ORDER — No. 17-cv-00201-LB

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

San Francisco Division

KARINA ARVIZU,

Plaintiff,

v.

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

Defendants.

Case No. 17-cv-00201-LB 

ORDER GRANTING THE PLAINTIFF’S 

MOTION TO REMAND AND DENYING 

THE DEFENDANT’S MOTION TO 

DISMISS AS MOOT

Re: ECF Nos. 5 & 9

INTRODUCTION & BACKGROUND

This is an employment dispute between a former employee, Karina Arvizu, and her employer, 

Wal-Mart.1 Ms. Arvizu, “a [forty-three] year old Hispanic married mother,” worked at Wal-Mart 

for over twenty-two years.2 Although she “received positive feedback,” “good performance 

ratings,” and “increasing responsibilities” while there, the company fired her on February 22, 

2016.3

Before her termination, Ms. Arvizu alleges, “Wal-Mart fostered a discriminatory workplace” 

where she “was subject to inappropriate race-based comments by management-level employees 

 

1

See generally Compl. – ECF No. 1 at 11–16. Record citations refer to material in the Electronic Case 

File (“ECF”); pinpoint citations are to the ECF-generated page numbers at the top of documents.

2

Id. ¶ 1.

3

Id. ¶¶ 1, 6.

Case 3:17-cv-00201-LB Document 26 Filed 02/27/17 Page 1 of 10
ORDER — No. 17-cv-00201-LB 2

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and was dissuaded from hiring other minorities, despite their qualifications.”4She expressed 

concern about “the discriminatory conduct of Wal-Mart’s manager and [she tried] to enforce rules 

relating to employee and customer safety.”5 But, in retaliation for these efforts, Wal-Mart fired 

her.6 Ms. Arvizu alleges that she appealed supervisor Jason Duffy’s retaliatory conduct and “asked 

for an investigation of his behavior and her termination.”7 But that did not happen: “Wal-Mart 

senior management ratified [Mr.] Duffy’s wrongful conduct.”8

Ms. Arvizu therefore sued Wal-Mart and Mr. Duffy in California state court. She brings five 

claims against Wal-Mart: (1) discrimination in violation of Cal. Gov. Code § 12940; (2) wrongful 

termination; (3) defamation; (4) violation of Cal. Gov. Code § 12940(k); and (5) wage and hour 

violations.9She also accuses Mr. Duffy of defamation, the only claim against him.10

Wal-Mart removed the case to federal court.11 It asserts that this court has diversity jurisdiction 

because, although Mr. Duffy is a California citizen,12 Ms. Arvizu inadequately pleads her 

defamation claim against him and he is therefore a “sham” defendant that should be disregarded 

for diversity purposes.13 Wal-Mart accordingly also moves to dismiss the defamation claim against 

Mr. Duffy.14 Ms. Arvizu moves to remand the case.15

The court can decide the matter without oral argument and vacates the hearing on March 2, 

2017. Civil L.R. 7-1(b). The court grants Ms. Arvizu’s motion to remand and denies as moot WalMart’s motion to dismiss.

 

4

Id. ¶ 8.

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Id. ¶ 14.

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Id.

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Id.

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Id.

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Id. ¶¶ 7–39.

10 Id. ¶¶ 17–20.

11 Notice of Removal – ECF No. 1.

12 Id. ¶ 20; Compl. ¶ 3.

13 Notice of Removal ¶¶ 20–22. 

14 Motion to Dismiss – ECF No. 5.

15 Motion to Remand – ECF No. 9. 

Case 3:17-cv-00201-LB Document 26 Filed 02/27/17 Page 2 of 10
ORDER — No. 17-cv-00201-LB 3

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GOVERNING LAW

A defendant in state court may remove an action to federal court if the case could have been 

filed originally in federal court. 28 U.S.C. § 1441(a). Original jurisdiction may be based on 

diversity or federal-question jurisdiction. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 

(1987); 28 U.S.C. §§ 1331, 1332. To invoke diversity jurisdiction, the complaint must allege that 

“the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, 

and is between . . . citizens of different States . . . .” 28 U.S.C. § 1332(a)(1).

Diversity jurisdiction requires “complete diversity of citizenship” — that is, each of the 

plaintiffs must be a citizen of a different state than each of the defendants. Morris v. Princess 

Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). And an action that otherwise meets the 

diversity-jurisdiction criteria may not be removed “if any of the parties in interest properly joined 

and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. 

