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Nash-Perry v. JTH Tax Inc.

United States District Court, C.D. California

November 8, 2019

Tametria Nash-Perry
v.
JTH Tax, Inc., et al.

          Present: The Honorable GEORGE H. WU, UNITED STATES DISTRICT JUDGE

          CIVIL MINUTES - GENERAL

         PROCEEDINGS: IN CHAMBERS - FINAL RULING ON DEFENDANT JTH TAX, INC.'S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT BY PLAINTIFF TAMETRIA NASH-PERRY [14]

         Attached hereto is the Court's Final Ruling. The Court would accept Plaintiff's First Amended Complaint and, consequently, would remand this case forthwith back to the Superior Court of the State of California, County of Los Angeles, for further proceedings.

         Nash-Perry v. JTH Tax, Inc. d/b/a Liberty Tax Service, et al. ; Case No. 2:19-cv-05843-GW-(FFMx) Final Ruling on Motion to Dismiss

         I. Introduction

         Plaintiff Tametria Nash-Perry filed suit against JTH Tax Inc. d/b/a/ Liberty Tax Service (“JTH” or “Defendant”) and Does 1 to 100 in state court, alleging numerous violations of employment and anti-discrimination laws. See Complaint, attached as Ex. 1 to Notice of Removal, Docket No. 1-1. JTH removed the case to federal court on the basis of diversity, on July 8, 2019. See Notice of Removal (“NOR”), Docket No. 1. On August 10, 2019, Plaintiff filed a first amended complaint which added two claims against Sharif Vaughn (“Vaughn”) for tortious interference with prospective economic advantage (“TIPEA”) and negligent interference with prospective economic advantage (“NIPEA”). See First Amended Complaint for Damages (“FAC”), Docket No. 9 at ¶¶ 128-48. Plaintiff did not seek leave to file the first amended complaint. See generally Docket.

         Before the Court is Defendant JTH Tax Inc.'s (“JTH”) motion to dismiss Plaintiff's first amended complaint.[1] See Notice of Motion and Motion by Defendant JTH Tax, Inc. to Dismiss the First Amended Complaint by Plaintiff Tametria Nash-Perry (“MTD”), Docket No. 14. Plaintiff filed an opposition in which she asserts that the case must be remanded to state court due to a lack of diversity jurisdiction. See Plaintiff Tametria Nash-Perry's Opposition to Defendant JTH Tax, Inc.'s Motion to Dismiss Plaintiff's First Amended Complaint (“Opp'n”), Docket No. 17, 3. Plaintiff argues that diversity was destroyed when she amended the complaint to add a non-diverse defendant (i.e. Vaughn). See id.

         The Court requested that the parties file supplemental briefing to address whether the Court should accept the amended complaint under the standards laid out by 28 U.S.C. § 1447(e) and Rule 15(a) of the Federal Rules of Civil Procedure. See generally Order to Show Cause Regarding Subject Matter Jurisdiction (“OSC”), Docket No. 22. The Court also asked the parties to address whether the case should be remanded to state court if the amended complaint is accepted. Plaintiff filed a supplemental brief regarding subject matter jurisdiction. See Plaintiff Tametria Nash-Perry's Supplemental Brief Re Subject Matter Jurisdiction (“Supp. Br.”), Docket No. 24. Defendant filed an opposition. See Defendant JTH Tax, Inc.'s Opposition to Plaintiff's Supplemental Brief Re Subject Matter Jurisdiction (“Supp. Opp.”), Docket No. 26. Plaintiff filed a reply. See Plaintiff Tametria Nash-Perry's Reply to Defendant JTH Tax, Inc.'s Opposition to Plaintiff's Supplemental Brief Re Subject Matter Jurisdiction (“Supp. Reply”), Docket No. 28.

         II. Applicable Law

         A. Leave to Amend

         “If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.” 28 U.S.C. § 1447(e). Under the Federal Rules of Civil Procedure, “leave [to amend] shall be freely given when justice so requires.” Fed.R.Civ.P. 15(a); Foman v. Davis, 371 U.S. 178, 182 (1962). Rule 15(a)'s policy of favoring amendment should be applied with “extreme liberality.” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981) (citation omitted). Leave to amend under Rule 15(a) involves consideration of factors including undue delay, bad faith, futility, and prejudice to the defendant. See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman, 371 U.S. at 182). Prejudice to the defendant carries the most weight. See Id. at 1052; Howey v. United States, 481 F.2d 1187, 1190 (9th Cir. 1973) (finding “the crucial factor is the resulting prejudice to the opposing party”). “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Eminence Capital, 316 F.3d at 1052 (emphasis original).

         However, some courts have concluded that “the logic and policy of Rule 15(a) do not apply” in the case of a potentially diversity-destroying amendment, and that analysis is instead performed solely under 28 U.S.C. § 1447(e) (“Section 1447(e)”). See Bakshi v. Bayer Healthcare, LLC, No. C07-00881 CW, 2007 WL 1232049, at *2 (N.D. Cal. Apr. 26, 2007); see also Clinco v. Roberts, 41 F.Supp.2d 1080, 1086-88 (C.D. Cal. 1999) (holding that amendment under Fed.R.Civ.P. 15(a) should not be permitted where to do so would destroy diversity after removal because it “would allow a plaintiff to improperly manipulate the forum of an action”); Winner's Circle of Las Vegas, Inc. v. AMI Franchising, Inc., 916 F.Supp. 1024, 1026 (D. Nev. 1996) (“Rule 15(a) cannot be used to deprive the Court of jurisdiction over a removed action.”).

         Courts within the Ninth Circuit have identified several factors for analysis under the Section 1447(e) standard which allows the Court more discretion than under Rule 15(a). See Clinco, 41 F.Supp.2d at 1082. Under that approach, the Court considers:

(1) Whether the party sought to be joined is needed for just adjudication and would be joined under Federal Rule of Civil Procedure 19(a); (2) whether the statute of limitations would prevent the filing of a new action against the new defendant should the court deny joinder; (3) whether there has been unexplained delay in seeking the joinder; (4) whether the joinder is solely for the purpose of ...

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