1 J'SO-'6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 CV 23-00243-RSWL-SKx 12 MICHAEL ANGEL REYES-

CORBETON,

ORDER re: MOTION FOR 13

REMAND [18]

Plaintiff, 14 v. 15 16 U.S. RENAL CARE, INC., ET

AL.,

17 Defendants. 18 19 20 Plaintiff Miguel Angel Reyes-Corbeton (“Plaintiff”) 21 brought the instant Action against Defendants U.S. Renal 22 Care, Inc. (“Defendant Renal Care”) and Tabatha Thrasher 23 (“Defendant Thrasher”) (Collectively, “Defendants”) 24 alleging employment retaliation under California Labor 25 Code section 1102.5, wrongful termination in violation 26 of public policy, and wage and hour claims. After 27 Defendant Renal Care removed this case to this Court, 28 1 Plaintiff filed his Motion to Remand the Action [18]

2 (“Motion”) back to Los Angeles Superior Court.

3 Having reviewed all papers submitted pertaining to 4 this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: 5 the Court GRANTS Plaintiff’s Motion and REMANDS this 6 Action back to state court. 7 I. BACKGROUND 8 A. Factual Background 9 Plaintiff is a resident of Los Angeles County, 10 California. Compl. ¶ 2, ECF No. 1. Defendant Renal 11 Care is a Delaware corporation doing business at 4955 12 Van Nuys Blvd. #111, Sherman Oaks, in Los Angeles 13 County, California. Id. ¶ 3. Defendant Thrasher is an 14 individual resident of Los Angeles County, California. 15 Id. ¶ 6. 16 On or about September 1, 2018, Defendant Renal Care 17 hired Plaintiff to work as a patient care dialysis 18 technician (“PCT”), where Defendant Thrasher supervised 19 Plaintiff. Id. ¶ 17. Near the end of his employment, 20 Plaintiff complained to Defendant Thrasher that the 21 other PCTs were not properly cleaning the dialysis 22 machines, which Plaintiff believed was a violation of 23 federal and/or state law. Id. ¶ 20. Soon after, on 24 September 30, 2020, Defendant Renal Care fired Plaintiff 25 for “unprofessionalism” and “outbursts.” Id. ¶ 22. 26 Plaintiff now brings this Action alleging employment 27 retaliation under California Labor Code section 1102.5, 28 wrongful termination in violation of public policy, and 1 wage and hour claims. 2 B. Procedural Background

3 Plaintiff filed a Complaint [1, Ex. 1] on 4 November 18, 2022. Defendant Renal Care removed the 5 case to this Court on January 12, 2023 [1]. Plaintiff 6 filed his Motion to Remand [18] on February 13, 2023. 7 Defendant Renal Care opposed [21] on February 21, 2023. 8 Plaintiff replied [22] on February 28, 2023. 9 II. DISCUSSION 10 A. Legal Standard 11 Civil actions may be removed from state court if 12 the federal court has original jurisdiction. See 13 Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 33 14 (2002) (“Under the plain terms of § 1441(a), in order to 15 properly remove [an] action pursuant to that provision, 16 petitioners must demonstrate that original subject- 17 matter jurisdiction lies in the federal courts.”). 18 Diversity jurisdiction exists in all civil actions 19 between citizens of different states where the amount in 20 controversy exceeds $75,000, exclusive of interest and 21 costs. 28 U.S.C. § 1332. There must be complete 22 diversity of citizenship, meaning “each of the 23 plaintiffs must be a citizen of a different state than 24 each of the defendants.” Morris v. Princess Cruises, 25 Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). Federal 26 question jurisdiction exists in “all civil actions 27 arising under the Constitution, laws, or treaties of the 28 United States.” 28 U.S.C. § 1331. 1 The “burden of establishing jurisdiction falls on

2 the party invoking the removal statute . . . which is

3 strictly construed against removal.” Sullivan v. First 4 Affiliated Sec., Inc., 813 F.2d 1368, 1371 (9th Cir. 5 1987) (citing Hunter v. United Van Lines, 746 F.2d 635, 6 639 (9th Cir. 1984)). Courts resolve all ambiguities 7 “in favor of remand to state court.” Hunter v. Philip 8 Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). A 9 removed case must be remanded “[i]f at any time before 10 final judgment it appears that the district court lacks 11 subject matter jurisdiction.” 28 U.S.C. § 1447(c). 12 B. Analysis 13 Plaintiff seeks to remand this Action back to state 14 court because Defendant Thrasher is also a citizen of 15 California, and therefore there is no diversity 16 jurisdiction. See generally Mot. Defendant Renal Care 17 argues that Defendant Thrasher is a sham defendant 18 because Plaintiff cannot sustain a claim for wrongful 19 termination against Defendant Thrasher, as California 20 Labor Code section 1102.5 does not provide for 21 individual liability of an employee on behalf of its 22 employer. Opp’n 2:13-4:8, 4:18-23. Defendant Renal 23 Care therefore alleges the Court has diversity 24 jurisdiction over the matter because without Defendant 25 Thrasher, there is complete diversity between the 26 parties, and the amount in controversy exceeds $75,000. 27 See generally Opp’n. Plaintiff counters that Defendant 28 Thrasher is not a sham defendant because Defendant 1 Thrasher is a necessary party, as she played a pivotal

2 role in the alleged wage violations and retaliation.

