Karl v. Zimmer Biomet Holdings, Inc.

Background

James Karl brought an employment action against his former employer, Zimmer Biomet Holdings, Inc., and his former supervisor, Donald Quigley. Karl alleged that they retaliated against him for supporting an employment class action. He alleged that they suggested he resign, changed his sales territory so he would receive fewer commissions, withheld earned commissions, interfered with his client relationships, and terminated or constructively terminated him in December 2021.

Karl filed state-law claims in the Superior Court for the County of Marin for unlawful retaliation, failure to pay wages, wrongful termination, intentional infliction of emotional distress, negligent misrepresentation, and intentional misrepresentation. Zimmer Biomet removed the case to federal court based on diversity jurisdiction, arguing that Quigley, identified as a California resident, had been fraudulently joined to defeat federal jurisdiction. Karl moved to remand the case to state court and requested attorney’s fees and costs related to the removal.

Fraudulent Joinder and Remand

The court explained that fraudulent joinder exists when a plaintiff cannot state a claim against a resident defendant under settled state-law rules. A defendant asserting fraudulent joinder bears a heavy burden. If there is any possibility that a state court could find the claim valid, remand is appropriate.

The court found a possibility that Karl could state an unlawful-retaliation claim against Quigley under California Labor Code section 1102.5, the California Whistleblower Protection Act. The court noted that California courts had not addressed whether the statute, as amended in 2013, permits claims against supervisors. Because the amended language was ambiguous and could reasonably be read to allow supervisory liability, the court concluded that Karl’s claim was not obviously invalid for purposes of fraudulent joinder.

The court also found a possibility that Karl could state an intentional-infliction-of-emotional-distress claim against Quigley. Karl alleged that Quigley tied changes to his sales territory to whether Karl abandoned his support for the class action. The court determined that this alleged use of managerial authority for retaliation could be considered contrary to public policy and potentially extreme or outrageous, rather than ordinary personnel management. The court also rejected Zimmer Biomet’s argument that the claim was barred by the California Workers’ Compensation Act because the alleged conduct could fall outside the normal employment relationship.

Because these two claims could possibly proceed against Quigley, the court did not address Karl’s misrepresentation claim and granted the motion to remand. The court ordered the case remanded to the California Superior Court for the County of Marin based on lack of subject-matter jurisdiction and directed the clerk to close the federal file.

Attorney’s Fees and Costs

Under 28 U.S.C. § 1447(c), a court that remands a case may award costs and actual expenses, including attorney’s fees, caused by the removal. Judge William Alsup denied Karl’s request for fees and costs because the court found that Zimmer Biomet had a sufficient minimal good-faith basis for removing the case.

Disposition

Karl’s motion to remand was GRANTED. Karl’s motion for attorney’s fees and costs was DENIED. The case was REMANDED to the California Superior Court for the County of Marin.