Lau v. Wal-Mart Associates, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA [10] 11 CRYSTAL LAU, No. 2:24-cv-01202-DAD-AC 12 Plaintiff, 13 v. ORDER GRANTING PLAINTIFF’S MOTION TO REMAND, DENYING DEFENDANTS’ 14 WAL-MART ASSOCIATES, INC., et al., MOTION TO DISMISS AS MOOT, AND REMANDING THIS ACTION TO THE 15 Defendants. BUTTE COUNTY SUPERIOR COURT 16 (Doc. Nos. 29, 30) [18] 19 This matter is before the court on plaintiff’s motion to remand filed on October 15, 2024 20 and defendants’ motion to dismiss plaintiff’s first amended complaint filed on October 16, 2024. 21 (Doc. Nos. 29, 30.) On October 23, 2024, the motions were taken under submission on the papers 22 pursuant to Local Rule 230(g). (Doc. No. 31.) For the reasons explained below, the court will 23 grant plaintiff’s motion to remand and deny defendants’ motion to dismiss as moot. 24 BACKGROUND 25 On February 2, 2024, plaintiff Crystal Lau filed this discrimination action against her 26 employer, defendant Wal-Mart Associates, Inc. (“Wal-Mart”), managers Robin Feathers and 27 Ibrahim Khalaf (the “Individual Defendants”), and unnamed Doe defendants 1–50 in the Butte 28 County Superior Court. (Doc. No. 1-1 at ¶¶ 2–7.) On April 25, 2024, defendants removed the 1 action to this federal court pursuant to 23 U.S.C. §§ 1332 , 1441(b), and 1446, on the grounds that 2 diversity jurisdiction exists because the amount in controversy is at least $75,000, plaintiff and 3 defendant Wal-Mart are citizens of different states, and the citizenship of the Individual 4 Defendants should be disregarded for purposes of diversity because they “are ‘sham 5 defendants[.]’” (Doc. No. 1 at 5.) In their notice of removal, defendants argue that plaintiff’s 6 complaint fails to allege facts sufficient to support claims against the Individual Defendants 7 brought pursuant to the California Fair Employment and Housing Act (“FEHA”), California 8 Government Code §§ 12900, et seq.1 (Id. at 7.) Plaintiff filed a first amended complaint 9 (“FAC”) in this action on September 16, 2024. (Doc. No. 25.) 10 In her FAC, plaintiff asserts the following eight causes of action: (1) discrimination based 11 on disability in violation of FEHA against defendant Wal-Mart; (2) hostile work environment 12 through harassment based on disability in violation of FEHA against all defendants; (3) retaliation 13 in violation of FEHA against defendant Wal-Mart; (4) failure to provide reasonable 14 accommodation in violation of FEHA against defendant Wal-Mart; (5) failure to engage in the 15 interactive process in violation of FEHA against defendant Wal-Mart; (6) failure to prevent 16 discrimination, harassment, and retaliation in violation of FEHA against defendant Wal-Mart; (7) 17 retaliation in violation of California Labor Code § 1102.5 against defendant Wal-Mart; and (8) 18 wrongful termination in violation of public policy against defendant Wal-Mart. (Id. at ¶¶ 39– 19 105.) 20 On October 15, 2024, plaintiff filed the pending motion to remand this action to the Butte 21 County Superior Court. (Doc. No. 29.) Defendants filed their opposition on October 29, 2024, 22 and plaintiff filed her reply thereto on November 8, 2024. (Doc. Nos. 32, 36.) 23 ///// 24 ///// [25] 1 Defendants also claim that plaintiff’s complaint fails to state a cognizable claim with respect to [26] several causes of action brought against the Individual Defendants because those causes of action 27 do not create personal liability for individual employees. (Doc. No. 1 at 6.) Upon the filing of her first amended complaint, plaintiff no longer asserts those claims against the Individual 28 Defendants. (Doc. No. 25 at 9–18.) 1 LEGAL STANDARD 2 A. Removal Jurisdiction 3 A suit filed in state court may be removed to federal court if the federal court would have 4 had original jurisdiction over the suit. 28 U.S.C. § 1441 (a). Removal is proper when a case 5 originally filed in state court presents a federal question or where there is diversity of citizenship 6 among the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331 , 7 1332(a). An action may be removed to federal court on the basis of diversity jurisdiction only 8 where there is complete diversity of citizenship. Hunter v. Phillip Morris USA, 582 F.3d 1039 , 9 1043 (9th Cir. 2009). 