Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-02643/USCOURTS-casd-3_14-cv-02643-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LATASHA TONE,

Plaintiff,

CASE NO. 14cv2643-LAB (DHB)

ORDER OF REMAND

vs.

WAL-MART STORES, INC., et al.,

Defendants.

This case arises from Wal-Mart's termination of Latasha Tone. After she was fired,

Tone sued Wal-Mart and her former supervisor, Camille Canegan, in state court. Wal-Mart

removed the case to federal court, alleging diversity of citizenship. It contends Canegan's

California citizenship doesn't defeat diversity because it's legally impossible for Tone to prove

her intentional infliction of emotional distress (IIED) or defamation claims against Canegan

and, therefore, she was fraudulently joined. 

The Court ordered Wal-Mart to show cause why this Court has jurisdiction in light of

Wason v. Am. Intern. Group, Inc., 2010 WL 1881067 (S.D. Cal. May 6, 2010), which

undermines the contention that Tone can't state an IIED claim against Canegan. The Order

cautioned that if Wal-Mart failed to distinguish Wason, this case would be remanded.

I. Legal Standards

A. Removal

Federal Courts are under an independent obligation to confirm their own jurisdiction,

even if neither party raises the issue. See United Investors Life Ins. Co. v. Waddell & Reed

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Inc., 360 F.3d 960, 966 (9th Cir. 2004). Under 28 U.S.C. § 1441(a), a defendant may remove

from state court only if the case could originally have been brought in federal court. The rule

is construed strictly against removal, and "[f]ederal 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); see also Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988). A removing party

bears the burden of proving the requirements for federal jurisdiction. Abrego Abrego v. The

Dow Chem. Co., 443 F.3d 676, 685 (9th Cir. 2006). Otherwise, the case must be remanded.

28 U.S.C. § 1447(c).

B. Fraudulent Joinder

"[O]ne exception to the requirement of complete diversity is where a non-diverse

defendant has been 'fraudulently joined.'" Morris v. Princess Cruises, Inc., 236 F.3d 1061,

1067 (9th Cir. 2001). Fraudulent joinder occurs where "the 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." Id. (quotation omitted). "If there is any possibility that the state law might

impose liability on a resident defendant under the circumstances alleged in the complaint,

the federal court cannot find that joinder of the resident defendant was fraudulent, and

remand is necessary." Hugais v. Sara Lee Corp., 2013 WL 3929141, at *2 (N.D. Cal. July 26,

2013). "There is a presumption against finding fraudulent joinder." Plute v. Roadway

Package Sys., Inc., 141 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001).

II. Discussion

Wal-Mart argues Tone can't state an IIED claim against Canegan because: (1) the

manager's privilege bars the IIED claim; (2) the Workers' Compensation Act (WCA) preempts

the IIED claim; and (3) Tone doesn't have a plausible IIED claim.

A. Manager's Privilege

Cases analyzing the manager's privilege apply it only to contractual or economic

relationships, not IIED claims. See Onelum v. Best Buy Stores L.P., 948 F. Supp. 2d 1048,

1052 (C.D. Cal. 2013) (finding defendants failed to meet their burden since it's unclear

whether the "manager's privilege" applied to an IIED claim); Barsell v. Urban Outfitters, Inc.,

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2009 WL 1916495, at *5 (C.D. Cal. July 1, 2009) ("We are unaware of any case holding that

the managerial privilege applies to insulate a defendant from liability for intentional conduct

in violation of public policies contained in FEHA."). The Court finds that the manager's

privilege doesn't apply here.

B. Workers' Compensation Act

Generally, employer-based actions causing emotional distress are preempted by the

WCA, see Johns-Manville Prod. Corp. v. Super. Ct., 27 Cal. 3d 465 (1980), since they are

"part of the normal risk of employment." Charles J. Vacanti, M.D., Inc. v. State Comp. Ins.

Fund, 24 Cal. 4th 800, 814–15 (2001). The California Supreme Court has carved out two

exceptions to this rule: (1) actions contravening "fundamental public policy;" and (2) actions

that "exceed[] the risks inherent in the employment relationship." Livitsanos v. Super. Ct.,

2 Cal. 4th 744, 754 (1992). Discriminatory acts, for example, contravene fundamental public

policy and therefore fall outside the normal employment relationship:

An employer's behavior while dealing with employees can be outside the

compensation bargain if the evidence shows it was beyond what would be

considered normal aspects of an employment relationship. If an action

contravenes a fundamental public policy (e.g., discrimination, harassment,

strike-breaking, termination for refusal to testify falsely), it cannot be viewed as

a risk of employment or a normal part of the work relationship. 

