United States District Court, N.D. California, San Jose Division
ORDER DENYING PLAINTIFF'S MOTION TO REMAND; AND
GRANTING DEFENDANTS' MOTION TO DISMISS FIRST AMENDED
COMPLAINT, WITH LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO
AMEND IN PART [RE: ECF 37, 41, 44]
LABSON FREEMAN UNITED STATES DISTRICT JUDGE
Muhammad Khan (“Khan”) worked for Defendant SAP
Labs, LLC (“SAP”), from 2013 through December 1,
2015, when he left the company. The following month, Khan set
fire to the residence of his former SAP manager, Defendant
Sanjay Shirole (“Shirole”), while Shirole and his
family were asleep inside. Khan was convicted of arson of an
inhabited structure in September 2017, and he is serving a
nine-year term of imprisonment for that crime. Khan filed
this pro se employment discrimination action from
prison approximately one year after his arson conviction and
more than two years after separating from SAP. His original
complaint, which was filed in the Santa Clara County Superior
Court, alleged that while employed at SAP he was denied leave
and accommodation in violation of the federal Family Medical
Leave Act (“FMLA”), and was subjected to a
hostile work environment, harassment, discrimination, and
retaliation in violation of California's Fair Employment
and Housing Act (“FEHA”) and other state laws.
removed the action to federal district court on the basis of
both federal question jurisdiction and diversity
jurisdiction. Khan moves to remand the action to the state
court, asserting that the operative first amended complaint
(“FAC”) asserts only state law claims and that
diversity jurisdiction does not lie. Defendants oppose the
motion to remand and seek dismissal of the FAC for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6).
Khan opposes the motion to dismiss. The Court has taken both
motions under submission without oral argument. See
Orders, ECF 40, 48.
reasons discussed below, Khan's motion to remand is
DENIED, and Defendants' motion to dismiss is GRANTED WITH
LEAVE TO AMEND IN PART AND WITHOUT LEAVE TO AMEND IN PART.
reviewing the file, the Court discovered that a clerical
error was made in the electronic filing of Khan's
operative FAC. See FAC, ECF 41. In its order
granting Khan's motion for leave to amend to file the
FAC, the Court ordered that “[t]he Clerk shall file
Khan's proposed pleading (ECF 36-2) as a separate docket
entry titled ‘First Amended Complaint.'”
Order, ECF 40. When the Clerk electronically filed the FAC,
several pages of the FAC and the exhibits to the FAC were
omitted. See FAC, ECF 41. The Clerk SHALL correct
that clerical error by replacing the partial document
currently filed as ECF 41 with the entire FAC, including
exhibits, which was submitted by Khan at ECF 36-2.
began working for SAP in 2013, first as an intern, and later
as a manager. FAC ¶ 8, ECF 41. In April or May of 2014,
Khan began reporting to Defendant Shirole, a high-level
software executive. FAC ¶ 11. h, i. Shirole was abusive
toward Khan. FAC ¶ 11.i. Shirole made comments about
Khan's body, stating that Khan was overweight, and
forcing Khan to race him (Shirole) up flights of stairs. FAC
¶ 11.j, k. Shirole also asked Khan about his sexuality,
asked if Khan was gay, and told Khan that he should
“seriously consider coming out.” FAC ¶ 11.l.
Shirole told Khan about another SAP employee who had come out
as gay later in life. FAC ¶ 11.o. Shirole told
colleagues that Khan was gay, and stated to colleagues that
he (Shirole) liked to “ride Khan like a tiger.”
FAC ¶ 11.m, n, w. During the same time period, Shirole
referred to Khan and some other employees by derogatory Hindi
epithets meaning “fool.” FAC ¶¶ 11.p,
14. Shirole complained about other employees wearing
traditional clothing to work. FAC ¶ 11.r. Khan got the
impression that Shirole believed in the caste system
prominent in India. FAC ¶ 15.
