Nguyen v. Durham School Services L.P.

          Present: Honorable JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE

          (IN CHAMBERS) ORDER DENYING PLAINTIFF’S MOTION TO REMAND (DOC. 20)

          JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff Peter Nguyen’s motion to remand this matter to state court. (Mot., Doc. 20.) Defendant Durham School Services, L.P. opposes the Motion. (Opp., Doc. 23.) Nguyen replied. (Reply, Doc. 25.) The Court finds this matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78(b); C.D. Cal. R. 7-15. Accordingly, the hearing scheduled for June 17, 2016 at 2:30 p.m. is VACATED. For the reasons stated below, the Court DENIES Nguyen’s Motion.

         I. BACKGROUND

         From February 2010 through July 25, 2014, Nguyen was employed by Durham as a mechanic performing maintenance and safety inspections on buses. (Complaint ¶¶ 8, 23, Doc. 1-1.) Nguyen brought the instant action against Durham and Defendant Jim Eslinger, who served as Nguyen’s direct supervisor from January 17, 2014 until his termination. (Id. ¶¶ 7, 10.) Nguyen alleges Durham retaliated against him because of his “whistleblowing action” and because he “engag[ed] in a protected activity, ” namely, filing two complaint letters with his supervisors. (Id. ¶¶ 7, 24, 92.) Additionally, Nguyen asserts two causes of action - for Intentional Infliction of Emotional Distress and Negligent Infliction of Emotional Distress, respectively - against both Durham and Eslinger. (Id. ¶¶ 96-103.) The emotional distress is alleged to have resulted from the aforementioned retaliation. (Id.)

         Nguyen’s Complaint asserts that he is a resident of Orange County, California. (Id. ¶ 1.) Additionally, Durham is alleged to be “a California corporation doing business in the County of Orange[.]” (Id. ¶ 2.) Finally, Nguyen states that Eslinger is a resident of Orange County. (Id. ¶ 3.) Durham removed this action on August 5, 2015 on grounds that the Court possesses diversity jurisdiction. (Notice of Removal ¶ 9, Doc. 1.) Contrary to the allegations in the Complaint, Durham denies that it is a citizen of California and, instead, asserts that it is a limited partnership consisting of two limited liability companies organized under Delaware law. (Id. ¶ 13.) Moreover, Durham contends, each of these companies has only a single member, which is itself a limited liability company organized in Delaware with its principal place of business in Illinois. (Id.)^[1] Although the parties do not dispute that Eslinger is a resident of California, Durham contends “his citizenship is irrelevant because he was fraudulently joined to defeat jurisdiction[.]” (Id. ¶ 15.) The instant Motion followed.

         II. LEGAL STANDARD

         When reviewing a notice of removal, “[i]t is to be presumed 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.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (quoting Abrego v. Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006) (quotation marks omitted)). Courts “strictly construe the removal statute against removal jurisdiction, ” and “the defendant always has the burden of establishing that removal is proper.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

         A federal court has diversity jurisdiction under 28 U.S.C. § 1332 if the amount in controversy exceeds $75, 000 and the parties to the action are citizens of different states. See 28 U.S.C. § 1332(a). Section 1332 “requires complete diversity of citizenship; each of the plaintiffs must be a citizen of a different state than each of the defendants.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). Nevertheless, “one exception to the requirement of complete diversity is where a non-diverse defendant has been ‘fraudulently joined.’” Id. “Joinder of a non-diverse defendant is deemed fraudulent, and the defendant’s presence in the lawsuit is ignored for purposes of determining diversity, ‘[i]f the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state.’” Id. (quoting McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)).

         III. DISCUSSION

         The crux of Nguyen’s argument is straightforward: the case must be remanded “because [Defendant Eslinger] was a California citizen at the time the action was filed, and the action was removed from California state court in violation of 28 U.S.C. § 1441(b).” (Mot. at 1.) Durham does not challenge that Eslinger is a California resident. (Notice of Removal ¶ 15.) Instead, Durham contends that “Eslinger is, in fact, a sham defendant and his citizenship should be ignored.” (Opp. at 1.) In part, Durham supports this contention by arguing that “Eslinger cannot be liable for [Nguyen’s] IIED or NIED claims because these claims are preempted by the California Workers’ Compensation Act (“WCA”)[.]” (Opp. at 7.)^[2] Therefore, Durham contends, Eslinger was fraudulently joined and his citizenship does not defeat complete diversity.

         In relevant part, California Labor Code §§ 3600 and 3601 provide that “the right to recover [workers] compensation . . . is . . . the exclusive remedy for injury or death of an employee against any other employee of the employer acting within the scope of his or her employment[.]” Cal. Lab. Code §§ 3600-01. That is, where “the alleged wrongful conduct . . . occurred at the worksite, in the normal course of the employer-employee relationship, ” then “workers’ compensation is plaintiffs’ exclusive remedy for any injury that may have resulted.” Miklosy v. Regents of Univ. of Cal., 44 Cal.4th 876, 902 (2008) (citations omitted).

         This general rule, however, is subject to two exceptions: first, where the employer’s conduct “contravenes public policy, ” and, second, where an employer’s conduct “exceeds the risks inherent in the employment relationship.” Id. Here, the only claims Nguyen asserts against Eslinger are for IIED and NIED. (Complaint ¶¶ 96-103.) These claims purportedly arise from Defendants’ “relentless retaliation against Plaintiff.” (Id.) Defendants’ retaliation, in turn, was in response to both Nguyen’s “whistle-blowing action” and to his workplace complaints. (Id.) In short, Nguyen contends that Durham and Eslinger retaliated against him for whistleblowing and for submitting two complaint letters, and that this retaliation caused him emotional distress. (See generally Complaint, Doc. 1-1.)

         Because California’s WCA is the “exclusive remedy for injury or death of an employee against any other employee of the employer acting within the scope of his or her employment, ” Cal. Lab Code § 3601(a), Nguyen must argue that his IIED and NIED causes of action against Eslinger fall into one of the two aforementioned exceptions. A careful review of California Supreme Court precedent, however, makes clear that Nguyen’s claims are precluded by California’s WCA. First, as to the “public policy” exception, the California Supreme Court has expressly limited its application to “common law claims of wrongful termination in violation of public policy, ” also referred to as “Tameny claims.” Miklosy, 44 Cal.4th at 898. Thus, Nguyen cannot rely on the “public policy” exception to save his claims for emotional ...