Vigil v. HMS Host USA, Inc.
| Decision Date | 10 August 2012 |
| Docket Number | No. C 12-02982 SI,C 12-02982 SI |
| Court | U.S. District Court — Northern District of California |
| Parties | MELISSA VIGIL, individually and on behalf of other members of the general public similarly situated, etc., Plaintiff, v. HMS HOST USA, INC., HOST INTERNATIONAL, INC., CHRISTIAN HENRY, and DOES 1-10, inclusive, Defendant. |
Plaintiff's motion to remand this case to state court and defendant's motion to dismiss were scheduled for hearing on August 10, 2012. Pursuant to Civil Local Rule 7-1(b), the Court determined that these matters are appropriate for resolution without oral argument and vacated the hearing. For the reasons set forth below, the Court GRANTS the motion to remand. Because the Court lacks jurisdiction, it does not reach defendant's motion to dismiss, stay, or transfer.
On April 23, 2012, plaintiff Melissa Vigil, on behalf of herself and others similarly situated, filed this class action complaint in Alameda County Superior Court against HMS Host USA, Inc., Host International, Inc., Christian Henry, and Does 1 through 10 (the "Vigil" action). Defendants HMS HostUSA, Inc. and Host International, Inc. employed plaintiff as a non-exempt, hourly paid server at defendants' business at the Oakland, California airport ("Oakland airport business"). Compl. ¶ 25. Christian Henry ("Henry") was the store manager while plaintiff worked at defendants' Oakland airport business. Compl. ¶ 10. Plaintiff alleges a class action on behalf of "[a]ll non-exempt or hourly paid employees who worked for defendants at their Oakland, California airport location within four years prior to the filing of this complaint until the date of certification ("Class")." Compl. ¶18. Plaintiff asserts seven causes of action for violation of (1) California Labor Code §§ 510 and 1198 for unpaid overtime, (2) California Labor Code §§ 1194, 1197, and 1197.1 for unpaid minimum wages, (3) California Labor Code § 226(a) for non-compliant wage statements, (4) California Labor Code §§ 201 and 201 for wages not timely paid upon termination, (5) California Labor Code §§ 2800 and 2802 for unpaid business expenses, (6) Labor Code §§ 2698, et seq. (Private Attorney General Act), and (7) California Business & Professions Code §§ 17200, et seq.
Vigil filed her first amended complaint ("FAC") in the Alameda County Superior Court on June 7, 2012.1 The following day, defendants removed this action to federal court, asserting (1) diversity jurisdiction under 28 U.S.C. § 1332 and, alternatively, (2) jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). On June 15, 2012, defendants filed a motion to dismiss, stay or transfer. On July 6, 2012, Vigil filed a motion to remand this case to state court on the ground that this Court lacks subject matter jurisdiction.
Prior to the filing of this action, on August 23, 2010, Cesar Batres and Maria DePerz filed suit against HMS Host USA, Inc. and Host International, Inc. in the Orange County Superior Court (the "Batres action"), alleging (1) failure to pay hourly wages including overtime, (2) failure to timely pay wages, (3) knowing and intentional failure to comply with itemized employee wage statement provisions, (4) violations of the Unfair Competition Law, (5) violation of Labor Code § 2698, et seq. The Batres action was removed to the Central District of California.
On September 15, 2010, plaintiff Melissa Vigil's counsel, Initiative Legal Group APC, filed a class action on behalf of Sandrika Medlock ("Medlock action") against HMS Host USA, Inc. and Host International, Inc. in the Fresno County Superior Court. The case was removed to the United States District Court, Eastern California, and then transferred to the Central District. On April 26, 2011, the Court ordered the Batres action and Medlock action ("Batres-Medlock") consolidated for discovery and for filing a joint motion for class certification. However, there is no consolidated complaint, and the Batres and Medlock actions retained their operative pleadings. Batres filed a motion for class certification, which is currently pending in the Central District of California. Medlock did not join the motion and has missed its court deadline for class certification.
