Wu v. Shopify Inc.

Background

Hong Wu sued Shopify (USA) Inc. and former coworkers Matthew Colyer and Michael Tamir in California Superior Court. Wu alleged that Shopify terminated his employment because of his race and brought various statutory, contractual, and tort claims. Shopify removed the case to federal court based on diversity jurisdiction. Wu moved to remand, arguing that the court lacked diversity jurisdiction because Colyer and Tamir are California citizens.

Fraudulent joinder

The court explained that fraudulent joinder is a rule allowing a federal court to disregard a nondiverse defendant’s citizenship when the plaintiff cannot establish a cause of action against that defendant in state court. Shopify had the burden to show that there was no possibility that a state court would find that Wu stated a claim against Colyer and Tamir.

Wu asserted California Fair Employment and Housing Act harassment claims and intentional infliction of emotional distress claims against the two coworkers. The court held that Wu did not identify harassing conduct by either coworker. His allegations described their participation in meetings and discussions in which Andrew McNamara allegedly diminished Wu’s responsibilities, and their failure to include Wu. The court characterized those allegations as inaction related to personnel decisions, not harassment. It also noted that neither coworker was in Wu’s supervisory chain and that their declarations stated they had limited contact with Wu and were unaware of harassment experienced by Wu. Wu submitted no evidence rebutting those declarations.

The court likewise found that Wu did not allege the extreme and outrageous conduct required for an intentional infliction of emotional distress claim. The allegations described only implicit participation in personnel decisions, which the court held did not meet that standard even if the decisions were improperly motivated. The court rejected Wu’s argument that the alleged lack of a legitimate reason for diminishing his responsibilities changed the result. It concluded that Colyer and Tamir were fraudulently joined and disregarded their citizenship for purposes of diversity jurisdiction.

Amount in controversy

The complaint sought more than $35,000 but did not otherwise specify the amount at stake. The court therefore required Shopify to show by a preponderance of the evidence that more than $75,000 was in controversy.

Wu stated that his Shopify salary was $395,000 and that Shopify discharged him on April 4, 2025. He also stated that he began a new job in or around late June 2025. Using 261 weekdays in 2025, the court calculated a daily salary of approximately $1,513.40. Assuming that late June began on June 16, the court calculated 50 weekdays of unemployment between April 5 and June 15, resulting in approximately $75,670 in lost wages. The court also noted that attorney fees potentially recoverable under California law for Wu’s harassment claim against Shopify increased the amount in controversy.

Ruling

After disregarding Colyer’s and Tamir’s citizenship, the court found that a California plaintiff and a New York- and Delaware-connected defendant remained, with more than $75,000 in controversy. The court exercised diversity jurisdiction and denied Wu’s motion to remand. The order addressed whether the case should remain in federal court, not whether Wu ultimately would prevail on his employment claims.