Hernandez v. Ignite Restaurant Group, Inc.

Citations: 917 F. Supp. 2d 1086; 2013 WL 129286; 2013 U.S. Dist. LEXIS 3645Docket: No. 2:12-cv-02468-MCE-AC

Court: District Court, E.D. California; January 8, 2013; Federal District Court

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Plaintiff Rachel Hernandez initiated a lawsuit against Ignite Restaurant Group (operating as Joe’s Crab Shack) and her former supervisor, Kelly Alton, in state court, alleging wrongful termination and employment discrimination. Ignite removed the case to federal court, claiming diversity jurisdiction under 28 U.S.C. 1441. Hernandez filed a Motion to Remand and for Attorney’s Fees. The Court granted the Motion to Remand but denied the request for Attorney’s Fees.

The relevant facts include that Hernandez worked as a server at Joe’s Crab Shack from March 2010 until January 2012. Ignite is a Delaware corporation operating in California, while both Hernandez and Alton are California citizens. Hernandez took medical leave due to aseptic meningitis in late 2011 and returned with work restrictions. Despite these restrictions, she performed tasks that caused her pain, fearing termination. On January 29, 2012, Alton terminated her due to customer complaints, which Hernandez claims were unjustified and that similarly situated employees were not terminated. Alton allegedly communicated to Hernandez that she needed to go on unemployment to recover from her illness, implying that Hernandez was disabled. Hernandez asserts that Alton's actions and disclosure of her medical condition to others were humiliating.

Hernandez's lawsuit, filed on July 10, 2010, in the Sacramento Superior Court, alleges violations of California’s Fair Employment and Housing Act, unpaid wages under the California Labor Code, invasion of privacy due to the disclosure of her medical condition, and defamation against both Ignite and Alton. Ignite's removal to federal court was based on the argument that Alton was a "fraudulently joined" defendant, despite both parties being California citizens.

A defendant can remove a civil action from state to federal court if the federal court has original jurisdiction, which occurs in two scenarios: (1) a federal question exists, or (2) complete diversity of citizenship exists between the parties. For diversity jurisdiction, the amount in controversy must exceed $75,000, and each plaintiff must be a citizen of a different state than each defendant. An exception to complete diversity is when a non-diverse defendant is considered 'fraudulently joined,' meaning the plaintiff cannot possibly recover against that defendant based on state law. The burden of proving federal jurisdiction lies with the removing party, and any ambiguities are resolved in favor of remand.

In the case at hand, the plaintiff argues the removal was improper for two reasons: (1) Defendant Alton did not join in the removal notice, and (2) Alton is not a sham defendant, thus negating diversity. Ignite contends that Alton was not required to join because he had not been served with the complaint before removal. According to 28 U.S.C. 1446, only defendants who have been properly joined and served must consent to removal. Since the record shows Alton had not been served, his failure to join Ignite's notice does not invalidate the removal.

Ignite requests the Court to overlook Alton's citizenship for diversity jurisdiction, claiming Alton is a 'sham' defendant fraudulently joined by the Plaintiff. Fraudulent joinder occurs when a plaintiff fails to present a viable claim against a resident defendant, a failure that must be evident based on established state law. However, if a state court could potentially find a valid cause of action against any resident defendant, the federal court must deem the joinder appropriate and remand the case. Ignite must prove that the Plaintiff cannot amend her complaint to address any deficiencies. The Plaintiff's claims against Alton include Unlawful Public Exposure of Private Facts and Defamation. Ignite argues that both claims are barred by the 'manager’s privilege' under California law, which protects managers from individual liability for torts committed within the scope of their employment. California case law indicates that the scope of the manager’s privilege is ambiguous and lacks consensus. The privilege mainly applies to cases of intentional interference with contractual relationships, preventing terminated employees from suing supervisors for decisions made in their managerial capacity. Thus, the manager’s privilege serves as a protective measure for managers acting on behalf of a corporation, maintaining that their actions cannot be liable for inducing contract breaches.

In Los Angeles Airways, Inc. v. Davis, the Ninth Circuit highlighted that under California law, managers may have the privilege to induce the breach of an employment contract with another employee. However, it remains uncertain whether this privilege extends beyond intentional interference claims. The case Kacludis v. GTE Sprint Commc’ns Corp. suggested that this privilege might apply to defamation claims, but without thorough analysis. Conversely, multiple California cases have denied the application of the manager's privilege to torts like intentional infliction of emotional distress, harassment, discrimination, and interference with contracts involving third parties. There is no established precedent for applying the privilege to invasion of privacy claims. Additionally, the nature of the privilege—whether absolute or conditional—remains ambiguous, with various interpretations found in California law. Judge Patel's evaluation indicates skepticism regarding the privilege's applicability in cases of egregious conduct. Overall, the legal landscape surrounding the manager's privilege in California is complex and fact-dependent, leading to the conclusion that the privilege does not definitively preclude the plaintiff's defamation and invasion of privacy claims. Consequently, given the potential for a viable claim against a non-diverse defendant, the court must remand the case to state court.

Ignite failed to demonstrate that Plaintiff could not assert a viable claim against Defendant Alton under California law, thus no complete diversity exists, necessitating the remand of the case. Plaintiff's request for attorney’s fees and costs associated with the motion to remand was evaluated under the federal removal statute, which permits such awards unless the removing party has an objectively reasonable basis for removal. The Court determined that Ignite's removal decision was not objectively unreasonable due to the ambiguity surrounding the manager’s privilege in California law, leading to the denial of Plaintiff's motion for attorney’s fees. Consequently, Plaintiff's Motion to Remand was granted, and the case is remanded to the Superior Court of California, County of Sacramento. Oral argument was deemed unnecessary, and the matter was submitted based on the briefs.