§ 1441(b)(2). But despite the presence of a non-diverse or resident defendant, removal is proper 

when that defendant was fraudulently joined. See McCabe v. Gen. Foods, 811 F.2d 1336, 1339 

(9th Cir. 1987). If a 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.” Id.

There is, however, a presumption against fraudulent joinder, and a defendant who asserts it 

“carr[ies] [a] heavy burden of persuasion.” Lieberman v. Meshkin, Mazandarani, C-96-3344 SI, 

1996 WL 732506, at *2 (N.D. Cal. Dec. 11, 1996) (citing Boyer v. Snap-on Tools Corp., 913 F.2d 

108, 111 (3d Cir. 1990)). “Indeed, [a defendant] must show to ‘a near certainty’ that joinder was 

fraudulent and that ‘plaintiff has no actual intention to prosecute an action against [that] particular 

resident defendant[].” Osorio v. Wells Fargo Bank, No. C 12-02645 RS, 2012 WL 2054997, at *2 

(N.D. Cal. June 5, 2012) (quoting Diaz v. Allstate Ins. Group, 185 F.R.D. 581, 586 (C.D. Cal. 

1998) (emphasis in original) (citing Boyer, 913 F.2d at 111)); see also Lewis v. Time, Inc., 83 

F.R.D. 455, 466 (E.D. Cal. 1979), aff’d, 710 F.2d 549 (9th Cir. 1983). 

A non-diverse defendant will be deemed fraudulently joined if, after all disputed questions of 

fact and all ambiguities in the controlling state law are resolved in the plaintiff’s favor, the 

Case 3:17-cv-00201-LB Document 26 Filed 02/27/17 Page 3 of 10
ORDER — No. 17-cv-00201-LB 4

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plaintiff could not possibly recover against the party whose joinder is questioned. See Kruso v. 

Int’l Tel. & Tel. Corp., 872 F.2d 1416, 1426–27 (9th Cir. 1989). A removing defendant must 

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

the non-diverse defendant. See Burris v. AT & T Wireless, Inc., No. C 06-02904 JSW, 2006 WL 

2038040, at *2 (N.D. Cal. July 19, 2006) (citing Nickelberry v. DaimlerChrysler Corp., No. C-06-

1002 MMC, 2006 WL 997391, at *1–*2 (N.D. Cal. Apr. 17, 2006)). “Remand must be granted 

unless the defendant shows that the plaintiff ‘would not be afforded leave to amend his complaint 

to cure [the] purported deficiency.’” Padilla v. AT & T Corp., 697 F. Supp. 2d 1156, 1159 (C.D. 

Cal. 2009) (quoting Burris, 2006 WL 2038040 at *2) (alteration in original).

To meet its burden, “[t]he defendant seeking removal to the federal court is entitled to present 

the facts showing the joinder to be fraudulent.” McCabe, 811 F.2d at 1339.

ANALYSIS

The parties filed competing motions: Ms. Arvizu’s motion to remand and Wal-Mart’s motion 

to dismiss. The court first considers Ms. Arvizu’s motion because it goes to federal subject-matter 

jurisdiction, a threshold inquiry. 

The issue in that motion is whether Wal-Mart has shown that Ms. Arvizu fraudulently joined 

Mr. Duffy, a California resident. To do so, Wal-Mart argues that (1) Ms. Arvizu fails to state a 

defamation claim against Mr. Duffy, and (2) the alleged defamatory statement is privileged. The 

court addresses each argument in turn.

1. The Viability of Ms. Arvizu’s Defamation Claim

Ms. Arvizu brings a defamation claim based on compelled self-publication.16 To state a claim 

for defamation, a plaintiff must allege facts showing “(a) a publication that is (b) false, (c) 

defamatory, and (d) unprivileged, and that (e) has a natural tendency to injure or that causes 

special damage.” Taus v. Loftus, 40 Cal. 4th 683, 720 (2007). A “publication” is a 

 

16 Compl. ¶¶ 17–20.

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ORDER — No. 17-cv-00201-LB 5

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“communication to some third person who understands both the defamatory meaning of the 

statement and its application to the person to whom reference is made.” Ringler Assocs. Inc. v. 