3 Further, Plaintiff argues that Defendant must prove that 4 Plaintiff cannot recover from Defendant Thrasher on any 5 theory to show she is a sham defendant, and Defendant 6 has not shown this. Reply 3:25-4:2. Additionally, 7 Plaintiff argues California law in employer retaliation 8 seems to stretch itself to include employees on behalf 9 of the employer, meaning that Defendant Thrasher may be 10 liable. Mot. 6:5-16. For these reasons, Plaintiff 11 argues complete diversity does not exist and his Motion 12 to Remand should be granted. Reply 4:12-17. 13 As such, the Court needs to determine if Defendant 14 Thrasher may be individually liable under section 1102.5 15 to then determine whether Defendant Thrasher is 16 fraudulently joined. 17 The citizenship of a fraudulently joined non- 18 diverse defendant is disregarded when determining 19 whether complete diversity exists in a matter. 20 Grancare, LLC v. Thrower ex rel. Mills, 889 F.3d 543, 21 548 (9th Cir. 2018). If a plaintiff fails to state a 22 cause of action against the non-diverse defendant, and 23 the failure is obvious according to the settled rules of 24 the state, then the defendant is fraudulently joined. 25 McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th 26 Cir. 1987). There is generally a presumption against 27 fraudulent joinder. Hamilton Materials, Inc. v. Dow 28 Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). 1 Therefore, demonstrating that a plaintiff is unlikely to

2 prevail on her claim is not enough. Grancare, 889 F.3d

3 at 548. Rather, the defendant must show by clear and 4 convincing evidence that there is no “possibility that a 5 state court would find that the complaint states a cause 6 of action against any of the [non-diverse] defendants.” 7 Id.; Baker v. Sunrise Senior Living, No. 8 220CV07167ODWSKX, 2020 WL 7640731, at *2 (C.D. Cal. 9 Dec. 23, 2020). 10 Here, if there is any possibility Plaintiff could 11 recover against Defendant Thrasher on any of his causes 12 of action, Defendant Thrasher is not fraudulently 13 joined. If Defendant Thrasher is not fraudulently 14 joined then there is no diversity of citizenship and 15 this Action should be remanded for adjudication in state 16 court. See Arellano v. Wal-Mart Stores, Inc., No. CV 17 17-5134-GW(JCX), 2017 WL 4083144, at *7 (C.D. Cal. 18 Sept. 14, 2017) (granting the plaintiff’s motion to 19 remand because there was no diversity since the 20 non-diverse defendant was not a sham defendant). As 21 mentioned, Defendant Renal Care argues that Defendant 22 Thrasher cannot be individually liable for Plaintiff’s 23 claims, and therefore Plaintiff cannot state a claim 24 against Defendant Thrasher. Opp’n 2:13-4:8. 25 Accordingly, to determine whether Defendant Thrasher is 26 fraudulently joined, the Court must assess whether 27 Defendant Thrasher may be individually liable. 28 In 2014, the California legislature amended 1 section 1102.5 by adding the following italicized

2 language: “[A]n employer, or any person acting on behalf

3 of the employer, shall not retaliate against an 4 employee . . . .” See Tan v. InVentiv Health Consulting 5 Inc., CV 19-07512-CJC (ASx), 2019 WL 5485654, at *3 6 (C.D. Cal. Oct. 24, 2019) (quoting Cal. Lab. Code 7 § 1102.5). Both California state courts and California 8 district courts have been divided on if the 9 interpretation of section 1102.5’s amendment precludes 10 individual liability. Compare Baker, 2020 WL 7640731, 11 at *4 (granting the plaintiff’s motion to remand after 12 finding that state law regarding individual liability 13 under section 1102.5 is not obvious or settled), with 14 CTC Glob. Corp. v. Huang, No. SACV 17-02202-AG (KESx), 15 2018 WL 4849715, at *4 (C.D. Cal. Mar. 19, 2018) 16 (granting the defendant’s Rule 12(b)(6) motion to 17 dismiss after finding that section 1102.5 does not 18 provide for individual liability). 19 While there are inconsistent interpretations of 20 Section 1102.5 throughout the courts, it is clear that 21 this section precluded individual liability prior to the 22 amendment. Tan, 2019 WL 5485654, at *3. Nonetheless, 23 there is now an argument that the plain language of the 24 section seems to stretch itself to individual liability. 25 Id.; CTC Glob., 2018 WL 4849715, at *4. 26 Federal courts look to the highest state court when 27 interpreting state law. PSM Holding Corp. v. Nat’l Farm 28 Fin. Corp., 884 F.3d 812, 820 (9th Cir. 2018). When 1 there are no governing decisions from the highest court