Wason, 2010 WL 1881067, at *4 (emphasis added); see also Fretland v. Cnty. of Humboldt,

69 Cal. App. 4th 1478 (1999) ("Fretland's emotional distress claims are not barred by the

exclusivity rule to the extent they seek emotional distress damages for the alleged

work-related injury discrimination."); Accardi v. Super. Ct., 17 Cal. App. 4th 341, 352 (1993)

("[A] claim for emotional and psychological damage, arising out of employment, is not barred

where the distress is engendered by an employer's illegal discriminatory practices.").

Other federal districts courts agree with this conclusion. See Bejarano v. Int'l Paper

Co., 2015 WL 351420, at *11 (E.D. Cal. Jan. 23, 2015) (holding that discriminatory conduct

prohibited under FEHA can form the basis of an IIED claim); Graves v. Johnson Control

World Serv. Inc., 2006 WL 618796, at *11 (N.D. Cal. Mar. 13, 2006) ("[C]ourts considering

[IIED] claims have clearly ruled that such claims can be brought where the distress is

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engendered by an employer's illegal discriminatory practices" (internal quotation marks

omitted)). None of these cases require an IIED plaintiff to allege an "extracurricular activity"

like fraud or harassment, as Wal-Mart asserts. (Docket no. 15 at 4:2–11.) They only suggest

that either discrimination or harassment may shift an employer's conduct outside the WCA. 

See Nazir v. United Airlines, 178 Cal. App. 4th 243, 288 (2009) ("Neither discrimination nor

harassment is a normal incident of employment.").

Wal-Mart argues that Miklosy v. Regents of Univ. of California, 44 Cal. 4th 876 (2008)

held that public policy exceptions—like discrimination—only apply to wrongful termination

claims, not to discharge claims. (Docket no. 15 at 1:21–25.) But that's wrong. Miklosy held

that the plaintiff's claims were preempted by the WCA because "whistle blower retaliation"

is a risk inherent in the normal employment relationship. See Miklosy, 44 Cal. 4th 876, 903.

Tone's claim is different; she alleges discrimination, which is not a risk inherent in the normal

employment relationship. See Hattox v. State Farm Mut. Auto. Ins. Co., 2013 WL 314953,

at *6, n.4 (S.D. Cal. Jan. 25, 2013). Wal-Mart hasn't shown the WCA preempts Tone's

discrimination claim against Canegan.

C. Failure to State a Claim

Even if Tone hasn't plausibly stated an IIED claim, Wal-Mart still must show that it

would be impossible for her to amend her complaint to allege a viable claim. See Birkhead

v. Parker, 2012 WL 4902695, at *3 (N.D. Cal. Oct. 15, 2015) (the defendant "must do more

than show that the complaint at the time of removal fails to state a claim against the

non-diverse defendant, but must show that there is no possibility that the plaintiff could

prevail on any cause of action it brought against the non-diverse defendant"). Wal-Mart

hasn't made the necessary showing:

Merely showing that an action is likely to be dismissed against [a] defendant

does not demonstrate fraudulent joinder. Rather, it must appear to a near

certainty that joinder was fraudulent. As a result, the removing defendant must

establish that there is absolutely no possibility that the plaintiff would be able

to establish a cause of action against the in-state defendant . . . [t]hus, that a

claim against the in-state defendant is insufficiently pled does not prove clearly

and convincingly that there is absolutely no possibility that the plaintiff will be

able to establish a cause of action. 

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Amarant v. Home Depot USA., Inc., 2013 WL 3146809, at *6 (E.D. Cal. June 18, 2013)

(internal citations and quotation marks omitted). Wal-Mart may ultimately prevail on what

appears to be a relatively weak IIED claim, but for now it bears the burden to show by clear

and convincing evidence that Canegan was fraudulently joined. It hasn't.

III. Conclusion

Because Tone and Canegan are both citizens of California, diversity jurisdiction is

lacking. This action is REMANDED to the Superior Court of the State of California for the

County of San Diego. Defendants' motion to dismiss (Docket no. 4) is DENIED as moot.

IT IS SO ORDERED.

DATED: August 3, 2015

HONORABLE LARRY ALAN BURNS

United States District Judge

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