Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-03532/USCOURTS-cand-4_15-cv-03532-2/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 REMANDING ACTION 

This matter is before the Court for a determination of whether the Commissioner of 

the California Department of Insurance (“Commissioner”) is a fraudulently joined 

defendant whose citizenship may be ignored for purposes of diversity jurisdiction. At the 

direction of the Court, the parties have submitted supplemental briefing regarding this 

issue. Having read and considered the papers filed in connection with this matter and being 

fully informed, the Court hereby finds that the Commissioner was not fraudulently joined, 

and therefore, the action must be remanded to state court in accordance with 28 U.S.C. 

§ 1447(c).1

I. BACKGROUND 

Plaintiff Gayle Mahoney filed the instant insurance bad faith action in San Francisco 

County Superior Court against Defendants Unum Group and Unum Life Insurance 

Company of America (collectively “Unum”) and the Commissioner, alleging that Unum 

wrongfully terminated her long-term disability benefits. Compl. ¶¶ 68-71. According to 

Plaintiff, Unum’s actions are attributable to claims handling practices that it previously 

agreed to cease, pursuant to a settlement (styled as the California Settlement Agreement 

 1 The Court, in its discretion, finds this matter suitable for resolution without oral 

argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b). 

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(“CSA”)), reached with the Commissioner in 2005. Id. ¶¶ 71, 111-117. Plaintiff claims, 

however, that Unum has continued to engage in such practices through the Commissioner’s 

purported failure to monitor Unum’s compliance with the CSA. Id. ¶¶ 114-16; see also id. 

Ex. A (CSA) at 10.2 Thus, as to the Commissioner, Plaintiff alleges a claim for mandamus 

relief to compel “the Commissioner . . . [to] exercise [his] discretion in conformity with 

California law, in light of the conduct alleged herein and the Commissioner/[Department of 

Insurance’s] notice of said conduct[.]” Compl. at 19. 

Unum removed the action on the basis of diversity jurisdiction. Although 

acknowledging that the Commissioner is a California citizen, Unum contends that he was 

fraudulently joined for the sole purpose of destroying diversity. Notice of Removal ¶¶ 14-

26. Following removal, Unum filed a motion to dismiss. However, because the unresolved 

issue of fraudulent joinder is germane to the Court’s subject matter jurisdiction, the Court 

ordered the parties to submit further briefing on whether the Commissioner may be deemed 

to be a fraudulently joined defendant, whose citizenship may be disregarded for purposes of 

diversity jurisdiction. Dkt. 33. The parties timely submitted their respective briefs, Dkt. 

37, 38, and the issue is now ripe for adjudication. 

II. LEGAL STANDARD 

“A defendant may remove an action to federal court based on federal question 

jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 

(9th Cir. 2009) (citing 28 U.S.C. § 1441). The diversity jurisdiction statute confers 

jurisdiction in cases where the parties are citizens of different states and where the amount 

in controversy exceeds the sum of $75,000. 28 U.S.C. ' 1332. Remand may be ordered 

either for lack of subject matter jurisdiction or for any defect in the removal procedure. See 

28 U.S.C. § 1447(c). The “strong presumption against removal jurisdiction means that the 

 2 The CSA provides that: “The Insurance Commissioner shall conduct examinations 

of the Claims Reassessment Unit’s claim decisions and compliance with the other terms of 

the CSA, including changes made in the claim handling practices and procedures 

contemplated by the CSA, all in the manner and at such intervals as he or she deems 

appropriate in accordance with the Insurance Code and Regulations.” CSA at 10. 

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defendant always has the burden of establishing that removal is proper,” and that the court 

resolves all ambiguities in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 

Cir. 1992) (per curiam) (internal quotation marks omitted). 

“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 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 removing defendant must also show that the plaintiff “would not be 

afforded leave to amend his complaint to cure [the] purported deficiency.” See Nickelberry 

v. DaimlerChrysler Corp., No. 06-1002 MMC, 2006 WL 728200, *1-2 (N.D. Cal., Apr. 17, 

2006). There is a “general presumption against fraudulent joinder” and the defendant’s 

burden of demonstrating that a joinder is fraudulent is a “heavy” one. Hunter v. Philip 

Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009). 