heterosexual, Pakistani, Muslim individual, felt that
Shirole's conduct created a hostile work environment. FAC
¶¶ 10, 11.t. Khan interviewed for and accepted a
position at another company. FAC ¶ 11.t. When Shirole
found out, he became upset and told Khan that leaving SAP
would not be good for Khan and would affect Khan's
efforts to obtain citizenship. FAC ¶ 11.t, x. Khan
became scared and did not show up for his start date at the
other company. FAC ¶ 11.x. Shirole threatened
retaliation if Khan reported Shirole's conduct. FAC
¶ 11.z. Khan then started looking for other positions
within SAP. FAC ¶ 15. Shirole told Khan that he would
not approve Khan going elsewhere in the company, and that
Khan should work under Shirole or quit. FAC ¶ 16. At
that time, Shirole suddenly started giving Khan poor reviews,
which was a change from his prior excellent reviews. FAC
complained to the company's human resources
(“HR”) department from May 2015 through December
2015. FAC ¶ 19. Defendant Le was assigned to handle
Khan's complaint. Id. Le put Khan on unpaid
leave. Id. In November 2015, Khan learned that his
position on Shirole's team had been given to a white
male. FAC ¶ 20. Shirole told Khan that SAP needed a
white person to be the face of the project. Id. On
December 1, 2015, Khan emailed HR and stated that he felt
compelled to leave his employment because of harassment and
discrimination by Shirole and the company's failure to
address his prior complaints. FAC ¶ 22.a. Khan could not
find other employment because Shirole and SAP stated that he
had been fired and said negative things about him. FAC ¶
January 9, 2016, someone set fire to Shirole's home while
he and his family were asleep inside. See People v.
Khan, No. H045524, 2019 WL 5542840, at *3 (Cal.Ct.App.
Oct. 28, 2019). Khan was arrested for the arson offense.
See FAC ¶ 14.a, ECF 41; Def.'s RJN Exh. A,
ECF 44-1. SAP hired a law firm to help the district attorney
prosecute Khan. FAC ¶ 24.b. SAP acquired Khan's
private medical records and disclosed them to a
“private practice Psychiatrist.” FAC ¶ 24.c,
d. SAP also provided a report regarding Khan's medical
records to the judge and prosecution in Khan's criminal
case. FAC ¶ 24.e. Following a jury trial, Khan was
convicted of arson of an inhabited structure by use of a
device designed to accelerate the fire, and he currently is
serving a nine-year term of imprisonment. See People v.
Khan, 2019 WL 5542840, at *1.
Complaint and Right-to-Sue Letter
March 2017, more than a year after his December 1, 2015
separation from SAP, Khan filed an administrative complaint
with California's Department of Fair Employment and
Housing (“DFEH”). See Def.'s RJN
Exh. B, ECF 44-1. The DFEH Complaint named SAP as the only
respondent. See Id. It alleged that Khan was
“was subjected to Discrimination, Retaliation by
respondent, SAP LABS LLC due to one or more Fair Employment
and Housing Act protected bases: Disability [physical or
mental], Family Care or Medical Leave.” Id.
The DFEH Complaint also alleged that Khan was “Denied a
work environment free of discrimination and/or retaliation,
Terminated, ” and that “[t]he most recent harm
occurred on or around December 01, 2015.” Id.
Finally, the DFEH Complaint alleged, “I believe I was
terminated on the basis of my disability and in retaliation
for taking California Family Rights Act Leave. My beliefs are
based on the following: From June 1, 2015 to December 1,
2015, my physician place me on leave due to my disability. On
December 1, 2015, Jenny Lee, Human Resources told me I was
being terminated due to recent events.” Id.
The DFEH Complaint made no reference to sexual harassment,
discrimination based on sexual orientation, racial
harassment, or discrimination based on race or national
origin. See Id. The DFEH Complaint did not allege
misconduct on the part of Le and did not mention Shirole at
all. See id.
24, 2017, the DFEH issued a right-to-sue letter, advising
Khan that he had to file any civil action within one year
from the date of the right-to-sue letter. See
Def.'s RJN Exh. C, ECF 44-1. SAP was the only identified
respondent. See id.
of Complaint in State Court and Removal to Federal District
filed this action in the state court on August 21, 2018, more
than a year after the date of the right-to-sue letter.
See Notice of Removal Exh. A, ECF 1. Defendants
removed the action to federal district court and immediately
filed a Rule 12(b)(6) motion to dismiss. See Notice
of Removal, ECF 1; Defs.' Motion to Dismiss, ECF 7. While
that motion was pending, Khan filed a motion for leave to
amend and a motion to remand. See Pl.'s Motion
for Leave to Amend, ECF 35; Pl.'s Motion to Remand, ECF
37. The motion for leave to amend was unopposed by
Defendants. See Defs.' Statement of
Non-Opposition, ECF 39. The Court granted Khan's motion
for leave to amend and terminated the motion to dismiss the
original complaint as moot. See Order Granting
Motion for Leave to Amend, ECF 40. The Court also directed
the Clerk to file Khan's proposed amended pleading as the
operative FAC. See id.
