Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01853/USCOURTS-caed-2_06-cv-01853-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:2000e Job Discrimination (Employment)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

VICKI NAZAROFF, KIM DE SANTO

and SONIA ORTEGA,

NO. CIV. S-06-1853 WBS KJM

Plaintiff,

v. MEMORANDUM AND ORDER RE:

MOTION TO REMAND, REQUEST FOR

COSTS AND EXPENSES, AND TO

COMPEL ARBITRATION AND STAY

PROCEEDINGS

AMERIQUEST MORTGAGE COMPANY,

INC.; RICARDO PACHECO, an

individual; and DOES 1 through

50 inclusive,

Defendants.

----oo0oo----

Plaintiffs Vicki Nazaroff, Kim De Santo, and Sonia

Ortega filed suit against defendants Ameriquest Mortgage Company,

Inc., and Ameriquest manager Richard Pacheco claiming that

defendants’ conduct violated numerous provisions of the

California Fair Employment and Housing Act (“FEHA”) as well as

state tort law. Defendants removed the case to this court, and

plaintiffs now seek to remand, arguing that removal was improper

because this court lacks jurisdiction. For the following

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Vicki Nazaroff began working for Ameriquest on or about 1

January 2003 as an Account Executive. (Compl. ¶ 17.) Kimberly

De Santo began working for Ameriquest on or about October 2003 as

a loan processor. (Compl. ¶ 25.) Sonia Ortega began working for

Ameriquest on or about September 9, 2002 as an Account Executive. 

(Compl. ¶ 36.)

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reasons, this court will grant plaintiffs’ motion to remand.

I. Factual and Procedural Background

Plaintiffs were employed by defendant Ameriquest

Mortgage Company, Inc. (“Ameriquest”), one of the nation’s oldest

and largest home-equity lenders. (Compl. ¶ 12.) They were hired

in 2002 and 2003 to work in different capacities under the 1

direct supervision of Ameriquest manager, defendant Richard

Pacheco. (Compl. ¶¶ 11, 17, 25, 36.) Over the course of several

years, plaintiffs claim that they were the victims of systematic

sexual harassment, retaliation, and gender-based discrimination,

caused by disparate terms of employment and the creation of a

hostile work environment. (Compl. ¶¶ 18, 26, 37.)

In particular, plaintiffs allege they were told lewd

jokes and sexual fantasies by co-workers, sent e-mails that

included pornographic photos and explicit content, and ridiculed

on account of their sex and age. (Compl. ¶¶ 19, 20, 21.) 

Plaintiffs further allege that, when they brought this conduct to

the attention of their manager, defendant Pacheco, he said he

would remedy the situation, but took no action to do so. (Compl.

¶¶ 20, 29.) Finally, plaintiffs claim that Ameriquest

consistently denied or delayed promotion opportunities for

plaintiffs, solely on the basis of their sex. (Compl. ¶ 44(g).) 

In June to July 2005, plaintiffs resigned as a result of the

alleged systematic harassment. (Compl. ¶¶ 17, 25, 36.)

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In approximately April or May, 2006, plaintiffs filed a

charge based on the above conduct with the U.S. Equal Employment

Opportunity Commission (“EEOC”). (Brandon R. McKelvey Decl. ¶¶

6-7.) This was presumably done because, in order to be able to

file suit in federal or state civil court, a plaintiff must first

exhaust their administrative remedies by filing a charge with

either the EEOC or Department of Fair Employment and Housing

(“DFEH”) respectively, and then receiving a right-to-sue letter. 

42 U.S.C. § 2000e-5; Cal. Gov’t Code § 12960. On May 2, 2006,

the EEOC sent a letter in response, indicating that it would be

processing the complaint, and that a copy of the charge was

automatically filed with FEHA in order to “protect [their] right

to sue in state court.” (Id. Exs. A, B at 1.) Plaintiffs

additionally received on May 2, 2006, a “right-to-sue” letter

from FEHA, authorizing a civil action based on the allegations

included in their charge. (Id. Exs. A, B at 2.)

On May 30, 2006, plaintiffs filed a First Amended

Complaint in the Sacramento County Superior Court setting forth

the following seven causes of action: (1) gender discrimination

and harassment in violation of FEHA; (2) sexual harassment and

hostile work environment in violation of FEHA; (3) retaliation 

in violation of FEHA; (4) failure to prevent in violation of

FEHA; (5) wrongful constructive termination in violation of

public policy under FEHA; (6) intentional infliction of emotional

distress; (7) negligence and negligent infliction of emotional

distress. (Compl.) Defendants removed the case to this court on

August 15, 2006, arguing that plaintiffs’ submission of their

charges to the EEOC mandates that they bring suit in federal

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court under Title VII, and therefore, under 28 U.S.C. 1441(b), a

“substantial federal question” is raised. (Notice of Removal

2:24-25.) Plaintiffs now move to remand the case to state court

pursuant to 28 U.S.C. 1447(c), and request costs and attorneys

fees. (Pls.’ Mot. to Remand.)

