. § 1332. Normally, a defendant must file a notice of removal within thirty days of receiving the state court complaint. 28 U.S.C. §1446(b)(1). This is a statutory requirement that cannot be waived by the Court. The parties agree that Defendants did not remove within thirty days of receipt of the state court complaint.
Nonetheless, Defendants contend that removal was proper under 28 U.S.C. §1446(b)(3), which allows for removal based on diversity jurisdiction "within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." Defendant's argument, when boiled down to its simplest form, is that the state court's decision sustaining Aruya's demurrer is the first such "paper" from which it could be ascertained that the case was or had become removable.
All parties would presumably agree that if California law were absolutely clear that Aruya was fraudulently joined from the beginning, Defendants would have been required to remove within thirty days of receipt of the state court complaint, because in such a case the complaint itself is the "paper" that makes clear that the non-diverse defendant is fraudulently joined. There is no requirement that the state court rule on the fraudulent joinder issue before the case is removable. "[I]t is not necessary to wait until the fraudulently joined defendant has tested the claims against it in state court and succeeded in defeating them on a motion to dismiss or demurrer... Either the complaint states a claim that possibly may be cognizable against the purported sham defendant or it does not." Simpson v. Union Pacific R. Co , 282 F.Supp.2d 1151, 1157 (N.D. Cal 2003).
Defendants, however, essentially argue that because California law is unclear as to Aruya's liability, the case was not removable. To support this contention, Defendants point to the "heavy burden" on one who would seek removal: the defendant must demonstrate by clear and convincing evidence that the non-diverse defendant has been fraudulently joined. Hamilton Materials, Inc. v. Dow Chem. Corp. , 494 F.3d 1203, 1206 (9th Cir. 2007).
That heavy burden, however, must be borne in a timely manner. It would defeat the purpose of the thirty-day rule entirely if the mere fact that Defendants' case for removal was not very strong could stop the clock. Here, Defendants knew or should have known that they could argue that Aruya was fraudulently joined from the face of the complaint, since the plain language of the statute under which she was being sued limited its sweep to "employers, " defined in relevant part as "[a]ny person who directly employs fifty or more persons to perform services for a wage or salary." Cal. Gov't Code § 12945.2. (c)(2). Simply put, Aruya is not an employer of fifty or more people as required for liability under the statute. She is merely an individual acting as a supervisor.
Defendant argues that the issue of individual supervisor liability is "murky, " (Opp'n at 5:17), because some courts have found that there is "ambiguity" based on certain "interpretive guidelines" propounded by the Fair Employment and Housing Commission ("FEHC") in 1995. (Id. at 5:26-6:10.) The FEHC regulation allows for liability for "any person" under the Fair Employment and Housing Act, under which CFRA is subsumed. Cal. Admin. Code Title 2, §7297.7. But Defendants point to no courts affirmatively ruling that there is individual liability, and the Court agrees with its sister court's assessment of the "interpretive guidelines" issue:
Mr. Lewis... contends that a supervisor can be held individually liable based on a regulation issued by the California Fair Employment and Housing Commission ("FEHC"), which provides as follows: "[I]t shall be an unlawful employment practice for any person to discharge, fine, suspend, expel, punish, refuse to hire, or otherwise discriminate against any individual... because that individual has... exercised his or her right to CFRA leave." 2 Cal.Code Reg. § 7297.7(a). But this argument is unavailing for two reasons.
First, § 7297.7(a) simply reflects that a "person" can be held individually liable. This is consistent with § 12945.2(c)(2)(A) which states that an employer can be a person. But simply because an employer can be a person does not address the issue of whether the supervisor of an employer may be held individually liable.
Second, even if the FEHC intended § 7297.7(a) to impose individual liability on a supervisor, the FEHC "has no discretion to promulgate [a] regulation that [is] inconsistent with the governing statute, in that [the regulation] alter[s] or amend[s] the statute or impair[s] its scope.'" Colmenares v. Braemar Country Club, Inc. , 29 Cal.4th 1019, 1021, 130 Cal.Rptr.2d 662, 63 P.3d 220 (2001). Interpreting the FEHC regulation to impose liability on "any person" regardless of employer status renders the CFRA's definition of "employer" nugatory.