III. DISCUSSION 

The salient question presented is whether Plaintiff has stated or could state a claim 

for mandamus relief against the Commissioner for failing to monitor Unum’s compliance 

with the CSA and California insurance laws and regulations. Under California law, 

ordinary mandamus may be utilized “by any court to any . . . person, to compel the 

performance of an act which the law specifically enjoins, as a duty resulting from an office, 

trust or station.” Cal. Code Civ. Proc. § 1085(a). “Ordinary mandamus may be used to 

compel the performance of a duty that is purely ministerial in nature or to correct an abuse 

of discretion.” Am. Bd. of Cosmetic Surgery, Inc. v. Medical Bd. of Cal., 162 Cal.App.4th 

534, 547 (2008). “While a party may not invoke mandamus to force a public entity to 

exercise discretionary powers in any particular manner, if the entity refuses to act, mandate 

is available to compel the exercise of those discretionary powers in some way.” Ellena v. 

Dep’t of Ins., 230 Cal.App.4th 198, 205 (2014). 

Under the CSA, the Commissioner has a duty to monitor Unum’s compliance with 

the settlement. CSA at 10. Unum contends, however, that under the CSA, the manner in 

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which the Commissioner chooses to monitor the settlement is entirely within his 

discretion—and that Plaintiff cannot “dictate the manner in which the Commissioner 

exercises his discretion . . . .” Not. of Removal ¶ 19. Further, Unum argues that Plaintiffs’ 

allegation that the Commissioner has “failed to timely and comprehensively” monitor 

Unum’s compliance with the CSA, see Compl. ¶ 114, is contradicted by the 

Commissioner’s issuance of a Market Conduct Examination Report (“Market Report”) in 

March 2008 which found no violations of the CSA. See Griffin Decl. Ex. 1 (Market 

Report) at 7, Dkt. 4-1. The Market Report concludes: The [California Department of 

Insurance] continues to monitor UNUM’s compliance with the CSA via the CDI complaint 

process. In the event that any pattern or trend of non-compliance is identified, additional 

Market Conduct Examinations will be performed.” Id. 

The Court is unpersuaded by Unum’s contention that the Commissioner is a 

fraudulently joined defendant. As Plaintiff points out, the audit conducted by the 

Commissioner took place once in 2008. Although the CSA affords the Commissioner 

discretion with respect to the time “intervals” to audit Unum’s practices, Plaintiff may 

pursue a claim that the Commissioner abused his discretion by choosing to review Unum’s 

compliance only one time, numerous years ago. See Rando v. Harris, 228 Cal.App.4th 868, 

876 (2014) (“An appellant may challenge the Attorney General’s exercise of discretion via 

a writ of mandamus.”). Unum contends that the Commissioner’s monitoring is ongoing, 

and highlights a statement in the Market Report that the Department of Insurance 

“continues to monitor” Unum’s claims handling practices. Beyond that hearsay statement, 

however, there is no evidence that has actually occurred. See Hamilton Materials, Inc. v. 

Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) (“Fraudulent joinder must be 

proven by clear and convincing evidence.”) (emphasis added).3 

 3 Unum also suggests that Plaintiff has not yet served the Commissioner, which 

ostensibly shows that she has no actual intention of pursuing a claim against him. 

However, “the motive for joining such a defendant is immaterial.” Fink v. Unumprovident 

Corp., No. C 05-2875 CW, 2005 WL 2375168, *2 (N.D. Cal. Sept. 27, 2005) (citation 

omitted). 

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IV. CONCLUSION 

In sum, the Court finds that Unum has failed to carry its heavy burden of 

demonstrating that Plaintiff’s joinder of the Commissioner in this action was fraudulent. 

Since the Commissioner’s presence in this action destroys diversity, the Court lacks subject 

matter jurisdiction over the action. Accordingly, 

IT IS HEREBY ORDERED THAT, pursuant to 28 U.S.C. § 1447(c), the instant 

action is REMANDED to the San Francisco County Superior Court. Unum’s motion to 

dismiss is DENIED without prejudice to reasserting the arguments in said motion in state 

court. 

IT IS SO ORDERED. 

Dated: 12/8/15 ______________________________ 

SAUNDRA BROWN ARMSTRONG 

Senior United States District Judge 

Case 4:15-cv-03532-SBA Document 39 Filed 12/08/15 Page 5 of 5