When a case "of which the district courts of the United States have original jurisdiction" is initially brought in state court, the defendant may remove it to federal court. 28 U.S.C. § 1441(a). There are two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 28 U.S.C. § 1331, and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court has federal question jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A district court has diversity jurisdiction where the matter in controversy exceeds the sum of $75,000, and is between, inter alia, citizens of different States, or citizens of a State and citizens or subjects of a foreign state. 28 U.S.C. § 1332.
Diversity jurisdiction requires complete diversity of citizenship, with each plaintiff being a citizen of a different state from each defendant. 28 U.S.C. § 1332(a)(1); Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996); Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). The one exception to this standard arises when a non-diverse defendant is made a party to an action if fraudulently joined as a "sham" to defeat diversity. Morris, 236 F.3d at 1067. Allegations of fraudulent joinder can only succeed on a showing that there is an obvious failure to assert a cause of action against that defendant under well-settled rules of state law. United Computer Sys., Inc. v. AT&T Corp., 298 F.3d 756, 761 (9th Cir. 2002); Morris, 236 F.3d at 1067. The court may look beyond the pleadings andconsider affidavits or other evidence to determine if the joinder was a sham. Morris, 236 F.3d at 1068; see also Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 263 (9th Cir. 1995).
A motion to remand is the proper procedure for challenging removal. Remand to state court may be ordered either for lack of subject matter jurisdiction or for any defect in removal procedure. See 28 U.S.C. § 1447(c). The court may remand sua sponte or on motion of a party, and the parties who invoked the federal court's removal jurisdiction have the burden of establishing federal jurisdiction. See Enrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (U.S. 1921)). When ruling on a motion to remand, the court generally looks to the complaint. See Miller v. Grgurich, 763 F.2d 372 (9th Cir. 1985). Upon a defendant's removal of a case to federal court, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). To protect the jurisdiction of state courts, removal jurisdiction is strictly construed in favor of remand. Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 698 (9th Cir. 2005). Any doubt as to the right of removal must be resolved in favor of remand. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992).
Plaintiff moves to remand this case on the ground that there is no diversity jurisdiction because plaintiff Vigil and defendant Henry are both California residents. Pls.' Mot. to Remand at 1. The parties do not dispute that there is complete diversity among the remaining defendants. Defendants contend that removal to federal court was proper under the doctrine of fraudulent joinder, asserting that plaintiff lacks a cognizable claim against Henry. In the alternative, defendants assert that this Court has jurisdiction under CAFA. The Court finds that it lacks subject matter jurisdiction over this action because Henry was not fraudulently joined and CAFA jurisdiction does not apply.
A district court has diversity jurisdiction where the matter in controversy exceeds the sum of $75,000, and is between, inter alia, citizens of different States, or citizens of a State and citizens or subjects of a foreign state. 28 U.S.C. § 1332. Host Defendants argue that diversity jurisdiction existsbecause plaintiff is a citizen of California and defendants are citizens of Delaware and Maryland. Defendants assert that Henry, the non-diverse individual defendant, "should be disregarded for purposes of diversity as his joinder is 'fraudulent.'" Notice of Removal of Action to Federal Court ("Notice of Removal") ¶12 , Dkt. No. 1. Defendants argue that plaintiff's allegations in her complaint against Henry are "insufficient to allow the court to draw an inference that [Henry] is liable for any alleged misconduct." Id. ¶18.
Fraudulent joinder is one exception to the requirement of complete diversity under 28 U.S.C. § 1332. Fraudulent joinder "is a term of art" used to describe a non-diverse defendant who has been joined to an action for the sole purpose of defeating diversity. McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). In order to prove fraudulent joinder, the defendant must prove that 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." Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001) (citing McCabe, 811 F.2d at 1339). There is a heavy burden on the defendant as "[f]raudulent joinder must be proven by clear and convincing evidence," Hamilton Materials, Inc., 494 F.3d at 1206 (9th Cir. 2007), and "all disputed questions of fact and all ambiguities in the controlling state law are [to be] resolved in plaintiff's favor." Calero v. Unisys Corp., 271 F. Supp. 2d 1172, 1176 (N.D. Cal. 2003). "If there is a non-fanciful...
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