10 “If at any time before final judgment it appears that the district court lacks subject matter 11 jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447 (c). “The removal statute is strictly 12 construed against removal jurisdiction, and the burden of establishing federal jurisdiction falls to 13 the party invoking the statute.” California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th 14 Cir. 2004) (citation omitted); see also Provincial Gov’t of Marinduque v. Placer Dome, Inc., 582 15 F.3d 1083 , 1087 (9th Cir. 2009) (“The defendant bears the burden of establishing that removal is 16 proper.”). If there is any doubt as to the right of removal, a federal court must reject jurisdiction 17 and remand the case to state court. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089 , 18 1090 (9th Cir. 2003); see also Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1118 (9th Cir. 2004). 19 B. Fraudulent Joinder 20 The Ninth Circuit has recognized an exception to the complete diversity requirement 21 where a non-diverse defendant has been “fraudulently joined.” Morris v. Princess Cruises, Inc., [22] 236 F.3d 1061, 1067 (9th Cir. 2001). If the court finds that the joinder of the non-diverse 23 defendant is fraudulent, that defendant’s citizenship is ignored for the purposes of determining 24 diversity. Id. 25 When a plaintiff “fails to state a cause of action against a resident defendant, and the 26 failure is obvious according to the settled rules of the state, the joinder of the resident defendant is 27 fraudulent.” McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987); see also 28 Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). However, 1 “if there is a possibility that a state court would find that the complaint states a cause of action 2 against any of the resident defendants, the federal court must find that the joinder was proper and 3 remand the case to the state court.” Grancare, LLC v. Thrower ex rel. Mills, 889 F.3d 543 , 548 4 (9th Cir. 2018) (quoting Hunter, 582 F.3d at 1046 ); see also Avellanet v. FCA US LLC, No. 195 cv-07621-JFW-KS, 2019 WL 5448199 , at *2 (C.D. Cal. Oct. 24, 2019) (“A claim of fraudulent 6 joinder should be denied if there is any possibility that a plaintiff may prevail on the cause of 7 action against an in-state defendant.”). The Ninth Circuit has acknowledged that the analysis 8 under Federal Rule of Civil Procedure 12(b)(6) shares some similarities with the fraudulent 9 joinder standard, and that “the complaint will be the most helpful guide in determining whether a 10 defendant has been fraudulently joined.” Grancare, LLC, 889 F.3d at 549 . The two tests should 11 not, however, be conflated. Id. 12 If a plaintiff’s complaint can withstand a Rule 12(b)(6) motion with respect to a particular defendant, it necessarily follows that the 13 defendant has not been fraudulently joined. But the reverse is not true. If a defendant cannot withstand a Rule 12(b)(6) motion, the 14 fraudulent inquiry does not end there. For example, the district court must consider . . . whether a deficiency in the complaint can possibly 15 be cured by granting the plaintiff leave to amend. [16] Id. at 550 . Thus, remand must be granted unless the defendant establishes that plaintiff could not 17 amend her pleadings so as to cure the purported deficiency. Padilla v. AT&T Corp., 697 F. Supp. 18 2d 1156, 1159 (C.D. Cal. 2009). Where “arguments go to the sufficiency of the complaint, rather 19 than to the possible viability of [plaintiff’s] claims . . . , they do not establish fraudulent joinder.” 20 Grancare, LLC, 889 F.3d at 552 . 21 DISCUSSION 22 In their notice of removal, defendants assert that this court has diversity jurisdiction over 23 this action because the amount in controversy of this action exceeds $75,000, plaintiff and 24 defendant Wal-Mart are citizens of different states, and the Individual Defendants are 25 fraudulently joined defendants whose citizenship should not be considered. (Doc. No. 1 at ¶¶ 8– 26 10, 13.) In her motion for remand, plaintiff does not dispute that the amount in controversy of 27 this action exceeds $75,000 and also does not dispute the citizenship of any defendants. (Doc. 28 ///// 1 No. 29.) The court therefore only considers whether the Individual Defendants were fraudulently 2 joined in this action. 