II. Discussion

Removal is appropriate when the complaint contains a

claim that “aris[es] under the Constitution, laws, or treaties of

the United States.” 28 U.S.C. §§ 1331 & 1441(b). If the

complaint does not contain such a claim, then “the district court

lack[s] subject matter jurisdiction, and the action should [be]

remanded to the state court.” Toumajian v. Frailey, 135 F.3d

648, 653 (9th Cir. 1998) (citing 28 U.S.C. 1447(c)). “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). In determining whether a

complaint contains a federal claim, courts must apply the “wellpleaded complaint rule.” Id. (citing Metro. Life Ins., Co. v

Taylor, 481 U.S. 58, 63 (1987)). 

A. Well-Pleaded Complaint Rule

A cause of action arises under federal law only when

“the plaintiffs’ well-pleaded complaint raises issues of federal

law.” Metro. Life, 481 U.S. at 63. For removal to be

appropriate, the federal claim must appear on the face of the

complaint. Franchise Tax Bd., 463 U.S. at 9-10. Moreover, the

federal cause of action plead must be “unaided by the answer or

by the petition for removal.” Gully v. First Nat. Bank in

Meridian, 299 U.S. 109, 113 (1936). 

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There exists a corollary to the well-pleaded complaint 2

rule (called the “complete preemption” doctrine), where some

courts have found that the “pre-emptive force of a statute is so

‘extraordinary’ that it ‘converts an ordinary state common-law

complaint into one stating a federal claim for the purposes of

the well-pleaded complaint rule.” Rains, 80 F.3d at 344 (citing

Metro. Life Ins. Co., 481 U.S. at 65). The Ninth Circuit and the

statutory language of Title VII make clear that Title VII does

not preempt complementary state law. Id. (citing Cal. Fed. Sav.

and Loan Ass’n v. Guerra, 479 U.S. 272 (1987)) (“Title VII does

not completely preempt state law. Rather Title VII only preempts

state law inconsistent with it.”); 42 U.S.C. § 2000e-7 (stating

that nothing under that section “shall be deemed to exempt or

relieve any person from any liability, duty, penalty, or

punishment provided by any present or future law of any State”).

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In this case, all of plaintiff’s claims are plead as

California state law causes of action. The first five causes of

action allege violations of FEHA, a California state statute,

while the remaining two causes of action for infliction of

emotional distress sound in state tort law. (Compl.) The only

arguable reference in the entire complaint to federal law is

that, in an attempt to exhaust state administrative remedies,

“[p]laintiffs have filed timely charges with the United States

Equal Employment Opportunity Commission. . . .” (Compl. ¶ 7.) 

A mere “reference” such as this is insufficient to constitute a

well-pleaded federal complaint. Rains v. Criterion Sys., Inc.,

80 F.3d 339, 344 (9th Cir. 1996). “[S]ince the plaintiff is ‘the

master of the complaint,’ the well-pleaded-complaint rule enables

him, ‘by eschewing claims based on federal law, . . . to have the

cause heard in state court.’” Holmes Group, Inc. v. Vornado Air

Circulation Sys. Inc., 535 U.S. 826, 831 (2002) (citing

Caterpillar Inc., v. Williams, 482 U.S. 386, 392 (1987)).2

B. Artful Pleading Doctrine

Even if a federal question does not appear on the face

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of the complaint, however, there are several exceptions to the

general rule that allows federal courts to retain jurisdiction. 

Rains v. Criterion Sys., 80 F.3d 339, 343 (9th Cir. 1996). Under

the artful pleading doctrine, a plaintiff may not avoid federal

jurisdiction simply by “omitting from the complaint federal law

essential to his claim, or by casting in state law terms a claim

that can be made only under federal law.” Olguin v. Inspiration

Consol. Copper Co., 740 F.2d 1468, 1472 (9th Cir. 1984). 

Plaintiffs’ five statutory claims under FEHA are based

on violations of California Government Code § 12965(b), which

accordingly authorizes civil suits in state courts. Cal. Gov’t

Code § 12965(b) (“[T]he person claiming to be aggrieved may bring

a civil action under this part against the person, employer,

labor organization, or employment agency named in the verified

complaint within one year from the date of [a right-to-sue]

notice. . . . The superior and municipal courts of the State of

California shall have jurisdiction of those actions, and the

aggrieved person may file in any of these courts.”). The

existence of similar provisions in Title VII, which would allow

plaintiffs to also allege violations of federal law, is not

sufficient to demonstrate that plaintiffs’ claims are necessarily

federal. Rains, 80 F.3d at 344 (noting that just because “the

same facts could have been the basis for a Title VII claim does

not make [a state claim] into a federal cause of action”). 

Moreover, plaintiffs’ last two claims for infliction of emotional

distress are state law claims, a fact not disputed by defendant. 

Therefore, the artful pleading doctrine is inapplicable to

plaintiffs’ complaint.