2 and there is an absence of guidance from intermediate

3 appellate court decisions, courts may look to California 4 trial court rulings for support, even though they are 5 not binding. See Baker, 2020 WL 7640731, at *3 (noting 6 that the plaintiff’s proffered California Superior Court 7 decisions finding individual liability established that 8 “at least some California courts have found individual 9 liability available under section 1102.5, thus opening 10 the door to the possibility that [the plaintiff] may 11 recover against [the supervising employee] in his 12 individual capacity”). 13 Here, neither Party cites to any decisions from the 14 California Supreme Court or intermediate appellate 15 courts on this matter. Defendant cites to two cases 16 outside of this district that refer to a California 17 Supreme Court matter that interpreted similar yet 18 different statutory language to preclude individual 19 liability years before section 1102.5’s amendment. 20 Opp’n 3:28-4:7. This argument is unconvincing as it 21 does not provide for a settled ruling on this issue 22 under established state law. 23 The Court finds the reasoning in Baker instructive. 24 Baker established that if trial courts are split on the 25 decision of individual liability, this demonstrates that 26 “the question of individual liability under section 27 1102.5 is far from [obvious or] ‘settled.’” Id. at *4. 28 In other words, the conflicting court holdings 1 demonstrate that Defendant Thrasher’s potential

2 individual liability under section 1102.5 claim is

3 clearly unsettled. As such, because the sham defendant 4 standard requires proving fraudulent joinder based on 5 settled state rules, the Court cannot certainly 6 determine if Defendant Thrasher is fraudulently joined 7 due to the current ambiguity in the state law. See id. 8 (finding the conflicting district court holdings 9 demonstrate that section 1102.5 is far from obvious or 10 settled and thus, “[t]he Court need not resolve the 11 question here, because [the defendant] is fraudulently 12 joined only if [the plaintiff’s] claim against [the 13 defendant] obvious[ly] fails according to the settled 14 rules of the state.”) (internal quotation marks 15 omitted). 16 However, in instances where such ambiguity has 17 surfaced, courts have found that this ambiguity should 18 be resolved in the plaintiff’s favor. Id.; see Tan, 19 2019 WL 5485654, at *3 (granting the plaintiff’s motion 20 to remand because the Court found the law is not settled 21 on the issue of whether section 1102.5’s amendment 22 precludes individual liability); Jackson v. Dollar Tree 23 Distrib., Inc., No. CV 18-2302 PSG (SKX), 2018 WL 24 2355983, at *1 (C.D. Cal. May 23, 2018) (same). 25 Additionally, the circumstances leading to 26 Plaintiff’s termination suggests that Plaintiff could 27 possibly recover against Defendant Thrasher on at least 28 Plaintiff’s cause of action for employment retaliation 1 under section 1102.5. Here, shortly before Plaintiff

2 was fired, Plaintiff complained to Defendant Thrasher

3 that the other PCTs were not properly cleaning the 4 dialysis machines, which Plaintiff believed was a 5 violation of federal and/or state law. Compl. ¶ 20. In 6 her capacity, Defendant Thrasher was not any ordinary 7 supervisor, but rather, was allegedly Plaintiff’s 8 manager, a managing owner of Defendant Renal Care, and 9 the person who could potentially be responsible for the 10 alleged violations pertaining to Plaintiff, such as the 11 wage and hour violations. Mot. 6:17-23. As such, 12 Defendant Thrasher may have played a critical role in 13 Plaintiff’s termination. 14 Moreover, Defendant Renal Care has not met its 15 heavy burden of proving that there is no possibility a 16 state court would find a potential cause of action 17 against Defendant Thrasher. Grancare, 889 F.3d at 548. 18 Defendant Renal Care only argues it is irrefutable that 19 Defendant Thrasher is a sham defendant because 20 Plaintiff’s Motion did not address this argument, as 21 Plaintiff cannot sustain a claim for wrongful 22 termination against Defendant Thrasher. Opp’n 4:18-23. 23 This does not demonstrate with “clear and convincing 24 evidence” that there is no possibility a state court 25 would find a cause of action against Defendant Thrasher. 26 Thus, the Court finds that Defendant Thrasher is 27 not fraudulently joined because the unsettled law 28 regarding individual liability under California Labor 1 Code section 1102.5 favors. Accordingly, there is a

2 possibility Plaintiff could recover against Defendant

3 Thrasher on his causes of action. 4 III. CONCLUSION 5 Based on the foregoing, the Court GRANTS 6 Plaintiff’s Motion and REMANDS the Action back to state 7 court for the remaining claims to be properly 8 adjudicated. 9 10 IT IS SO ORDERED. 11 12 DATED: May 12, 2023 _ _ _ _ _ _ _ /S_/_ R_O_N_A_LD_ _S_.W_._ L_E_W_________

HONORABLE RONALD S.W. LEW

13 Senior U.S. District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28