Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-03532/USCOURTS-cand-4_15-cv-03532-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

GAYLE MAHONEY, 

 Plaintiff, 

 vs. 

UNUM GROUP, et al., 

 Defendants. 

Case No: C 15-3532 SBA 

ORDER SETTING BRIEFING 

SCHEDULE RE FRAUDULENT 

JOINDER ISSUE, AND HOLDING 

DEFENDANTS’ MOTION TO 

DISMISS IN ABEYANCE 

Plaintiff Gayle Mahoney filed the instant insurance bad faith action in state court 

against Defendants Unum Group and Unum Life Insurance Company of America 

(collectively “Unum Defendants”), along with the Commissioner of the California 

Department of Insurance (“Insurance Commissioner”). The Unum Defendants removed the 

action on the basis of diversity jurisdiction and have now filed a motion to dismiss. Dkt. 1, 

26. Before addressing the motion to dismiss, however, the Court must first address whether 

subject matter jurisdiction is present. See United Investors Life Ins. Co. v. Waddell & 

Reed Inc., 360 F.3d 960, 967 (9th Cir. 2004) (“the district court had a duty to establish 

subject matter jurisdiction over the removed action sua sponte, whether the parties raised 

the issue or not”). 

The Notice of Removal alleges that Plaintiff is a citizen of California, while the 

Unum Defendants are citizens of Tennessee and Maine. Not. of Removal ¶¶ 4-5. The 

Unum Defendants acknowledge that the Insurance Commissioner is a citizen of California, 

but contend that he is a fraudulently joined party-defendant. Id. ¶¶ 14-26. “Joinder of a 

non-diverse defendant is deemed fraudulent, and the defendant's presence in the lawsuit is 

ignored for purposes of determining diversity, if the plaintiff fails to state a cause of action 

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against a resident defendant, and the failure is obvious according to the settled rules of the 

state.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). 

The standard for determining whether a defendant is fraudulently joined is similar to 

that of a 12(b)(6) motion to dismiss. See Sessions v. Chrysler Corp., 517 F.2d 759, 761 

(9th Cir. 1975) (“Inasmuch as appellant’s case against the individual defendants was 

sufficient to withstand a dismissal motion under [Rule] 12(b)(6), the joinder of claims 

against them was not fraudulent . . . .”). At the same time, “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). A defendant seeking removal based on an allegedly fraudulent joinder therefore 

must do more than show that the complaint fails to state a claim against the non-diverse 

defendant. See Nickelberry v. DaimlerChrysler Corp., No. 06-1002, 2006 WL 728200, *1-

2 (N.D. Cal., Apr. 17, 2006). The removing defendant must also show that the plaintiff 

“would not be afforded leave to amend his complaint to cure [the] purported deficiency.” 

Id.; see also Kruso v. Int’l Tel. & Tel. Corp., 872 F.2d 1416, 1426 (9th Cir. 1989) (holding 

that defendants are fraudulently joined where the complaint fails to state a cause of action 

against them, and the plaintiff “cannot prevail on any claims they seek to bring against the 

defendants”). 

The Notice of Removal contains an extensive argument in support of the Unum 

Defendants’ contention that the Insurance Commissioner is a fraudulently-joined defendant. 

Not. of Removal ¶¶ 14-26. Plaintiff has not yet addressed that contention. Because the 

fraudulent joinder issue bears upon the Court’s subject matter jurisdiction, the issue must be 

resolved before the Court proceeds further with the action, including the adjudication of the 

Unum Defendants’ motion to dismiss.1

 Accordingly, 

IT IS HEREBY ORDERED THAT: 

 1 Plaintiff previously filed a motion to remand based on defects in the removal 

process. The Court denied the motion to remand as untimely. Dkt. 25. However, because 

lack of jurisdiction is a non-waivable defect, the issue may be raised at any time. Snell v. 

Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002). 

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1. Within seven days of the date this order is filed, Plaintiff shall file a 

memorandum, not to exceed seven pages in length, in response to the Unum Defendants’ 

fraudulent joinder argument as set forth in the Notice of Removal. The Unum Defendants 

shall file a reply memorandum, not to exceed four pages in length, no later than five days 

after Plaintiff files his memorandum. 

2. The Unum Defendants’ pending motion to dismiss shall be held in abeyance 

pending the Court’s determination of whether subject matter jurisdiction is present. 

IT IS SO ORDERED. 

Dated: 10/27/15 ______________________________ 

SAUNDRA BROWN ARMSTRONG 

United States District Judge 

Case 4:15-cv-03532-SBA Document 33 Filed 10/27/15 Page 3 of 3