3 In their opposition, defendants argue that plaintiff’s claim against the Individual 4 Defendants for hostile work environment in violation of FEHA does not, and cannot upon 5 amendment, establish a plausible claim for relief. (Doc. No. 32 at 9.) Specifically, defendants 6 argue that: (1) plaintiff’s allegations do not establish that the Individual Defendants’ conduct was 7 motivated by plaintiff’s disability, and (2) plaintiff’s allegations cannot give rise to an inference 8 that the Individual Defendants’ actions were severe or pervasive enough to create a hostile work 9 environment. (Doc. No. 32 at 11–15.) 10 “To state a claim for hostile work environment in violation of FEHA, a plaintiff must 11 [allege and] demonstrate: (1) membership in a protected group; (2) harassment because plaintiff 12 belonged to this group; and (3) harassment so severe that it created a hostile work environment.” 13 Huezo v. Quantic Ohmega Ticer, No. 2:25-cv-00142-AJR, 2025 WL 723024 , at *3 (C.D. Cal. 14 Mar. 5 , 2025) (citing Lawler v. Montblanc N. Am., LLC, 704 F.3d 1235, 1244 (9th Cir. 2013)). 15 Defendants do not contest that plaintiff has alleged that she is affected by Attention Deficit 16 Hyperactivity Disorder (“ADHD”) nor that this satisfies the first element of a FEHA claim that 17 she is a member of a protected group. (Doc. Nos. 25 at ¶ 16; 32 at 10–12.) Accordingly, the 18 court will consider defendant’s arguments as to the latter two elements of a FEHA cause of action 19 to determine whether plaintiff’s claim is “wholly insubstantial and frivolous.” Anderson v. Sam’s 20 Club, No. 24-cv-02086-RSH-ASG, 2025 WL 846584 , at *5 (S.D. Cal. Mar. 18, 2025) (finding 21 that the defendants who asserted fraudulent joinder bore the burden to show that plaintiff had no 22 possible viable claim). 23 1. Discriminatory Intent 24 Defendants argue that, although plaintiff has alleged multiple instances of harassing 25 comments or conduct by the Individual Defendants, she has not alleged facts that would give rise 26 to an inference that this conduct was because of her disability. (Doc. No. 32 at 11–12.) Plaintiff 27 responds that she need only allege that the harassment was “because of” or “based on” her 28 ///// 1 disability, and that here the harassing conduct was based on the symptoms of her disability. (Doc. 2 No. 36 at 6–7.) 3 Plaintiff alleges, in relevant part, as follows. The Individual Defendants increased “[t]he 4 frequency and severity” of their improper conduct after plaintiff informed defendant Khalaf that 5 she suffered from a disability. (Doc. No. 25 at ¶¶ 25, 27.) After informing defendant Khalaf of 6 her disability, the Individual Defendants called her names, yelled at her, and intentionally 7 damaged merchandise while yelling at her. (Id.) The Individual Defendants “singled Plaintiff out 8 and treated her worse than other employees who were not disabled because of her disability[.]” 9 (Doc. No. 25 at ¶ 28.) Although she does not provide a specific instance, plaintiff asserts the 10 Individual Defendants made “negative comments about her disabilities.” (Id. at ¶ 55.) Plaintiff 11 also alleges that the Individual Defendants were aware of her diagnosis and nonetheless escalated 12 their hostile treatment of her by referring to her using charged and derogatory language. These 13 allegations, she contends, are sufficient to show that it is possible for her to allege discriminatory 14 intent on the part of the Individual Defendants. See Brown v. Beazley USA Servs., Inc., No. 2415 cv-09035-SI, 2025 WL 436716 , at *4 (N.D. Cal. Feb. 7, 2025) (finding that the plaintiff could 16 “possibly” state a FEHA harassment claim based on allegations that the defendant criticized and 17 disparaged the plaintiff after learning of her pregnancy). Moreover, the court notes that this 18 possibility is strengthened by the relaxed pleading standards applied by California courts to 19 allegations of discriminatory intent. See Thomas v. Regents of Univ. of Cal., 97 Cal. App. 5th 20 587, 613–14 (2023) (discussing in the sexual harassment and FEHA harassment contexts how 21 allegations of discriminatory intent often depend on inferences and therefore need not be alleged 22 with particularity); see also Wong v. Michaels Stores, Inc., No. 1:11-cv-00162-AWI-JLT, 2012 23 WL 718646 , at *5 (E.D. Cal. Mar. 5, 2012) (applying state court pleading standards in conducting 24 ///// 25 ///// 26 ///// 27 ///// 28 ///// 1 the fraudulent joinder analysis rather than the plausibility pleading standard applicable to motions 2 to dismiss).2 3 Even if these allegations were found to be insufficient to state a claim in state court under 4 FEHA, defendants have made no argument that these allegations could not possibly be amended 5 to state a cognizable FEHA claim against the Individual Defendants. See Shaw v. Am. Airlines, 6 Inc., No. 2:22-cv-08137-JLS-PLA, 2023 WL 1815870 , at *3–4 (C.D. Cal. Feb. 7, 2023) 7 (concluding that the defendants had not shown fraudulent joinder where the defendants solely 8 argued that the plaintiff’s allegations did not currently state a claim for relief) (citing Lewis v. 9 Time Inc., 83 F.R.D. 455, 460 (E.D. Cal. 1979), aff’d, 710 F.2d 549 (9th Cir. 1983)). 