Maryland Cas. Co., 80 Cal. App. 4th 1165, 1179 (2000). The originator of a defamatory statement 

is not normally liable for damage caused by the defamed person’s communication of the statement 

to others. Ellis v. Starbucks Corp., No. 15-cv-3451-PJH, 2015 WL 8293965, at *5 (N.D. Cal. Dec. 

9, 2015) (citing Shoemaker v. Friedberg, 80 Cal. App. 2d 911, 916 (1947)). But under the 

“compelled self-publication” exception, self-publication “may be imputed to the originator of the 

statement if the person [defamed] is ‘operating under a strong compulsion to republish the 

defamatory statement and the circumstances that create the strong compulsion are known to the 

originator of the alleged defamatory statement at the time it was made.’” Id. (quoting Davis v. 

Consol. Freightways, 29 Cal. App. 4th 354, 373 (1994)); see also McKinney v. Cnty. of Santa 

Clara, 110 Cal. App. 3d 787, 795, 798 (1980). “This exception has been limited to a narrow class 

of cases, usually where a plaintiff is compelled to republish the statements in aid of disproving 

them.” Live Oak Publ’g Co. v. Cohagan, 234 Cal. App. 3d 1277, 1285 (1991). 

In Umamoto v. Insphere Insurance Solutions, Inc., the employee-plaintiff did not fraudulently 

assert a defamation claim against a non-diverse manager-defendant. No. 13-CV-0475-LHK, 2013 

WL 2084475 (N.D. Cal. May 14, 2013). There, the plaintiff previously worked for the defendantcompany. Id. at *1. Among other things, the plaintiff asserted a defamation claim based on 

compelled self-publication against an individual company manager. Id. at *3. The plaintiff alleged 

that “[the company] stated they were terminating [her] ‘due to performance’” and that the plaintiff 

was “compelled to disclose the content of the defamatory statements . . . during subsequent 

applications and interviews for new employment.” Id. As alleged, the plaintiff’s claim against the 

manager was likely to fail because “[the company] [was] alleged to have been ‘the originator’ of 

the statement,” not the manager. Id. at *4. But “[i]t [was] possible that [the manager] was involved 

in [the plaintiff’s] termination and was responsible for the statement.” Id. at *5. Indeed, the 

defendant “was [the company’s] ‘Zone Manager’ for California, the state in which [the plaintiff] 

operated,” and was involved in a co-plaintiff’s termination. Id. Because the defendants “offered no 

evidence from which it may be determined that [the manager] was not responsible for the 

Case 3:17-cv-00201-LB Document 26 Filed 02/27/17 Page 5 of 10
ORDER — No. 17-cv-00201-LB 6

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[defamatory] statement,” a court was likely to grant leave to amend and the manager was not a 

fraudulent defendant. Id.

Here, like Umamoto, Ms. Arvizu’s defamation claim against Mr. Duffy is likely to fail as pled. 

She alleges that she “was falsely accused of gross misconduct, including retaliation and/or 

discrimination against other employees.”17 She asserts that this statement, made by “Defendants,” 

was false, unprivileged, and “directly impugned [her] character and honesty.”18 And she asserts 

that she was “forced to republish certain of these defamatory statements to third parties outside of 

Wal-Mart.”19

For at least two reasons, these allegations alone are insufficient to state a claim against Mr. 

Duffy. First, Ms. Arvizu does not allege facts plausibly supporting a claim for compelled selfpublication. She does not, for example, allege to whom she was forced to communicate the 

statement. That is an important factor, see Estrada v. Wal-Mart Stores, Inc., No. 16-cv-04091-LB, 

2016 WL 5846977, at *10 (N.D. Cal. Oct. 6, 2016); and her assertion that she was forced to 

republish “certain of these defamatory statements to third parties outside Wal-Mart” is not 

sufficient.20 But this deficiency could be cured on amendment if, for example, Ms. Arvizu was 

forced to republish the defamatory statement to “explain the grounds for [her] termination to 

potential employers.” See Howerton v. Earthgrains Baking Cos., Inc., No. 1:13-CV-1397 AWI 

SMS, 2014 WL 2767399, at *2 (E.D. Cal. June 18, 2014); Live Oak Publ’g, 234 Cal. App. 3d at 

1287.

