Opinion
No. C 15-03538 WHA
10-08-2015
SANDRA RAMIREZ, Plaintiff, v. JAMES SPELTZ, GRACE NAYLOR, AVALONBAY COMMUNITIES, INC., and DOES 1-50, Defendant.
ORDER REMANDING ACTION TO STATE COURT
INTRODUCTION
In this workplace-harassment action, plaintiff has sued her former employer and two employees. The action was removed from state court although the parties are not completely diverse, based on the theory that the employees were fraudulently joined. The employees now move to dismiss all claims against them. For the reasons stated below, the case is REMANDED to Contra Costa Superior Court and defendants' motion to dismiss is DENIED AS MOOT.
STATEMENT
1. PROCEDURAL HISTORY.
This is a follow-on action to a lawsuit previously reduced to judgment. Prior to commencing this action, plaintiff Sandra Ramirez sued her employer, AvalonBay Communities, Inc., (also a defendant here) in state court, asserting claims for discrimination, harassment, and tortious discharge. That case was removed to federal court here in San Francisco on the basis of diversity. Ramirez v. AvalonBay Communities, Inc., No. 14-4211 (N.D. Cal.). Ramirez is a citizen of California, AvalonBay is incorporated in Maryland and has its principal place of business in Virginia.
Nearly six months after the deadline to seek leave to add new parties and just three weeks before the close of discovery, Ramirez moved to voluntarily dismiss that case without prejudice. Ramirez wanted to join two employees of AvalonBay — general manager James Speltz and human resources director Grace Naylor — as defendants, but (wrongly) believed that joining those individuals (both California citizens), would deprive the court of subject-matter jurisdiction. She also feared that the limitations period would bar claims against Speltz and Naylor. The day before she moved to dismiss her first case, Ramirez commenced this action against Speltz and Ramirez in state court.
Ramirez's motion for voluntary dismissal of her first case was denied. AvalonBay then moved for summary judgment, which was granted. While that motion was pending, this action was removed to federal court, on the basis that Speltz and Naylor were fraudulently joined, and the remaining parties were completely diverse. This action was then related to Ramirez's first action. Speltz and Naylor now move to dismiss all claims against them.
2. FACTUAL BACKGROUND.
From 2010 to 2014, plaintiff Sandra Ramirez, a lesbian, worked as a leasing agent with defendant AvalonBay Communities, Inc., a firm that developed, redeveloped, and managed apartment communities. At first, Ramirez worked at a property in Dublin, California. One of Ramirez's duties was to conduct tours of the property for prospective residents. She received commissions from successful sales of apartment units to those prospective residents. In 2012, Ramirez fell while on the job, and injured her knee. She was placed on modified duty, which limited her to conducting three tours a day.
In 2013, AvalonBay sold the Dublin property, and transferred Ramirez to a new property called Walnut Creek. Soon after Ramirez started at Walnut Creek, defendant James Speltz took over as general manager for that property. Ramirez alleges that "from the time Mr. Speltz arrived, his attitude towards [her] was negative and aggressive and [he] maintained a bully type of management when it came to her" (Amd. Compl. ¶ 13).
In August 2013, Speltz reassigned Ramirez to work in the back office where she could not conduct tours, because "she was unable to give 'good customer service,' with her disability" (id. ¶ 17). This reassignment negatively affected her commissions. Ramirez asked her doctor to put her back on full duty on a temporary basis, which was granted (id. ¶ 19). Ramirez continued to be subject to a series of written disciplinary actions and negative performance reviews issued by Speltz, for her contributions to team activities, for having her girlfriend visit the office, and for refusing to conduct a tour that Ramirez believed violated fair housing law. Those write-ups were approved by Naylor (id. ¶¶ 24-25, 31).
Ramirez scheduled a meeting with Naylor, the human resources director, to discuss her concerns about how Speltz was treating her. Naylor informed Ramirez during that meeting that she would have to leave in order to get to a personal appointment, which Ramirez felt was dismissive. Naylor did not re-schedule another meeting with Ramirez (id. ¶¶ 28-30).
