Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02099/USCOURTS-caed-2_09-cv-02099-3/pdf.json

Parties Involved:
Erik Brechbill
Defendant
Professional Bureau of Collections of Maryland, Inc.
Defendant
Professional Bureau of Collections, Inc.
Defendant
Erin Swete
Plaintiff
Michelle Zapata
Defendant

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

ERIN SWETE, an individual,

No. 2:09-cv-2099 FCD KJM

Plaintiff,

v. MEMORANDUM AND ORDER

PROFESSIONAL BUREAU OF

COLLECTIONS OF MARYLAND, INC.,

a Maryland Corporation;

PROFESSIONAL BUREAU OF

COLLECTIONS, INC., a

California Corporation;

MICHELLE ZAPATA, an

individual; ERIK BRECHBILL, an

individual; and DOES 1-10,

inclusive,

Defendants.

----oo0oo----

This matter is before the court on plaintiff Erin Swete’s

(“Swete”) motion to remand this action to the Superior Court of

California for the County of Sacramento pursuant to 28 U.S.C. §

1447. Defendants Professional Bureau of Collections of Maryland,

Inc. (“PBM”), Professional Bureau of Collections, Inc. (“PBC”),

Michelle Zapata (“Zapata”), and Erik Breckbill (“Brechkbill”)

oppose the motion, arguing that there is complete diversity

Case 2:09-cv-02099-FCD-KJM Document 33 Filed 01/14/10 Page 1 of 7
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1 Because oral argument will not be of material

assistance, the court orders the matter submitted on the briefs.

E.D. Cal. L. R. 78-230(h).

2

between plaintiff and defendant PBM because PBC and the

individual defendants were fraudulently joined. For the reasons

set forth below,1 plaintiff’s motion to remand is GRANTED.

Plaintiff Swete was employed by defendant PBM as a

collections agent from October 2008 until March 2009. (Am.

Compl. (“Compl.”), filed Oct. 9, 2009, ¶ 11.) Swete alleges that

defendant PBC is an alter-ego, parent corporation, subsidiary

corporation, agent, partner, and/or association and affiliated

corporation of PBM. (Id. ¶ 3.) During the beginning of her

employment with PBM, Swete and other collections agents were

required to represent to debtors that they represented defendant

PBC. (Id. ¶ 12.) Defendants contend that during 2008 and 2009,

PBC was an active California corporation, but it had no employees

and conducted no business in California or elsewhere. (Decl. of

Travis Justus in Opp’n to Pl.’s Mot. (“Justus Decl.”), filed

Sept. 15, 2009, ¶ 3.) Further, defendants contend that PBM did

not service PBC collection accounts during 2008 or 2009, and

there was no business servicing agreement in place between the

two entities. (Id. ¶ 6.) 

During the course of her employment, Swete was in the

process of divorcing her husband. (Compl. ¶ 13.) Legal

proceedings concerning the divorce took place in the State of

Arizona. (Id.) On or about March 8, 2009, Swete received notice

that she was required to appear at a court hearing in Arizona on

March 31, 2009. (Id. ¶ 14.) The next day, Swete submitted to

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3

Zapata, the General Manager, a written request to be granted two

days off work, March 30 and March 31, to attend the March 31

hearing. (Id. ¶ 15.) Zapata declined the initial request. 

(Id.) On or about March 11, 2009, Swete requested time off from

Brechbill, the Operations Manager. (Id. ¶ 16.) Brechbill

brushed Swete off and told her to speak to Zapata, knowing that

Zapata had declined the request. (Id.) On or about March 23,

2009, Sweet submitted a second written request to be granted one

day off work, March 31, to attend the hearing; Zapata again

declined the request. (Id. ¶ 17.) Swete advised Zapata that she

would nevertheless have to attend the hearing and miss work. 

(Id.)

On or about March 30, 2009, Swete advised her other

supervisor and Unit Manager, Misty McReynolds, that she was going

to be absent from work on March 31 to attend the court hearing in

Arizona. In the early morning hours of March 31, Swete called

Zapata, who informed her that she had been terminated “for a no

call, no show.” (Id. ¶ 19.)

Plaintiff filed suit in the Superior Court of California for

the County of Sacramento, alleging (1) wrongful termination in

violation of public policy against defendants PBM and PBC; (2)

violation of California Labor Code §§ 230, et seq., against

defendants PBM and PBC; (3) violation of California Business and

Professions Code §§ 17200, et seq., against defendants PBM and

PBC; (4) slander against all defendants; (5) intentional

infliction of emotional distress against all defendants; and (6)

negligent infliction of emotional distress against all

defendants. 