Second, the complaint’s allegations against Mr. Duffy are few and far between; she does not 

even assert that Mr. Duffy made the allegedly defamatory statement. But the few allegations 

involving him — he is a supervisor and Market Manager;21 she “appealed the retaliatory actions 

undertaken by [Mr.] Duffy and asked for an investigation of his behavior and her termination”; 

 

17 Compl. ¶ 18.

18 Id. ¶ 19.

19 Id.

20 Id.

21 Id. ¶ 3.

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ORDER — No. 17-cv-00201-LB 7

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and “Wal-Mart senior management ratified [his] wrongful conduct”22 — support the conclusion 

that he was involved in her termination and was responsible for the defamatory statement. And the 

defendants have not offered evidence to the contrary.

The court therefore concludes that, although Ms. Arvizu inadequately pleads a defamation 

claim against Mr. Duffy, leave to amend would be proper. The defendants have no shown that, 

under California law, she could not possibly recover against Mr. Duffy.

The cases that the defendants cite do not change this outcome.23 See, e.g., Toth v. Guardian 

Indus. Corp., No. 1:12cv0001 LJO DLB, 2012 WL 468244 (E.D. Cal. Feb. 13, 2012); RolandWarren v. Sunrise Senior Living, Inc., No. 09 CV 1199 JM (WMc), 2009 WL 2406356 (S.D. Cal. 

Aug. 4, 2009). Both of those cases addressed fraudulent joinder under a standard more akin to a 

Rule 12(b)(6) motion to dismiss, denying the plaintiffs’ motions to remand where they merely

“failed to state a claim” against the non-diverse defendant. Toth, 2012 WL 468244 at *5; RolandWarren, 2009 WL 2406356 at *8. But the question is whether the plaintiff could possibly recover 

against the party whose joinder is questioned. See Schwarzer, Tashima & Wagstaffe, Rutter Group 

Prac. Guide: Federa. Civ. Pro. Before Trial § 2:2467 (The Rutter Group 2016) (“Courts do not 

apply even a Rule 12(b)(6) motion to dismiss standard in which the claim must be ‘plausible’ on 

its face. Rather, the standard is whether there is ‘any possibility’ the complaint stated a cause of 

action.”) (citing Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1333 (11th Cir. 2011)). Ms. Arvizu 

could possibly recover against Mr. Duffy under California defamation laws. And the defendants’ 

cases “rejected the possibility that the plaintiff would be able to correct the deficiencies in the 

defamation allegations by filing an amended complaint.” Morales v. Gruma Corp., No. CV 13-

7341(CAS) (FFMx), 2013 WL 6018040, at *6 (C.D. Cal. Nov. 12, 2013) (citing Toth, 2012 WL 

468244 at *5; Roland-Warren, 2009 WL 2406356 at *8). But it is the defendants’ burden to 

“show[] that the plaintiff ‘would not be afforded leave to amend [her] complaint to cure [the] 

 

22 Id. ¶ 14.

23 See Opposition to Motion to Remand – ECF No. 20 at 13–14.

Case 3:17-cv-00201-LB Document 26 Filed 02/27/17 Page 7 of 10
ORDER — No. 17-cv-00201-LB 8

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purported deficiency.’” Padilla, 697 F. Supp. 2d at 1159 (quoting Burris, 2006 WL 2038040 at 

*2). They have not done so in this case.

2. The Common Interest Privilege Defense

Wal-Mart asserts that “[e]ven if [Ms. Arvizu] could allege facts sufficient to support 

defamation against [Mr.] Duffy, she would still not be able to escape application of the common 

interest privilege.”24

California Civil Code section 47(c) creates a qualified privilege for any communication made 

“without malice, to a person interested therein . . . by one who is also interested.” “‘Parties in a 

business or contractual relationship have the requisite ‘common interest’ for the privilege to 

apply.’” Umamoto, 2013 WL 2084475 at *5 (quoting King v. United Parcel Serv., Inc., 152 Cal. 

App. 4th 426, 440 (2007)). A plaintiff may defeat the privilege by showing that the defendant 

acted with malice. See Noel v. River Hills Wilsons, Inc., 113 Cal. App. 4th 1363, 1368 (2003). The 

plaintiff must demonstrate “actual malice” by showing that either: (1) “the publication was 

motivated by hatred or ill will towards the plaintiff,” or (2) “the defendant lacked reasonable 

grounds for belief in the truth of the publication and therefore acted in reckless disregard of the 

plaintiff’s rights.” Id. at 1370. “Mere allegations that the statements were made ‘with malice’ or 

with ‘no reason to believe the statements were true’ are insufficient to rebut the presumption of 

privilege.” Kacludis v. GTE Sprint Commc’ns Corp., 806 F. Supp. 866, 872 (N.D. Cal. 1992). And 

“malice is not inferred from the communication itself.” Noel, 113 Cal. App. 4th at 1370.