Ramirez was ultimately terminated from her position at AvalonBay (id. ¶ 33).
Ramirez now brings claims against both Speltz and Naylor for harassment on the basis of sexual orientation, against Speltz only for harassment on the basis of disability, and against AvalonBay for retaliation. Speltz and Naylor now move to dismiss Ramirez's harassment. Attached to her opposition to this motion, Ramirez filed a proposed second amended complaint (Pl.'s Opp., Exh. 1). The proposed second amended complaint alleges a single harassment claim against both Speltz and Naylor, on the basis of both sexual orientation and disability along with a retaliation claim against AvalonBay. Ramirez has not moved to remand this action, however, federal subject-matter jurisdiction only exists if Speltz and Naylor were fraudulently joined. This order follows full briefing and oral argument.
ANALYSIS
Ramirez, Speltz, and Naylor are all citizens of California, but defendants argue that removal to federal court was proper because Speltz and Naylor were fraudulently joined, and the remaining parties were diverse. Speltz and Naylor argue that Ramirez has failed to state a claim against them, which they contend is sufficient to establish fraudulent joinder.
"If a plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state, the joinder of the resident defendant is fraudulent," and the fraudulently joined defendants' citizenship may be disregarded for removal purposes. McCabe v. General Food Corp., 811 F.2d 1335, 1339 (9th Cir. 1987). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
Our court of appeals has not offered a standard to determine whether a failure to state a claim is sufficiently "obvious according to the settled rules of the state," to establish fraudulent joinder. Every district court in our circuit to address the question has found that "some room must exist between the standard for dismissal under Rule 12(b)(6), for example, and a finding of fraudulent joinder." Davis v. Prentiss Properties Ltd., Inc., 66 F. Supp. 2d 1112, 1115 (C.D. Cal. 1999) (Judge Harry Pregerson). A mere "glimmer of hope" that the plaintiff could establish a claim is sufficient to defeat removal on the basis of fraudulent joinder. Segura v. Allstate Insurance Co., No 13-5594, 2014 WL 394657, at *4 (N.D. Cal. Aug. 11, 2014) (Judge Yvonne Gonzalez Rogers). Numerous decisions have specifically held that removal on the basis of fraudulent joinder is inappropriate unless the defendant can show that the plaintiff "would not be afforded leave to amend his complaint to cure [the] purported deficiency." Nickelberry v. DaimlerChrysler Corp., No. 06-1002, 2006 WL 728200 (N.D. Cal. Apr. 17, 2006) (Judge Maxine Chesney); see also Pooshs v. Altria Group, Inc., 331 F. Supp. 2d 1089, 1096 (N.D. Cal. 2004) (Judge Phyllis J. Hamilton). These decisions all require the district court to "walk a very fine line: it must consider the merits of the matter without assuming jurisdiction over it." Davis, 66 F. Supp. 2d at 1114.
In the absence of binding authority and with the benefit of persuasive authority, this order follows the trend of district courts in our circuit and finds a defendant cannot be held fraudulently joined simply on the basis that the plaintiff's claim could not survive a motion to dismiss. Rather, a finding of fraudulent joinder requires a showing that the plaintiff could not plead any facts sufficient to state a claim against those defendants, such that leave to amend would be futile. Speltz and Naylor have failed to carry that burden.
Ramirez's complaint alleges that Speltz's and Naylor's respective conduct constituted harassment within the California Fair Employment and Housing Act. Unlike a discrimination claim, for which only an employer may be liable, an individual employee may be liable for workplace harassment (in addition to an employer). Compare Cal. Gov. Code § 12940(a) with § 12940(j)(1). To plead a claim for harassment, Ramirez must "demonstrate that the conduct complained of was severe enough or sufficiently pervasive to alter the conditions of employment and create a work environment that qualifies as hostile or abusive" because of her protected status. Lyle v. Warner Bros. Television Products, 38 Cal. 4th 264, 283 (2006) (emphasis in original). A harassment claim specifically focuses on hostility and changed conditions in the social environment of the workplace, as opposed to the explicit terms and conditions of employment, which are the subject of discrimination claims. Roby v. McKesson Corp., 47 Cal. 4th 686, 708-09 (2009).