10 Defendants’ contention that plaintiff’s allegations are conclusory is also unavailing. 11 Although plaintiff’s allegation that the Individual Defendants treated her worse “because of her 12 disability” may be somewhat conclusory, such a pleading defect would only make the FAC 13 subject to a demurrer in the state court which does not compel a finding of fraudulent joinder. 14 (Doc. No. 25 at ¶ 28); see Hampton v. Transfield Servs. Ams., No. 14-cv-01251-JAK-E, 2014 WL 15 5427465, at *10 (C.D. Cal. Oct. 23, 2014) (finding that the plaintiff’s conclusory allegations in 16 the complaint may be subject to demurrer but concluding that this did not support a finding of 17 fraudulent joinder) (citing Cal. Code Civ. Proc. § 430.10(e)). Plaintiff’s allegations that she 18 belongs to a protected group, that she was subjected to harassment by the Individual Defendants 19 through belittling and yelling, and that this harassment was motivated by the Individual 20 Defendants’ animus towards her disability is sufficient to show that the Individual Defendants 21 could possibly be held liable under FEHA. See Grancare, LLC, 889 F.3d at 548 (9th Cir. 2018) 22 (finding that a defendant must establish fraudulent joinder either by showing actual fraud in the 23 pleading of jurisdictional facts or by showing that the defendant cannot be liable on any theory); 24 Wong, 2012 WL 718646 , at *6 (concluding that, though the plaintiff only stated in conclusory 25 2 Defendants also contend that certain allegations of plaintiff’s FAC pertain to personnel management decisions, , specifically allegations regarding coaching sessions plaintiff was given, [26] which cannot provide a basis for individual liability in connection with a FEHA hostile work 27 environment claim. (Doc. No. 25 at ¶¶ 29–32; 32 at 13.) The court need not determine whether these allegations could potentially support a hostile work environment claim against the 28 Individual Defendants because it bases its conclusion on plaintiff’s other allegations. 1 fashion that the defendant’s harassing actions were motivated by racial animus, the possibility 2 that the defendant’s actions were racially motivated was sufficient to reject a finding of fraudulent 3 joinder). 4 Accordingly, the court concludes that defendants have not shown fraudulent joinder on the 5 basis that plaintiff cannot adequately allege a discriminatory intent on the part of the Individual 6 Defendants in connection with her FEHA claim. 7 2. Severity and Pervasiveness of Conduct 8 Defendants next argue that the severity of the conduct alleged by plaintiff is insufficient to 9 state a claim of a hostile work environment pursuant to FEHA. (Doc. No. 32 at 14.) Plaintiff 10 retorts that the issue of whether the alleged conduct is so severe or pervasive as to create a hostile 11 work environment is ordinarily a question of fact and that she has adequately alleged some 12 incidents of harassing conduct. (Doc. No. 36 at 10–11.) 13 To state a hostile work environment claim pursuant to FEHA under California law, a 14 plaintiff must allege harassment which is “sufficiently severe or pervasive to alter the conditions 15 of the victim’s employment and create an abusive working environment.” Bailey v. S.F. Dist. 16 Attorney’s Off., 16 Cal. 5th 611 , 629 (2024) (internal quotation marks omitted) (quoting Harris v. 17 Forklift Sys., 510 U.S. 17, 21 (1993)). The California Supreme Court has recognized that even 18 isolated incidents may be severe enough to create a hostile work environment depending on the 19 totality of the circumstances. Id. at 630. 