In Umamoto, the common-interest privilege did not render the individual manager a “sham 

defendant.” 2013 WL 2084475 at *5–*6. The employee-plaintiff there alleged that she “was 

terminated due to performance even though [she] was ‘consistently ranked #1 nationally 

throughout the company in sales’ and had ‘earned approximately 129 awards [and] accolades.’” 

Id. at *6. The company also fired the plaintiff “just two months after her husband [and co-plaintiff] 

filed a sexual harassment complaint against [the manager-defendant] and [the manager] sent [her 

 

24 Id. at 12.

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ORDER — No. 17-cv-00201-LB 9

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husband] an email terminating him.” Id. Based on these allegations, it was “possible that the 

Superior Court would find that Plaintiffs’ allegations [were] sufficient to show malice” and, even 

if not, the deficiencies were not so obvious as to render the defamation claim fraudulent. Id. The 

court therefore remanded the case. Id.

Here, as in Umamoto, the common-interest privilege does not render fraudulent Ms. Arvizu’s 

defamation claim. As in Umamoto, she alleges that she had a history of success while employed at 

Wal-Mart: she worked there for over twenty-two years and, throughout her time there, she 

“received positive feedback and good performance ratings, along with increasing 

responsibilities.”25 And as in Umamoto, the allegations surrounding the circumstances of her 

termination may indicate malice: she “was subject to inappropriate race-based comments by 

management-level employees and was dissuaded from hiring other minorities”; she expressed 

concern “about the discriminatory conduct of Wal-Mart’s manager” and tried to “enforce rules 

relating to employee and customer safety” but was ultimately fired for doing so; and she “appealed 

the retaliatory actions undertaken by [Mr.] Duffy and asked for an investigation of his behavior 

and her termination,” but that never happened.26 These allegations give some support to the 

conclusion that the defamatory statement — that she engaged in “gross misconduct, including 

retaliation and/or discrimination against other employees” — was motivated by malice. And even 

if a court concluded that these allegations were insufficient, the deficiencies would likely be cured 

by amendment and do not indicate fraudulent joinder.

* * *

In sum, Wal-Mart has not satisfied its burden of demonstrating that Ms. Arvizu fraudulently 

joined Mr. Duffy in her defamation claim. Because Mr. Duffy is a California citizen, the court is 

without subject-matter jurisdiction and remands the case to the Superior Court for the County of 

Alameda. 

 

25 Compl. ¶¶ 1, 6.

26 Id. ¶¶ 8, 14.

Case 3:17-cv-00201-LB Document 26 Filed 02/27/17 Page 9 of 10
ORDER — No. 17-cv-00201-LB 10

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3. Attorney’s Fees

Ms. Arvizu requests attorney’s fees and costs incurred as a result of Wal-Mart’s removal.27 A 

defendant who removes a case improperly may be sanctioned under Rule 11 and 28 U.S.C. 

§ 1447. In particular, § 1447(c) provides that “[a]n order remanding the case may require payment 

of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” 

Awarding fees in this situation is discretionary, and they may be awarded only if such an award is 

“just.” See Martin v. Franklin Capital Corp., 546 U.S. 132, 136, 138 (2005). “Absent unusual 

circumstances, courts may award attorney’s fees under § 1447(c) only where the removing party 

lacked an objectively reasonable basis for seeking removal.” Id. at 141. Thus, “when an 

objectively reasonable basis exists, fees should be denied.” Id.

Here, Wal-Mart, although not ultimately successful, had an objectively reasonable basis for 

removing the case based on Toth and Roland-Warren. See Morales, 2013 WL 6018040 at *6 

(denying attorney’s fees where defendant removed the case based on Toth and Roland-Warren). 

The court therefore denies Ms. Arvizu’s request for attorney’s fees and costs.

CONCLUSION

The court grants Ms. Arvizu’s motion and remands the case to the Superior Court for the 

County of Alameda. The court denies Wal-Mart’s motion to dismiss as moot.

IT IS SO ORDERED.

Dated: February 27, 2017

______________________________________

LAUREL BEELER

United States Magistrate Judge

 

27 See Motion to Remand at 6–8.

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