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4

“[A]ny civil action brought in State court of which the

district courts of the United States have original jurisdiction,

may be removed by the defendant or the defendants, to the

district court” in which the action is pending. 28 U.S.C. §

1441(a). Federal district courts “have original jurisdiction of

all civil actions where the matter in controversy exceeds the sum

or value of $75,000” and is between citizens of different states. 

28 U.S.C. § 1332(a). 

“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, the joinder of the resident defendant

is fraudulent and the defendant’s presence in the lawsuit is

ignored for purposes of determining diversity.” United Computer

Sys., Inc. v. AT&T Corp., 298 F.3d 756, 761 (9th Cir. 2002)

(internal quotations and citations omitted); McCabe v. Gen. Foods

Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). There is a general

presumption against fraudulent joinder, and the burden on

defendant is a “heavy one.” Hamilton Materials, Inc. v. Dow

Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007); Davis v.

Prentiss Props. Ltd., Inc., 66 F. Supp. 2d 1112, 1113 (C.D. Cal.

1999) (citing Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th

Cir. 1983). “Fraudulent joinder must be proven by clear and

convincing evidence.” Hamilton Materials, Inc., 494 F.3d at 1206

(9th Cir. 2007). “The removing party must prove that there is

absolutely no possibility that the plaintiff will be able to

establish a cause of action against the in-state defendant in

state court, or that there has been outright fraud in the

plaintiff’s pleadings of jurisdictional facts.” Davis, 66 F.

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2 Defendants also contend that plaintiff’s complaint

fails to state a claim for slander, IIED, or NIED against the

individual defendants. However, because the court finds that

defendants have failed to meet their burden to demonstrate

fraudulent joinder as to defendant PBC, it does not reach the

merits of this argument.

5

Supp. 2d at 1113. 

Defendants argue that complete diversity exists because

plaintiff Swete fraudulently joined PBC and the individual

defendants and thus, their residency should be not be relevant to

the determination of jurisdiction. Specifically, defendants

contend that PBC never employed plaintiff and therefore, cannot

be liable for any of the alleged violations.2 Defendant asserts

that plaintiff has pled insufficient facts to support a theory

that the two corporations should be treated as one.

Plaintiff alleges that defendant PBC is an alter-ego, parent

corporation, subsidiary corporation, agent, partner, and/or

association and affiliated corporation of PBM and that, during

her employment with PBM, she was instructed to represent to

debtors that they represented defendant PBC. Plaintiff also

asserts that defendant Brechbill was designated by PBC as an

agent for service of process. (Ex. 2 to Decl. of Eran Lagstein

in Supp. of Pl.’s Mot. for Remand, filed Oct. 22, 2009.) 

In deciding whether a corporation is the alter ego of

another, “the court must determine (1) that there is such unity

of interest and ownership that the separate personalities of the

corporation[s] . . . no longer exist and (2) that failure to

disregard [their separate identities] would result in fraud or

injustice.” Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1393

(9th Cir. 1984) (citing Watson v. Commonwealth Ins. Co., 8 Cal.

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2d 61, 68 (1936)). 

On the facts and allegations before it, defendants have

failed to demonstrate that there is absolutely no possibility

that the plaintiff will be able to establish a cause of action

against PBC. While defendants present evidence that there was no

servicing agreement in place between PBM and PBC and that PBM did

not service PBC collection accounts, they utterly fail to provide

any information regarding what the relationship between PBM and

PBC is. Defendants fail to address whether PBM is a parent or

subsidiary corporation of PBC or whether PBM worked as PBC’s

agent. Further, defendants fail to present any evidence

regarding whether collection agents were advised to tell debtors

that they represented defendant PBC. Moreover, they fail to

present any explanation why collection agents were given such

instructions. Accordingly, it is not “obvious” that plaintiff

has failed to state a claim against defendant PBC. United

Computer Sys., Inc., 298 F.3d at 761; see Good v. Prudential Ins.

Co. of America, 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998)(“the

defendant must demonstrate that there is no possibility that the

plaintiff will be able to establish a cause of action in state

court against the alleged sham defendant”). 

Therefore, plaintiff’s motion to remand this action to the

Superior Court of California for the County of Sacramento is

GRANTED.

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///// 

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IT IS SO ORDERED.

DATED: January 14, 2010 

 

FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

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