20 Defendants rely on the California Supreme Court’s decision in Aguilar v. Avis Rent a Car 21 System, Inc. for the proposition that isolated acts of harassment cannot constitute actionable 22 harassment under FEHA. (Doc. No. 32 at 14); see Aguilar, 21 Cal. 4th 121 , 130–31 (1999) 23 (“[H]arassment cannot be occasional, isolated, sporadic, or trivial[;] rather the plaintiff must show 24 a concerted pattern of harassment of a repeated, routine or generalized nature.”) (alterations in 25 original)). However, the California Supreme Court has subsequently disapproved of this reading 26 of its decision in Aguilar. Bailey, 16 Cal. 5th at 631 n.6 (noting that an isolated incident of 27 harassment may constitute a hostile work environment depending on the totality of the 28 circumstances). As another district court has explained in considering a claim of fraudulent 1 joinder as to a FEHA claim based upon an alleged hostile workplace: 2 Thus, the California Supreme Court’s opinion in Bailey expressly disclaims the interpretation of Aguilar upon which Defendants rely . 3 . . . Because an isolated incident can constitute actionable harassment under FEHA, the Court cannot say that Plaintiff’s FEHA 4 claim fails due to the absence of allegations supporting “a concerted pattern” of harassment. . . . Moreover, the California Supreme 5 Court’s opinion in Bailey recognizes that “[h]arassment claims are inherently fact specific” and therefore courts “need to consider the 6 totality of the circumstances when assessing the severity of harassment.” Bailey, 16 Cal. 5th at 632. Accordingly, the Court 7 cannot conclude at this stage of the proceedings that Plaintiff’s allegations of harassment against Defendant Yacoub are not 8 sufficiently severe to be actionable under FEHA. See Dunn v. Infosys Ltd., [No. 12-cv-03561-YGR], 2012 WL 4761901 , at *4 (N.D. Cal. 9 Oct. 5, 2012) (“Whether the conduct was severe or pervasive enough to create a hostile or abusive working environment depends on the 10 totality of the circumstances and is ordinarily a question of fact.”); see, e.g., Felix v. California, [No. 1:13-cv-00561-LJO-SKO], 2013 11 WL 3730176 , at *6 n.4 (E.D. Cal. July 12, 2013) (denying in part defendants’ motion to dismiss a FEHA claim due to the lack of “a 12 complete evidentiary record” and “stress[ing] that a showing of facial plausibility at the pleading stage does not necessarily mean that 13 Plaintiffs will ultimately prevail on summary judgment or at trial”). 14 Huezo, 2025 WL 723024 , at *3. 15 Here, as discussed above, plaintiff has alleged several instances of conduct that may have 16 created a hostile work environment and those allegations are sufficient to show the possibility of 17 recovering against the Individual Defendants. See Shelton v. Wayfair LLC, No. 2:24-cv-0154118 TLN-JDP, 2025 WL 467263 , at *4 (E.D. Cal. Feb. 12, 2015) (finding that the defendants had 19 failed to establish that there was no possibility of the plaintiff showing the defendants’ alleged 20 actions created a hostile work environment where plaintiff had alleged instances of harassing 21 conduct and because a single incident of harassing conduct is “sufficient to create a triable issue 22 regarding the existence of a hostile work environment”) (citing Cal. Gov’t Code § 12923(b)). 23 Therefore, the court concludes that defendants have not met their burden of establishing that 24 plaintiff has no possibility of alleging sufficiently severe or pervasive conduct to state a 25 cognizable claim pursuant to FEHA. 26 Because defendants have not met their burden with respect to either the discriminatory 27 intent or the severity elements as to a claim of creating a hostile work environment in violation of 28 FEHA, the court concludes that they have also not met their burden to show that the Individual 1 | Defendants are fraudulently joined. Accordingly, plaintiff's motion to remand this action to the 2 | Butte County Superior Court will be granted.? 3 CONCLUSION 4 For the reasons stated above, 5 1. Plaintiff's motion to remand (Doc. No. 29) is granted; 6 2. Defendants’ motion to dismiss (Doc. No. 30) is denied as moot; 7 3. This action is remanded to the Butte County Superior Court, pursuant to 28 U.S.C. 8 § 1447(c), due to this court’s lack of subject matter jurisdiction; and 9 4. The Clerk of the Court is directed to close this case. 10 IT IS SO ORDERED. Dated: _ April 16, 2025 Dae A. 2, pel 12 DALE A. DROZD UNITED STATES DISTRICT JUDGE [26] 27 | -—_ 3 Defendants’ motion to dismiss plaintiff's FAC (Doc. No. 30) will therefore be denied as having 28 | been rendered moot by this order.