Ramirez v. Oldcastle APG West, Inc.

Background

Alejandro Munguia Ramirez brought a state-law employment action naming Oldcastle APG West, Inc. and Ruben Romero as defendants. Oldcastle removed the action to federal court based on diversity jurisdiction. The complaint, however, named Romero as a non-diverse defendant. Oldcastle argued that Romero was a “sham defendant,” meaning a defendant whose citizenship should be ignored for purposes of federal jurisdiction.

Ramirez moved to remand, or return, the case to state court. The court vacated the scheduled hearing and decided the motion without oral argument.

Court’s Analysis

A defendant seeking removal bears the burden of establishing federal jurisdiction. The court explained that fraudulent joinder can be established in either of two ways: by showing actual fraud in the pleading of jurisdictional facts, or by showing that the plaintiff cannot establish a cause of action against the non-diverse defendant in state court.

The court found no allegation that Ramirez had committed fraud in pleading the jurisdictional facts. It also held that Oldcastle had not shown that Ramirez could not possibly prevail against Romero on any legal theory. Oldcastle argued that Ramirez’s allegations were legally insufficient to support a harassment claim against Romero. The court characterized that argument as applying the standard for failure to state a claim under Rule 12(b)(6), which is not the same as the standard for fraudulent joinder.

The court noted that Oldcastle acknowledged that an individual such as Romero could be liable for harassment. It further stated that a possible deficiency in the complaint could potentially be corrected by allowing Ramirez to amend the complaint. That possibility prevented the court from treating Romero as a sham defendant. The court also rejected as irrelevant to the jurisdictional question Oldcastle’s argument concerning whether Romero was a managing agent. The court cited California’s Fair Employment and Housing Act provision stating that an employee of an entity covered by that law may be personally liable for prohibited harassment perpetrated by the employee.

Ruling

The court granted Ramirez’s motion to remand and remanded the lawsuit to Contra Costa Superior Court. The court stated that Oldcastle’s removal was not objectively reasonable and had failed to cite governing Ninth Circuit precedent, but it also noted that Ramirez had not cited that precedent and that the case was being remanded before Ramirez filed a reply brief. Exercising its discretion, the court declined to award fees and costs. The order disposed of Docket No. 7.