the original complaint asserted both federal and state law
claims, FAC asserts only state law claims against SAP and two
of its employees, Shirole and Jenny Le (“Le”):
(1) sexual harassment in violation of FEHA (against all
Defendants); (2) discrimination on the basis of sexual
orientation in violation of FEHA (against all Defendants);
(3) discrimination on the basis of race or national origin in
violation of FEHA (against all Defendants); (4) harassment on
the basis of race or national origin in violation of FEHA
(against all Defendants); (5) disability discrimination in
violation of FEHA (against all Defendants); (6) failure to
prevent discrimination, harassment, and retaliation in
violation of FEHA (against SAP only); (7) wrongful
constructive termination in violation of public policy
(against SAP only); (8) violation of California Labor Code
§ 1102.5, et seq. (against SAP only); (9)
common law invasion of privacy (against SAP only); (10)
violation of the California Constitution, Article 1, §
1, Right to Privacy (against SAP only); (11) intentional
infliction of emotional distress (against all Defendants);
and (12) retaliation in violation of FEHA (against SAP only).
filed both an opposition to Khan's motion to remand, and
a Rule 12(b)(6) motion to dismiss the FAC. See
Defs.' Opp. to Remand, ECF 43; Defs.' Motion to
Dismiss, ECF 44. After several extensions of time for
opposition were granted by the Court, Khan filed opposition
to the motion to dismiss his FAC. See Pl.'s
Opp., ECF 55. Khan did not file a reply with respect to his
motion to remand. Briefing on the motions was completed when
Defendants filed a reply with respect to their motion to
dismiss in September 2019. See Defs.' Reply, ECF
57. The Court submitted both the motion to remand and the
motion to dismiss the FAC for disposition without oral
argument. See Orders, ECF 40, 48.
Court addresses Khan's motion to remand first, and then
Defendants' motion to dismiss.
MOTION TO REMAND
“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). “A
defendant may remove an action to federal court based on
federal question jurisdiction or diversity
jurisdiction.” Hunter v. Philip Morris USA,
582 F.3d 1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. §
Ninth Circuit recognizes a “strong presumption against
removal.” Hunter, 582 F.3d at 1042 (quoting
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.
1992)). Thus, “‘the defendant always has the
burden of establishing that removal is proper,' and . . .
the court resolves all ambiguity in favor of remand to state
court.” Id. (quoting Gaus, 980 F.2d
action was removed on the bases of both federal question
jurisdiction and diversity jurisdiction. Khan points out that
the federal FMLA claim that gave rise to federal question
jurisdiction has been dismissed, and he asks the Court to
decline to exercise supplemental jurisdiction over the
remaining state law claims. Khan also argues that no
diversity jurisdiction lies. Defendants oppose remand,
arguing that diversity jurisdiction does lie and that, even
absent diversity jurisdiction, the Court should exercise its
discretion to retain supplemental jurisdiction over
Khan's state law claims despite his dismissal of the
federal FMLA claim.
Court concludes that Defendants have met their burden of
establishing that removal is proper, because Defendants have
shown that diversity jurisdiction exists and that, even
absent diversity jurisdiction, exercise of supplemental
jurisdiction over Khan's state law claims is appropriate
in this case.
district courts have diversity jurisdiction over civil
actions between citizens of different states where the amount
in controversy exceeds $75, 000, exclusive of interest and
costs. 28 U.S.C. § 1332(a)(1). “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).
exception to the requirement for complete diversity is where
a non-diverse defendant has been fraudulently joined.”
Hunter, 582 F.3d at 1043 (internal quotation marks
and citation omitted). Joinder is fraudulent “if 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. (internal
quotation marks, citation, and alteration omitted). “In
such a case, the district court may ignore the presence of
that defendant for the purpose of establishing
diversity.” Id. However, “the test for
fraudulent joinder and for failure to state a claim under
Rule 12(b)(6) are not equivalent.” Grancare, LLC v.
Thrower by & through Mills, 889 F.3d 543, 549 (9th
Cir. 2018). “A claim against a defendant may fail under
Rule 12(b)(6), but that defendant has not necessarily been
fraudulently joined.” Id.
argue that diversity jurisdiction lies under 28 U.S.C. §
1332(a)(1) because (1) Khan is a California citizen, (2) SAP
is not a California citizen and thus is diverse from Khan,
(3) the California citizenship of Le and Shirole should be
disregarded under the fraudulent joinder rule, and (4) the
amount in controversy exceeds $75, 000.
these points in reverse order, the FAC does not specify the
amount of damages sought, alleging only that “[t]he
amount demanded exceeds $25, 000.” FAC, Prayer.
“Where the complaint does not specify the amount of
damages sought, the removing defendant must prove by a
preponderance of the evidence that the amount in controversy
requirement has been met.” Abrego v. The Dow Chem.
