Franey v. Advanced Micro Devices

Background

Michael Franey and Jon Navarro alleged that they were full-time facilities technicians assigned to work at a San Jose facility managed by Cushman & Wakefield U.S. Inc. for Advanced Micro Devices, Inc. The plaintiffs alleged that a Cushman supervisor directed them to perform maintenance inside an energized heating, ventilation, and air-conditioning unit despite inadequate training and safety procedures. After they reported the incident to Cushman and AMD personnel, they were placed on unpaid administrative leave and terminated. The plaintiffs also alleged that AMD participated in or directed their termination after officials wanted a “clean slate.”

The plaintiffs asserted four causes of action: wrongful termination in violation of public policy and retaliation under California Labor Code sections 98.6, 1102.5, 6310, and 6311. AMD is a Delaware corporation with its principal place of business in Santa Clara, California. The plaintiffs reside in California, and Cushman is a Missouri corporation. AMD removed the case to federal court. The plaintiffs moved to remand for lack of complete diversity, while AMD moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) and argued that it had been misjoined.

Requests for Judicial Notice

The court granted in part the plaintiffs’ request for judicial notice, taking notice of a California Secretary of State document showing that AMD’s principal place of business, including the offices of its chief executive and chief financial officers, was in Santa Clara, California. The court denied as moot the request concerning the other documents because the parties did not dispute AMD’s California citizenship.

The court denied AMD’s request for judicial notice of the declaration submitted by Lisa Perlmutter. The court found that the declaration contained facts that could reasonably be disputed and therefore could not be treated as true when deciding the motion to dismiss.

Motion to Dismiss

Rule 12(b)(6) permits dismissal when a complaint does not state a claim for relief. The parties agreed that the claims at issue provided remedies against an employer. The plaintiffs argued that AMD and Cushman could have been joint employers. Under the California authorities discussed by the court, a joint employer may include an entity that exercises control over wages, hours, or working conditions, or that suffers or permits the plaintiff to work.

The court held that the plaintiffs plausibly alleged a joint-employer relationship. The complaint alleged that AMD and Cushman used shared systems, supervised work, enforced safety protocols and training, controlled overtime availability, required use of AMD badges and email systems, and had representatives involved in the safety matter. Most importantly, the plaintiffs alleged that AMD participated in or directed the termination based on a Cushman manager’s statement that AMD officials wanted a “clean slate.” At the pleading stage, the court treated the well-pleaded allegation about that statement as true and drew reasonable inferences in the plaintiffs’ favor.

The court also held that the Perlmutter declaration could not be used to defeat the complaint on the Rule 12(b)(6) motion because it was outside the materials properly considered at that stage. The court therefore denied AMD’s motion to dismiss on the failure-to-state-a-claim ground.

Misjoinder, Fraudulent Joinder, and Remand

The court separately considered whether AMD had been fraudulently joined. Fraudulent joinder is a jurisdictional doctrine that allows a federal court to disregard a nondiverse defendant’s citizenship when the plaintiff cannot establish any possible claim against that defendant under state law. Unlike the Rule 12(b)(6) analysis, this inquiry permits the removing party to present additional facts.

For this issue, the court considered the Perlmutter declaration. The declaration stated that Cushman alone was responsible for the plaintiffs’ wages, hours, schedules, hiring, firing, discipline, and training. The court found that the declaration undermined many of the plaintiffs’ allegations about AMD’s day-to-day control. But it did not resolve the allegation that AMD participated in the plaintiffs’ termination. The court stated that testimony from the relevant Cushman manager, cross-examination of Perlmutter, and other evidence could lead a state court to find that AMD exercised control over the termination and was therefore a joint employer.

Because the evidence did not establish that AMD could not be liable on any theory, the court denied AMD’s motion to dismiss on the misjoinder ground and found that AMD had not been fraudulently joined. AMD remained a party, and its California citizenship meant that California citizens were present on both sides of the case. Complete diversity was therefore absent.

Disposition

The court denied AMD’s motion to dismiss on both grounds, found that AMD was not fraudulently joined, and granted the plaintiffs’ motion for remand. The action was remanded to the Superior Court of the State of California for the County of Santa Clara, and the federal court clerk was directed to close the file.