Nieves v. Costco Wholesale Corporation

Background

Lucinda Nieves originally filed this lawsuit in the California Superior Court for Alameda County. The complaint alleges California-law claims for negligence and premises liability against Costco Wholesale Corporation and Costco store manager Kari Shields, based on a slip-and-fall incident at a Costco store in Hayward, California.

Costco removed the case to federal court under diversity jurisdiction. Nieves and Shields are both citizens of California, so complete diversity was absent. Costco argued that Shields should be disregarded because she was fraudulently joined—that is, added to the case only to defeat federal jurisdiction. Nieves asked the court to remand, or return, the case to state court.

Court’s analysis

Federal courts require complete diversity for jurisdiction based on the parties’ citizenship. A defendant seeking removal bears the burden of overcoming the strong presumption against removal. When a non-diverse defendant is alleged to have been fraudulently joined, the defendant must show either actual fraud in the jurisdictional allegations or that the plaintiff cannot possibly state a claim against that defendant. The court explained that this possibility standard is lower than the ordinary standard for dismissing a claim for failure to state a claim.

The court focused on whether Nieves’s negligence and premises-liability claims against Shields were potentially viable. Under California law, those claims require duty, breach, causation, and damages, and a premises-liability defendant must have owned, possessed, or controlled the property. Costco argued that Shields could not be liable because she was on vacation on the date of the incident and therefore lacked control of the store.

The court rejected that argument at the remand stage. It said it was not self-evident that an acting general manager would have no control over the premises while on vacation. The court also noted that Shields’s answer admitted allegations that she operated and managed the store, owed Nieves a duty of reasonable care, and operated, maintained, and otherwise controlled the premises. Those admissions indicated that Shields’s vacation did not necessarily eliminate all of her duties and responsibilities.

Disposition

The court concluded that Costco had not shown that there was no possibility Shields could be liable under the circumstances. It therefore found that Costco had not met its burden to prove fraudulent joinder. The court held that the case had been removed improvidently and without jurisdiction and remanded it to the Superior Court of California for Alameda County under 28 U.S.C. § 1447(c). Judge James Donato signed the order.