Recognizing that distinction, the California Supreme Court, in Reno v. Baird, 18 Cal. 4th 640, 646-47 (1998), established that personnel-management actions, such as work assignments, performance evaluations, or firing, cannot, themselves, establish a claim for harassment:
We conclude, therefore, that the Legislature intended that commonly necessary personnel management actions such as hiring and firing, job or project assignments, office or work station assignments, promotion or demotion, performance evaluations, the provision of support, the assignment or nonassignment of supervisory functions, deciding who will and who will not attend meetings, deciding who will be laid off, and the like, do not come within the meaning of harassment. These are the actions of a type necessary to carry out the duties of business and personnel management. These actions may retrospectively be found discriminatory if based on improper motives, but in that event the remedies provided by FEHA are those for discrimination, not harassment. Harassment, by contrast, consists of actions outside the scope of job duties which are not of a type necessary to do business and personnel management. This significant distinction underlies the differential treatment of harassment and discrimination in the FEHA.A contrary holding would chill a supervisor's ability to perform his job responsibilities, inasmuch as a supervisor cannot insulate himself from personal liability exposure by refraining from performing essential job functions, although he can insulate himself by declining to use slurs, derogatory drawings, or engaging in other offensive conduct unrelated to job duties. Id. at 646.
Every allegation in Ramirez's first amended complaint relates to a personnel-management decision. Ramirez's allegations against Speltz pertain to disciplinary actions, work-station assignments, and termination. Ramirez's allegations against Naylor pertain directly to her performance of her duties providing support to Ramirez in her capacity as the human resources director and her approval of the performance evaluations issued by Speltz. Thus, defendants argue that Ramirez has failed to plead any factual basis for a claim of harassment.
Indeed, even if Ramirez's allegations that Speltz and Naylor performed their job duties with discriminatory animus are credited, there is still no basis in Ramirez's first amended complaint from which one could infer that either defendant created a social environment so severely hostile as to change the conditions of Ramirez's employment, apart from the explicit changes that resulted from personnel-management actions. Those allegations sound in discrimination and may not be brought against Speltz or Naylor as individuals.
In her opposition to this motion, Ramirez argues that her allegations were not just about personnel-management actions, but also about the way defendants "communicated and engaged with" her (Pl.'s Opp. at 4). Ramirez has filed a proposed second amended complaint. That proposed complaint offers specific details about each of the personnel-management decisions in Ramirez's first amended complaint, along with new examples of allegedly-discriminatory personnel-management decisions.
The proposed second amended complaint includes allegations that Speltz and Naylor spoke to her in a different tone from how they spoke to other employees (id., Exh. 1 ¶ 13, 61). Ramirez also alleges that "she walked on eggshells around Mr. Speltz . . . trying not to do anything to upset him," although she offers no specific examples of "walking on eggshells" (id. ¶ 23). Those allegations could support a claim for hostile work environment, but as proposed they are conclusory and not entitled to credence on a motion to dismiss. Defendants face a higher burden here. They must show that Speltz and Naylor were fraudulently joined, not merely that Ramirez has failed to state a claim against them. Defendants have not shown us that we can safely rule out the possibility that Ramirez could allege specific facts that would support a claim for harassment, if given leave to amend. The fact that her proposed second amended complaint lacks such allegations is unavailing.
Accordingly, Speltz and Naylor have failed to carry the burden that they were fraudulently joined, and their citizenship must be considered. As Ramirez, Speltz, and Naylor are all California citizens, there is not complete diversity. This Court lacks subject-matter jurisdiction.
CONCLUSION
For the reasons stated above, this case is hereby REMANDED to Contra Costa Superior Court. This is without prejudice to a future removal in the event the state court eventually dismisses the individual defendants. Defendants' motion to dismiss is DENIED AS MOOT.
IT IS SO ORDERED. Dated: October 8, 2015.
/s/_________
WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE