Schwenn v. Sears, Roebuck & Co.

• Decision Date: 08 June 1993
• Docket Number: Civ. No. 4-92-484.
• Parties: LaRae SCHWENN and Gerd Olson, Plaintiffs, v. SEARS, ROEBUCK & CO., Londa Kerby and Bruce Pence, Defendants.
• Court: U.S. District Court — District of Minnesota

822 F. Supp. 1453

LaRae SCHWENN and Gerd Olson, Plaintiffs, v. SEARS, ROEBUCK & CO., Londa Kerby and Bruce Pence, Defendants.

Civ. No. 4-92-484.

United States District Court, D. Minnesota, Fourth Division.

June 8, 1993.

Gerald T. Laurie, Lapp, Laurie, Libra, Abramson & Thomson, Minneapolis, MN, for plaintiffs.

David D. Alsop and Laura L. Myslis, Gislason, Dosland, Hunter & Malecki, Minnetonka, MN, for plaintiff Gerd Olson.

John M. Mason, Jean F. Holloway, Dorsey & Whitney, Minneapolis, MN, for defendants Sears, Roebuck & Co. and Bruce Pence.

Frank J. Walz and Caryn S. Glover, Best & Flanagan, Minneapolis, MN, for defendant Londa Kerby.

MEMORANDUM AND ORDER

MacLAUGHLIN, District Judge.

This matter is before the Court on defendants' motion for summary judgment and plaintiffs' motion for summary judgment on defendant Londa Kerby's counterclaim.

FACTS

Until their demotions in November 1991, plaintiffs LaRae Schwenn and Gerd Olson worked as supervisors in the maintenance agreement department of defendant Sears, Roebuck and Co. Plaintiffs' immediate supervisor was defendant Londa Kerby; Kerby's immediate supervisor was defendant Bruce Pence. Plaintiffs allege that while they were employed by Sears, they suffered ongoing verbal and physical sexual harassment from Kerby. According to plaintiffs, Kerby used vulgar language, made frequent references to sexual acts, and kept a manilla folder at her desk that contained obscene materials. Plaintiffs allege that Kerby touched their breasts and buttocks, attempted to tickle them, and on one occasion grabbed plaintiff Schwenn by the neck, hugged her, and placed her in a headlock. Plaintiff Schwenn also alleges that Kerby discussed engaging in sex with another woman and that woman's husband, told Schwenn that true sexual satisfaction required having sex with both men and women, and told Schwenn that the man with whom Kerby was living liked Schwenn's breasts and would like her. Plaintiffs allege that they complained of Kerby's sexual harassment and the hostile work environment that it created to Kerby's supervisor, Pence; they assert that rather than taking remedial action, Pence and Sears responded to their complaints by demoting them and reducing their salaries.

In April 1992, plaintiffs commenced this action in state court, raising claims under the Minnesota Human Rights Act (MHRA), Minn.Stat. § 363.01, et seq., and Minnesota's whistle-blower statute, Minn.Stat. § 181.932; they also raised claims for battery, assault, intentional infliction of emotional distress, and negligent infliction of emotional distress. Defendants removed the action in May 1992, invoking the Court's diversity jurisdiction. Defendants' notice of removal states that plaintiffs are Minnesota citizens, that Sears is a New York corporation with its principal place of business in Illinois, and that defendant Kerby is a Montana resident. The notice of removal also acknowledges that Pence is a citizen of Minnesota, but asserts that the action is nonetheless removable because plaintiffs have no good faith claim against Pence and joined him solely to defeat diversity jurisdiction. Plaintiffs did not move to remand the action to state court.

After the action was removed, defendant Kerby counterclaimed against plaintiffs, alleging that they had defamed her by making allegations of sexual harassment. Plaintiffs now move for summary judgment on the counterclaim, and defendants move for summary judgment on plaintiffs' claims. Because plaintiffs and defendant Pence are all citizens of Minnesota, the Court questioned whether it had subject matter jurisdiction over this action and requested the parties to brief that issue. The Court concludes that it lacks subject matter jurisdiction over the action, and therefore will remand the action to state court without ruling on the summary judgment motions.

DISCUSSION

An action commenced in state court that falls within the original jurisdiction of the federal district courts may be removed to federal court. 28 U.S.C. § 1441(a). An action based upon federal question jurisdiction may be removed without reference to the citizenship of the parties; however, where the action is based upon diversity jurisdiction, it is removable only if none of the defendants is a citizen of the state in which the action is brought. 28 U.S.C. § 1441(b). Because this action presents no federal question, and because defendant Pence is a Minnesota citizen, the action is not, on its face, removable. However, defendants assert that the action was properly removed despite Pence's presence under the doctrine of fraudulent joinder. Under that doctrine, joinder of a party that is designed solely to deprive federal courts of jurisdiction is deemed fraudulent and does not prevent removal. Anderson v. Home Insurance Co., 724 F.2d 82, 84 (8th Cir.1983) (citing Tedder v. F.M.C. Corp., 590 F.2d 115, 117 (5th Cir. 1979)). A finding of fraudulent joinder does not require a finding of fraudulent intent; rather, fraudulent joinder exists if, whatever the plaintiffs' motive, their claim against an in-state defendant has no chance of success. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.1992). The burden of establishing that a party has been fraudulently joined is on the defendants. Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991).

Although the parties agree on the basic contours of the fraudulent joinder doctrine, they disagree upon the standards to be applied by the Court in determining whether Pence has been fraudulently joined. Plaintiffs assert that the Court should employ a standard similar to that for a motion to dismiss; they argue that the Court should review the pleadings to determine whether there is any possibility that a state court would find that they have stated a cause of action against Pence. If such a possibility exists, they assert that removal was improper. Defendants argue that in determining the fraudulent joinder issue, the Court must consider essentially the same question raised by a summary judgment motion: whether, under the governing law, the facts support any claim against Pence. Thus, defendants urge the Court to "pierce the pleadings," look beyond the allegations of the complaint to the underlying facts, and determine whether plaintiffs have a meritorious claim against Pence. If they are entitled to summary judgment on the claims against Pence, they argue, his joinder must be deemed fraudulent, and the Court must hold that it has subject matter jurisdiction over this action.

The Court rejects defendants' proposed standard for determining the fraudulent joinder issue as contrary to controlling Eighth Circuit precedent. In Anderson v. Home Insurance Co., the Eighth Circuit stated that "fraudulent joinder exists if, on the face of plaintiff's state court pleadings, no cause of action lies against the resident defendant." Anderson, 724 F.2d at 84 (citing Tedder, 590 F.2d at 117) (emphasis added). In accordance with Anderson, another judge of this court recently rejected the standard that defendants urge the Court to apply here. Banbury v. Omnitrition Int'l, Inc., 818 F.Supp. 276 (D.Minn.1993). This court agrees with the Banbury court that it is inappropriate to apply a summary judgment standard to a claim of fraudulent joinder, because the merits of an action are distinct from the jurisdictional issues presented by such a claim. The more appropriate standard for a claim of fraudulent joinder is whether there is a possibility that a state court would find that the complaint states a cause of action against the resident defendant. In addressing this issue, contested issues of fact and uncertainty as to the controlling substantive law should be resolved in favor of the plaintiff. Joinder is fraudulent only where there is no reasonable basis in fact or colorable ground supporting the claim against the resident defendant, or where the plaintiff has no real intention of prosecuting the action against the resident defendant. Banbury, at 280 (citing Boyer v. Snap-on-Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991)).

Under these standards, plaintiffs' joinder of Pence cannot be deemed fraudulent. In their complaint, plaintiffs allege that Pence was the direct supervisor of the alleged harasser, that they complained of the alleged harassment to Pence, and that he not only failed to take remedial action to address their concerns, but retaliated against them by demoting them and reducing their salaries. Based upon this conduct, plaintiffs allege that Pence aided and abetted violations of the MHRA or intentionally obstructed compliance with the MHRA in violation of Minn.Stat. § 363.03, subd. 6.¹ Defendants concede that an individual may be held liable for aiding and abetting or obstruction under section 363.03, subd. 6. Because the MHRA provides plaintiffs with a cause of action against individuals such as Pence, and because the complaint, on its face, states a claim against Pence for a violation of section 363.03, subd. 6, Pence's joinder cannot be viewed as fraudulent. Therefore, the Court concludes that it lacks subject matter jurisdiction over this action and that the action must be remanded.

Even if the Court...