Gibbs v. BB OPCO LLC

Background

Jessica Gibbs, identified as a California citizen, sued BB OPCO LLC and Pichinda Duong in the Superior Court for Sonoma County. The complaint asserted state-law discrimination and employment claims, including a harassment claim under the California Fair Employment and Housing Act against Duong.

BB OPCO removed the case to federal court based on diversity jurisdiction. Diversity jurisdiction generally requires that all plaintiffs be citizens of different states from all defendants and that the amount in controversy exceed $75,000. BB OPCO acknowledged that Duong was a California citizen but argued that removal was proper because Duong had not been served when the case was removed and because she was a “sham defendant.”

Service of the Complaint

The court explained that federal removal law generally requires all proper defendants to join or consent to removal. BB OPCO’s removal notice stated that Duong had not been served. BB OPCO later submitted a declaration stating that it had contacted Duong before removal and that she confirmed she had not been served. BB OPCO then learned that Duong was served two days after removal.

The court concluded that this declaration was enough to show proper removal on the service issue, assuming BB OPCO could obtain Duong’s consent within 30 days after service. The court’s remand ruling instead turned on whether Duong had been fraudulently joined.

Fraudulent Joinder and Jurisdiction

A defendant asserting federal jurisdiction has the burden of establishing it. Under the fraudulent-joinder doctrine, a federal court may disregard the citizenship of a nondiverse defendant only when the plaintiff cannot possibly establish liability against that defendant under any theory. If there is a possibility that a state court would find that the complaint states a valid claim against the resident defendant, joinder is proper and the case must be remanded.

The court held that BB OPCO had not met that demanding standard. Gibbs’s complaint alleged a FEHA harassment claim against Duong. Although BB OPCO argued that the complaint described only routine supervisory decisions, the court stated that this argument did not come close to showing fraudulent joinder under binding Ninth Circuit precedent. BB OPCO withdrew its fraudulent-joinder position, while preserving Duong’s ability to file a motion under Rule 12 or another response to the complaint.

Because Duong was properly considered a defendant, her California citizenship meant that Gibbs and Duong were not completely diverse. The court therefore concluded that it lacked diversity jurisdiction.

Disposition

The court REMANDED the case to the Superior Court of the State of California for the County of Sonoma. It also ordered the federal clerk to transfer the case file, together with a certified copy of the remand order, to the state-court clerk. The opinion did not decide the underlying discrimination, employment, or harassment claims.