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C. Substantial Disputed Federal Question

Finally, even if a federal claim is not plead, and the

plaintiff has not engaged in artful pleading, federal

jurisdiction may still be appropriate if it “appears that some

substantial, disputed question of federal law is a necessary

element of one of the well-pleaded state claims. . . .” Rains,

80 F.3d at 345 (citing Franchise Tax Bd., 463 U.S. at 13)

(emphasis in original). However, “[w]hen a claim can be

supported by alternative and independent theories - one of which

is a state law theory and one of which is a federal law theory -

federal question jurisdiction does not attach because federal law

is not a necessary element of the claim.” Id. at 346. 

The primary thrust of defendants’ argument for removal

is that by filing their original charge only with the EEOC,

plaintiffs exhausted their federal administrative remedies but

failed to exhaust their state administrative remedies. (Defs.’

Opp’n to Pls.’ Mot. to Remand 2-4.) Therefore, since plaintiffs

would only be able to successfully bring a case in federal court,

defendants claim that federal law is necessary to plaintiffs’

claims and federal question jurisdiction has been created. (Id.) 

Defendants’ argument that plaintiffs’ filing with the EEOC did

not constitute an exhaustion of state administrative remedies may

or may not be valid. However, defendants’ reasoning ignores the

fundamental and threshold fact that jurisdiction flows from the

claims in the complaint. See generally Merrill Dow, 478 U.S.

804; Franchise Tax Bd., 463 U.S. 1. Plaintiffs’ failure to

exhaust state administrative remedies affects only whether suit

in state court is appropriate--it does not create jurisdiction in

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Both parties devote an extensive portion of their 3

briefs on this motion to arguing about whether or not filing a

charge with the EEOC constitutes an exhaustion of state

administrative remedies. The issue presently before the court,

however, is whether or not the federal court has jurisdiction to

hear the case at all. The question of exhaustion of state

remedies is secondary to the threshold question of jurisdiction. 

Therefore, since this court finds that removal was improper, it

need not, and in fact cannot, address whether the filing of a

charge with the EEOC is sufficient to exhaust state

administrative remedies.

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federal court. Therefore, this court concludes that it does not

have jurisdiction over this matter, and the case must be remanded

to state court.3

D. Attorney’s Fees

Plaintiff additionally requests an award of attorneys’

fees and costs associated with this motion. (Pls.’ Mot. to

Remand 7). Even if a district court finds that remand is

required, it retains jurisdiction to consider an award of

attorneys’ fees. 28 U.S.C. § 1447(c). District courts have wide

discretion to award fees under § 1447(c) based on whether removal

was improper. Moore v. Permanente Medical Group, Inc., 981 F.2d

443, 447 (9th Cir. 1992). In general, “absent unusual

circumstances, fees should not be awarded when the removing party

has an objectively reasonable basis for removal.” Martin v.

Franklin Capital Corp., 126 S.Ct. 704, 708, (2005).

This court is mindful of the fact, repeatedly cited by

defendants, that plaintiffs filed their charge with the EEOC, a

federal administrative agency. However, as explained above,

plaintiffs’ decision to do so has absolutely no bearing on this

court’s jurisdiction, a fact which would surely could have been

revealed with a minimal amount of research. Removal in this case

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Because defendant did not object to the plaintiffs’ 4

calculation of the attorneys’ fees incurred in preparing

plaintiffs’ motion for removal, the court assumes the amount

proposed by the plaintiffs is reasonable.

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was clearly improper, as there is no objectively reasonable basis

in law for asserting that federal question jurisdiction exists,

and thus an award of attorneys’ fees is appropriate.4

E. Motion to Compel Arbitration and Stay the Proceedings

Also currently before this court, under separate

motion, is defendants’ motion to compel arbitration and stay the

proceedings pursuant to the Federal Arbitration Act (“FAA”). 

(Pls.’ Mot. to Compel Arbitration). The FAA provides that “[a]

party aggrieved by the alleged failure, neglect, or refusal of

another to arbitrate under a written agreement for arbitration

may petition any United States district court which, save for

such agreement, would have jurisdiction under Title 28.” 9

U.S.C. § 4 (emphasis added). This section “provides for an order

compelling arbitration only when the federal district court would

have jurisdiction over a suit on the underlying dispute. . . .” 

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,

25 n.32 (1983); see also G.C. & K.B. Inv., Inc. v. Wilson, 326

F.3d 1096, 1103 (9th Cir. 2003); Rio Grande Underwriters, Inc. v.

Pitts Farms, Inc., 276 F.3d 683, 685 (5th Cir. 2001). For the

reasons explained above, this court lacks subject matter

jurisdiction over this action, and thus the court will not reach

the merits of defendants’ motion to compel arbitration and stay

the proceedings.

///

///

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IT IS THEREFORE ORDERED that plaintiffs’ motion to

remand the action to state court be, and the same hereby is,

GRANTED, and this matter is hereby REMANDED to Superior Court of

the State of California in and for the County of Sacramento.

IT IS FURTHER ORDERED that plaintiff recover its

reasonably incurred attorney fees and costs in the amount of

$2,750.00.

IT IS FURTHER ORDERED that, because this court lacks

jurisdiction to render a decision on the merits of the motions,

defendants’ motion to compel arbitration and stay the proceedings

be, and the same hereby is, DENIED.

DATED: October 4, 2006

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