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McCrow v. Supercuts

United States District Court, E.D. California

September 6, 2017

MARY McCROW, also known as MARY DUNCAN, an individual, Plaintiff,
SUPERCUTS, also known as SUPERCUTS CORPORATE SHOPS, INC., and also known as REGIS CORPORATION, and Does 1-100, Defendants.




         Plaintiff Mary McCrow (“Plaintiff” or “McCrow”) brought this action against Defendant Supercuts Corporate Shops, Inc. (“Supercuts”) and Does 1 through 100. Defendant Supercuts removed the case to federal court. (ECF No. 1.) Plaintiff's moved to remand, explaining that it intended to amend the complaint to substitute Laura Saavedra (“Saavedra”), a citizen of California, as a Doe Defendant. (ECF Nos. 11, 13.) Since Plaintiff is also a citizen of California, the addition of Saavedra as a defendant would destroy complete diversity and deprive this Court of subject matter jurisdiction. In light of Plaintiff's representation, the Court issued an order to show cause why the Court should not grant Plaintiff leave to amend her complaint and, depending on the amended complaint, remand the case to state court.[1] (ECF No. 18.) In its response to the order to show cause, Defendant asserts three arguments in support of its position that the Court should deny Plaintiff's motion for remand and deny Plaintiff leave to amend the complaint. (ECF No. 21.) First, Defendant argues that Saavedra is a sham defendant whose fraudulent joinder would not defeat diversity. Second, and relatedly, Defendant argues that because Plaintiff cannot state a claim against Saavedra, amendment would be futile. Third, Defendant argues that leave to amend should be denied because Plaintiff's dilatory conduct in this case evinces bad faith and has caused undue delay and prejudice.


         Plaintiff's amended complaint alleges ten state law causes of action for disability discrimination, wrongful termination, slander, and blacklisting, among others. (ECF No. 1-3, (“FAC”).) Plaintiff alleges in her amended complaint that she is “ignorant of the true names and capacities of defendants sued herein, ” that she is “informed and believes and thereon alleges, that each of the factiously named defendants is responsible in some manner for the occurrences herein alleged, ” and that each defendant was “the agent and employee of the defendants and was acting within the course and scope of that relationship.” (FAC ¶¶ 3-4.) The Eighth, Ninth, and Tenth Causes of Action in the FAC, alleging slander per se, slander, and blacklisting under the California Labor Code, respectively, are brought against “Doe 1.” (FAC at 17-19.) In those causes of action, Plaintiffs allege that Doe 1, an employee of Supercuts, made slanderous comments about Plaintiff to her potential employer, a salon named “Perfect Cut” in Visalia, California. (Id.) However, the FAC provides no further detail regarding the identities or citizenship of the alleged Doe Defendants, including Doe 1.

         In her memorandum in support of her motion to remand, Plaintiff asserted that “once Doe 1 is identified, the facts will show that this person is a resident of the State of California.” (ECF No. 11 at 3; ECF No. 11-1 (Declaration of Larry Shapazian ¶ 4).) Plaintiff alleged for the first time in her reply brief that she had recently discovered the name of a Doe Defendant who made slanderous statements about her. (ECF No. 13 at 3.) Plaintiff indicated that she would seek leave to amend the complaint to add Laura Saavedra, an individual who resides in Kings County, California, as a defendant.[2] (Id.)


         A. Defendant Has Not Met Its Burden of Showing That Saavedra Would Be Fraudulently Joined

         Defendant contends that Saavedra cannot be liable for the causes of action alleged against Doe 1 in the FAC-causes of action for slander, slander per se, and blacklisting under the California Labor Code § 1050. Therefore, Defendant contends that Saavedra would be fraudulently joined. (ECF No. 21 at 4 (citing Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001).)

         Civil actions not involving a federal question are removable to a federal district court only if there is diversity of citizenship between the parties. 28 U.S.C. § 1332(a)(1). Section 1332 requires that there be complete diversity; that is, each plaintiff's citizenship must be diverse as to each defendant's citizenship. Id. A defendant may remove a civil action that alleges claims against a non-diverse defendant when the plaintiff has no basis for suing that defendant, or in other words, when that defendant has been fraudulently joined. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).

         On a motion to remand, the removing defendant faces a strong presumption against removal, and that party bears the burden of establishing that removal was proper by a preponderance of evidence. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-404 (9th Cir. 1996); Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992). A case should be remanded if it appears the case was removed improvidently or without jurisdiction. See 28 U.S.C. § 1447(c). Federal jurisdiction must be rejected if there is any doubt as to the right of removal. Gaus, 980 F.2d at 566.

         Where a non-diverse defendant has been “fraudulently joined” to an otherwise completely diverse case, that defendant's citizenship is disregarded for diversity jurisdiction purposes. United Computer Sys., Inc. v. AT & T Corp., 298 F.3d 756, 761-62 (9th Cir. 2002) (citations omitted). However, there is a “general presumption against fraudulent joinder.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009) (citation omitted). “A defendant is fraudulently joined when [a] ‘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.'” Kwasniewski v. Sanofi-Aventis U.S., LLC, 637 F. App'x 405, 406 (9th Cir. 2016) (quoting McCabe, 811 F.2d at 1339); see also Nasrawi v. Buck Consultants, LLC, 776 F.Supp.2d 1166, 1169-70 (E.D. Cal. 2011) (“[A] non-diverse defendant is deemed fraudulently joined if, after all disputed questions of fact and all ambiguities in the controlling state law are resolved in the plaintiff's favor, the plaintiff could not possibly recover against the party whose joinder is questioned.”) (citations omitted). In determining whether a non-diverse defendant has been improperly joined, courts may look beyond the pleadings and examine the factual record. McCabe, 811 F.2d at 1339. “Fraudulent joinder must be proven by clear and convincing evidence.” Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007).

         Defendant first argues that Plaintiff cannot state a claim for slander against Saavedra because the allegedly slanderous statement is protected by “common interest” privilege under California law. California Civil Code § 47(c). Under the statute, privileged communications include those “concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, one whom the employer reasonably believes is a prospective employer of the applicant.” California Civil Code § 47(c) (emphasis added). Although the FAC alleges that Doe 1 made a slanderous statement about Plaintiff to Plaintiff's prospective employer “with malice, ” (Compl. ¶ 10), Defendant suggests that the FAC fails to plead adequate factual support for its contention that the statement was made with malice. Therefore, Defendant asserts, the common interest privilege applies and Plaintiff's slander and blacklisting claims fail.

         Essentially, Defendant's position is that Plaintiff fails to state a claim against Doe 1 that would survive a 12(b)(6) motion to dismiss. Therefore, Saavedra (presumably Doe 1) is a sham defendant who would be fraudulently joined. However, Defendant misconstrues the Ninth Circuit standard for fraudulent joinder; whether the allegations against Doe 1 would survive a motion to dismiss as pled is not the relevant inquiry. Under Ninth Circuit precedent, the standard for fraudulent joinder is whether Plaintiff can possibly state a claim against the non-diverse defendant she seeks to join, not whether she states a plausible claim under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Hunter, 582 F.3d at 1046 (“if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court” (quotation marks and citations omitted)); see also Gomez v. Miranda Hills Rehab., No. ...

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