Co., 443 F.3d 676, 683 (9th Cir. 2006). Defendants point
out that the FAC contains numerous FEHA claims, and that in
connection with each Khan claims lost earnings and benefits,
among other damages. See, e.g., FAC ¶¶ 34,
41, 47, 53, 59, 67. Defendants direct the Court to evidence
that Khan's base salary alone exceeds $75, 000.
See FAC Exh. 4. Because Khan separated from SAP
nearly four years ago in December 2015, his lost earnings to
date exceed $300, 000. Khan also seeks emotional distress
damages, punitive damages, and attorneys' fees. See,
e.g., FAC ¶¶ 35-37, 42-44, 48-50, 54-56,
60-62, 68-70. Other courts have found the amount in
controversy requirement satisfied when the plaintiff alleged
multiple FEHA claims and sought similar types of damages.
See, e.g., Simmons v. PCR Tech., 209 F.Supp.2d 1029,
1035 (N.D. Cal. 2002) (jurisdictional minimum “clearly
satisfied” when plaintiff asserting multiple FEHA
claims sought unspecified compensatory, punitive, and
emotional distress damages as well as attorneys' fees).
The Court concludes that Defendants have demonstrated by a
preponderance of the evidence that the jurisdictional minimum
Court also finds persuasive Defendants' showing that Le
and Shirole are sham defendants. As discussed below in
connection with Defendants' motion to dismiss, Khan has
failed to state a claim against either Le or Shirole and
there is no possibility that Khan could do so even if given
further leave to amend. The sham defendant rule may be
applied where it is shown “that the individuals joined
in the action cannot be liable on any theory, ”
Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th
Cir. 1998), and that “there is no possibility that the
plaintiff will be able to establish a cause of action in
state court against the alleged sham defendant, ”
Good v. Prudential Ins. Co. of Am., 5 F.Supp.2d 804,
807 (N.D. Cal. 1998).
have demonstrated diversity of citizenship between Khan and
SAP. As an LLC, SAP takes its citizenship from that of its
owners/members. See Johnson v. Columbia
Properties Anchorage, LP, 437 F.3d 894, 899 (9th
Cir. 2006) (“[A]n LLC is a citizen of every state of
which its owners/members are citizens.”). The sole
member of Defendant SAP is SAP America, Inc., which is a
citizen of Delaware and Pennsylvania. Notice of Removal
¶¶ 8-9 and Heck Decl. ¶¶ 3-5, ECF 1.
Accordingly, SAP is a citizen of Delaware and Pennsylvania,
but not of California.
only real question presented by Defendants' showing is
with respect to Khan's citizenship. In their notice of
removal, Defendants assert that Khan is a California citizen
based on records showing that Khan currently resides at the
Correctional Training Facility located in Soledad,
California; Khan's allegations that he resided in
California while working for SAP; and records showing that
Khan paid California state taxes while working at SAP.
See Notice of Removal ¶ 7 and Exhibits, ECF 1.
While these documents establish that Khan was and is
domiciled in California, they do not establish that
he is a citizen of California. “To be a
citizen of a state, a natural person must first be a citizen
of the United States.” Kanter v. Warner-Lambert
Co., 265 F.3d 853, 857 (9th Cir. 2001). It appears from
the face of the FAC and exhibits thereto that Khan was in the
process of applying for United States citizenship while
working at SAP. See FAC ¶ 11.x & Exh. 2.
Defendants have not shown the Khan obtained United States
citizenship, and thus have not shown that he is a California
citizen for purposes of establishing diversity jurisdiction
under 28 U.S.C. § 1332(a)(1).
Khan is a foreign national, however, federal courts'
diversity jurisdiction generally extends to civil actions
between “citizens of a State and citizens or subjects
of a foreign state” where the amount in controversy
requirement is satisfied. 28 U.S.C. § 1332(a)(2). The
exception to this rule is that diversity jurisdiction does
not lie with respect to an action between “citizens of
a State” and foreign nationals “who are lawfully
admitted for permanent residence in the United States and are
domiciled in the same State.” Id. It is
unclear from this record whether Khan is lawfully admitted
for permanent residence in the United States. Even assuming
that he is, Defendant SAP is not a citizen of California and
Defendants have established that the California citizenship
of Defendants Le and Shirole should be disregarded under the
fraudulent joinder rule. Accordingly, whether Khan is a
California citizen or a foreign national, his citizenship is
diverse from that of Defendant SAP and the citizenship of
Defendants Le and Shirole may be disregarded under the
fraudulent joinder rule.
has not responded to any of these arguments, as he did not
file a reply to Defendants' ...