Lewis v. Home Depot U.S.A., Inc., No. C-12-6354 EMC 2013 WL 843089 at *1-*2 (N.D. Cal. 2010).
Additionally, at least one California appellate court, perhaps the only one to address it, has found that there is no individual liability under the CRFA. Nazir v. United Airlines, Inc. , 178 Cal.App.4th 234, 287 (2009)(granting summary judgment in favor of an individual defendant on CFRA retaliation claim on the basis that "there is.... no individual liability for retaliation."). So have a number of federal district courts in California. (Opp'n at 5:19-26 (listing cases holding there is no individual liability).)
In short, while the issue may not have been ruled on by the California Supreme Court, the plain language of the statute and the weight of logic and authority provided sufficient basis for Defendants to understand that the case was removable on the face of the complaint. Defendants could have, and did, ascertain fraudulent joinder from the face of Plaintiff's complaint and the plain language of the statute, asserting in their reply to Plaintiff's opposition to Aruya's demurrer that Aruya was a "sham defendant." (Ex. D, Bello Decl.; Es. R, Abiyoye Decl.) To the degree that the law was not in perfect clarity, that was not a reason for Defendants to stay their hand as to removal; rather, they were obligated to submit their (quite strong) arguments to a federal court that it was "obvious" under California law that Aruya was fraudulently joined. McCabe, 811 F.2d at 1339. A district court is competent to assess whether the law is so obvious that are grounds for removal.
And where state law is not settled, the case is better handled at the state level, where a state judge can initiate the process of making state law. This division of labor between federal and state courts makes sense especially when one considers that the state court will generally not be overruled on "obvious" questions of law, but might be overruled on a more doubtful question. If, as Defendants suggest, state law is unclear as to whether CFRA imposes liability on Aruya, then even now Plaintiff could reasonably appeal the dismissal of Aruya as a defendant, presenting an opportunity for a state appellate court to clarify the law. In such a circumstance, remand is the appropriate course. "At the point of decision, the federal court must engage in an act of prediction: is there any reasonable possibility that a state court would rule against the non-diverse defendant? If a state court has come to judgment, is there any reasonable possibility that the judgment will be reversed on appeal?" Poulos v. Naas Foods, Inc. , 959 F.2d 69, 73 (7th Cir. 1992).
Thus, if the law was not settled prior to the state court's sustaining the demurrer, it remains unsettled now, and the state court's order is subject to a reasonable possibility of appellate reversal. Therefore, it was not a paper making it newly ascertainable that the action was removable. But if, as seems more likely, the law was obvious enough that no California appellate court would reverse, then grounds for removal were apparent on the face of the complaint, and Defendants should have filed a petition of removal within thirty days of receiving the complaint.
B. Subject Matter Jurisdiction
Because removal was untimely, the Court does not reach the subject matter jurisdiction issue.
C. Attorney's Fees
Alleging that Defendant had no reasonable basis for removal, Plaintiff seeks attorney's fees and costs pursuant to 28 U.S.C. § 1447(c). ("An order remanding the case may require payment of just costs and any actual expenses, including attorney's fees, incurred as a result of the removal."). Where the court finds that removal is improper the court has discretion to impose attorney's fees and costs and where the court's remand is correct as a matter of law these fees and costs will be affirmed. Kanter v. Warner-Lambert , 265 F.3d 853, 861 (9th Cir. 2001); Gibson v. Chrysler Corp. , 261 F.3d 927, 949 (9th Cir. 2001).
Plaintiffs request $3, 600 for reimbursement of attorney's fees. However, the Court finds that Defendants' belief that removal was timely was not so lacking in an "objectively reasonable basis" as to warrant the award of attorney's fees. Martin v. Franklin Capital Corp. , 546 U.S. 132, 141 (2005).
Defendants' removal having been untimely, this matter is remanded to state court. Attorney's fees are not awarded. The SCHEDULING CONFERENCE set for November 24, 2014 is vacated.
IT IS SO ORDERED.